Rethinking Mobile Business Models

A few years ago, you might have a real debate as to whether your consumer company should be mobile first, but the market has spoken and for many companies mobile is the way that consumers engage.

And it shows not only in the venture world, but in the public markets - where investors are keeping a keen eye on the mobile monetization strategies of companies like Zynga, Pandora and Facebook.

interestingly, at first, the goal was simply to get consumers to engage with the mobile apps - which were web apps initially, moving toward responsive design and now more commonly native apps in either iOs or Android. Now the question isn't so much engagement (which is taken as a given based on having a superior product in a category) but how you can monetize your engagement.

As you might expect the same business models as ever have emerged - being subscription (think news organizations with a pay wall), in app sales and disruption marketing - i.e. advertising.

While advertising has gotten more personalized and more advertorial (see BuzzMedia), the marketing opportunities are limited by the amount of time a consumer spends with the app. In other words, the better you deliver content and the faster you get your message across - the less time you actually have to monetize - unless of course, you are Google, and sending people off of your app pays in terms of search monetization.

What many of these mobile companies are missing is a lesson learned by cable channels a long time ago - which is that placement matters.

there are few people who do not suffer from app overload - and increasingly, it is the aps that sit on your home screen that get used 90% of the time - with everything behind relegated to the other 10%.

So if you happen to be a Pandora or a Yelp you actually have an asset (screen placement) that has yet to be monetized - but should be.

To this end, we at Raptor Ventures have partnered with Sonic Notify, a company that distributed data signals through a hypersonic signal on any audio system, and which can be decoded by any mobile device - assuming that the SDK is attached to an app on the phone. 

Thus, Pandora, with its 200M users and 75% mobile use can actually benefit from its largely home screen presence during the 23 hours a day when the average user is not engaged with the app. Same with Yelp, same with Facebook. All they need to do is integrate a small bit of code - and they immediately can begin to serve ads (and they can decide which type of ads they wish to serve - or if they wish them to be geofenced) and reap a big chunk of the ad budget from an advertiser.

So instead of having audio ads on Pandora, perhaps users who agree to receive push notifications or offers from partners of their choosing can receive a free Pandora One subscription - or perhaps the same applies to Spotify. Who knows what the future might bring - but the system is there for the using. 

While we expect this system to take some time to develop, we truly believe that the opportunity to rethink some of the business models in mobile will yield real returns in the years to come.