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By Tony Fish – member of Gerbsman Partners Board of Intellectual and principal at AMF Ventures. Visit his blog at: http://blog.mydigitalfootprint.com

Summary

Virtually unlimited mobile usage tariffs means that advertising is perceived as free from the users perspective, as there is no additional cost of bandwidth to the user.  These tariffs have lead to an unprecedented growth in mobile applications and the emergence of  a new eco-system. However,  “all you can eat” pricing models for mobile have become increasingly risky with the advent of new devices and operating systems from Apple and Google.  With the prospect of a return to a pay per something, users may change their view of “free” advertising and this could lead to a change in behaviour, as they will be un-willing to pay for the bandwidth for the advert.  Whilst this may seam ridiculous to anyone who understands, explaining to the user they have the wrong perception or that this is not the reason for a significant monthly bill, could be difficult.  This viewpoint therefore opens the debate; “Could some selfish business decisions be destroying the mobile eco-system that has just been created and what scenarios are worth considering?”

Unlimited Growth

We have all benefitted from the introduction of unlimited mobile tariffs.  Voice, SMS and data usage has exploded.  Economically it made sense to the operator as they had spare capacity and in reality “unlimited” has caps but these caps are set so high that a user was unlikely to reach them.

Mobiles (smart phones) have evolved and today, web site and applications (inc games) for mobile are now built with an advertising model in mind and with this has come the download requirements of, in some simple cases, banner ads to some thing complex such as video and multimedia.  With network improvement, the ability to deliver a near web experience, advances in connection management and now the iPad, users can find it easy to get close to, or pass their “unlimited” data caps.

Mobile applications driven by adverts work and the application method of delivery made up for a number of early shortfalls in network constraints and mobile web browser capability. However, due to the improved experience and performance of the mobile there are now less reasons for a Brand to have a specific mobile version.  However, in this move adverts are also served in full form from the web to the mobile.  This transition will become more important as Apple looks to force applications to use their own iAd serving technology and analytics.  These forced change are likely to speed up the migration from mobile specific application to webapp – just adding a web address and icon to the mobile desktop and also removes the dependence on apps stores as the controlling point.

So what has changed?

Apple launched OS4 with a 7th temple, which is the ability to deliver a fabulous advertising experience as “most of it sucks”.  The move is to deliver emotion and interactivity as this will help the developer community who want to build advertising revenues in exchange for free apps.  This advertising experience does come at a cost – bandwidth. OS4 also introduces background processing (multitasking), “yippee!” says the developer. However this means that the phone can hack thought the battery really quickly and chat to the network constantly.  Pushed updates become streaming.

Changes to the OS and how much data phones require for a great experience mean that the unlimited data package become very attractive to the user and advertiser as they don’t care about bandwidth, developers love it as they can deliver the real time applications and services they want for mobile. However, for the operators who are already struggling with capacity, this becomes a real headache and introduces value chain conflicts.

Implications

If the operators choose, and the evidence is currently pointing to this fact, to remove from the market unlimited packages, or such a high cap it is perceived as unlimited and lean back towards some form of pay-by-how-much-you-eat model then there could be some significant changes to the market as the users, device and applications guys try to reduce a swing to a doom loop scenario.

Here’s the crunch.  For those reading this we can find arguments why all of the above is not a concern, however, the issue may not be the reality of the situation we find ourselves in, but from the user perception, it could be very real.  If the user believes that there is a cost, irrespective of reality; they may change behaviour!

The simple newspaper headline that reads “Your paying for advertising” is difficult to counter with the argument that informs a user how big an advert is in bytes and that there is a trade for free services.  If the reason for adverts is interactivity and engagement then a technical explanation may not be that useful or that someone is exploiting your data to sell you more.

Behavioural or targeted adverting depends at some level on understanding the user which is an output from the analysis their data – My Digital Footprint.  If users find that the real monetary cost of sharing that data is too high, it kills the input.  If users find that the real monetary cost of engaging with ads is too high, it kills the value.

Given that eco-systems require trusted players who can balance risk and reward together and be reliant on complex inter-dependences; mobile is no different.  However, it would appear that some of the players are trying to play for themselves rather than the community.

Scenarios to ponder over coffee

  1. Restrictive – in this scenario the user decides to restrict their use and applications to focus on a few that are a priority and will not experiment or discover.  This could have a significant impact on social media tools and applications.
  2. Blockers – in this scenario the user decides that they are unwilling to pay for the bandwidth and introduces a blocker service to prevent their costly bandwidth being used.  This in turn destroys the fee advertising model and an outcome could be that the user ends up paying for applications.
  3. Selective – in this scenario the operator decides to become selective about which handsets can have unlimited (capped) data plans and which handsets are forced to have a PAYG data pricing model.  This forces users into a choice and device manufactures start to work with the operators to produce devices in tune with the network to gain a competitive advantage.
  4. Side-Load – in this scenario PAYG could lead to more applications being downloaded by sideloading on the PC or by WiFi. If so, developers could be affected in ways that are hard to predict. But it may affect apps being advertised on the device.
  5. Doom loop – in this scenario the operator changes the pricing and this in turn creates all the dis-benefits for the advertisers, device guys, applications developers and users.  Mobile slows and mobile operator valuations dive.
  6. Intelligence – in this scenario the middleware and platform companies work with the operators and seek out methods and processes to compress, reduce, focus, profile and select data and services that should use the limited wireless network, that is expensive.  Can data/ ads be cashed locally on the device and selected as needed or side load them using wifi or other alternative networks, or put on hold until bandwidth cost is not an issue.
  7. Advertising pays for the bandwidth – a somewhat difficult scenario to comprehend, but in this scenario the advertiser takes on the cost of the bandwidth.  However this is full of complex conflicts such as – I want to deliver the best ad, but it costs to much.
  8. No change – in reality – this is not a scenario.

Reality check

Those reading this know that ‘most’ mobile advertising is very bandwidth lean, as it a blend of:-

i)  an invitation with the consumer to interact, normally in the form of a banner. The reality being that for most consumers most of the time, this is likely to be negligible in terms of cost across a month.

ii)  a landing page, which they land on if they click on a banner – again negligible.

iii)  call to action at the landing page, which unless it involves rich media (eg video), is also likely to be small in terms of bandwidth

We know that users respond differently to ads and services on a mobile to the web but it is possible that the Apple OS4 interruption of advertising will be heavier on bandwidth, however, over 50% of iPhone ads are viewed over WiFi (2010) probably driven by speed as opposed to cost reasons. One could postulate that this trend would therefore be accelerated with the re-introduction of pay-as-you-go pricing!

All that said, users are users and their perception is how we need to live our business life – from their view point not ours.  Reflecting on the original question; “could consumer ignorance hurt mobile advertising?”, one could say this is the wrong question and it should be “is the mobile eco-system strong enough to defend itself against selfish desires of certain key players?”

If you would like to chat about the opportunities that digital footprint data brings, especially from the perspective of mobile and real time feedback, please contact me at tony.fish@amfventures.com. The book is free on line at http://www.mydigitalfootprint.com/ or you can buy it direct from the publisher at the web site. There is also a summary and a eReader/ Kindle version.

We hope that our Viewpoint improves awareness, raises questions and promotes deliberation over coffee. We will respond to e-mail, text, twitter or blog comments. http://blog.mydigitalfootprint.com

Kind regards,

Tony Fish

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By Tony Fish, Principal of AMF Ventures and a member of Gerbsman Partners Board of Intellectual Capital.

Internet players wrestling for control of your footprint
Whatever the personal reason for joining and participating in social networking, the debate has moved from being fashionable to how the key social networking players can unwittingly extend their influence and control of you.   Facebook wants to move from the confines of their own social networking cloud and be able to monitise property outside of their immediate control; hence the introduction by Facebook of opengraph and ‘Like’. The understanding of these new tools is, however, being over shadowed by the privacy setting debate which is also critical to the new Facebook model and its new utility.  The privacy setting allows Facebook to gain relationship data (digital footprint) and together with the tools change the internet from a Google ad centric world, into a relationship dependant Facebook ad centric world.

Issue 101. Control of Privacy settings
It has become evident that social networks will live or die by their privacy policy. Most users appear capable of providing their own interpretation of what privacy controls they would like.  Good tools will enable users to control the level of inclusion or exclusion of information about themselves and thereby control how much they reveal of themselves selectively, with tools that they understand and control.  However, whilst privacy is about the change of control, private is what you have elected or selected not to make public and a company should not be able to elect to change this default or set it open so you have to close it.

Private to Public is not a binary setting
However, when the private/ public issues is represented using a simplistic model such as a straight line, as above, it shows them as a binary choice, with an area of cross over, in the same way good/ evil can be represented and both of these models highlight the inadequacies of the straight line of choice, and specifically with private/public it does not provide enough context or insight to the real issues.  In philosophy, Aristotle presented the idea of a Golden Mean as the desirable middle between two extremes, one of excess and the other of deficiency. For example courage, a virtue, if taken to excess would manifest as recklessness and if deficient as cowardice.

Applying the analogy from this philosophy to the private/ public debate removes the simple binary judgment and provides are two possible models.  Public is two extremes with private in the middle or vice-versa.  I “like” the public at either end approach as at one end public could mean broadcast TV, newspapers, open, contextual, edited and time bounded.  The other public could be internet public, closed, non-contextual, raw and timeless.  This removes the binary extremes and grey area of public vs private debate moving the debate away from privacy policy towards how we define and articulate public as two extremes.

To subtle to notice
When you consider what is private within these boundaries, it highlights some common assumptions.  Public tends to mean to the general population the broadcast TV model, where we instinctively know how little we should trust headlines but also how rapidly its value can be eroded.  However if this is the only understanding of public we hold, it is inevitable that users will miss the subtlety of the internet public model and the critical issues such as timeless (never deleted) and lack of context (provision of historical context when looking at past materials)

And the Problem is?
For social networking to remain free it needs a business model.  An attractive model is to take your digital footprint, analyse it and sell adverts based on your preferences and relationships.  However, to demand that users continually update their information is hard, therefore when they are out and about in the internet make it possible to “Like” things that automatically updates their profile (and attractiveness for advertising).  However to deliver this, users must change their privacy settings so that social networking site can exploit their data.  Therefore social networking site need to achieve several things.  First, make everything public, but users don’t understand what public means for Internet data.  Second, make it easy for users to deliver new information from outside their bounded network, but users don’t understand the implications.  Three, analyse and sell relationship data, but are users getting a fair trade?

Is there a trade fair?
Applying the understanding of the eight business model built in “My Digital Footprint” there should be a trade for opting for a more public use of your data.  In one direction towards broadcast the trade for your privacy may be for fame and fortune, in the other direction towards trading your privacy on the internet it should be for services.

An interesting question becomes, in the trade for your Internet privacy, is there sufficient utility offered by the free application providers?  With Google you provide only public data (search key words, nothing is private) and you receive relevant search results.  With Facebook and social networking you provide relationship and private data for a free utility, but what is the utility?  Is it a tribe, is it communication, is it sharing platform, it is a representation of the physical you in a digital world, is it organisation or a new state or a new country, is it connection or is it a channel?   With such an unclear utility, why will users continue to provide more personal data?

Will Facebook survive?
Overall I have no doubt it will survive but in what form is a more difficult judgement call as Facebook has highlighted that the value of our relationships is sufficiently high that they need them and are willing to risk their Brand to get  more of our digital footprint.  The utility question, trade for our information and implementation of its privacy setting, however, does open up the possibility for new entrants.  It is naïve to say that inertia; my grandma and friends will not change, is enough to keep the social networking market closed. It is possible to your export data, difficult but this will happen.  It is not impossible to see that a new social media company will offer 50% of its equity to users as a trade for moving and privacy.  It also possible to see that your generic login becomes the mechanism to find unique discounts for you, all these open up the market and trade they I hope will provide a more even value balance for users.

So What!
Internet business models are predicated on the user being the provider of the data and the consumer of the data, with the business focussed on sitting between the two and adding value.  There is a battle for your data and relationships and therefore one of the implications of “my digital footprint” thinking is about the alignment of Brand values and the how the company protects and uses digital footprint data.

If you would like to chat about the opportunities that digital footprint data brings, especially from the perspective of mobile and real time feedback, please contact me at tony.fish@amfventures.com.  The book is free on line at http://www.mydigitalfootprint.com/ or you can buy it direct from the publisher at the web site. There is also a summary and a eReader/ Kindle version.

We hope that our Viewpoint improves awareness, raises questions and promotes deliberation over coffee. We will respond to e-mail, text, twitter or blog comments. http://blog.mydigitalfootprint.com

Kind regards,

Tony Fish

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By Tony Fish

Tony Fish is a member of Gerbsman Partners Board of Intellectual Capital and an International Technology Consultant

In the book “My Digital Footprint” eight business models were explored, this Viewpoint is an update to model 5. If the balance of value is not already in favour of web companies, as they barter free services for your privacy and data it soon will be, as they need more data to continue their growth and seek differentiation but are unable to offer more in return. The Viewpoint presents that there is now a continuous test on the consumer resolve for privacy, the unmarked boundaries of private and thresholds of liberty as web companies find routes to extract more information on you, without you realising.

Content Creation leads to Value Creation

In March 2010 Facebook was estimated to be worth $11.5bn, Twitter $1.4bn, Linkedin $1.3bn and Google $170bn. But why? In simple terms these web companies and many more like them, consist of millions of users creating and sharing large amounts of content which is subsequently monetised through advertising to create these public valuations.

Symbiotic Relationships

When studying the bonds and bridges between the users and these web companies, in the context of privacy, trust, identity, reputation and digital footprints, it clear that there are complex inter-dependencies. Indeed the relationship between the users and the web companies could even be described as symbiotic, as the users and web companies are mutually beneficial participants. The implied contract between web companies and their users is simple; they’ll provide users with free web services in exchange for “permission” to datamine and monetise the users “public” data via related advertising.

Constant Tension

However, there is a hidden cost of this seemingly beautiful symbiotic relationship, the more that users make “public” their data, the more they relinquish their privacy. It is this tension between the users desire to protect their privacy and limit their “public” data, that contrasts with the monetary needs of a web service business to access and liberate more of the users “private” data; that is constantly testing the symbiotic relationship.

Money Talks and Privacy Walks

Although this freemium model is working well during this Web 2.0 era, advertisers are seeking to maximise their ad budgets through improved targeting and behavioural advertising. A mechanism to make this happen is if web services can convince their users to either make public more personalised information or to unilaterally force through privacy policy changes. To do so might result in users abandoning the web service, to not do so might result in the advertisers spending their budgets elsewhere. For example Facebook has for sometime been changing their users’ privacy settings in order to test the users elasticity of acceptability. On more than one occasion users have protested so vehemently against the changes, ironically using Facebooks own Fan pages, that Facebook have rolled back the privacy settings, only for them to make smaller incremental privacy policy changes later on which the users then seemingly accept.

“Only recently Facebook unilaterally chose to remove its users’ ability to control who can see their own interests and personal information. Certain parts of users’ profiles, “including your current city, hometown, education and work, and likes and interests” will now be transformed into “connections,” meaning that they will be shared publicly. If you don’t want these parts of your profile to be made public, your only option is to delete them.” Source: OpenRightsGroup – 21.04.10

Facebook may have reached a tipping point where the potential value from forcing more openness, by unilateral changes to privacy, for user data outweighs the potential lose of users to an alternative.

Privacy Talks and Money Walks

Of course the fight to retain user privacy remains a tender point as proved by the recent introduction of Google Buzz and the scant disregard that Google placed on users privacy. The draconian way in which Google forced every GMail user to adopt Buzz was bad enough but to then set the privacy setting to “public” as a default meant that everyone’s email contacts where exposed publicly. Only a deafening outcry across the blogosphere and beyond led to Google publicly apologising for their faux pas and resetting the privacy policy of every user back to private as a default. Google’s monetisation of Buzz may take a lot longer now that users will be more cautious to open up their privacy settings. It is not difficult to comprehend that there is a balance between the amount of data that users will or can give up and the level of data that businesses demand for monetisation. For a symbiotic relationship to develop this balance between brand, trust, privacy, security, risk, identification and value needs to be understood and analysed. Fear, uncertainty and doubt go hand in hand with the erosion of privacy and liberty, get the balance wrong and the user will not give you data and the web business will not survive. Finding and pushing the balance is a new executive skill.

Adding value through social CRM

Companies, such as Kontagent, Klout, Gravity, Rapportive, Etacts, Grader and Flowtown are building analytical tools that track and interpret the way users behave on Facebook, Gmail and Twitter i.e the Public Interest Graph, particularly how they interact with third-party applications. Such analysis tools help figure out, for instance, which invitations lead to the most registrations and why. Collecting data is one thing, making it useful quite another and thatÕs the key challenge for every business in this digital era, indeed AMF Ventures would go as far as to say this is the next battle ground of the web.

Disruptive change to a status quo

A well published fact from the dark side of digital footprint data is that the invasion of liberty or privacy, snooping, identity fraud and the subsequent abuse of your data costs £25 per person in the UK Source: IdentityTheft.org Counter to this cost is the economic value created by user data, which is in the order of £100 per user. Market cap of Google (March 2010) divided across the number of users. Each user value will increase if Youtube, Facebook and other social media valuations are added to the equation. Your digital data has value Ð it is fragmented but users may realise that they don’t get a fair trade. The value created by them is far greater than the free service reward. Free may be good, free plus cash or share of an IPO for my privacy could be an alternative model for a new entrant who wants to cross the next boundary of user privacy, but at least there is an exchange value. This could leave those who want to hide their privacy having to pay, rather than free-riding.

The Way Forward

To help companies discover and make sense of the conflicting pressures AMF Ventures offers a 2 day workshop to deliver a digital footprint vision, who to trust and why, how to drive quality and value from relationships and an action plan based on a deep understanding of the complex balances.

A focussed workshop will help to improve understanding of your position and perspective and remove bias. The workshop will cover the following:

  • The bonds and bridges between privacy, risk and trust.
  • How much data is needed from your customers to create new and incremental value.
  • Where is the current privacy/ exploitation balance?
  • What metrics companies are using to track your Public Interest Graph (PIG) and brand sentiment?
  • What new Social CRM tools exist today to measure and manage social relationships externally and internally?
  • What is Social Graph Optimisation (SGO) and how are companies use it today to increase their valuation?
  • How your company can measure its Social CRM
  • What is Vendor Relationship Management (VRM) and how will it effect your future customer relationship strategy?

If you would like more information about the workshops or to chat about the opportunities that digital footprint data brings, especially from the perspective of mobile and real time feedback, please contact me at tony.fish@amfventures.com. The book is free on line at www.mydigitalfootprint.com or you can buy it direct from the publisher at the web site.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 60 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $790 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com

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Footprints

As important as our environmental carbon footprint is our digital footprint, which represents a significant business opportunity, once it is fully understood.

Tony Fish, a member of Gerbsman Partners Board of Intellectual Capital and serially successful entrepreneur, who advises Gerbsman Partners high growth business on their digital strategy and has written a book on the subject, My Digital Footprint.

“Everything we do on the internet is recorded and analyised from those seeking financial gain from understanding our behaviour, think Google. Our digital footprint includes the data from our interaction with different devices including PC, Mobile and TV, Examples of digital footprint data are websites we look at, our online purchases, location, attention, watching preferences, who we call and for how long, the content we create for twitter, blogs or pictures and the online conversations we have via e-mail or on social networking sites.

We have become used to the free model, TV paid for by advertising, search for free. To get these services there is a trade, your data for free services. Whilst we may have concerns about privacy and civil liberties, it must be acknowledged that we largely give these up as soon as we log in, switch on or click.

Such privacy concerns are of little concern to some people, who have either grown up with a ubiquitous and nearly free internet or have a trust in the trade and brands. These consumers will happily or unwittingly generate a significant amount of personal data as a by-product of their daily interactions. This process has been accelerated and enhanced by smart phones that add location-based, real-time data to extend significantly the user´s digital footprint”.

However, Fish argues that raw data from mobile, web and TV users is of little value unless it is put into context. It is not so much what you might be doing, or saying, but who you are doing it with which creates and accelerator of value creation. For example, the fact that you have just bought a new watch is of minimal interest on its own, purchase made. While you might be interested in watches, you have just bought one and are, therefore, not likely to be in the market for one soon. But if you are going online and telling everyone how wonderful the watch is, and how great the service you received was, this is of value – especially to the dealer and other relevant suppliers, who can identify your long-term value from measuring your digital footprint. Further I can now determine who influenced you to purchase the watch and who you influence – this created new value.

In the future, those of us with the largest digital footprints will be the most valued consumers. Fish predicts that soon we will all have two online identities: a personal one tailored for consumer benefits and a business one for a different level of transaction.

He concludes that the ability to understand the value of online conversations is an opportunity, as nobody owns the space. Entrepreneurs and digital businesses should, therefore, gather and analyse data, and concentrate on developing online relationships that can help them tailor products and services to customers´ needs.

About Tony Fish

Tony Fish: entrepreneur and strategic thinker with over twenty years of experience with leading brands, high growth companies and in venture capital. Tony is an experienced and qualified board level executive with professional experience crossing Web, mobile and TV and divides his time between his non-exec roles and board advisory work.

Tony is an acknowledged public speaker and a leader in “2.0” thinking, through the recipient of independent awards such as placement in the top 10 in The Observer and Guardian newspapers “The future 500 rising stars”, and from global recognition from his peer group.

Tony is known for delivery, probing questioning, clear decision making, simple no-nonsense attitude, robust financial views and governance controls. Tony enjoys an unblemished professional reputation, has a wide and diverse professional network and will bring a truly innovative flair.

Tony Fish B-Eng MBA C-ENG FIET FCIM is the author of “My Digital Footprint: a two sided business model where your privacy will be someone else´s business” Nov 2009 and has previously co-authored two books on mobile and innovation: “Mobile Web 2.0: the innovators guide to developing and marketing next generation wireless/mobile applications”, August 2006; and “OpenGardens, the innovators guide to mobile data industry”, December 2004.

Tony can be reached at: tony(dot)fish(at)amfventures(dot)com

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 60 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $790 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com

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