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BizReport : Advertising archives : October 12, 2000

Exclusive Interview with Craig Owensby, President and COO of Spotcast

As mobile computing becomes more prevalent (and spurs new buzzwords such as "m-commerce"), few people doubt that the gradual merger of mobile phones and palmtop computers will continue to change the way that people run their lives and businesses. The only question, it seems, is how this new revolution will shake out.

by Michael Grebb, Special Correspondent

As you might expect, new companies have sprouted up looking to capitalize on this explosion and bring order to the dizzying array of new wireless capabilities. One such company is Spotcast, which helps wireless companies add new Internet and data capabilities to their otherwise voice-centric networks. Craig Owensby, Spotcast's president and chief operating officer, took time out of his busy, globetrotting schedule (we tracked him down in Indonesia) to give BizReport his take on the exploding wireless marketplace.

MG: How does the Spotcast service work? What's the basic value proposition?

CAO: Spotcast operates as a technology vendor and "strategy and application consultant" to its operator partners. Spotcast generates revenues through a variety of approaches, including straight license fees on the software, sales of VRUs, personal profile generation licenses, and revenue sharing. Operator partners are not our vendors. Rather we are a vendor to them of our technology and enable them to become a mobile media by providing a vertical solution that, once installed, provides everything they need to successfully partner with an ad sales channel to sell advertising across the media touch points that they control.

MG: So how big will m-commerce get? Will it eclipse traditional target marketing and advertising?

CAO: M-commerce will ultimately become ubiquitous and could well command 50 percent of advertising dollars due to convergence of fixed and mobile media interfaces. TV, radio and even newspapers will become "mobilized" and hence marketing and advertising will become personalized. Over the next two years I would characterize growth as learning related. The focus is to be ready for 3G [third generation, broadband wireless networks] when they can't afford to be learning any more. They must be ready. I would project that as the major operators like Vodafone, Orange, Verizon, AT&T, Altel, NTT Docomo, Singtel, and Telefonica get advertising technologies in place to support their huge 3G investments, advertisers will recognize that the momentum is leading in that direction and become more excited. They will seek to establish expertise and support of the mobile medium for advertising and marketing. Keep in mind that advertising will look very different on a mobile phone than on fixed devices due to the uniquely personal character of the devices and the opportunity to filter offers to ensure uniquely appropriate commercial content.

MG: Assuming that mobile advertising and marketing takes off, how does the eventual introduction of location-based services affect the marketplace? People are already talking about beaming ads to people as they walk by a specific storefront.

CAO: Initially, it will struggle to make an impact. Location-based strategies will only create significant impact when local retailers embrace the concept. The problem is that local-retailers are very traditional in their marketing strategies. Until market leaders use this approach and begin to establish successful strategies to use location based contacts to drive the brick-and-mortar business, it will not catch on. I think that as location-based games (possibly group games) catch on--showing how much people will respond to a location based stimulus--this will capture the local advertiser's imagination first. They will then start to shift some of their funds from the newspapers (which is their main stay) into mobile advertising strategies.

MG: How do you get around the privacy concerns people may have about location-based services and wireless advertising in general?

CAO: Privacy concerns will be a problem if mobile operators do not view the users as partners in profiling. Spotcast supports the provision of PIN accessed personal accounts--what we call PEPER [Protected E-Personality] accounts--allowing people to access their own profiles to see what we know or believe about them. The amount of information they provide improves the operator's ability to provide valuable information to them, which is why they keep their profile accurate. However, ultimately, people will control what is and is not known. Location will not be recorded and linked to their identity. It will be used in the moment relative to the profile. People will ultimately form a trusting relationship with an entity that will control the profile to their advantage, and they will seek to limit the number of entities who do have personal information about them.

MG: There's a lot of talk lately about wireless data viruses crashing mobile devices. What issues does that raise for companies like Spotcast?

CAO: Spotcast envisions most mobile phones and devices will be dumb, allowing a centralized intelligence (provided by operators) that creates flexibility without constantly forcing users to purchase a new device. This also has the advantage of minimizing the danger of viruses. By keeping cookies out of mobile phones, dangers for most people can be limited. The other advantage of keeping the mobile phones from becoming mini-computers is that powerful applications can emerge more quickly and be spread more widely because the changes occur at the center and immediately apply to all the hand sets. Of course, some users will have powerful intelligent devices, but that will be a relative minority. Common people will not want to constant purchase cycle of new, more intelligent equipment. A hand-phone strategy with centralized intelligent service applications will be a broader based phenomenon that will ultimately bring the internet to the masses globally.

MG: How will m-commerce evolve going forward? Will it hit B-to-B markets as well as consumer markets?

CAO: Because mobile phones and devices are personal, B-to-B will eventually evolve. However, because most business have offices and interface with the Internet via a desktop PC, it is likely that the mobile phone will be a more B-to-C focused device. It is likely, in fact, that the mobile phone will become the primary B-to-C interface to the Internet while the desktop remains the primary B-to-B application. However, m-commerce is still in its infancy, and we shall see. The key is that companies that are investing in this future have a huge reason to aggressively pursue creative strategies to generate the momentum necessary for success. This momentum will involve creativity, hard work, and linked corporate relationships diverting standard advertising expenditures towards mobile interfaces. Fear of losing out is also a fundamental motivator. This will drive technology innovation on the mobile phone and ultimately lead to success as the interface improves and becomes more PC-like.

Tags: mobile marketing, Spotcast, wi-fi

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