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									                                                                     VELTI             | SOCIAL NETWORKING
                            By Paul Cheng, VP of Corporate Development, Velti

                                                                                                                                         “COMPANIES CANNOT
                                                                                                                                         CONTINUE TO
                                                                                                                                         BOMBARD CUSTOMERS
                                                                                                                                         WITH INFORMATION IF
                                                                                                                                         THEY ARE NOT
                                                                                                                                         SOCIALLY ENGAGING
                                                                                                                                         WITH A PRODUCT OR
                                                                                                                                         SERVICE RELEVANT TO
                                                                                                                                         THE CONSUMER.”
Getting $ocial
On Mobile
According to Juniper Research, the number of active users of mobile                        social networks through a single
social networking sites will rise from 54 million in 2008 to nearly 730                    interface. This is a compelling notion for
million in 2013. And, analyst house Informa has predicted mobile                           people with more than one established
social networking will generate revenues in excess of US$50 billion by                     social network that need their ‘online
2012. Despite this, currently no business model is generating                              self’ to juxtapose with their ‘mobile self’
substantial revenues for social networking - the CPM (cost per                             so they can stay ‘connected’.
thousand Impressions) and CPC (cost per click) approaches for                                Such new applications demonstrate
advertising just don’t work on mobile from a brand perspective.                            the need for continual innovation in
                                                                                           mobile social networking, both in terms
                                                                                           of function and in business model. Sticky
       ven Facebook and MySpace have          direct reciprocal value from any             services like this provide the ability to

E      had difficulty incorporating
       either a CPC or a CPM revenue
model, and are far from generating the
                                              conversation with a brand. So,
                                              companies cannot continue to bombard
                                              customers with information if they are
                                                                                           reduce customer churn but operators
                                                                                           must be careful not to misjudge
                                                                                           consumer needs and marginalise users
revenues originally projected. The            not socially engaging with a product or      with exclusive services or ‘walled garden’
strategies remain relatively unclear and      service relevant to the consumer.            scenarios that limit people reaching out
while sites such as Facebook have                Coca Cola has over two million friends    to others. Operators partnering with
dallied with advertising via its mobile       on its Facebook group which means            social networking sites – as Orange is
offering, the service was withdrawn           keen consumers of the drink can stay         doing with its Orange World aggregation
after a brief period.                         informed – by their choice – about the       portal – are heading down the right
  This begs the question as to whether        brand. This level of valued interaction is   track. Creating a ‘freemium’ offering
the myriad of social networks that have       critical in maintaining positive brand       maintains the original, viral ethos of
sprung up – from mainstream to niche –        equity, and ultimately stimulating sales,    social entities. Despite this some
can support and sustain marketing             but one thing it doesn’t offer is an         operators, such as T-Mobile in the UK,
programmes, and if so, what role the          immediate and portable incentive to buy      have priced most aspects of its social
mobile platform has to play in helping to     a drink, a simple SMS voucher can            offering; which is surely a turn off to
monetise them?                                provide that instantaneous benefit           potential new customers?
   As voice and SMS are commoditised          wherever you are. And this notion is            Initially, operators simply need to          And what consumers want is
and revenues from web browsing are            becoming an increasing reality. US outfit    foster the mobile social networking           relevance. Also, by not trying to scalp
eroded by flat data tariffs, operators need   Buzzd encourages members to buy their        culture and act as a catalyst for its         every penny out of customers, operators
to find new revenue streams. Mobile           friends drinks from brands that advertise    increased use. Being seen as a                will start to be seen as a trusted
social networking is that desirable add-      on the service. Codes are then delivered     gatekeeper to such networks by the next       destination and central hub rather than a
on for the new generation of mobile           via text message and can be redeemed at      generation of mobile customer isn’t a         dinosaur trying to control every aspect of
customers and, as such, operators need        bars in New York, Los Angeles, Chicago       good look; providing an environment           a user’s mobile lifestyle.
to facilitate this to stay relevant. These    and San Francisco.                           that enables communications with your            For today’s digital natives – and other
digital natives – consumers who have             But examples such as this form a          favourite people, content and brands is a     generations as well – sending images,
grown up in a media-saturated, internet-      nascent industry, with the majority of       much more agreeable place to begin.           status updates, event invitations and
connected world – expect to be                consumers being far from receptive              While these usage habits are being         music recommendations etc. to friends
connected to their peers constantly and       towards using their mobile phone as a        established, operators need to ask            via social networking, for free, is often
usually via several forms of media.           payment system, although there is            themselves how they can enhance these         the starting point or close off to a phone
   In order for mobile social networking      evidence this is slowly changing. The        new means of social communication and         call. So, understanding the psychology
to work financially for operators the onus    question is if brands can capitalise         interaction, rather than simply how they      behind what happens before and after a
needs to be on customer engagement,           directly from consumer transactions,         can deliver them on a mobile platform.        call, in terms of how people
offering the consumer value in exchange       what part does the operator play in the      What none of the social networks really       communicate is also crucial to making
for communication, rather than simply         monetised social networking equation?        have with their users is a billing            mobile social networking a success. Fail
serving benign adverts. Research                 Virgin Mobile is leading the charge in    relationship and this is where operators      to grasp these basic tenets of the new
conducted in 2008 verified that the vast      the US to create on-deck social              can leverage their position in the value      communications era and operators will
majority of consumers think mobile            networking        applications     giving    chain, providing they understand what         struggle to realise the potential that
marketing is inevitable but they expect       customers the ability to manage multiple     their customers want.                         mobile social networking offers.

  February 2009

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