With mobile phone penetration getting higher all the time, and with packs of Euroteens running around with calluses on their thumbs from text messaging, the strengths of mobile advertising would seem too tempting to pass up. Yet the same benefits that make mobile media so attractive to advertisers - the ability to reach consumers any time, any place, the ability to target specific demographics with near-surgical precision - could turn out to be irritants from the viewpoint of consumers, who may find themselves bombarded by messages unsuitable to their lives.
As the founder and Chief Technology Officer of Add2Phone Ltd, a Hewlett-Packard Mobile E-Services Bazaar partner and a forerunner in software technology for the mobile applications market, Vesa-Matti "Vesku" Paananen spends his days pondering the social politics of mobility. Working closely with operators both on strategy, and on developing innovative services, he helps a new generation of mobile marketers adapt the new medium to their company's image, their campaigns, and above all, their customers.
In 2000, Vesku founded MobileMonday.net, the open Finnish mobile society. Together with Linus Torvalds, he started an Open Source WAP Gateway Project called Kannel.org. Over the past five years, he has been a speaker at various Internet and wireless forums both in and outside of Finland. He has worked in the WAP Forum, founding the WAP developer's working group, and has authored two books in Finnish about multimedia, WAP and m-commerce. Holding an advanced degree in applied mathematics from the University of Jyväskylä, Finland, he is the designer of a broad range of wireless service products and business models, including Harmonium, the world's first commercial ring tone composer and downloader.
Navigating the shoals of today's fast-changing mobile applications market is not a job for the faint of heart. But Vesku, an accomplished kite-surfer and kiteboarder, is a connoisseur of extreme sensations and personal challenges - the thrill of risk and adrenaline. On a dark, chilly late-October morning, as he waits for Finland's 160,000 lakes to freeze over, Vesku spoke to Mpulse about airborne phone viruses, the concept of "total mobility," and the neverending conquest of cool, SMS-style.
Your company, Add2Phone, is widely considered Europe's leading technology company in the mobile marketing applications market. How did you conquer this unique space within the mobile Internet?
You already said a bad word - Internet.
Everyone at my company is coming from a telco background. And the telco world is not the Internet world. There are lots of different barriers. The operators own the control points. You cannot just take the open Internet approach and turn it into the mobile Internet if you want to do business. Otherwise what you end up with is a dot-comedy.
A 'dot-comedy?' Why is dot-com culture so irrelevant to the world of mobile marketing?
Because in Europe, what we've found is that all services that create revenue and profits are SMS or MMS services. They're based on the messaging metaphor, not the browsing metaphor. For me, the Internet is rich browsing. It's an email standard that's too rich for these very restricted mobile devices such as mobile phones. Which is why we ended up going with a multimedia MMS standard. If you emailed a rich text email to someone's phone, it would choke it.
OK, so you can't browse with your phone. How else is mobile marketing different from marketing in the Internet space?
The big thing is billing capability. In the U.S, most Internet services are free. But of course, nothing is free in the mobile world. Why? Because there is not enough bandwidth. In the Internet space, you have big ISPs collapsing because of excess capacity. That's not the situation in the mobile domain. On the contrary, there is not enough bandwidth for all these fancy services one can so easily imagine. But there is a billing mechanism. We've had premium billing capabilities in our telecom network for the past hundred years.
So now the challenge is, how do you invent something that will be viewed as premium - that is to say, worth paying for - but is also possible to download onto a handset? Right now, when people think of premium services, they think of big, flashy multimedia files, with graphics and moving video clips. All that stuff is coming to the mobile domain. It will just take time and creativity.
But in the meantime, we can't lie. We can't talk about mobile entertainment services as 'The Internet in your pocket.' Because right now, it's not the Internet. It's black-and-white graphics, and low bandwidth. We have got to be very careful about what metaphors we use. Or else we're setting users' expectations too high.
But do all premium mobile content services have to have that kind of rich multimedia quality? If I'm getting Zagat restaurant reviews on my Vindigo, I don't need to see pictures of food on the table.
I think that's right. What we have to understand is: What is the added value that mobility provides? What is the thing that I need to have in my pocket at all times?
You can make the case that it's entertainment. If I'm sitting in the station, waiting for the subway, and I have five minutes of spare time, I'll want something to entertain me. But then it's got to be good. If there's not enough value, I'll read a comic book or a magazine, because the end-user experience is better. Just because a thing is mobile doesn't automatically make it cool. And that's what some of the early players didn't understand.
It sounds like you're implying an Internet-business-model way of thinking.
Exactly. Back in 1999, 2000, it was easy to get funding for mobile startups. Here in Finland, you go into a sauna with your friend, you have a few beers, a bottle of wine, and it's, 'Hey, man, we can invent anything.' It's easy to come up with hundreds of ideas. And in fact, lots of companies got created. The problem with most of those companies is that they tried to solve problems that
did not exist.
What do you mean by that?
Well, take maps, or the various kinds of GPS locating services. Those kinds of services were idealized long before they became a reality. People are not, thank God, lost all the time. So do you really need those kinds of services when you are in your home territory? I have seen bad things happen when people try to solve problems that don't exist.
We've seen lots of cool companies go out of business. You can't provide a service if there's no money in it. What we've learned is that the biggest challenge, the coolest challenge, is to provide services that people actually use.
Speaking of wireless service products that people actually use, what's the story behind Harmonium (the world's first downloadable ring tone product)? That certainly turned out to be a killer app in mobile media
It was a Thursday morning in March of 1998. March in Finland is terrible, very dark and windy and rainy. I woke up in the morning with a terrible hangover. My phone rang, and it was the standard Nokia ring. De-de-de-de. I thought, My God, I want to change that thing. Then I thought: I'm sure I'm not the only one on the planet who wants to change it. Then it turned out that the Nokia guys
actually had the technology to do it. And so we started planning. What sort of service would this be? Who would be the composers? It was only then that I approached Radiolinja (Finland's leading telco) to ask if they wanted the service. It took me six months to convince them. The payback time was under two months. And then of course, the rest is history. Today, thirty percent of all SMS messages in Europe are requests for downloadable ring tones. Back in 1998, no one could have imagined anything like that.
In a sense, downloadable ring tones were the first true mobile commerce application. True?
Absolutely. Because when you download a ring tone, you pay a premium, something like fifty cents per ring tone. We gave fifteen cents to the copyright organization. The operators took their share. The service providers got their share. Everybody was happy.
So what went wrong?
Well, the most incredible thing happened. Something that no one on earth was expecting.
A new service provider, Jippii, came into the business. They saw that downloadable ring tones were a good business. They wanted to do it, too.
Now, if someone asked me, 'if I want to enter your market, what should I do,' you would think, 'Compete with price.' They did exactly the opposite. They doubled the price. Why? They understood that with downloadable ring tones, you have to have absolutely all the latest, latest hits. They took that seriously. And they doubled the price.
They established that the price of a good-quality ring tone is not going to be fifty cents. It's going to be one dollar. They went in there and doubled the price. And they took the whole market. They were clever. They really put all their effort into it and did the right thing.
I guess the lesson here is that it's really hard to know beforehand what will be valuable. It's hard to predict what will be cool in mobile because we don't have a long history of doing mobile data services. We don't know how people will want to use their mobile phones. That's the biggest challenge every day here.
In meeting that challenge, how important are regional considerations?
This is a huge issue for my company. Keep in mind that, while our first target market is our home territory, we also want to do business in Europe. But the European market is not one market. In terms of [mobile] billing, Italy is 90 percent prepaid, Finland is 90 percent postpaid. That simple figure tells you the markets are very different. Then there's Internet penetration. In the U.S and Sweden, it's high. In Italy, it's low. People don't want to spend time sitting at a desktop.
In Finland, the average number of text messages sent per month is 26. In the Phillipines, it's around 200. That's because Phillipines culture is an extreme messaging culture. All these things affect what kinds of services will be accepted.
From my perspective, it's difficult to know what kind of market your country will turn out to be. It's a huge country, with different ethnic groups. Will there be important regional differences? Will New York turn out to be different from California in the realm of mobile communication?
Finland, of course, is very homogenous. Everyone speaks the same language. Everyone has the same religion. But the U.S. is very heterogenous, with lots of different subcultures. So perhaps the U.S. market isn't just one market. Perhaps it's several different markets. And perhaps if we're clever, we can find the honey spots.
One problem that's plagued the mobile arena is the slow adoption rate for new services. What do you think the central challenge is there, and how can mobile media companies overcome it?
There's nothing inherently cool about mobile services. They're like any other service. It all comes down to: how good is the value proposal? If bus service is bad, people will take the subway.
You can do mobile marketing to market your mobile services. If you send a call to action to my mobile phone, I might respond, if it's a good value proposal. But to be honest, it's not enough. Mobile marketing is not a lonely island in a sea of different media.
You've got to utilize cross-media marketing. Take advantage of print, radio, TV, direct mail, outdoor, Internet. Use those mediums to explain your service: how to use it, what's good about it. Then use mobile media to remind people to use it, or point out new, better features. You can use mobile marketing, but first you have to use another media to better explain the service.
Talk a little bit about Add2Phone's Messaging Booster application. How does it fit into this media mix? And how does it differ from the traditional mobile push marketing concept, in which a message is sent to a list of subscribers?
It's why I started this company. This technology was not available before. To simplify: Our platform knows when you download a ring tone, and then the ring tone service sends a trigger to a marketing service. If someone downloads a ring tone in a particular category - say, Madonna - and if we have new logos and screensavers available in that category, the second after he or she orders a ring tone, we send a message saying, 'We also have a new screensaver.' We really try to analyze your activity, and react to that, by sending you a message directly related to what you've downloaded. We have seen that by using this mechanism, we can boost the usage of existing services anywhere between ten and thirty percent.
The average mobile media user is deluged with marketing messages, many of them duplicative of each other. Does this kind of real-time service marketing increase the likelihood that you're approaching customers with offers that are actually valid for them?
Absolutely. With this sort of concept, you don't send hundreds of thousands of messages. You just send a message when all the decision criteria are met. So the number of messages sent is low because they are so targeted. But then the clickthrough rate is fifty percent, which is pretty high.
Keep in mind that when you talk about mobile permission marketing, you're talking about an industry that's still taking baby steps. We're just at the beginning of this whole thing. Here's what we've learned so far, though: it's not like traditional marketing. It's much more like customer-relations management, customer care, whatever you want to call it. The point is, you are starting a dialogue with your customers, using mobile media.
What else can marketers do to try to understand more about mobile users, and what kinds of unsolicited messages will be accepted?
Mobile phones are the only medium you can use to reach your customers any time, any place. It's the only medium you carry with you always. You're not always next to the TV. You're not always reading direct mail. But you always have your mobile phone with you. And in Europe, where the calling party always pays the bill, you always have your phone on.
So, theoretically, I can receive marketing messages in the middle of a meeting, a classroom, a bar - anywhere. Marketers should use this, but carefully. They have to find the kind of marketing that provides value. And then their customers will love them.
What kind of marketing messages provide 'value'?
A strong, instant economic benefit, like a coupon. Or, information that's relevant to me at the right time, at the right place. That's of value. Or, support for your lifestyle or image. For instance, getting a rumor about Britney Spears before others in your class.
Or let's say you're at a bar, sitting next to a good-looking girl you'd like to get to know better. Your mobile phone rings, and you get a message saying, 'Hey, VIP, come to this nightclub, you'll get two drinks for the price of one.' And I can turn to the girl and say, 'hey, look at this.' That's an example of a marketing message that supports my lifestyle.
So far, many advertisers have been wary of advertising on phones, citing privacy issues. Do you think that atmosphere will start to change?
I really believe in the concept of total mobility. Total mobile networks - I think you're going to start seeing that term everywhere. But there are bad things you can do with total mobility. Privacy is a concern. Think of viruses. What's the worst kind of virus? An airborne virus. And total mobility is the perfect platform for all kinds of airborne viruses.
Imagine a virus in a mobile phone that could be voice-activated in the middle of a phone call. You activate the virus by saying a particular word. Then the software sends your conversation in real time to some third party.
Wow. What you're saying is that if our mobile devices become PCs, they're vulnerable to the same attacks that PCs are vulnerable to. I guess that's the dark side of premium services in this brave new world.
It's not so far-fetched, if you think about it. Ten years ago, the most sophisticated technology we carried around was our watch. Now we walk around with a CPU with memory and a radio unit and a high-powered battery in our pockets. It's a totally different situation.
And problems can arise. For instance, in Sweden, there's a location-based service called Buddy Finder. You give permission to your phone to disclose your location to a certain group of friends. One guy took his ex-girlfriend's phone and activated the system so he could stalk her. He used the phone to find her and physically assault her. So that's an example of how a well-intentioned service can also be used for bad ends.
I'm an aging nerd, an aging computer geek. What I've learned over the past twenty years is that the coolest thing is not technology. It's mobility. And mobility is all about communication and trust relationships. I have seen society change because of mobile phones. They are cool things. But in an industry based on trust relationships, every time you create these kinds of helpful services, there's always going to be another side of the coin. And that's what scares me.
I understand you're a devotee of kitesurfing and kiteboarding. How do these pastimes fit into the total mobility vision?
I love it when technology can make me more free and impulsive. It makes it possible to spend more time in nature doing things that I love.
I love all board sports, but kiteboarding is best: you use a kite, and the wind, to propel you on a board above water or snow. When you steer the kite up, it's like you're flying up into the sky. It's the ultimate feeling of being free. I call it "Zen and the Art of Kiteboarding."
It's adrenaline, but at the same time, it's technology. You can fine-tune your equipment, and make it better. But you also need to keep your mind and body in balance. You can never be perfect with sports like kiteboarding.
What's all this I hear about your groovy wireless surf van?
It's true I have a wireless WLAN base station in my car that is connected to the Internet via a GPRS backbone. The wireless LAN is open, so everyone can use it to read their emails, or to check the weather with laptops or PDAs. And of course, figure out wind speed and so on.
To me, my surf van definitely represents the ultimate in mobility, both in terms of moving myself, and my equipment, and mobile access to the Net. I think all of you in the U.S understand the car as a symbol of freedom. And if you add mobile internet access and your favorite hobby, all in the same package - jackpot!
Mobility is a natural thing that is in me. I want to express myself and live my life the way I want. And being mobile is an intrinsic part of that. I don't even think too much about it.
