The record 5.2 million iPhones that AT&T reported activating in the third quarter only highlighted the company's reliance on the Apple smartphone as it faces losing exclusive distribution of the device next year. Nearly a quarter of the iPhones sold in the period were to new subscribers, helping to drive a total of 745,000 net new wireless customers -- up 50% from a year ago. The 2.6 million subscribers added -- both contract and prepaid -- were the most ever for the third quarter. AT&T's wireless business increased 11.4% from a year ago. But the days of AT&T posting gaudy iPhone numbers and wireless subscriber gains may be coming to an end with Verizon Wireless expected to begin selling the device early next year. A study by Credit Suisse last month estimated that AT&T would lose 1.4 million iPhone customers to Verizon if its rival was to offer the Apple handset. But only a small proportion would break their contracts to switch. The iPhone accounted for two-thirds of the 8 million smartphones overall that AT&T activated in the third quarter. In anticipation of its exclusive iPhone deal ending, the carrier has been broadening its smartphone lineup, adding Android-based devices, BlackBerry models and most recently, a trio of new phones powered by Microsoft's Windows Phone 7 platform. During AT&T's earnings conference call Thursday, AT&T Mobility head Ralph de la Vega emphasized the growing competition the iPhone faces and how the company is trying to capitalize on the exploding smartphone market. "So I think it will be a race of innovation to see who can develop the most innovative products and services," he said. "And the thing that I liked about our position is we believe in having a wide choice of OSs, having every single major one." In other words, instead of simply riding the iPhone's popularity, AT&T is diversifying its portfolio of phones. With Android devices in particular outselling the iPhone in the last six months, according to Nielsen, that strategy makes sense. But with the company losing sole rights to sell the iPhone, it has little choice but to place its bets more widely. Beyond smartphones, AT&T has also touted the continued growth of subscriptions linked to connected devices such as e-readers, tablets, GPS devices and security systems. That emerging category added 1.2 million customers in the third quarter. "This is a terrific business for us -- lower ARPUs, but higher margins and low churn, and we're still in the starting blocks with this terrific opportunity," said de la Vega. But AT&T also has competition on that front, with Verizon last week announcing it would begin selling a Wi-Fi iPad at retail locations with data plans starting at 1GB for $20 a month. How well AT&T can compensate for losing iPhone exclusivity will hinge partly on the success of the Windows Phone 7 devices, which the carrier is strongly supporting. Early reviews of the platform have been mostly positive, although influential tech reviewer Walt Mossberg of The Wall Street Journal said this week it was inferior to the iPhone and Android. AT&T can only hope that Windows Phone 7 models prove more popular than Microsoft's ill-fated Kin phones.
Mobile ad network Greystripe has been one of the indirect beneficiaries of Apple's iAd launch earlier this year, which helped to raise awareness of mobile display advertising more broadly. Disney-backed Greystripe has even touted its own rich media "Ad-like" units even though the company was putting full-screen, interactive ads in mobile apps well before Apple debuted iAd. To give some insight on growing demand for mobile advertising, Greystripe today released some figures comparing its business now to a year ago. Among them, the company is forecasting bookings for the fourth quarter showing a 600% increase from the year-earlier period. (The company doesn't disclose actual revenue figures.) Retail, automotive, and consumer packaged goods brands lead the way when it comes to embracing mobile. "Last year, mobile was largely seen as optional and experimental. This year, mobile is a primary component of holiday campaigns," said Greystripe CEO Michael Chang. He added that the company expects a majority of Fortune 100 consumer brands to run mobile ad efforts this quarter and the upward trend to continue into 2011. In another sign of growing marketer enthusiasm, three-quarters of advertisers are buying across at least two smartphone platforms, with iPhone and Android being the most popular. "This roughly doubles the cross platform interest from its advertiser base just three months ago," according to Greystripe. Expansion to the Google platform also underscores the emergence of Android as a serious rival to Apple's iOS, capturing a roughly 20% share of the U.S. smartphone OS market this year and climbing. Google last week disclosed mobile revenue of $1 billion on annualized basis, though most of that is from search advertising. Greystripe also noted about half of brand advertisers are now running campaigns both within mobile apps and on the mobile Web. The company only expanded its ad offerings to the mobile Web last month. "Many brands have been embracing this new advertising option, which helps to address the fragmentation that can occur when trying to deliver ads across multiple platforms," said Chang. Greystripe says its rich media mobile Web ads are also driving click-throughs at nearly triple the rate of traditional static mobile banners. But high-impact, animated ads are supposed to deliver better results, right? A new forecast from eMarketer earlier this week predicted U.S. mobile advertising this year will grow nearly 80% to $743 million. As a subset, mobile display spending is expected to increase 122%. SMS messaging will remain the largest single ad category within mobile, accounting for $327 million of the total, but not growing as fast as display, video or search.
"You lost your Nano? How old are you?" That's usually the snarky question I ask my daughter, but she is already practicing her "my doddering Dad" routine. My legendary problems hanging onto the very gadgetry I cover is an endless font of storytelling for her. You see, just as I tell tales of my daughter and tech, she has her own portfolio of "You can't believe what he did now" routines she conveys to friends and eager audiences -- like her mother. For her, the unstated subtext of her disbelief is that I burn through so many gadgets by breaking, losing or washing (yes, the first iPhone got laundered) and still won't get her an iPhone. My selfishness is legion. Worse, my fiancée also took one look at the Nano when I first brought it into the house and said, "You're just going to lose that, you know." I live to fulfill the low expectations my family has of me. "And you bought another one?" my daughter gasped. Again, the real astonishment here is that I didn't buy her something instead. After all, if Dad is a bonehead, then getting something for his daughter should be the penance, if for no other reason than to compensate for the embarrassment. I think I have the teen logic right there, but I am still working my way through it. Yeah, at this point the guys at the local Apple store have said "Ouch" to me on several occasions when I tell my sad story about what happened to the device I am replacing. I lost my new touch-screen Nano within a week, and yet the Apple guru commiserated as if he already had heard the same story. There is a dark side to Jobs' genius -- create gadgets that are irresistible but easily lost. Why bother building in planned obsolescence when you sell to dopes like me. And oddly enough, while I am wedded to the iPhone and iPod line, I am not at all an Apple fan boy. I actually don't much like working on the Mac OS. I still think that iTunes itself is a mediocre way to organize your music. And the new Apple TV is too narrowly focused on TV and movie content. And while I am ranting, I still am not convinced that the iAds are that compelling a model for mobile advertising. I understand from anecdotes and press reports that some of the brand advertisers are very pleased with the performance they are seeing from the iAds. But what else are you going to say after ponying up a few million and handing creative control over your message to a third party? As a consumer, I know I am tapping on iAds now just to see what is there, not because the call to action is especially strong. Novelty is not a foundation for sustained performance. After all, the front end of this experience is still just an animated banner ad. Since I am the doddering old fool who can't keep his hands on a $150 Nano, perhaps my daughter is right. I am losing it. But I keep throwing myself at these iAds and coming away underwhelmed not only by the creative but by the experience itself. Let me ask all of you: Isn't the performance of these things often slow and jagged? The initial downloads can be bothersome even if you are on WiFi and sitting on top of the router. Is the promise of an iAd supposed to be so great to consumers that they should wait for it like a game loading its code? Starting from the time I first spun the whirling interface on that Nissan Leaf iAd, I still find the interactivity less than smooth. The Citi and AT&T ad units seem well optimized and smooth but the Nissan and new Geico units use the same spinning interface that feels as jerky as the old G1 running Android 1.0. To be sure, once you do get through to the iAds themselves the client has the opportunity to engage the user... if you really have the time to play with an app-within-an-app, when what you really came for was a dictionary look-up or tip calculation. There is a logic at work in the iAd I don't quite see. The basic banner-to-app-within-an-app model is supposed to avoid the supposed annoyance of in-your-face interstitials. But the model presumes that you do want to be interrupted on the back end for a deep dive into the brand's experience. I still smell something of a brand marketing fantasy at work here -- a dream that the consumer just can't wait to spend time with your brand. Even in its structure, this still feels like a brand vanity play rather than an ad model that maps to the device's utility. Which is not to say that the iAds don't have the opportunity to engage us. The new Geico Wheel of Wisdom earns the attention it gets from sheer creative energy. The Geico voice and attitude is well used to give people silly advice on love, finance, friends, etc. The branding extends to ringtones of the TV ad tracks ("I don't have a phone, cuz I'm a pothole...so"), although oddly that feature is pushed to you through an email and then Web download of the m4r file. It all works not because of the ad unit so much as the success of the Geico gecko. That is not a bad thing, of course, but it is not easily replicated by other brands. In the end, I am still struggling to see the revolution in all of this. I still find more effective and memorable some of the deeper app integrations I have seen, where the advertiser actually adds to the utility of the app. Bing had a sponsorship of Parenting magazine's Ages and Stages app that used the search engine as a tool for finding information. And for all of their interruptive qualities, I know Matt Damon's "Hereafter" is opening this week because those load screen ads have been popping up in my news apps -- and the creative is attractive enough to make me not care. The VISA iPad ad I wrote about several weeks back (and which VISA will speak about at the OMMA Mobile show next week) is more engaging and informative than any iAd I have seen, largely because it has entertaining utility that also conveys a brand message effectively. Or maybe it's just me, since my faculties have come into question. "Honey, did you mean to leave your iPad sitting on the roof of the Mini? You know if you have to replace one of those, there will be a helluva dinner out in it for me." I have my own reality distortion field to deal with. I can't handle Steve Jobs', too.
While many Web advertising companies individually have done a good done of offering consumers transparency and choice, collectively the Web industry has not done a great job managing privacy protection issues. Every week, there are headlines in the trade or consumer press of some creepy Web tracking or data practices recently uncovered -- whether it's Facebook apps leaking user IDs, or companies scraping personal comments on health forums or releasing "anonymous" search data that ended up not being so anonymous. Of course, the ability to deliver precision targeted ads is one great promise of the Web -- and is a critical driver for the tens of billions of ad and marketing dollars funding it and its extraordinary and robust array of content and services delivered to billions around the world for free. The Internet is learning lessons the hard way: making mistakes, taking heat from the press, regulators and the public, and then retroactively fixing those mistakes. Today, both the mobile and TV industries are just starting to embark on targeted advertising. Both could learn some valuable privacy lessons from the Web industry's experiences. Here are my top 10: Take Privacy Protection Seriously. The protection of personal privacy cannot be ignored when companies use digital media and communication channels to capture user information or deliver tailored ads. It doesn't matter that it's happening behind the scenes. It doesn't matter that the practices are no different from those direct marketers have used for years. Digital is different. People care. What happens in offline data collection doesn't scare them as much as online data collection does. Bake Privacy Protection in from the Beginning. I've borrowed this idea from Federal Trade Commission chair Jon Leibowitz: Make privacy protection an integral part of all targeted mobile and TV ad offerings. It's much easier than retrofitting privacy protection later. Embrace Self-Regulation Early. The only way to prevent new legislation or regulation -- which is never a great way to solve a problem -- is to be proactive about self-regulation. The mobile and TV industries should leverage the work of the IAB, AAAA, ANA and DMA and their pioneering self-regulatory frameworks, as mobile and TV companies go down similar paths. No Creepy. What matters most is not just avoiding what's illegal, but avoiding what's creepy. You can't have a productive and long-term advertising relationship without trust. If it seems creepy, don't do it. If nothing creeps you out, ask your mother or neighbor or child for a reaction; they are probably better thermometers. Deep-packet inspection is creepy. It doesn't matter how many Big 4 auditors say that it's legal. Enough said. No Personal Data. You don't need data that can be related to particular individuals to deliver dramatically better ads. Also, just because the recipient is anonymous to you, your targeting might not seem anonymous to them. Billions of dollars of TV ad inventory is bought each year on not much more than demographic projects, none of it remotely personal. Use Broad, Anonymous Segmentation. Rather than trying to thread the needle between personal and anonymous, use broad, anonymous consumer segmentations instead. You don't need one-to-one targeted-to-deliver ads that perform hundreds of percentage points better than the "spray and pray" method used in mass media advertising today. Mass customization against broad segmentations can do that just fine. Limit Individual Appended Data to First-Party Uses. Lots of folks want to append third-party data to media channel behaviors at the individual level and then sell that for usage on many other third-party media and marketing channels. Once this happens, it's hard for that data to be protected. We just heard from Yahoo that they don't even know what data is being captured on their own sites. Let's not let that happen to mobile or television. Lots of Notice. Be straight with your users. Do it early and often. I call this The Walt Mossberg Rule, since The Wall Street Journal columnist has been preaching this for years. Listen to Walt. This should be self-evident. Don't Keep User Data Long. I know. I know. IT departments want to keep data forever. They like data. They don't like destroying it. I bet most of them are hoarders at home as well. Don't treat user data the same. Most of it does not have a long shelf life, and keeping it makes consumers uncomfortable. Similar to giving notice, destroy this data early and often. Get to Know your Regulators and Legislators. The first time you meet officials from the FTC or Federal Communications Commission or House Consumer Protection Committee should not be when you are under investigation. They have a very good perspective on what is good and what is bad when it comes to protecting privacy. Get to know them. Tell them what you want to do. Listen to them. Follow their advice. I am very excited about the prospect for new robust emerging marketing services on the mobile and television platforms. I am hopeful that companies building these services won't repeat the mistakes we saw on the Web. What do you think of my Top 10 Lessons? What ones would you add?
I really had no idea how much I'd love my iPad. I have to say that it's now my preferred connection to the online world. Somehow, whether by design or coincidence, Apple has tapped into something primal and intuitive in myself. Judging from other iPad owners I've talked to, I suspect I'm not alone. There is a magical thing happening between me and this sleek little device. And whatever it is, it's important, even prescient. This, I suspect, is our future sitting in our laps. What's the Big Deal? I've spent a good part of my life pondering various technology interfaces. Based on this, I really didn't think the iPad was that big a deal. The reason I got one was because I needed an ebook reader and I felt that the iPad offered me more functionality than a Kindle. But other than the inevitable coolness (or, at least, perceived coolness) that comes with any Apple device, I didn't see what all the buzz was about. After all, it was just a big iPhone... without the phone. I still had to deal with an all-too-touchy digital keyboard and a rather anemic processor. But then I got my hands on one. And something rather strange happened. I suspect that Apple may have found the perfect form factor. When you combine the larger screen with multitouch technology, it completely changes how I interacted with my device. It wasn't something I could have predicted. But everything I did on the iPad just seemed more natural, more enjoyable, more -- dare I say it -- sensual. This was one sexy little piece of technology. Love of the Limbic Kind What happened? There is no new technology here. We're even using an obsolete OS, for heaven's sake. There may be no rational reasoning -- but I'll tell you, my irrational mind has fallen in love. Then again, perhaps it has nothing to do with ration. Maybe Apple is just making interactions with technology more primitive, in a good way. Keyboards are stupid in pretty much every way imaginable. I've dedicated several hours of my life to understanding the QWERTY layout so I'm a reasonably proficient touch typist, but the layout still makes no sense -- and yes, I'm aware of the history of it vs. the Dvorak keyboard.. The mouse was a step in the right direction, but there was still some rewiring of our brains required to understand that the cursor was really our proxy for our hand movements. I find track pads a rather poor compromise. But, to be able to grab something right in front of our eyes and manipulate it, ah -- that is touching something hardwired deep in our limbic brain. To flick, to stroke, to pinch -- that is what it means to be human. Up 'til now, our user experiences have had to be jammed in the arbitrary constraints of outdated and illogical interfaces. But the iPad, perhaps more than any other device before it, is letting us be human again. And the experience is intoxicating. The Human Part of HCI I felt something of the same rush when I first picked up the iPhone, but the extra real estate of the iPad delivers a compounding effect on the level of the user experience. Perhaps you think I'm making a big deal out of nothing, but I suspect that the very humanness of the iPad's interface could be a game-changer. I'm not the first to say so. This was much of the buzz I discounted when the iPad first came out. But now I've had the chance to see what might be behind the game-changing aspects of this device. And ironically, it's nothing to do with new technology. In fact, it's wrapping existing technology in a package that nailed the "human" part of the human-computer-interaction equation. The question that comes to mind is, how might this change the nature of our online experiences? If our entire online history has been built on the paradigm of a keyboard/mouse/monitor interaction, how might that change with a multitouch, interactive screen? And that's not even including geographically savvy devices, cameras or voice commands. That's a substantially different paradigm, which will inevitably lead to a substantially different experience. Imagine, interacting with a virtual world where you can picture your surroundings, know where you are, touch the things you're interacting with and express your intent verbally. Finally, technology will start to catch up with what it means to be a human.
When users navigate apps and the mobile Web they seem to have a memory of the sites that deliver information efficiently and the ones that don't. I am not sure where we spare the memory brain cells for this sort of thing, but somehow many of us recall that clicking on a link at this site is going to produce a long lag, while others have cached the experience wisely to smooth out the end user effect. I know that I think before I click on many apps and sites and wonder, 'is it worth the trip?' Speed really matters especially when it comes to video on mobile, and some recent stats bear this out. Bytemobile, a video optimizer for a number of Tier 1 carriers worldwide just released its network usage figures for Q2 2010, and it found that the majority of video requested over mobile phones is of low 240p resolution (56.63%) as opposed to 380p (22.19%) and 480p (21.18%). In many cases on mobile Web sites the user has a choice between hi and low res and Bytemobile finds they will go for the lower resolution to enjoy a smoother delivery. According to Bytemobile "perceived available bandwidth affects the selection of video content on wireless networks." That may be a no-brainer in a sense, but the simple insight has to inform the kinds of programming and ways video is deployed across different devices. For instance, Bytemobile also finds that iPhone users eat up a lot more video bandwidth than Android users. On a per-user basis, 42% of data traffic on iPhones is video content compared to 32% of total Android traffic. Why is that? Well, in part it may have to do with the difference in available apps as well as the differences in user bases. iPhone users are likely coming to the platform following Apple's lead - that mobile is a media experience. But even more than that it turns out that iPhone and Android users have different connectivity habits. Another report from video ad network Rhythm NewMedia showed that across their network of branded media apps 69% of video accessed on the Android platform came over the 3G networks vs. only 31% on WiFi. On the other hand, on iPhone 52% of video went over 3G with 48% over WiFi. This disparity could also explain some of the higher video use Bytemobile was seeing for iPhone users. If they are coming in on WiFi networks their expectation of performance might be higher. The same dynamic that helped drive video use on the Web, the perception of available bandwidth over faster networks, is also going to hold true of mobile. But the payoff may be better. Rhythm New Media also contends that when mobile video viewers pick a video, they are more likely to stay. They say that 94% of mobile video viewers stick through the first ten seconds compared to 81% for online video. At the 60 second mark, 68% of the mobile video audience was retained compared to 56% Rhythm simply cited a NYTimes article as the basis for their online video stats, so mileage will vary. But the suggestion is that when mobile video viewers commit to the experience they tend to stick.