The new Digital Divide

The New York Times shows how mobile app designers devise new ways to get teenagers' attention during the day,

Push notifications — those incessant reminders that make your phone light up and ding — are the infantry of app warfare, cracking the attention span to remind users that someone on the Internet might be talking about them. All summer Wishbone had been sending out alerts four times a day, but the three men were thinking about adding more and, now that students were back in class, trying to recalibrate around the school day. 

“Can we have a friends feed at noon?” Mr. Jones asked Mr. Vatere. “It would be great to do ‘Your friends have updated.’ ”

“And you talk about it while you’re at school,” Mr. Pham added.

What are the implications: not for the business and advertisers, which the NYT article discusses, but for the kids, their families and the society at large?

We already know that frequent interruptions worsen kids' learning performance. We also know that pre-teens and teens are becoming addicted to their mobiles. Given that well-funded and market-savvy mobile app developers create new ways to target kids during school hours, we can predict that there will be a learning gap between kids who can manage their mobile distractions and those who cannot.

The old Digital Divide existed between people who had online access and those who had not. The underlying assumption was that the former were better off because they had access to all the information information needed to learn effectively.

I believe the assumption is no longer valid. Having access to the internet all the time is becoming detrimental to learning. Arguably, it's worse than television because kids get bombarded with distractions and advertisement all the time, rather than during the leisure hours.

The new Digital Divide is going to emerge between those who can manage their online time and those who cannot. Online learning may even broaden this divide because it will provide the motivated with greater opportunities to excel. Most likely, we already seeing signs of things to come through the low completion rates in virtual universities — 3-5%: few get huge benefits, while the majority does not. Paradoxically, online learning has become a natural selection environment for the next generation of schoolchildren addicted to their ubiquitous social interactions.

tags: psychology, mobile, learning, virtual, media, advertisement

Facebook's market power

The Facebook patent I briefly discussed yesterday points to a business and technology revolution, similar to the one that made Chicago a major commercial center in the United States in the 19th century. Back then, the proliferation of railroads helped move grain and cattle from small, scattered farms to large grain elevators and slaughterhouses. As the result, Chicago merchants benefited enormously from the new economies of scale. Similarly, Facebook enjoys enormous economies of scale by aggregating and processing huge amounts of scattered pieces of user preferences data. 

Furthermore, Chicago merchants developed a new standardization system that

...partitioned a natural material — a steer or a bushel of wheat into a multitude of standardized commodities, each with a different price, each with a different market (Nature's Metropolis: Chicago and the Great West, by William Cronon).

The new partitioning system allowed the merchants to sell their commodities to those consumers who were interested in a particular grain variety or beef cut and willing to pay the right price for the right commodity.

Similarly, Facebook has the ability to partition their user social graphs (and even individual users like you and I) into a multitude of parts that can be sold to advertisers and content providers for the right price at the right time and in the right place. The only difference is that instead of the Beef Chart of the 19th century they have the User Interest Chart of the 21st century.

tags: innovation, technology, control, packaged payload, distribution, scale, facebook, social, advertisement

Social Networking: a Bubblecovery?

An interesting perspective on social media's economic impact:

...the social media bubble has played a very important role in the U.S.' post-2009 "bubblecovery" or bubble-driven economic recovery. The social media bubble has helped to create nearly 500,000 U.S. jobs in recent years (a very high percentage of newly-created jobs) and has helped to launch a housing and commercial real estate recovery in hard-hit San Francisco and parts of New York City. The social media bubble has contributed to an explosion in post-2009 entrepreneurial activity, with the number of startup incubators tripling from 2009 to 2011. The social media bubble is also important, because it has been one of the few glimmers of economic hope that many Americans have had in recent years, especially for young aspiring-professionals who see few other appealing career options (1, 2, 3).

The recent election cycle may have contributed to the expansion because politicians of all parties embraced social media as a vehicle for delivering their messages. It's a relatively easy task to influence one's vote (i.e. to "buy" a political preference) through online tracking and ad targeting because the vote is free for the person to give. A harder task would be to convince one to buy a product or service online when s/he has to part with real money. Even Zynga with its freemium business model is having trouble.

tags: distribution, cycle, social, networking, business, advertisement

BMW: to Russia with Love.

BMW takes a page from Steve Jobs' ad manual in it's latest web campaign in Russia. In 2010, selling the iPad as Magical, Beautiful, Amazing, Steve Jobs started focusing on emotional response rather than technical features of a hi-tech product. In 2012, BMW sells its car claiming (in Russian) "We Invent Emotions."

In short, ad campaigns hack into human brains, presenting consumer goods as live objects that feel right. We no longer talk about features and benefits. It's all about feelings. 

tags: social, emotion, psychology, advertisement, distribution, control

New Rules: Social Media Campaigns.

A simple formula for social media marketing:

Success = Tuesday + Celebrities + Prizes

(VBeat) The study suggests that factors increasing the success of YouTube campaigns include celebrity guest stars, incentivized user engagement (with prizes for commenting or posting in response), and interesting, odd titles that viewers have to click on to understand.

Incidentally, Tuesday happens to be the most productive day of the week.  Ad campaigns that parasitize on our need for information seem to be the early winners.

tags: social, networking, media, experience, advertisement,

Youtube is unstoppable.

Jan 23, 2012. VBeat -- The site has boosted its daily page views by 25 percent in the last eight months — and gathering over 4 billion page views per day, reports Reuters.

YouTube has made its video site accessible on more mobile devices, smart televisions, and streaming media set-top boxes (Roku, Apple TV, etc.).

Last week during its quarterly earnings report the company stated that its display ads sales are generating $5 billion in revenue due in large part to YouTube’s success.

Google has already started integrating Youtube with Blogger and Google+. The default video player on your mobile phone is most likely to by hooked to Youtube as well. In a few years, Microsoft's bundling of the Internet Explorer with its Windows OS will look like a child's play, compared to Google's mobile package of search, maps, videos, browser, social media, docs, apps, and much more.

Resistance is futile!

tags: internet, distribution, domination, packaging, business, model, mobile, advertisement

Organizing the world's users.

Google acquires Zagat, a service hosting user reviews of local businesses.

Having free content is essential to Google's search-related advertisement model. As people switch to social networks and apps on mobile devices, more and more content is streamed to them directly from the service providers. As a result, the share of free quality searchable information continues to decline. Since Apple controls in-app ads on iPhone, Google needs content; the more, the better. They already have Youtube and Maps, which they  favor heavily in their searches. There's no doubt in my mind that Google's acquisition of Zagat is another attempt to stay relevant in social/mobile networking. Therefore, the answer to CNet's question, "whether the company will give the information it owns preferential treatment over information owned by others," is Yes.

In the world of mobile social networking, organizing information means organizing users as well. And you can organize them and their information only if you have access to it.

tags: social, network, information, advertisement, model, business, google

Selling shopping data to retailers

A new business model is emerging in banking:

Many of the nation's leading banks are using information about their customers' shopping habits -- how much they spend, where they shop, what they buy -- to make money.

Based on that data, retailers are offering targeted discounts via the banks through text messages, email and online bank statements.

The banks don't actually hand over your data to retailers. Instead, retailers describe what type of customer they'd like to target and the bank then sends the deal to customers who fit the profile. When the customer cashes in on the deal, the bank gets paid a commission.

In many ways, this is not conceptually different from the good old method of stuffing discount coupons into your credit card bill envelope. But somehow, it still feels much different. One key difference is the frequency at which the banks can now offer deals. Instead of a once-a-month affair, they can provide daily or even hourly offers through e-mail, web, mobile apps, SMS, etc. Another - very low transaction costs: no paper, no envelopes, no people or even machines producing coupons. Finally, and in contrast with Groupon and the like, no user registration is required. That is, by being a credit or debit card customer you are almost automatically enrolled, which means extremely low customer acquisition costs. Overall, should work well as part of a mobile shopping app or a promotional campaign.

== 10x tag relates to an order of magnitude change in frequency and cost of service.

tags: business, innovation, model, information, commerce, advertisement, 10x

The cloack and dagger war between Apple and Google continues. It appears that Google might be locked out of the emerging market for mobile advertisement on Apple devices:

Apple quietly changed the terms of service for the iPhone developer agreement Monday along with the release of developer version of iOS4 at Apple's Worldwide Developers Conference, according to MediaMemo and several other blogs. If preliminary interpretations of a key section are correct, Google's newly acquired AdMob subsidiary will be unable to share ad analytic information with its customers who have placed ads in applications on the iPhone, rendering those ads much less valuable.

Either this is a legal quirk, or, more likely, Apple intends to extract from Google a heavy price for playing on the wrong side of their prisoner's dilemma game. In the meantime, Google protests the agreement.

tags: battle, technology, apple, google, advertisement, business, law, information, tool, detection

CNet on YouTube's slow march to generate a meaningful revenue:

Bernstein Research's Jeffrey Lindsay ... believes that YouTube has been able to increase the number of videos suitable for advertising to around 9 percent of YouTube's inventory. That doesn't sound like much, but it's up from around 3 percent last year, according to MediaMemo, and could reach 15 percent next year.

I am a little bit surprise that so many people still watch ads on the net despite the fact that ad-blocking browser extensions like AdBlock Plus are widely available. Do they think that it is unfair to use a resource without supporting its business model, or they are just unaware that ad blockers exist? The latter is more likely because a lot more people are interesting in distributing ads than distributing tools to remove ads.

p.s. hulu vs youtube would be a good "technology battle" exercise.

http://news.com.com/Google+rises+at+Yahoos+expense/2100-1038_3-6178164.html?tag=nefd.top

Yahoo, founded in 1995, had a three-year head start on Google when it was launched as a human-created directory. Google has always relied on software spiders to crawl the Web and create its index. Hard as it is to believe now, Yahoo invested in Google early on and used its engine to power Yahoo search results until early 2004 when it began using its own search technology.

Google founders Larry Page and Sergey Brin were unsure what business model they would use when they started their business. After snubbing merger talks in 2001 with Overture, the first search provider to use ads, Google launched its own pay-per-click model in early 2002. Overture sued for patent infringement and the case was later settled. Yahoo acquired Overture in 2003.

Technology story very similar to IBM/Microsoft deal in the early 1980s. A dominant company outsources service that doesn't make money. Then a new business model is discovered that boosts the upstart. The lesson: check outsourced technology for potentially new business models, i.e. the ability of the component to become the foundation of a new system.

Yahoo was too early in its quest to become a media company. After ten years of development Internet-based content distribution business model has not materialized yet.