Mobile Virtual Goods Generate 4X More Revenue Than Ads

There’s gold in them ‘thar hills of virtual stuff. According to data from analytics firm Flurry, mobile virtual goods are hot. So hot, in fact, they’re far surpassing the revenue generated from mobile advertising.

The study, conducted using data collected from leading iOS social networking and social gaming apps, shows that in September of ’09, out of close to every $2 of mobile revenue… either advertising or virtual goods…over 2/3rds went to advertising. Just one year later, not only has the amount of revenue grown significantly, the amount going to virtual goods…swords, gold coins, respect points or plum trees for farm plots…has shifted dramatically to where virtual goods now account for $8 of every $9 in revenue. And, because Google’s Android Market does not yet support in-app purchases or micro-transactions, the data doesn’t include users from this rapidly expanding platform.

Virtual goods sales were already going gang busters on social sites like Facebook. Michael Pachter, Wedbush Morgan Securities video game analyst, reports that social gaming revenue has grown from approximately $600 million in 2008 to $1 billion in 2009. Further, he forecasts that social gaming will generate nearly $1.6 billion this year, and grow to more than $4 billion by 2013. That’s a lot of quarters for plum trees on your Farmville farm.

The convergence of social and games will continue to expand their reach into our lives. In fact, social gaming is reaching a tipping point and with Wal-Mart and Verizon now selling iPads, the size of social gaming’s audience will quickly surpass prime time television viewership.

For marketers, this sweeping technology, entertainment and behavioral change represents tremendous opportunity to create highly engaging content built around the core premise of your brand, then invite consumers into a branded experience that extends far beyond your physical product or service. In fact, maybe it’s time to start thinking beyond the five “P’s” when it comes to marketing. Maybe it’s time to add a “V”. Seems plausible doesn’t it…the brand manager of the new realities has to think about Product, Price, Place, Promotion and Virtual. Can you imagine what a virtual version of your brand or brand experience would be, could be? If not, you should start dreaming. There’s money to be made for the imaginative mind.

Top 5 Emerging Brand Trends on Facebook

This was an excellent and comprehensive Mashable overview of the five major trends brands are using to connect, transact and serve customers on Facebook. There’s some very impressive innovation going on in the space, lead by some very big brands like Ford and Nike. What have you seen brands doing on Facebook that impresses you?

Agencies, Do Your Clients Really Need You?


I’m seeing a lot of chatter lately about the relevancy of the 20th Century agency business model and the demise of the client-agency symbiotic relationship. This post from a London-based BBH Labs raises some provocative questions and proposed some intriguing alternatives to the future relationship between the two entities.

Digital technology, social networks and tools have fully empowered consumer to being content creators, critics, participants in the marketing enterprise. The behaviors technology and tools are enabling, along with the companion erosion of the MASS in mass media they cause, does call into question the whole value proposition of having an agency or 50 agencies (such as some clients have) handle work that the client should be doing.

It’s clear there’s much duplication of costs between firms handling different silos of a clients business….account people, creatives, overhead, profit….each firm has to have these to deliver client work and stay in business and yet, multiply these costs 10, 20, 50 times over and a huge portion of the client’s marketing budget is paying for outside staff and expertise that many are saying should now be residing inside the client’s organization.

Another post I ran across last week was even more dismal in it’s prediction of the agency’s future, as evident from the title: “RIP: 20th Century Agencies”. According to Forrester Research, the firm that provides ongoing tracking of 300,000 global consumer’s online behavior and participation with their Social Technographic Profiling tool, we’ve now entered an era of Adaptive Marketing. In this ear, marketers take advantage of media addressability and more effective data-driven decision making. Larry Flanagan, CMO for MasterCard put it this way: “We are moving form decades of push stategy to a more holistic 360 consumer strategy”.

Or, Trevor Edwards, head of global marketing at Nike said: “We’re not in the business of keeping media companies (or agencies) alive. We’re in the business of creating consumer connections”. And Nike has done this, building the largest community of runners in the world with Nike+…a product, a service, a community. Now, Nike doesn’t need to conduct focus groups with consumers or rely on the newest creative idea from it’s agency to breakthough to runners. It has over a million runners who use this connection, giving them unprecedented data on actual, instead of self-reported, consumer behavior. It can eavesdrop into conversations their hundreds of thousands of community members are having on a real time basis. And, it’s changed every aspect of their marketing…research and development, promotions, CRM, advocacy, customer service…you name it. As brands become media producers and publishers, creating their own content, connections and communities, the power of traditional mass media and the agencies that craft the mass marketing interruptions (ad units, PR, etc.) brands relied on so much in the past has to fade.

Agencies are struggling to adapt to this new age for many reasons, according to the post. Among the biggest challenges agencies face:

* They are focused on campaigns rather than experiences
* They’re good at talking but not at listening
* Agencies create media-centric ideas
* They treat customers as an audience instead of participants
* They are mostly “unbundled”, offering services in disparate skill sets
* They have trouble mastering many new specialties at once
* Agencies have moved down the value chain. Purchasing in now involved in agency selection and compensation and there’s little difference between agencies.
* Marketers don’t trust traditional agencies with digital and interactive agencies struggle for a seat at the strategic table.

So, what’s an agency to do to survive in this Brave New World? The path forward is simple but it’s not easy.

* Agencies must focus on developing big ideas that work across multiple communication channels and consumer touch points and they need to adopt a more iterative process for creating ideas.
* Agencies need to understand experiences that foster interactions drive marketing success from here on out. Media has now fragmented into distinct categories of paid, earned and owned and there has been a dramatic shift from viewing media as the foundation of campaigns to being seen as a catalyst of experiences.
* Agencies need to become more intelligent and adaptive…relying more on analytics to drive customer insights and developing a business and staffing model that gives clients access to the the talent that can do this and help solve their business and marketing challenges.

The big question that remains is: Can clients also make the adaptations they need to make? For all the talk about integration and holistic effort, the fact remains, clients still fund marketing activities based on legacy allocations of dollars in various “buckets” or slices of the marketing pie as well as managing this with internal staff in very defined silos tied to those buckets…above-the-line, CRM, digital, media buying, promotions, etc. It’s difficult to near impossible for an agency to provide an integrated idea to a client that isn’t integrated.

In fact, I don’t think the issue is integration, I think the real issue is orchestration. Some clients interpret integration in a very wooden, literal sense. To them, integration means: same thing everywhere. To me, this makes about as much sense as going to see a symphony concert where the conductor forces every musician to play every note in the same key at the same time. Where’s the artistry or beauty in that? Boring! And frankly, a lot of integrated marketing is executed in the same boring manner….same thing, everywhere. No wonder campaign results are so pitiful.

Rather, I propose the real secret to success in the new realities is orchestration…where there are levels of interest and discovery that the consumer uncovers at different touch points along their path to purchase. Yes, it all looks like it’s coming from the same company and yes, the message is consistent. In this sense it’s fully integrated. But the idea is orchestrated to reveal itself in delightful ways in social media, on mobile, in live experiences and at retail in ways that are unique, relevant and compelling for each channel or environment.

To pull this off, continuing with our orchestration analogy, it requires a beautiful piece of music (the strategic idea), skilled musicians (the client and agency stakeholders) and instruments (the tools and technologies) and a masterful conductor…but who is this? It’s that last individual that is the big question mark in today’s marketing organization. Are there people on the client side of the equation that can masterfully conduct?

Apple Face Time Commerical: Perfect


Apple once again demonstrates what an intelligent and intuitive marketer they are, not just in terms of product development but in advertising…yes, advertising. This is a beautiful spot for Face Time on iPhone 4.

In this almost two-minute video, they show you BENEFITS of a feature. And, they make it seem like Apple just invented video chat, which has been around for years. But, in a way, they have invented it because video chat has never been so mobile.

What’s a benefit, you ask? You know, those reasons people actually buy something in the first place, not to be confused with features, which marketers take as the reasons people buy. Do people want a better camera or do they want to take better photos? Do people want a better smartphone or better, more intimate communication?

Other manufacturers in the consumer electronics category would have laden this ad with features, FEATURES and MORE F-E-A-T-U-R-E-S plus a ton of legal disclaimers taking up the last third of the spot. Reminds me of the brilliant and hilarious YouTube video entitled, “If Microsoft Designed the iPod packaging”.

Apple gets humans. They know we like beauty. They know sometimes dads travel for business and at the end of the day, sitting in some lonely hotel room, want to be reminded of why they go through all this in the first place and want to connect with their family. They know sometimes grandparents can’t be there for the graduation but want to experience it anyway. I got chills when the military dad watches the ultrasound of his unborn baby, while it’s happening. Do you notice the tear in his eye? I have to admit, I got one in mine.

This is a beautifully shot piece. It taps right into your emotions without a word. Apple gets humans. They know we communicate a lot with just our expressions and gestures. You can feel the reverence for the human experience. Maybe I’m too much of a fan of Apple but I don’t think so. I just admire the way they respect me, they anticipate me and understand that what I’m looking for is not a better widget but a better experience with other humans. How nice.


via Apple Face Time Commerical: Perfect.

Old Media Starts New Media Agency

If I were a client, I’d be highly skeptical that a dinosaur of the old media, like print, could attract the talent to help me develop best-in-class new media campaigns and activations. After all, the premise of all these business development operations within media companies is to keep the dollars on the publishers books. How does this really fit with a “free the content” strategy? I’ve been here and done that and I can tell  you, the client gets a “you can have any media you want as long as we own it” distribution strategy.

I guess they’ll find some takers and Meredith has certainly been aggressive about acquiring new media agencies of late. But, the same issue always does these guys in…it’s hard to innovate without cannibalizing the golden goose of your existing business.

Tribune Co. gets into consulting business with digital unit | Crain’s Chicago Business.

Does Social Media Engagement Translate to Brand Sales? Yes!


Excellent post by social media thought leader Brian Solis on how social media engagement on sites like Facebook and Twitter is translating into sales for brands. New research reveals that over 60% of Facebook users and a whopping 79% of Twitter users are more likely to recommend a brand since becoming a fan/follower on these social networks.

Solis goes on to point out that actively and thoughtfully engaging consumers in social networks is fast becoming a base expectation. But, brands beware! Reread the first part of the lead sentence in this paragraph again…the part about actively and THOUGHTFULLY engaging.

It never fails to amaze me when I find big brands using social media channels as yet another avenue for interruption or push messaging. You see this all the time. Some brands think it’s still all about them. This is the quickest path to irrelevance and having consumers dismiss you as hopelessly out of touch. This channel is NOT about what you have to say. It’s about LISTENING and joining in the CONVERSATION and one of the best ways to do this is with relevant content.

Brands have a tremendous opportunity to use social media as a platform to develop and employ a new set of relationship skills and a distribution vehicle to serve up content that seeks to first provide a value to their audiences. This skill set doesn’t come naturally to brand marketers who have spent years of their careers and millions of dollars perfecting their ability to TALK AT people through ads, direct mail, press releases and the like, delivered via traditional media channels. This is a comfortable and easy-to-manage process, for sure. Unfortunately, it’s a marketing method sharply in decline and no wonder: There’s very little consumer value delivered in this legacy advertising/pr, interruption-based approach.

The mantra of the internet in the first part of this decade was: if you’re not on Google, you don’t exist.

The mantra going forward is: if you’re not on Facebook or Twitter, you don’t exist.

This isn’t just the opinion of young people, according to the research Solis references.

“It shows they are not really with it or in tune with the new ways to communicate with customers.” Female 18-24.

“If they’re not on Facebook or Twitter, then they aren’t in touch with the…people.” Female 55-59

I know this to be the case from my own experience. I own two Lexus cars. I love them. But, there’s one problem…their keys suck! They have some kind of manufacturing defect in the plastic of the key fob and they become very brittle and break over the course of normal use. Now, aside from the fact that a cheap, crappy key is a big disconnect with a luxury brand experience, there are two other major irritations that go with this problem:

1) When the key fobs break, the transponder often falls out. Without the transponder, you can’t open the doors remotely and in certain cases may not even be able to start the car.

2) Replacement keys cost a ridiculous $200 a piece.

Least you think I’m petty and needlessly using the blog to harp on a personal matter…this has happened to three of our four main keys. Do you think Lexus covers this under warranty? Ah, no.

The last straw came a couple weeks ago when the third key broke as my wife was engaging in the extremely abusive behavior of removing it from her purse. I decided to see if Lexus was even listening on social media so I tweeted about the issue and got no response. So, I then posted it on Facebook…where I also got no response. In a Twitter search, I found lots of posts from Lexus about their new sexy new sports car…along with my tweet gripping about the key. In a Google search, I also found lots of links to people complaining about Lexus key fobs breaking. Either Lexus is not listening or they don’t care. And, you know what…I’m not so sure I care that much about $50,000 cars with cheap, crappy keys. After all, a $50,000 that won’t start because of it’s crappy key is the definition of useless. And infuriating.

This is obviously a customer service issue and social media is a great, real time lab for listening to customer complaints and issues and fixing them. Just look at what Comcast has done using Twitter to improve it’s customer service experience. If nothing else, responding to complaints on social networks gives brands the opportunity to not only solve problems but let everyone know they’re doing so. In the process, they can turn the complaints into compliments. This clearly reflects positively on the brand and everyone can know about it…something that doesn’t happen in a call center interaction.

But, to be relevant on Facebook and Twitter, brands need to go beyond using it to resolve customers service issue. A brand needs more than a social media presence. Brands should be surprising and delighting potential customers and customers with content that seeks to answer their questions and need for information first…and you can gently and organically integrate your brand into this content when and where it’s credible and makes sense. By taking this approach, a brand earns the right to be heard.

We call this approach Branded Conversations…listening first, then providing relevant content that answers customers questions and need for information. We think it’s a new marketing practice whose time has come.

How social media can make history | Video on TED.com

[ted id=575]

These tools don’t get socially interesting until they get technically boring. Great video from Clay Shirky, authot of “Here Comes Everybody” on how media is changing and how we’re changing how we communicate along with it.

Apple Aims to Make Mobile Ads Competitive to TV

This is a good post by John Gruber, of Daring Fireball, on the shots Jobs fired across Google’s bow with the iPhone OS 4.0 announcements Thursday.

His main point about iAds I agree with. On mobile devices, people are using apps, not search. The browser is, for the most part, too slow and clunky to peck around on. Once you go apps, you never go back to the browser and search…if there’s an app alternative.

iAds will allow creatives, agencies and developers to create very media rich ad experiences within the app. You don’t have to click on a banner for an ad in the app then have the browsers launch (like AdMob and other’s do now). You click on the ad and it launches in a layer over the existing app you’re in. And, the ad you get is full of richness and experience. It will be better than TV advertising in that it’s interactive. It will be better than interactive, in that it can incorporate a lot of rich media and use location, gaming and more.

To me, this is a very rich opportunity for building a new kind of agency of the future. When you think about it, if you could deliver the emotional and artistic impact of a very well made TV ad along with all the richness of interactivity, geolocation and instant purchase, that’s a powerful combination.

He who has ears to hear, let him hear!

Daring Fireball: Reading Between the iPhone OS 4.0 Lines.

via Apple Aims to Make Mobile Ads Competitive to TV.

Smart Phones Go Mass Market In 2010

According to J.P. Morgan analyst Rod Hall, this is the first year for true mass adoption of smart phones. Look for location, gaming and smart phones to merge in a unique kind of point of purchase marketing.

via Barrons.com.

Once-Casual Gamers Go 'Social'


More interesting news on the evolution of gaming. Expect to see savvy brands begin to leverage these trends into interesting social game promotions.

via MediaWeek.