Partnering with Facebook: Blessing or Curse? (Detecon Executive Briefing)

8/8/2019 Partnering with Facebook: Blessing or Curse? (Detecon Executive Briefing)

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Detecon Executive Briefing

Partnering withFacebook

Blessing or Curse?

As Internet users are migrating to mobile, usage patterns on

the fixed and mobile Web are becoming increasingly similar:

Top-10 lists of leading mobile applications are consistently

occupied by familiar Internet companies such as Google,

Facebook, Yahoo, and Twitter. Nearly half of users time

online on a mobile device is spent on social networking.

In light of such developments, telecommunication operators

are increasingly abandoning pure do-it-yourself strategies to

increase mobile data traffic in favor of more collaboration-

oriented approaches. Many carriers are actively supporting

third-party mobile Internet services next to their own

proprietary applications. They now face the challenge of

creating sustainable and attractive partnering strategies with

self-confident Internet players.

Despite significant risks, operators are poised to benefit from

active approaches to partnering with Facebook and Co.

Successful collaboration strategies leverage the partners

experience and brand strength in customer-facing Internetapplications to drive mass market adoption of mobile data

services and promote the operators own brand image.

We make ICT strategies work


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Detecon International GmbH 10/2010 2 www.detecon.com

Where the mobile Internet is heading

Users want the services they know and love on their PC and on their phone. Accordingly,established Internet players such as Google, Yahoo, Facebook, and Twitter are at the center

of user migration to the mobile environment. Mobile versions of their services are becoming

the primary drivers for widespread adoption of mobile data services. In the U.S. mobile

devices already serve as social network access points for 20% of the young users (16 to 24

years). In mobile first markets, such as Indonesia, South Africa, and Kenya, this number is

approaching 60%.

As telecom operators proprietary efforts to establish large-scale Internet user communities

have historically been ill-fated, carriers are now re-adjusting their strategies in favor of more

open approaches. Vodafone is increasingly distancing itself from its Vodafone 360 strategy

and has cancelled its 360-optimized H2 handsets and discontinued the LiMo line of

phones after disappointing user uptake. Deutsche Telekom has announced its coopetition-

based strategy, which opens DT towards actively supporting web-based services provided

by leading partners.

The collaboration between carriers and service providers thereby typically revolves around

four areas: accelerating the uptake of mobile Internet portals and applications; linking web-

based services to traditional revenue drivers, such as SMS-based messaging and data

access; leveraging a partners brand-strength in joint marketing activities; and coordinating

joint device strategies. Early findings from over 250 carrier collaborations worldwide with

Facebook in these areas are encouraging. Leading operators are promoting joint entry-level

offerings to create significant cross- and up-selling potential for mass market adoption of

mobile data services.

Collaboration Strategy

No

Partnering

Entry-Level

Services

Up-Selling

Potential

Mobile Internet SMS ServicesMobile Internet SMS Services

Co-Marketing Device StrategyCo-Marketing Device Strategy

How to extract value from partnering with Facebook


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Extracting value from collaboration

Low risk, low bandwidth, and low cost Internet services lower the barriers for new users toadopt mobile data applications. These services may include for example entry-level bundles

for social media, productivity, or entertainment services. Such services are light-weight as

they typically do not contain multimedia content and are optimized for entry-level data usage.

For instance, Facebook Zero offers a text-only version of Facebooks mobile site.

Embedded images and videos are replaced by links to the fully-fledged multimedia version of

the site. The text-based version of the portal is free to the end user. Revenue is generated

by charging users for clicking on links to access multimedia content, e.g. through the links to

a friends photo gallery or to other services, applications, games or external portals.

The proliferation of some Internet-based services will increase pressure on traditional

messaging-based revenues in the short-term. To mitigate some of the immediate impact,

leading operators are working together with service providers to connect SMS-based and

Internet-based messaging services. On the most basic level, such features may include

integrating SMS to post status updates to social networks, or enabling the use of SMS to

receive messages sent to users online profiles. For instance, Facebook has deployed such

integrated SMS-based services with more than 82 operators in 35 countries, with options to

optimize either for SMS (reply to this message) or towards driving mobile Internet traffic

(click here to reply). Innovators at the intersection between telecommunications and IT,

such as Ribbit, Sendflow, or Twilio, also offer more complex services including advanced

voicemail management, call routing, converged inboxes, enterprise data collection, and

reporting.

User demand for such highly interactive mobile Internet services is impressive, e.g.Facebooks mobile sites and applications account for 45% of total time spent online on

mobile devices. Carriers may benefit from co-marketing, i.e. using the partners brand,

showcasing key product features or devices, or highlighting value or pricing of data and

devices, to leverage the service providers brand strength in customer-facing mobile data

services. For example, a viral campaign targeted at a Eurasian carriers subscribers to vote if

they wanted to get free Facebook-browsing for a month resulted in more than one million

votes. Promotion of popular services by Internet players in sync with operator marketing

activities can also open the door to up-selling of higher-volume data bundles. A German

network operator found that a joint promotion campaign led to an immediate 20% increase in

mobile browsing usage (post promotion).

Web-based services are increasingly being integrated natively into the device. Examples

which are already found as standard features on modern smart phones include social

network contact integration into the on-device address book or direct uploading from the

phones camera to the social network profile. As applications and devices are being

integrated further, competences in managing the customer, device, and application portfolios

require alignment. Leading operators have benefited from bundling collaboration

competences in dedicated partnering teams. Special units that are exclusively focused on

managing partnerships can scale with the complexity of the ecosystem, as collaborating with

third-party Internet application providers is increasingly becoming more of a question of how

rather than if.


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Sharpen your partnering strategy

Extracting maximum value from partnering with Internet players requires a pragmaticapproach. Decision-makers need to consider:

The most popular applications on the mobile Web are Internet services that users are

familiar with. Due to impressive user bases Facebook today has over half a billion

members social networking accounts for nearly 25% of all time spent on the Internet.

While scale tends to favor the most popular services, Facebook is not the only service to

see rapid growth. Although growing from a much lower user base, the business social

network LinkedIn increased its user community by 96%, Twitter by 56%.

Leading operators profit from actively steering the transition to mobile data services.

Entry-level bundles provide access to ultra light-weight, fast, mobile, and cheap text-only

sites, keeping data usage low. Further revenue potential lies in offering access to

multimedia content for additional charges.

Leverage the partners brand through co-marketing. Picking the right and relevant

partner that resonates with the operators customer base is crucial. This should include

aligning the device portfolio with flag-ship applications and innovative services.

Local and contextual factors need to be taken into consideration when formulating a

sustainable, long-term partnering strategy:

Ensure alignment. Your partnering approach needs to harmonize with the overall

business strategy. Consider market maturity and customer segmentation, strategic

positioning of successful proprietary customer-facing Internet applications, ARPU

expectations, etc. Start small. Scale up from partnering with strategic partners as the basis for formulating

a more comprehensive and coherent collaboration strategy. Managing the partnering

ecosystem through an organizational entity dedicated to partnerships is essential for

building an attractive mobile applications portfolio. Consider innovative services of over-

the-top players to complement partnering concept.

Time-to-market remains key. Innovation in mobile data services is fast-paced; well

executed partnerships with the right partners can be a catalyst for short-term user uptake

and a basis for long-term growth.

The authors

Daniel Kellmereit

[email protected]

Dr. Jan Hartmann

[email protected]

Jan Steglich

[email protected]

Documents

Partnering with Facebook: Blessing or Curse? (Detecon Executive Briefing)