Rutberg Hits London

Rutberg & Co are an investment bank, who have a famously research-centric approach to life and put on great, small, intimate invitation-only conferences where networking is a major part of the agenda.

I was lucky enough to be invited to today’s event in London to hear two panels speak about mobile convergence and UGC, respectively. And very interesting it was too – if a little weighted too much to operator panelists and maybe not enough to smaller innovators for my tastes. But that’s a minor criticism and all the operators had interesting things to say, so I wouldn’t know who to drop in the interests of balance.

I can’t possibly condense the discussions here (both panels were 1 1/2 hours each), but there were some interesting snippets you might enjoy. In no particular order:

Vodafone saying that they were being more creative in how they work with start-ups – by arranging development loans in one instance, so that their little partners could take on additional staff to service their business. As someone who has long called for operators to reassess how they deal with little companies, this is great news and I hope not a one-off.

Vodafone (again) giving a great example of an ad-funded service. South Africans are mad on mobiles (it’s a major market for mobile browsing as I know from AdMob stats), but in a relatively poor country, a major proportion of PAYG customers are always out of credit – I think he said about 6 million at any one time. But Vodacom have launched a service that allows creditless customers to sms a friend with the message “Please call me”. It’s free to both parties and ad-funded. Nice, creative and everyone wins.

Three saying that 250 million of their customer base had signed up to use MSN on mobile and send 110 million messages a month. Actually, this seems low per user, but then it’s very, very early days. It also doesn’t seem to be cannibalising sms revenues, which has always been a big worry about IM for operators.

The panel was also asked about what percentage of their revenues would come from advertising in the next 5 years – a very nasty question to be put on the spot publicly with! Orange and Three sensibly ducked it, but our man from Vodafone hazarded somewhere between 2% and 50% “which doesn’t mean 20% either!”. As I say, horrid question, but the really interesting thing is that even at 2%, this would be around $12 billion for Vodafone alone and they are far from operational in every market and only have a part of each market they are in. In fairness, this is probably over-analysing what he was trying to communicate, which is that Vodafone at least are betting that mobile advertising will be a very significant market for operators.

Three said that since it introduced flat rate data pricing on the X Series, that mobile internet usage was up by 50%. Well done for Three for introducing the tariff, but then a lot of us have been saying for years that this will happen when fair pricing comes along.

Orange saying that big media agencies were the laggards in the mobile advertising chain. Hmmm…in fairness, I think that this is a little harsh. Most big agencies are certainly open to the proposition, certainly if the ad partner has enough reach and scale. But the main thing holding them back in my experience is that brands don’t have much of a mobile presence today. This is changing fast and I think that in the next 18 months, brands without a mobile website will be the laggards and once that happens, mobile advertising will truly explode. After all, the best way to promote a mobile website is via mobile advertising and then we’ll see some serious budget start to flow – not that the current revenue flow is exactly trivial even at this point.

So, many thanks to Rutberg for a very interesting afternoon and to TLcom Capital for sponsoring it.

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