Can Carriers/Mobile Network Operators execute Long Tail / Web 2.0 applications?

Can Carriers/Mobile Network Operators execute Long Tail / Web 2.0 applications?

A good question .. raised at forumoxford. Here is my analysis .. I believe that most of what I am describing below can be done by a product such as Xtract today

What is the Long Tail?

The Long Tail is the opposite of the Pareto distribution(aka 80/20 rule) and is the preferred business model behind many of the recent Web successes – specifically Amazon.com.

Supply side motivations

On the supply side, we need low inventory and distribution costs. This means, unpopular products can be stocked. Netflix and Amazon are examples of this model.

Demand side motivations

Demand side motivations include search engines, recommendation engines, sampling tools etc allowing customers to search a wide range of products OR for products that they normally cannot find physically in a store due to lack of time. Again, Amazon.com and many others excel here.

Much has been said about why telcos cannot execute Long Tail applications. So, I am addressing the more challenging aspect of – How Telcos CAN execute Long tail applications.

Firstly, demand side is a software, recommender, and influencer problem. This can be addressed.

The supply side problem is more complex. The Telco needs to maintain a Long Tail inventory of some entity. The obvious answer is a Long Tail of content. A more interesting answer (for a Telco) is a Long tail of people.

A Long Tail of people is an interesting proposition for a Telco since it is accessible through voice and SMS. Remember that a social network can be built from transactions i.e. the underlying data. There are various research papers about how this can be done(for instance creating a social network from email data or from IM data). Therefore, implicit and explicit recommendations can be captured from voice data or SMS data and that can then be used to identify the long tail in an aggregated manner

Here is an example:

If many people call a specific Pizza place, then that Pizza place gets an implicit recommendation as ‘Good’. Note that individual records are not revealed ; rather aggregate records are used to create the rating. The initial rating can be displayed to the users and users can contribute. For instance – if users see this Pizza shop rated ‘Good’ and it turns out that they have been calling to complain – then users can update that information (this works same as Amazon ratings). But the difference is – this information is seeded by the Telco from voice records. Once it is seeded by the Telco, it can be enriched by the users. This is classic Web 2.0

So,

a) Supply side: The ‘Long tail content’ could be lots of shops and stores(by postcode)

b) Demand side: The social search and recommendation tools can be created

What is missing

a) Profiles!!! At the moment, very basic user information is known to the Telco

b) External feeds(for instance feeds of restaurants etc)

c) A social network built from transactions i.e. the underlying data

Like I said, all this is currently possible through products like Xtract. I think Telcos need to address this space by engaging more with the end users and building the profiles(that’s the missing link!).

Comments welcome

Crossing the chasm with the long tail: Mobile web 2.0, mobile advertising, user generated content

In this blog, I ask the question is: How does Geoffrey Moore’s Crossing the Chasm apply to a Web / Mobile Web based business? and I propose that : On the Web and the Mobile Web, you have to cross the chasm with the long tail

I was invited to be a part of the Nokia thought leadership program for the Nokia ad service facilitated by mobiadnews. This week, we had our first meeting. The group comprises some very interesting, senior people from some of the biggest companies in the world (I am not sure how much more I can blog about the attendees – but everyone in that room was very clued on – and I learnt a lot from it!). Many thanks to Nokia for inviting me.

I am interested in Mobile advertising because it is critical to the success of Mobile Web 2.0. In a nutshell, like Web 2.0, Mobile Web 2.0 involves User generated content driven by mobile devices. Obviously, the advertising model is the best way to monetise that content. I am of course a big fan of the Nokia Ad service program – mainly because it oriented to the Long tail.

I raised this (i.e. Long tail) as a critical success factor for mobile advertising services. It was not possible to elaborate in detail and I promised to blog about my reasons why. So, here we are ..

Let us first understand the advertising value chain and the flow of money in it.

Note that some of these roles are being blurred – but for the purposes of this discussion, these roles are good enough(If you can add any more insights to this value chain, please comment and I shall incorporate that)

Money starts with the ‘Brand’ the advertiser(say Nike). The brand approaches an agency. The agency works with the Media buyers – who in turn, approach the publishers(i.e. the sites /destinations where the advertisement is actually placed)

This is a well established value chain – and worked well prior to the Web.

Web 1.0 (around 2000), tried to replicate the existing advertising model to the Web. That was not very useful because the Web was behaving in a different way to the advertising industry.

I believe that to understand this, we have to understand how Geoffrey Moore’s Crossing the Chasm applies(or not ..) to Web based companies .

The basic idea of Crossing the Chasm is:

A company should focus on a single market, a beachhead, win domination over a small specific market and use it as a springboard to adjacent extended markets to win. .

According to Moore, the steps are:

- Target the point of attack:

- Assemble an invasion force:

- Define the battle:

- Launch the invasion:

Source: parkerhill.com summary – as below

(If you have not read the book, see a summary HERE(pdf) )

The methodology has analogies with the D-day landings in Normandy

Question is: How does Crossing the Chasm apply to a Web based business?

More importantly, does it?

These ideas certainly do apply to a manufacturing type business .. but I believe that they don’t apply to a Web business.

Who exactly do we target?(because we don’t know who the customer is)

If we don’t know the customer, what invasion force will assemble?

Where is the battle?

What are we invading?

What if we can categorise the customer, but we are not sure that they will pay?

What if ..

We landed on the beach .. only to find sand?

Sand .. is actually a good analogy ..

Many small grains .. endless .. each with low value in itself ..

And that was essentially the genius of Google ..

Change the battle plan ..

Redefine the battle ..

Its ok if you don’t know the customer individually as long as you know the customer collectively aka the Long tail

Hence, on the Web, you have to cross the chasm with the long tail

If you think about it, it makes sense .. when a market is very tiny(as the Web was initially), it is difficult for the big media agencies to give it attention. When they did, it replicated their existing model – which does not go very far as we can see with Doubleclick v.s. Google(Google acquired Doubleclick .. and one would expect at the start that it may have been the other way round i.e. the big media model will acquire the new media)

The next big frontier is ‘mobile’ – and by extension mobile advertising

The same Long tail principles apply .. with one exception ..

Because the Mobile Web is fragmented, you need to unite it across some dimension across Operators. We see this with admob and screentonic .. both of whom have individually a billion ad impressions (across Operators) on the Mobile web.

If we naturally extrapolate this, the Nokia ad service is very powerful since it follows the same principles(Long tail) and unites the customer base across devices.

In some ways, this is counterintuitive – but the evidence of admob and screentonic shows that it is successful. As an industry, we are heavily oriented towards context .. context is great .. when we can achieve it .. but I believe that the Long tail + advertisement sponsored (user generated?) content could also be very successful – even if we had limited context – because the users would gain something of value.