Staying in the Revenue Chain: Using Partner Management to Ensure Content’s Success

While there is an enormous amount of excitement around new mobile content, practicalities are being overlooked. In the typical rush to get services to market, many issues that affect users have not been addressed. Mobile operators appear to pursue reactive strategies in dealing with everything from user education and device troubleshooting to marketing, pricing and content presentation. These are the very issues, however, that are of the greatest concern to content providers that want to channel their products, encourage users and see positive returns. To ensure their place in the revenue chain, mobile operators will have to improve on their traditional weaknesses—user education, targeted marketing and keeping offerings simple.

What Operators Have to Lose

“ What mobile operators fear is losing control of the customer,” says Darren McKinney, director of corporate marketing for Amdocs. Operators are concerned that subscribers will find ways to go directly to content providers and cut them out of the revenue chain. Today, operators control the customer’s access to content, but how they continue to manage their position will determine their future. Improving their customer care capabilities to free partners from dealing with complex issues while satisfying their marketing demands is critical to maintaining leverage in the big content game.

“ We’ve had firsthand feedback from U.S. carriers that it creates huge credibility issues if they sell content but can’t provide support for it,” says McKinney. Operators have a chance to provide strong enough care that their content providers will see it as a differentiator and may not seek the means to sidestep operators where they fall short. Considering that media conglomerates such as Viacom, AOL Time Warner and Disney have well known brands and massive television and Internet platforms, they could provide their own user education, cross-marketing and perhaps even customer care if driven to do so.

Operators recognize the upside to improved customer care, but their offerings don’t reflect it, according to their vendors. Though they generally have sophisticated billing and care platforms in place, they don’t always use them to their fullest extent. Their reliance on generic bucket plans is an example of this. The next level systems that can better manage customer relationships in the content world, and keep partners satisfied with marketing and user education, are not in place yet. Even if those systems are installed, there are questions about whether operators have the knowledge they need to use them effectively.

By leveraging even their existing back office systems, operators can offer valuable services to partners. Today, billing relationships and capabilities are a critical first step, but they won’t be enough in the long run. “PRM flexibility will be a huge differentiator as carriers are out there negotiating with the big partners everyone wants,” says McKinney. Operators need to segment their partners according to their value in the overall offering and make sure they automate the settlement, data sharing, customer support and marketing capabilities each partner needs. Not much of this is actually being done today.

“ The operators haven’t really analyzed these issues as well as they need to,” says Shirley Evans, senior director of product management at Convergys. “Who owns the caller, how the expense is shared, how calls are handed off among partners—all of these things must be closely managed and understood. You really need to understand the specifics of each service and what it will take to support it. We don’t know that they’re looking at that carefully enough.”

Marketing to Each End User

Content marketing is partly about presenting users with the services they want and making them simple to use. “The challenge is to become better marketing companies, choose the right partners and better target the people they need to reach,” explains Tom Antunes, vice president of industry solutions at Convergys.

Traditionally, mobile operators have been relatively poor target marketers. Promotions are mass produced and rarely based on any customer history or usage patterns. But people want what they want, and they want control. They don’t want to be spammed or overwhelmed with non-targeted messaging and telemarketing. “You can’t start driving content and services to people without understanding how they want to be contacted and when and what their interests are,” says Mark Wolsky, senior product manager at Convergys.

Fortunately, subscribers can play a role in targeted marketing, and an interactive medium like a mobile device can let them do just that. “In the trials we’ve done so far, it’s obtaining demographic data from the network that’s really important. A lot of subscribers are happy to set their personalization settings,” says Steve Owen, solutions architect at LogicaCMG Wireless Networks. With easy access to simple preference options, subscribers gain a sense of control over what’s being sent their way.

Beyond user-driven settings, systems are available from most of the major billing and customer care vendors that can gather and segment user data, analyze it and distribute it as a service to content providers. “You want to segment your partner relationships, and need to in the new environment. We can segment or profile partners in different groups to market certain information or services back upstream,” says Pam Rayom, senior product manager at Convergys.

Access to information and care services based on partner segmentation is a leverage point and differentiator for the operator. It allows the operator to generate further revenue, to analyze the relationship between specific services and their cost of care, and it keeps major content providers happy by giving them operations services they don’t want to create for themselves.

Attending to the User

Just as partners aren’t always getting what they need, users aren’t either. When discussing the “soft” subjects at the recent CTIA Wireless show, it was clear that operators and handset manufacturers are not really considering fundamental subscriber issues that will impact usage, such as:

• Which phones are best suited to which content?

• How will the point of sale guide subscribers to the right devices?

• How will subscribers be educated about using new devices and services?

• How will operators provide specific customer care for a huge range of devices, services and problems?

“ Before you bring out a new service, you have to stop and teach people how to use it,” says Rick Findlay, director of wireless industry solutions at Convergys. One place subscribers go to find information about any mobile operator’s content offerings is its Web site. Today, the major operators’ sites are somewhat overwhelming and poorly organized. They throw volumes of information at the user about handsets and various services, but little is done to introduce subscribers to the new mobile experience. Only Sprint PCS makes an effort to guide users to the right handset by offering a list of services with checkboxes. Selecting different service categories changes the display of handsets that support them. Sprint PCS also provides flash animations that give the user a 3D look at any device, with a few high level pointers on what the device can do. What are missing, however, are directions for actually using each service. If the devices and options intimidate people, they may be content to stick with a low-end voice phone, or carry a high-end phone as a social statement but use only a fraction of its capabilities.

Big Steps for Customer Support

Subscribers are neither being educated on how to use services, nor are they being shown where to find them. Most users do not want to get lost in a menu looking for something they’re not sure is there, and then spend another 10 minutes figuring out whether their phone can support it and how it’s used.

The anecdotes are piling up about bad user and customer care experiences. Wireless industry veteran Ian Collins, president of Mobile Diagnostix, a company that develops automated device troubleshooting, repair and configuration software, offers a recent tale. An early adopter, an affluent banker with a high-end phone, tries to download a simple ring tone. The ring tone he wants won’t work, so he calls customer care. He spends roughly 20 minutes on the phone as the rep tries to talk him through reconfiguring his phone’s settings to make the ring tone compatible—and it still doesn’t work. So he gives up. No ring tone sale, no upsale opportunity, a disinterested spender and 20 minutes of support time for which the operator will eat the cost. “In parallel with service launches, calls are getting heavier, longer and harder to answer…and obviously the cost is going up,” says Collins.

What should be an easy, positive user experience that generates incremental revenue can turn into an instant negative—a frustrated user, a lost sale and an associated cost that cuts into or eliminates margin.

Automating Customer Care

Customer care is one area where more automation can be introduced to keep costs and calls minimized. New mobile devices tend to be armed with on-board intelligence. They are essentially small network elements that can be provisioned and managed remotely. Though no operator has yet installed the systems to do it, there is technology available today that can provide this functionality. Mobile Diagnostix, for example, offers a means to remotely troubleshoot and fix problems.

If a subscriber downloads a ring tone that makes his phone crash, it could be due to a bug in the phone’s configuration. Mobile Diagnostix’s technology can send new configuration files or patches from its archive to a phone to affect a fix. If it encounters a new problem, it will trap the troubled device’s configuration and analyze it for errors or alert an engineer. When the error is identified, a new patch or fix can be created, downloaded to the phone, and stored in the archive in case other users encounter the same problem. The next step for this technology is to provide real-time configuration as users download content to make the experience as smooth as possible. This kind of technology would, in concept, minimize call volumes and automate the process for solving all but the most uncommon problems. It also would eliminate the need for the subscriber to become a handset expert—a major hurdle that is also overlooked.

Match.com Says “Keep Things Simple”

Keeping content simple is also a key to success. “I can’t overemphasize the importance of simplicity in everything we do,” says Jeff Rudluff, vice president of new product development for Match.com. “Ifyou make something too complicated, people are never going to use it.”

Match.com should know. Its Web site is the second largest paid content site onthe Internet, and it sees the mobile channel as a way to expand its reach. Rudluffsays the mobile offering is targeted to the 18 to 28 demographic, where SMS usageis growing the fastest. Currently, its service is offered through AT&T’s mlifeplatform for a $4.99 monthly subscription for unlimited messaging. The servicewill be rolled out with other providers as well, and will add a location-basedaspect this summer.

The service is likely to be cross-promoted with other services, such as ringtones. “If you’re buying a ring tone, you’re the perfect audience for Match.com,” says Rudluff. When a user purchases a ring tone, he or she is provided with a confirmation message as the ring tone is being prepared for download. This provides an opportunity for Match.com, or another content provider, to ask the user if he or she would like to fill out a profile and try out the service. The key is that the user is given the choice to say no and the cross-promotion stays simple. “If you get too complicated with bundles, you reduce the consumer spending. 95 percent of the time you cost yourself money giving someone something they would have bought anyway. So why not give them a [brief] free trial and see if they’ll stick with it,” saysRudluff.

Mobile operators “are learning after a long road of failure that they are not application specialists. What they do best is provide the pipe and the service, and then leverage application experts and their brands. We are billing this through them—like Visa or Mastercard, though [operators] charge more—and we are paying them for the plumbing services,” explainsRudluff.

What the Match.com example shows is that content partners are willing to payfor infrastructure services and required demographic targeting. If the operatorwon’t provide good enough service though, the partners can create their own meansto market services and collect subscriber data. This will become increasinglyimportant as more services become available, and especially when more video channelsbecome available for pushing entertainment and advertising.

Video is Simple and On its Way

The traditional arguments against wireless video service claim that video eatstoo much bandwidth and isn’t suited to mobile devices. However, new devices, especially those coming out later this year, are capable of running full motion video on clear, color screens. With just a 20Kbps connection, unidirectional streaming is possible with relatively high quality. Most importantly, it’s simple for users because it’s a service they are accustomed to and is usable with just a few buttons—play,stop and rewind for example. LogicaCMG is offering a streaming platform and service,and has already cut deals with the big names in television to deliver packagedand specialized video content.

The company recently ran a highly successful trial with Orange and the BBC inthe UK, streaming video and sending MMS clips around the Rugby World Cup. “Every morning [users] would receive a multimedia teaser like headlines or a clip of a goal,” explains LogicaCMG’s Owen. “Theycould reply to the MMS message, which invokes the link to the video streamingproduct.”

“We’re big advocates of keeping things simple, so when you launch a new service it requires very little overhead,” says Owen. Mobile video will soon take large leaps forward as a crossover technology from broadcast and home video services, like Tivo. “It will be possible for people to start streaming from their home video pretty soon. Also, by the end of the year, I think you’ll see at least two of the major Tier 1 operators offering dedicated video channels on their networks,” saysOwen.

Disney Calls for Better Education and Marketing

In order for any technology to succeed, people need to know it’s coming, how much it costs and where to find it. This again comes down to marketing, which is not the operators’ strength,but is something their partners can do very well for themselves.

Disney, for one, has offered online mobile content in Japan for more than two and half years through DoCoMo and others. It is the number one branded content provider with 3.4 million paid monthly subscriptions and 35 current services across three carriers.

“When you look at DoCoMo, they have published lists and take aways at stores to promote short cuts to new content,” says Larry Shapiro, executive vice president of business development of the World Disney Internet Group. “You see some of that coming from U.S. carriers…but the Web sites are not there yet. There’s some training at company stores, but it’s not there. [The operators] have invited us to talk to sales reps, but they don’t understand it yet. It’s a whole new education. They recognize the opportunities, but it requires a shift in mindset, training and focus to accomplish that,” saysShapiro.

Many early adopters complain that even when they know about content they’d like to try, it’s not available or not on the menu they expect. “We have a new application out now, and I couldn’t find it—it wasn’t where I thought it would be,” says Shapiro. He says he immediately called the mobile operator to discuss the issue, and they simply didn’tunderstand which of the available categories made the most sense.

This is most likely a matter of inexperience, but in this first wave, if userscan’t find what they want, two problems will arise. First, users won’t downloadcontent as often as is necessary to drive success. Second, content partners likeDisney will run out of patience and begin looking for new ways to control howtheir content is directed to their target audiences and use alternative platformsto provide it exclusively.

Shapiro admits, however, that the skill of the operator is still critical tosuccess. “We like to give ourselves credit for our branding, and for good marketing, but the anchor is how DoCoMo came to market with good devices, a good network, integrated billing and a business model that encouraged a strong development community. Plus, they educated people a little bit, saying ‘here’s stuff you can do that’s cool and fun.’ Whatever it may be, you have to teach people…and it’s not yet ingrained in the DNA of carrier marketing,” hesays.

MTV Focuses on its Sweet Spot

Without sophisticated technology in place to target users, there are some more practical ways to reach the right audiences. MTV provides a good example. In the mobile realm, it has chosen a partner that already targets its primary audience: Virgin Mobile. Virgin Mobile targets the youth demographic with a strategy based heavily on prepaid service. Mobile penetration in the 15 to 30 age group, particularly on the younger side, is relatively low. Thus,

it represents a “tremendous growth opportunity for the main mobile voice business and for new data offerings,” says Nicholas Lehman, vice president of Interactive Business Development for MTV and VH-1. MTV sees the mobile offering as a way to “develop another strong connection with our existing audience, and be on a relevant and meaningful platform like television and the Internet,” Lehmansays. By focusing on one partner that shares its target demographic, MTV minimizesmarketing complexity while mitigating its risk as it takes a manageable firststep in the mobile arena.

MTV can target all Virgin Mobile subscribers, many of which are already fansof its primary television and Internet businesses, and vice versa. This kindof promotion and education, says Lehman, is where most content offerings fallshort. “There aren’t great reasons to use many of the services. Few have marketed or branded them well, and they haven’t done integrated promotions. We can educate people from the TV platform,” hesays. Lehman explains that integrating the platforms means using one to promoteand educate users about the other.

For example, many of MTV’s offerings are driven through messaging. Total Request Live, one of MTV’s most successful shows, is based on interaction with the audience. Simply stated, people who watch make requests and hope that what they want to see will end up on the show. The on-air hosts of the show encourage and show mobile users how to cast their votes using SMS. When subscribers vote, they are entered into various sweepstakes, where they can win cash and prizes. MTV also offers Video Clash, which lets mobile users vote for the next video that will appear. They are also planning a similar offering around the upcoming MTV Movie Awards. Users pay 10 cents per vote and MTV and Virgin share the resulting revenue. Similarly, MTV uses messaging to send TRL alerts to users to tell them what’s coming up, or who the next day’sguests will be. They also encourage users to contact each other about the videosand music they like best.

Fighting for a Bigger Piece

The ultimate value of content for mobile operators is that it drives infrastructureutilization. More messages and downloads means increasing returns on their coreinvestments in network, operations systems and spectrum. But content partnersknow this too. Today they may be testing the waters to see what works. They’re willing to pay a little extra and give a little more to get up and running. “If there is a sufficient business model for content, we’re happy with that,” says Disney’s Shapiro. But the business model, and the operator’s place in the revenue chain, can break down if usage isn’t as strong as it could be, or if pricing isn’tarranged in a way where everyone makes good without dissuading usage.

Further, what happens once those subscribers that are interested in content areusing it regularly? The goal won’t be to see what works so much as to competefor greater command of the audience and its dollars. The biggest brands and bestservices will drive the most usage.

The battle of the brands has yet to begin between mobile operators and theircontent partners. However, leading content partners may say, “we’re driving usage and we want a share of the bandwidth revenue,” says Kevin Dorton, mobile industry product manager for CSG Systems. This is where things can become ugly—when content partners start treading on mobile operators’ hometurf.

Operators need to protect themselves today in the way they arrange content partnershipsand agreements to help ensure their business interests. By stepping up theirinvestments in customer care and user education, they protect the best leveragethey have—their relationships with the customer and the infrastructure in place to support them. The right billing, care and partner management capabilities can help operators “better market and negotiate,” says Dorton. “It all comes down to negotiation in the end. When you put a partnership agreement in place, it’sa business agreement. You work out the terms and put it into a platform thatcan automate [partner management] for you.”

The key is to acknowledge subscriber and partner needs, find business models that meet them, and use the systems capabilities that offer the most repeatability and leverage in each partner relationship. If operators just throw content out there and hope it sticks, they may give up their captive audience and let content providers outmaneuver them in their own backyard.