M-Commerce: can Voice 2.0 make mobile ads work at last?

One of the things that our Facebook pre-IPO analysis highlighted was that Facebook has 425 million mobile users and isn't making a penny from them. It's a top priority for them to change that, and the constraints of designing a good mobile user experience mean that it will take all their ingenuity to shoehorn adverts into the mobile client.

Further, even within the online version of Facebook, customers are in 'social' rather than 'shopping' mode, and many mobile users are on third-party apps that talk to the Facebook API, so Facebook doesn't control the user interface "chrome" that surrounds the content.

JCPenney's Facebook store, now closed JCPenney's Facebook store - now closed. source

Facebook's big idea is to inject "sponsored stories" into the content itself. But will anyone accept that? And might the integration of Voice 2.0 communications into mobile advertising help turn it into a lead generating business? There's starting to be some signs that it could.

[Ed. We're looking at local advertising and commerce strategies at the Silicon Valley Brainstorm (27-28 March), and at Voice 2.0 strategies both there and at the London Brainstorm (12-13 June).]

Mobile is a medium of immense opportunity which the advertising, tech and telecoms industries have not yet cracked at scale. There's an interesting discussion of this in this Quora thread. 64% of the British and 67% of Americans find receiving advertising on their mobile annoying, and 77% of them find banner ads in mobile apps annoying. 27% of Brits say they would stop using an application if it started to push adverts. And one of the drivers of mobile Facebook usage is that the mobile client is cleaner, less "noisy" with additional features and, of course, ads.

Bloomberg recently reported that several big retailers have shut down their Facebook "storefronts", basically because the return on investment was poor. The problem is summarised by Forrester analyst Sucharita Mulpuru:

Facebook, which this month filed for an initial public offering, has sought to be a top shopping destination for its 845 million members. The stores' quick failure shows that the Menlo Park, California-based social network doesn't drive commerce and casts doubt on its value for retailers.

"There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop," Mulpuru said in a telephone interview. "But it was like trying to sell stuff to people while they're hanging out with their friends at the bar."

Both retailers and advertising agencies Bloomberg spoke to said the same sort of thing. Selling on Facebook duplicated their existing Web sites (and probably worse, as their design has to conform to the platform's limitations). Meanwhile, advertising on Facebook might generate brand awareness, but it didn't generate leads.

"We just didn't get the return on investment we needed from the Facebook market, so we shut it down pretty quickly," Sheetz (a US convenience store and gas station chain) said in a telephone interview. "For us, it's been a way we communicate with customers on deals, not a place to sell."

This is hugely important, as online advertising's big advantage - well, let's be clear, Google's big advantage - is that it delivers hot sales leads, and you can see them, count them, and analyse them to improve your site design. The energy-efficiency expert Amory Lovins famously said that nobody wants energy, instead they want cold beer. That is to say, "energy" isn't valuable in the abstract, but only because of the work that can be done with it. People value the cold beer, not the electricity used to make it cold. In the same way, businesses don't want "advertising". Advertising is a means to an end - sales.

And the great thing about online advertising from the advertising vendor's point of view is that because it delivers leads and they are tracked and counted, the buyer's budget for online is defensible in a way that display ad budgets never are.

Now consider this case study (PDF) from the Google Mobile Ads official blog. The client, Starwood Hotels, decided to make use of Google's search-based advertising to get at customers who were looking for a hotel, and therefore potential leads.

The really interesting element, though, is the call-to-action. Starwood, and their agency (Razorfish) decided to emphasise click-to-call. This turned out to work very well indeed - rather than getting worse click-through rates on mobile, they got better click-to-call rates than they got click-through rates on the desktop. And click-to-call customers were more likely to go through and spend money.

No wonder call-tracking analytics firm, Freespee blogged it.

The other half of this is the power of Voice 2.0. If you're looking at the mobile Web site, clearly your phone has a web browser (and the ones with no web capability are vanishing).

If we use a web-based voice API with a call-back architecture (like Fonolo, Tropo, Twilio, Jajah et al), we can send along a rich variety of data with the call request. That in turn lets us identify the customer, intelligently route the call in the call centre, and pre-populate the customer service agent's screen with information, hints, and offers.

Further, we can make sure the callback originates from a local phone number, so if the customer rings up again they go to the right place, and we can also make the Web site serve the right phone number by location. We can send reminders and authenticate the customer via SMS. And we can analyse our customer interactions with statistics in order to refine the process.

This is another reason why you need Voice 2.0. Obviously, you could implement this using one of the various API providers, but perhaps there's an opening for a specifically ad-focused click-to-call product, with a Google Ads-like two-sided business model? Advertisers could buy x number of calls, or pay per-conversion. We can certainly see potential for operators here, especially those who've recently created a "digital" division. And it offers the chance to price this as advertising rather than just as minutes.

For their part, Facebook have a chat product, and a deal with Skype. These days you can run Skype into a PBX, so it ought to be possible to make something of it that way. Or, of course, they could make use of one of the voice APIs themselves. Either way, though, this depends on the fundamental advertising model of Facebook on mobile actually working. If people don't go on Facebook looking to buy things, replacing web links with click-to-call won't necessarily make them - but it might.

So, if this is potentially such a good deal in terms of lead generation, why, then, are there only two entries regarding click-to-call on Google's mobile ads blog?

Carriers tend to think of mobile advertising as a product in itself, which makes sense because they are sellers of it. Similarly, the ad agencies who dominate mobile marketing discussions consider the product to be ads themselves. But advertisers don't want ads, they want leads. No wonder it's only the Web-voice insurgents who've cottoned on so far.

But Google's business is built on this insight. The question is surely "Could Google's core ad business do with some more investment?"

We'll be discussing this in a forthcoming Google analyst's note. Meanwhile, check out this classic Telco 2.0 blog post from 2009.