Here is a recent chart published by Silicon Valley Insider on the relative Average Revenue Per User (ARPU)/ Year in 2009 for some of the leading Internet players.  Google leads the pack with an ARPU of >$18 USD, where as the social media players are still much lower.  I think it is going to be interesting year in 2010 as Facebook/Twitter and others really build on there social advertising strategies.   I think what would be interesting to model is the time it took Google to reach this value as opposed to now both Facebook and Twitter.

I was once  told that the advertising business is “a distribution constrained business”;  based on the quality of segmentation and reach.  As Social channels do offer that deep insight, as they move from a Social utility business structure to more Social entertainment, I am interested to see how high they will go over the next 5 years and the major brands gravitation toward them.

There have been many charts that show Google’s search growth has been relatively flat, so  I would expect their first priority is definitely to move toward innovative location-based local advertising with a focus on mobile.  Even if we were to add up $18 per person for year for 2 years= $36 does not completely buy a mobile device.  There is still a long way to go for a free phone powered by advertising only by Google.

Most recently, the Digital Entertainment Group published this chart that shows the changes in consumer spending. Although there is an increase in spending for Blue-Ray and VOD, if we extract the lines to run until 2012, it appears that there could be about a $3B USD drop in the industry of consumer spending in the home.

Again we are seeing a major shift in an industry that has been pretty well established with hardware and physical goods and the growth curve that existing from 200o~2006 with the shift from VHS to DVD’s is not showing the same spurt in growth like it did before.  We could guess that Blue-Ray and VOD will fill this new paradigm shift, but we must imagine with the fragmentation of media and the rise of consumer spending on mobile could really be the culprits that will this industry as well.

It would be nice to think that the $3B USD that disappears moves toward mobility and other consumer  services, and that the “Connected Home” as a strategy and philosophy will be made up of consumer spending on more of subscription and digital transactions to offset the purchasing culture of hard media.

Major Retailers such as Best Buy and others will really need to look at the strategy of mobile and consumer behavior of on-demand, real-time media with models that tie this all together to the convenience of anytime, anywhere as well, I believe.

In a recent interview on Charlie Rose with Paul  Otellini, CEO Intel Corporation, Paul mentioned that in the next 5 years we will see changes in consumer products like we have seen with mobile devices. Everything will become “Smart” in the next 5 years.  Today Intel has been a leader in providing the brains behind the PC, but with Intel’s strategy behind the “Atom” processor ( A chip that is minimum in size with the most advanced processing power) to become the low-cost solution that powers everything. ” We will see chips in TV’s, in the car, in appliances- for what will be the SMART era”- he stated. ” Today we have over 10K engineers working on these software solutions that the consumer does not see”. As Paul sits on the Board of Google, it is pretty clear that we can see that this might lead to a strong alliance to Android, but most recently at MWC ( Mobile World Congress) in Barcelona,  Nokia-Intel announced their strategic partnership around the next generation OS called- MeeGo.  So there is that angle to think about.  ”No we are not creating another WinTel”- he stated, but the battle will ensue between Android, iPhone and now potentially MeeGo that will be the OS that not only occupies those 1.2Billion mobile devices shipped yearly, but all of the consumer appliances and electrical objects around us.

So where does this leave the Best Buy’s of the World? Yes- they need to grow the Best Buy-Mobile business, but it really opens an interesting opportunity for customer support and services.  In a recent presentation I heard from the VP of Marketing of Best Buy Canada, Angela Scardillo, she stated that the core of their marketing strategy is to build the brand around the “Connected Home”.  What a phenomenal strategy! Geek Squad will now be the customer support function to help us fix all of those problems that the online services have left us in utter abyss? We hope that Google and the rest of them will offer more customer support services instead of inanimate forums to answer questions, but if this does not happen, it will potentially be your local Super Geek ( A close colleague of mine that invented this concept way before Geek Squad) to now come to the rescue.

So I think that this shift has the players and the strategies in place now to really take us forward in this new decade.  The big losers could potentially be the hardware manufactures that will need to look for new avenues to build revenue streams  around ” Smart” objects.  We have seen the release of the iPad from Apple in 2010, but how cool will it be to start seeing the new “Smart” TV’s, Cars, Refrigerators, Washer and dryers, Rice cookers all connected into a grid that is controlled by our mobile devices.

I was moved by a recent blog post by Clara Shih titled, titled “Social Showdown: Google vs. Facebook” who in my mind is one of those real though leaders in the social media space.

What I find interesting and challenging for Google as they attempt to enter the social media space is about spread of the social graph amongst users that are looking for choice.  Even though Google has 176M users of Gmail, Facebook is ~400M  strong as a user base, with many of them using Gmail as a subset to their Facebook accounts.   I thought with the release of Wave, Google was positioning itself out of the box from its own services to have an agnostic service that could eventually spread to all users.  What makes Facebook so powerful ( in my mind) is that it can exist with many other products as a connector.  Once you build something into an existing product, I find it pigeon-holes you into the users of that service and in many ways you can fall victim to your own boundaries.  This has been a very complicated position for many years when I was at Nokia.   Even when many services were launched, they were mainly only for Nokia devices and it was a challenge for those services to also work across other devices to create that brand awareness that this existed.  This is my opinion, but I feel Social communication services should be agnostic to all services and devices and work as a form of connector of services.  How will Buzz work within a Google defined structure of Gmail vs. Facebook that is agnostic and a service that stands alone on its own right that now is getting positioned across all mobile operators and something complementary to your email, IM, etc…   In other words, I would say it would probably make more strategic sense for Facebook to incorporate the email service of your choice as opposed to try to create your own email service that again artificially creates a boundary of usage when users are comfortable with their own email service and email address to begin with.

I do believe that Google will find a very strong way to make Buzz a success, but being positioned in Gmail was something that might be limiting.  Any other thoughts out there?  Here is also a great presentation by Facebook Mobile at #MWC this past week.

The Olympics has started here in Vancouver!  This picture sums up the beauty and excitement of the days to come….

Great article by an old friend at Nokia.  Henry is one of those visionaries that really has quite a view of the future of mobile.  Here is his interview posted on the mashable TED channel ( sponsored by Nokia).

Since the release of Google Buzz, I have been thinking quite a bit about usage cases of public and private ( even without the mobile usage case as this goes even to a different level).  In our daily lives we touch many different products that serve this kind of public/private usage case and have been an established behavior associated with them.  Our emails have a certain privacy shroud wrapped around them even though we may have conversations with people on many different levels….

Here is my first pass thoughts on why Buzz has opened the debate around Privacy.   It is not that Buzz is any different from the status box on Facebook and twitter, or even the one that Linked-in has added.  I think the real debate is about around the social behavior around privacy and the tools we use to manage our conversations.  Twitter exists on its own with the tools surrounding it as a certain usage case for many-to-many public discussions.  I would not think that I would want to include these types of communications in the inbox of my email, but Twitter has in fact done so with SMS and Text messaging that has been private.

I am still trying to figure out in my mind the ethos of social behavior and the tools we use, but email and twitter seem to be on completely opposite sides of my social communication graph.

As we all waited patiently for the Third Quarter of the Super bowl on Sunday to see for the first time Google’s brand ad as part of their media strategy, it dawned on me an interesting thought about how Google really does marketing in this Web 2.0 world.

We all know that after the Superbowl on the following weekend starts the Vancouver2010 Olympics ( #VO2010, #Olympics, #Van2010). Even though there is a usage case  for people  to use search the web during the superbowl, it may not be as much high-density searching as we we are going to probably see globally during the Olympics.  Google’s ad campaign was considered Brand building, but given the fact that Google has over 70% of the search penetration in most countries around the world and on average more then 50%, most likely people at some point during the Olympics are most likely going to be coming to Google and searching for an event information, results, etc… anyway regardless of brand building. Why was it so important to start this now when Google has made a statement they do not believe in this form of advertising in the past?

Up until now, Google has not been spending money on traditional media. Moreover, for an event like the Olympics,  sponsors are dishing out 100′s of Millions of $$$ for brand building. Google has traditionally used search and its own assets in search results at the top of the page as their form of marketing.  As they have said, “We are not keen on tweaking the organic results, but always like to follow their regimented strategic algorithms for determining what gets on the top of the pages”.  Some of the best marketing during the Olympics is going to come through Search during the weeks the events are live.  What I found interesting was that Google has really built up  its own strategy as a method to get the maximum exposure to their own properties without spending money on traditional media.    Have you seen their initiative around Google Earth and the 3D creations of all the different venues as a form of sponsorship?  Google offered to do these 3D models of the venues as a service for the Olympics Events.  I find this a very interesting offer, but can only imagine that the real reason behind this is to give themselves good ranking if the Olympics puts these links on the pages of Olympics site.  They become the masters of their own game, a way to use their own algorithms to finesse the system to give Google assets high-ranking during the events; thus driving traffic to Google maps for visitors to find local information on the go during the events.  With the billions of Dollars spent by the sponsors during the events, Google may have just again gotten away with a kind-of-freebie for its own marketing efforts to potential spoof the traditional marketing system.  This is only my guess, but it somehow makes sense to me. Would love the gamet of SEO experts out there to comment on this if you can?

Back to the Superbowl…..so then why did they buy advertising the week before?  Again I am only thinking and guessing and I do not have facts to support this, but again it makes sense to me in the greater scheme of things this kind of thinking:

If Google is getting all this search traffic during the Olympics for somewhat free at the expense of the traditional sponsors by leveraging their own algorithms to their own advantage, it might just kick-up a stir amongst traditional media  in the effect that Google using its own engine to get marketing value and  not spending money on traditional media.  ” Oh No”, they can say….. did you see we do spend money on traditional media as well. Did you see our ads that ran last week?  So by spending money on traditional media from time and again makes for a good balanced media strategy when the pundits start to sniff…..Smart I would think.

Again, I am only thinking from the standpoint of business strategy and it makes perfect sense to master mind the shell game of spending money on different media.  In this case for them,  the pea is under all the shells?…… for us, maybe there never was a pea?

It was very funny, now that CES is winding down, I felt that the “tsunami” of news about Nexus One would stop hitting me in the face. Yes- there is the constant faucet of Twitter about the new Android device, but there is an equal number of discussions about other devices as well. I like hearing the balance of debate about iPhone, Blackberry, Palm and others.  It even seems quite natural that  the other device manufactures  have formed strategic alliances with Google for search, but maintain their own platforms to bring a different flavor to the mobile world.

Given that Google has greater then 70% of the search traffic share in the US and over 50% globally….they do have the ability to market themselves all the time, and make it clear there value proposition of their products front and center.  It has become routine in our lives to use Google as a search engine…..  it is even a “VERB”.

Getting back to my story…. This evening,  I went to Google to check out something on Google Maps, and searched “Google Maps”.  Yes- it has been my mapping search of default these days.  Even though  I used to be a big fan of MapQuest, Yellowpages and others,  it has just become routine for me just to use  Google out of pure convenience.  This  again is a key factor and asset they have going for them all the time.  It validates why search is so powerful as the first point of the User-Interface we all use, and Google is clearly leveraging their search asset to drive business leads to their other services and products.  I guess why would they not do this?  It is only smart business practices.

Well what I found was shocking.  The first results for Google Maps  search was the Nexus One from the Google News…. [See picture below]  It was not the Google Maps product or something pertaining to this, but it was traffic to drive me to that feature on the Nexus One.

The only results on the page were about “Google” ( www.google.com) .  None  of their Strategic Partners?  No iPhone with Google Maps? etc… As this was one of the key features for many of their Partners, developer communities, it is very clear that Google has an incredible position to trump the very partners now with Google maps when it comes to marketing the feature with their new device.  So as a company that partners with Google to embed maps into product as part of your core business, you must have a very careful strategy on how you market Maps and Location based services as part of your product. It is clear that some of that marketing  spend could even drive traffic to Google’s mobile initiatives.

I tried to find “iPhone and Google maps” as one of the results as this should be very relevant today.  Well, I looked on page 2 of the search results and then finally found a reference for iPhone at the bottom of the second page. Not many of us users go to the second page.

I then wanted to see what Google Maps search result would be on the site GoogleminusGoogle ( www.startupbin.com).  I found these results.

This time we do see iPhone.  It is #6 in the search results behind Wikipedia, etc…. Not many bloggers sites or third party developer sites talking about Google Maps, and no other handset manufactures on the first page.

So from now on, regardless of the mobile device we own….. any time we look up any of those Google Services, we will get information about Android and Nexus…. It is just the way it is going to be I guess.   There is clearly a price for using Free services as part of your product strategy.  In the case of Google, their ROI for the Free offer is clearly leveraging your marketing spend and distribution to continually drive more traffic back to Google.

Some thoughts of key trends and areas of growth for 2010.

1) Facebook will move from the major online social media player to a very focused mobile application and developer platform.

Facebook Connect will take on new meanings.  Mobile Advertising will become the a key social media/ direct marketing/ brand monetization player in the mobile industry. Maybe even stronger then Google/Admob?

2) Smart Phone Critical Mass. Smart phone penetration will continue to accelerate with Apple again surprising us amongst the massive competitive releases from Google, Nokia, RIM and Palm.  2010 will leave us with >20% ( maybe >30% US)  of all devices in the market to become Smart Phones.  In 2009, about 17% of the US market had smart phones.  It has been predicted by Strategic Analytics and others that 50% of the market will be using smart phones by 2013.  So 2010 is the  turning point year in the industry as the massive transition will start as iPhone/ Android- Nexus One/ RIM/ Palm and Nokia devices compete like crazy that drives user adaption very quickly over the course of the year.

3) Mobile Ad Server and Mobile Ad Network convergence with Online will follow streamlining in the Agency and Marketing world. Mobile as a stand-alone media strategy and channel only will be less and less apparent… AdMob/ Quattro were the first to go, but the other mobile ad networks will be part of the continued M&A frenzy of the Online players looking to cross-over to mobile.

4) Cross-Border innovation and Cooperation will take a new form in the mobile space.  A spree of unexpected M&A from Asia to the US, and visa versa will solidify the need for operational interdependence in the mobile space. Regional Carriers and cross-boarder alliances…. I particularly feel this to be the case with  Korea, Japan and Taiwan first over China which will  happen a bit later.

5) Social Brand Marketing Innovation will continue to occur around the unique engagement and real-time platforms of Twitter, Google Wave and Bing, thus solidifying a more established budgeting process for brand marketers in digital with social media, search.  This could be the year of media buy transition from Traditional to Social. The rise of the social media agency and more association of engagement to pricing models… Intuition models? WOM models?

6) The innovation focus on Applications ( iPhone)  will continue, but there will be several new devices in the market that will begin to challenge this with the pure Web experience! Namely Nokia/ Android….HTML5? Flash light 3.1?  The App store frenzy will continue.

7) Real-time search will continue be a major topic and key to the “mobile moment”. We will see a unique convergence with entertainment and maybe event the music space.

8) Live streaming! We started the trend in 2009 with the U2 event and a variety of others, but live streaming now will ins 2010 become a basic requirement and model for events. Enabling increased revenue opportinities for the “mobile moment”.

9) Location will be a key factor in direct marketing performance pricing, and new innovative inventory opportunities will become mainstream.  Augmented Reality, Navigation Advertising,  Social Location….. map integration in media properties and publications will be standard.  It will take time for this to really evolve and fill as a true inventory source, but the critical foundation will be set it 2010.

10) User-Generated Content portals and Mash-ups will continue and verticalize.  There will be some big surprising new UGC solution portals for sale in 2010.