The second revolution

By 25 May 2012Posts

When cellphones first appeared these mobile devices created a huge disruption in telecommunication. This became known as the voice revolution. With the advent of smartphones and faster networks, data transfer (although slowly at first), has now become the second revolution.

It’s incredible how quickly this mobile data revolution is growing. At Vodacom’s annual results presentation on 21 May 2012 (for the year ending 31 March 2012), group CEO Pieter Uys mentioned data revenue growth for the year was 27%. Vodacom’s active data customers increased 35% to 12.2 million, while the results also show a 55% increase in active smartphones on the network, now totalling 5.1 million.

But from where does data growth originate? According to Uys Facebook specifically, as well as other social media, predominantly account for the huge data growth on the Vodacom mobile network. (The same is probably true for MTN, 8ta and Cell C.)

This means the rapid move of social interaction to mobile devices, via purpose-built apps rather than browser-based internet, is having a profound effect on how consumers interact via mobile devices.

What has become clear since the tumultuous listing of Facebook on Nasdaq as a public company on 18 May 2012 is the company needs to speed up its ability to generate revenue from its mobile apps. This means advertising. But not advertising as we know it now.

Facebook fans will not take kindly to irritating messages they do not want or need intruding into their personal space on their phone or tablet. Facebook thus has to find a Google-like way to deliver useful advertising at the time when the individual is really looking for the specific info.

In large part this means social search. Looking for the in-spot for a drink after work? If Facebook advertising can direct you in a meaningful way to the nearest cool place, hey presto. You enjoy the benefit of social advertising on mobile.

It’s hard to get right in practise though. Facebook needs to find a way to draw real connections between social behaviour (read: search and social mentions) and advertising that delivers solutions to immediate needs. Facebook has to crack the socially relevant, mobile app-based advertising code for real future success.

I suspect a significant part of the $7 billion the company raised for itself from its listing will go to creating and buying expertise on this front. (From The Wall Street Journal: “At the $38-a-share offer price, Facebook itself will raise nearly $7 billion. Add cash already on its balance sheet, and it begins life as a public company with about $11 billion total. About 60% of the [approximately $17 billion] cash raised in the social network’s IPO is going straight to selling shareholders, not to the company.”)

But Facebook is only part of the equation. Advertisers, or would-be advertisers, will need to learn a new socially relevant way of communicating too. The hotel on the corner needs to be able to communicate its message appropriately to the person in its vicinity expressing a need for a room with a view via social.

I therefore believe Facebook fundamentally needs a Google AdWords-like programme for mobile that can quickly, easily and without hassle or admin guide advertisers to access targeted consumers in a socially relevant, but unobtrusive way. They should combine technical know-how and user interface design on mobile with media planning and social expertise, plus enhance their existing automated sales platform to be increasingly powered by social and location-based, relevant search.

All of the above is driven by the data revolution happening at breakneck speed in a mobile world. Advertisers take note. Your future is mobile too.