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It was as exciting as always to chair one day of the MVNOs Industry Summit 2009 in Barcelona last week. It is the best place that I have found to get an update on what’s happening with MVNOs. In addition to the interesting MVNO business model and operator partnership debates, there were few moments that were touching the most essential topic of being a virtual operator: knowing the customer. Lebara had just got a new CMO, James Condon, and coming from Tesco retail brand straight to his first telco conference put it all in one sentence: “Having sat through retail conferences, there is a striking difference in this industry: no-one talks about the customer here”. Knowing this inherent focus on technology, platforms and business models–  the industry even calling normal people subscribers (!) – we also pulled together with Sophie Powell from Informa a session to show what young people in the UK do with mobile. We filmed 5 stories at Blyk’s ^6 user group on young people explaining what they do with their mobile. It was a great contrast against the industry’s technology-driven hype of young people who use Instant Messaging, browse content like crazy, and are attracted by operators’ asterisk –heavy new phone offerings. Let’s have these young people to tell the story. Unfiltered, as it should be. I was just left wondering how much better the industry would serve its customers if it only dared to ask what they want and deliver on that promise – something that is embedded into the way how media works.

* Kev is on O2, and likes his cheap plan and simple phone whose battery is falling out

* Jade is on O2 and likes simple phones, doesn’t care what they look like, and avoids contracts

* Daniel has Nokia on Orange. It costs him £ 20 with £ 10 in credit to text and talk

* Jenny is on Vodafone with her replacement phone that wakes her up every morning

* Laura on T-Mobile hates her new touch screen phone that is hard to write texts

After an interesting week in Barcelona at Mobile World Congress, I took time to put 5 things down on what we learned related mobile and advertising:

1. Advertising spend is cut and moved to Blyk-like media. After a panel discussion I attended, a senior ad executive from Ogilvy came to me and said: “You know Timo, this year in advertising is about driving sales, sales and sales. The only thing people do for their brand is ensure that it is preserved while focus is on tactical sales campaigns. No brand building this year. And are the budgets cut or moved? Both – they are first cut, and the remaining moves below-the-line.” For a Blyk-like media this is not necessarily a bad thing as everything that gets a brand closer to its customer is now becoming increasingly important. This is certainly seen already as January 2009 was our best campaign month ever.

2. Mobile advertising fulfills variety of communications goals. “Our clients use mobile both for branding and direct response. Mobile can do both and it should be used to do both when appropriate for a campaign”, said Valerie Itey, Head of Mobile at Universal McCann in Spain. Another consensus was achieved that mobile needs to be integrated into the media mix. These are certainly our observations at Blyk as well: in 2008 our campaigns were equally split between awareness, engagement, driving sales and gaining customer insight. In the same GSMA panel discussion, Michael Smith, Deputy Director of COI Interactive from the UK, provided very good balanced views on this as well.

3. There are a lot of mobile advertising platforms around. It seems that everyone has one to offer. Literally, everyone: SIM card manufacturer, messaging platform vendor, WAP gateway provider, content provider, network infrastructure company and handset manufacturer. Even the ones making mobile phone chips have their ad platforms — not to even mention the traditional online brands, software companies, and focused mobile advertising platform developers. All these platforms do the same thing: campaign management, targeting and reporting, and are the best in what they do. It must be very difficult for operators to navigate in this environment where many people are selling platforms but only few are providing a business model to start generate revenues.

4. Mobile media is a strategic dilemma for operators. Almost every operator has mobile advertising among the top 3 strategic priorities in 2009, but most acknowledge that there is no strategy in place yet. The transformation from a telecommunications provider to a media company is a step to execute.

5. Mobile media is unique, and needs to be treated uniquely. Mobile is different to online, like television is different to radio. Mobile is about engagement more than any other channel. Mobile is a personal media built on communications between people, and generates a highest impact when advertising utilizes this unique nature. At Blyk we have taken this principle to youth market and built advertising on message dialogs – the same way you respond to your friend you respond to a brand.

Let’s see what 2009 will bring…

I was chairing a day at the Informa MVNO Industry Summit 2008 in Barcelona this week. The discussion focused on how operators and MVNOs can best work together.

Being Blyk – a youth media – puts us in an interesting position. Through connection to preferred brands, Blyk provides more value to youths compared traditional mobile offerings. In fact, Blyk is in a league of its own with the ad funded business model. As a result, most analysts have difficulty fitting Blyk into their MVNO positioning frameworks. Why is that? Because Blyk Media is not an MVNO, although it happens to have operator capabilities in order to serve young people.

Also, many people in the telecommunications industry see mobile advertising similar to the advertising model in Internet – the place to create a high number of impressions and eyeballs for a campaign. On the contrary, mobiles are used to interact and communicate, therefore being a place to engage and build relationships between brands and consumers. It is the most personal media for people, and thus not a natural place for broadcasting.

Another major question discussed during the summit asked “how are MVNOs doing today?” Informa’s Mark Newman shared some statistics that would suggest that MVNO’s are doing quite well: Western European MVNOs have grown subscribers between December 2006 and February 2008 from 40 million to 55 million, which is over 35% in 15 months. In the UK, Spain, Germany and France, MVNOs averaged to 30-40% of net adds (a term that mobile industry uses for new customers) every quarter in 2007.

From an industry point of view, specifically interesting is the wave of MVNOs starting from Northern Europe in early 2000, moving first towards Central Europe a few years later, and now reaching to the south and east. William Barrar from Ovum presented an interesting model. A market becomes ready for MVNOs when: mobile penetration is high; cost to acquire one new customer for operators passes a certain threshold cost; and when revenue generated by one customer is high enough and stops growing.

And what makes an MVNO successful and the relationship with operators work? This was the topic at the Crystal Ball Panel – where champagne was served – at the end of the conference. The panel included Keith Greenfield (Orange UK), Markus Freikamp (T-Mobile International), Dan Armstrong who has been involved in 22 MVNOs (Rabo Mobile), and the undersigned. The panel summarised the two days well: in order to succeed, one needs to create a special relationship between mobile service and the consumer, on top of the economically attractive offer that is the entry ticket for creating the relationship.

All in all, it was two days well spent. Thank you to Informa, all presenters and the active audience.

We have been meeting with the leading telecom and media analysts in Europe on our recent release related to Goldman Sachs and IFIC joining as new investors, and our country expansion starting with the Netherlands using the Vodafone network.

We have also been discussing our recent advertising results. The average 29% response rate across 498 campaigns ran until January 24th is a result that gets many people asking: how?

In summary: relevance of all ad communications, delivery based on the simple and familiar user experience, and Blyk’s unique media environment in combination make the Blyk Media effective. In fact, most young people don’t see these conversations as advertising but as information they would like to have.

To put the 29% response rate into a perspective: typically media delivers 2% at its best, and cold mobile campaigns 3-6% growing to 13-20% if in-depth profiling data is used, as referred by the DMA Chair Nick Fuller last year.

Marek Pawlowski from MEX recently summarized this quite well: “Much of the success can be attributed to Blyk’s approach to the mobile advertising experience. They use a medium with which the users are already very familiar – messaging – thereby avoiding much of the confusion and pricing uncertainty around clicking through to mobile web-sites. The advertisements are sent as a text or picture message, and are designed to be two-way conversations. Users are invited to respond with a simple reply, e.g. Would you like to receive more information about our discounts on summer holidays? ^Y/N”

The ad format – SMS and MMS messaging used for conversations between brands and members – is currently active in Blyk with 55 advertisers across 14 industries. The simple but rich building blocks are used to create variety and breadth of campaigns to create awareness, build relationships and drive sales. The applied formats are text, picture and video with sound and animation when required. And most importantly, not only rich in pixels, but more so to be rich in interaction and context: highest response rates are generated when relevance and flow of interaction come together in the unique Blyk Media environment – that is difficult or impossible replicate anywhere else.

Finally, and most importantly, young Blyk members are excited and want to join one of the fastest growing youth media in the UK. Blyk is well on track to reach 100,000 members and to become a significant youth media in the UK in its first year of operations. The best feedback we have received so far – unprompted and via our research lab shift6.net – is that the Blyk form of media really works for young people.

Geoff Morley from Blyk UK will present at IIR Mobile Advertising Conference on advertising-sponsored mobile services and the Blyk Media: the model that is today present in every other media than mobile, from newspapers to television. Geoff will also discuss messaging: the most simple dominant pattern in mobile, and the pattern that forms the most effective format for mobile advertising. For young people, it is natural to get a message and respond to it, just like they communicate with their friends many times every day.

GSMA Mobile Asia Congress 2007 in Macau this week was an interesting event. Despite our initial European focus, most of people knew Blyk: this really is a global industry!

I was presenting Blyk in the mobile advertising session on November 14th, followed by a lively panel discussion on operator strategies, consumer perceptions, industry ecosystems and analogies (–or in my opinion, no real analogies) between effective mobile and Internet advertising models and formats. To sum up, for operators mobile advertising is a way to increase ARPU, while there are no other Blyk-like media and operator propositions than Blyk in the market.

Differences between maturing Europe and emerging Asia are obvious. There are a lot of people in Asia without mobile phones, many mobile services still to be introduced, fast-growing GDP and a large young population keen on technology and entertainment, ready to secure the growth in both operator ARPU and subscriber base for the years come. And if Europe is a scattered map of nationalities, so is Asia, where socioeconomic differences within one country are beyond any European imagination, not to even mention differences between countries themselves.

So, against this, I got asked a lot how does this all fit into what Blyk is doing in Europe? The simple answer goes: a Blyk-like media would do very well in Asia.

Why?

First, the need to lower the phone bill is universal among young people. No matter where you go, young people are students or early in their careers, needing to save money for both necessity and fun. They also are most eager to adopt new ideas. This is exactly what Blyk does by being the first to bring the ad-funded media model into mobile, to give free text and voice every month. And why text and voice, not mobile content? Simply because text and voice are what young people use in mobile today (– in addition to alarm clock as our extensive research covering more than 3,000 16-24 year olds across European countries shows), no matter if you are in Europe, Asia or anywhere in the world.

Second, Blyk links young people up with brands they like. Access to brand messages is social capital among young people. This is, in fact, even more so among the larger audiences of the Asian youth compared to Europe, where brands have been accessible to everyone for decades. Blyk is the invite to the network of messages and information from respected brands that want to hear and listen to what you think.

Third, advertising in traditional media is losing its power exactly like in Europe. Street corners are packed with billboards, and television programs are testing the limits of advertising per hour. A mobile media where themes, frequency, timing and pace of advertising are designed to deliver the best impact for brands and user experience for consumers does play very well in this environment.

The next question against this is, of course, that when will we see Blyk in Asia? Well… this really is a global industry!

International Herald Tribune wrote an excellent summary article on what is latest with mobile operators and their mobile advertising plans, featuring Blyk as the pure play ad-funded mobile media for the 16-24 year olds.

The new uses of cellphones present vast opportunities for consumer brand companies, who are finding it difficult to reach customers through media like magazines and television. “[Mobile] advertising absolutely makes sense to extend expensive multimedia services and mobile TV to the mass market,” said Linda Barabee, an analyst at Yankee Group. “I think we will see consumers say, ‘You know what? I’m only going to spend this much money on my mobile phone.’ ”

Blyk is giving a keynote speech at the Informa Mobile Advertising & Marketing conference in Paris, Jan 16-17.

First, it has been a great conference with a lot of valuable insight being shared between the participants, and there is still the second day to come. Thanks to Informa for inviting us to give a keynote speech on building a mobile, ad-funded media and operator for young people.

We have had a lot of interesting discussions on Blyk as a mobile media, how we have built it, and why it is being built in this novel way – as a full scale mobile operator. In short, every media starts from understanding its audience, and providing something that is of high value to this specific group of people. In our context in mobile media, the 16-24 year old audience uses – we have done a lot of research on this topic and intend to continue our efforts – their mobiles for talking, texting and… as an alarm clock. This leads to the obvious conclusion: in order to build a mobile media one needs to provide something of great value for its audience, and in mobile it is the two ‘killer applications’ that Blyk provides: free voice and text. And in order to do that, to be able to provide what is most valuable for the 16-24 year old consumers, one technically needs to become an MVNO.

The second key question is how one builds the content into this new mobile media, considering especially that rich content is not consumed in masses via mobile, and is hard and expensive to make attractive. Well…we do in fact have the richest of all media at hand when it comes to user-generated content in everyday communication. One thing that we have observed in all our trials is that the young consumers – in our opinion not surprisingly – start to miss Blyk after the trial ends once the ad user experience is delivered in a fun, enjoyable and relevant Blyk manner.