An interesting news story popped up today. Mobile data services company Zamano reported a revenue drop of almost 40% in the UK during 2009 – a drop that the Irish Times attributed to “a shift away from advertising services on print and TV to advertising on mobile devices.” Zamano declared it is withdrawing investment from the UK altogether. This really drew our attention, as it sounded pretty dramatic. It sounded like mobile advertising was being blamed for the low revenues of the company. So GoMo News spoke to Zamano CEO, John O’Shea. And the picture he painted was one of a successful mobile advertising model that was destroyed by one weak link.
What is Zamano?
Zamano is what you might call a “mobile interaction” company. It started out as a Premium SMS service – giving publishers the tools they needed to distribute content via text. Since then it has grown into a much larger number of channels (including banner advertising and smartphones), but the core offering remains the same: Zamano sells content over mobile.
What’s the problem in the UK?
According to John O’Shea, the reason that Zamano has lost revenue is because of poor conversion. Just attracting someones attention isn’t enough – you need to “convert” that potential buyer into an actual buyer. And Zamano claims that a part of the conversion process in the UK is so awkward that it completely destroyed the business model. And that awkward part is called Payforit.
Payforit is a mobile payment service that is supported by every licensed operator in the UK. It was designed to give operators a way to allow consumers to make small, secure payments over mobile. It’s bill based, so consumers don’t need to enter bank or credit card details. They just need a mobile phone number.
However, according to Zamano, Payforit is a slow and awkward system. It re-directs from the mobile page you’re currently viewing, and adds several layers of time and complexity to what should be an incredibly simply process. It’s an unfortunate truth when it comes to mobile: unless something works incredibly quickly and easily, the public tend not to go for it.
John O’Shea described it very well: “Mobile advertising can work very well as long as you’ve got a number of things going for you. First, you need effective targeting – down to the level of handset type, network and geography. Second, you need to be getting a good CPM on your banners. But you also need to have a very slick and easy method whereby people can see the banner, go to a landing page, view the content, see all the Ts and Cs and purchase and get access to the content as quickly as possible. When ALL those things are right, mobile advertising can be very effective. But because of Pay-For-It in the UK, the system breaks down. It’s a very awkward system. The consumer has already gone to a landing page and made the decision to buy – but then they get re-routed. When you ad 45 seconds to the payment process, you lose 50% of the people through that. All it takes to kill the model is for one of the steps to knock the percentage down.”
What we think?
I absolutely love this story, because it contains all it’s own proofs. What I mean by that is that the UK is a great “test example” of how an awkward payment process can kill conversion – but the best part is that Zamano provides it’s own “control examples”. In several other markets around the world, mobile advertising is an incredibly revenue driver for Zamano. In Spain, South Africa and the USA, Zamano is migrating all of its advertising to mobile as much as possible. Zamano is actually incredibly optimistic about the future of mobile advertising – just not in the UK, where Payforit is making it incredibly difficult to clinch the sale. Zamano is only withdrawing investment from the UK until Pay-For-It can be made to work.
