March 22nd, 2012
Posted by Darlene Lo

The 2012 South by South West Interactive conference (SXSW) just ended and introduced many new start-ups to the technology landscape. Among the most buzzed-about topics at this year’s conference are social discovery apps.

You may be asking, “What exactly are social discovery apps?” Social discovery is a service that helps users discover potential social connections in their proximity. These connections could be people they already know or strangers who share common friends or interests. Their main utility is to forge new, random meetings based on your geographical location and to hopefully translate that to a real-life conversation. For instance, you can sit next to the same people every day on the subway, but never know their name. Now, with the help of social discovery apps, you could learn their name, where they’re from, what hobbies they have and any status updates they’ve posted about their upcoming weekend. This goes one step further than other location-based services such as Facebook geo-tags or Foursquare, which only broadcast to your existing social network where you’ve checked in.

Social discovery start-ups such as Highlight, Glancee, Sonar and Banjo received excited buzz at SXSW. While they all work to find you new friends, each works in a different way. Highlight and Glancee use your phone’s GPS running in the background and constantly broadcast your location to the app. This allows the app to alert you in real time to other users in the area and “pushes” to you what you have in common, without you physically checking into the app.

Other apps such as Sonar and Banjo will pull in location data from status updates or check-ins from other social networks, such as Facebook or Foursquare. They aggregate these public check-in data and alert you of nearby users and their interests. This gives you more control as you choose to check in and decide to view potential social contacts.

The mass-market adoption of these apps must overcome a couple of obstacles; the biggest ones are privacy concerns and how to jump to the mass market from the SXSW bubble. In terms of privacy, how will these apps facilitate a real-life meeting without being creepy? One thing to keep in mind is that Facebook and Foursquare each have run into privacy concerns before and were eventually embraced by the public.

Second, recent changes in the social media landscape show that many consumers are connecting on more interest-based relationships (such as Pinterest, Tumblr, Google+) rather than shared past (same high school, sorority, yoga class, etc.). With the direction of social media changing, this may help the jump of social discovery apps from popularity at SXSW to public adoption. These apps show us that we’ve only tapped the surface of what geo-location apps can do and where the next extension of social media is taking us.

March 2nd, 2012

During the last couple of years, mobile has been one of the hottest topics among marketers, and 2011 was definitely a pivotal year for this industry. It seems one cannot visit a marketing, advertising, media or business website without stumbling upon multiple articles speaking about some aspect of mobile. The increase in media consumption has been driven by the tremendous growth in adoption of smartphones, tablets and connected devices and the improved user experience. Merrill Lynch estimated that by 2013, mobile phones will overtake PCs as the most common device to access the Internet.

Mobile devices are embedded into our daily lives, and smartphones have quickly become our always-on companion, especially while making a purchase decision. In a recent survey by Google and Ipsos, 89% of respondents said they use their phone throughout the day for other than receiving calls, and 77% listed “in a store” as the place where they use their smartphones. The real benefit of having a smartphone in our hands at all times, other than being connected 24/7, is the possibility of engaging with our environment in new ways.

Mobile Commerce Taking Off
While mobile shopping may not be at the top of the list in terms of activities among smartphone users, frequent access to the Web from mobile phones is helping push mobile commerce into the mainstream. I recently read an article on Forbes about the matter, and it was explained very simply: when you order a camera on Amazon from your tablet or phone, it is mobile-enabled commerce, while the ability to use your phone at the actual point of sale and pay for coffee in Starbucks with your phone is mobile commerce.

Companies like Chipotle and Starbucks are using the technology to their advantage to keep their customers coming back, allowing them to order and pay directly from their phones. I have been using the Starbucks mobile app for quite some time now, and I have to admit, during the first three months after downloading, I made more trips to Starbucks than usual just to be able to test the new payment service. The app allows me to reload my rewards card, check my balance and, of course, pay at the store directly from my phone, which somehow I find fun every time.

(Watch the video here: http://www.starbucks.com/coffeehouse/mobile-apps)

Are We Shopping or Buying?
Currently, it is more about shopping than buying on mobile phones, but this is expected to change soon. Retailers are delivering a richer experience in-store to make deeper connections with consumers and ultimately convert shoppers into buyers. The same survey from Google and Ipsos referenced above mentioned that 74% of smartphone users made a purchase decision as a result of using their smartphone.

The main features shoppers are looking for are product information, ratings and reviews, coupons, and price comparisons. This raises the stakes for retailers, as they now have to compete for a purchase even within their store. For example, this past holiday, Amazon offered a 5% discount for consumers who scanned a barcode for an item at a store and then buy on Amazon within 24 hours.

Mobile Payments
What is next for mobile? Everything points at NFC, short for near-field communication. This is a short-range wireless technology that allows similar devices to establish communication by bringing them into close proximity; many credit cards already have this functionality. According to some new research, 44 million NFC-enabled devices will ship by the end of this year; however, to put things in perspective, over 630 million NFC devices are expected to ship in 2015 – this is four of every 10 phones. Services like Google Wallet, Square or Level Up are becoming more popular, and merchants such as 7-Eleven, CVS and Petco, which already have the technology, are now accepting this method of payment.

Although mobile payments seem to be “the last mile,” as some say, the value proposition of these services is still not clear. Is it really convenient to replace my wallet with my phone while I still need to carry my ID or passport? NFC is far from being a standard. Bluetooth 4 is now also part of the conversation, and the main difference between them is the longer transmission range.

Influencing the Final Decision
The rise of smartphones has made us more savvy consumers and has also created more opportunities for marketers. The ubiquity of the mobile device has allowed consumers to be better informed when making a purchase decision, and our smartphones have truly become the new shopping companion. These new mobile shopping habits enable marketers to influence a “ready-to-buy” consumer in new ways right before they buy. Anything from promotions, coupons and product reviews to ease of payment, the possibilities are limitless.

February 8th, 2012

Traditionally, the Super Bowl is the biggest night for TV advertising, but Sunday night’s Super Bowl was a big night for digital, too. Trends from the 2011 Super Bowl were back, with advertisers releasing ads online prior to the Super Bowl in hopes of increasing viral spread and integrating mobile ads with the TV campaigns. In fact, this year over half of advertisers released ads online before the game, looking to draw on Volkswagen’s success last year. And mobile upped the ante from last year’s Anheuser-Busch iAd with a QR code in Go Daddy’s spot, linking to discounts off Go Daddy products. But this year, the digital showing went even further.

Mobile

Shazam announced just before the big night that the entire Super Bowl, the halftime show and many of the ads would be Shazamable. Viewers could Shazam the Toyota spot for the chance to win two Camrys, download an MP3 from Bud Light, watch a music video from Pepsi, vote for their favorite ads, access music content during the halftime show and check out stats about the plays and players during the game. While QR codes connect print to the digital world, Shazam is blazing the trail for connecting TV and audio to digital content. Shazam has not released exact participation stats, but has noted that with “millions” of viewers participating in the Super Bowl integration, 2012 will be “the year of the Shazamable TV ad.”

Chevy invited fans to “experience Super Bowl Sunday in a whole new way” with the Chevy Game Time mobile app, which allowed viewers to play trivia, take polls and enter to win one of 20 Chevrolets or other prizes.

Video Streaming

This year, the Super Bowl was streamable both online and from mobile devices. Verizon cut a deal with the NFL to exclusively stream the Super Bowl on iOS and Android devices with the NFL mobile app, and for the first year the game was streamed on computers. Live streaming is a testament to the changing landscape of TV: the Super Bowl is the biggest moment for TV every year, and yet it’s recognizing the growing trend of streaming TV online. The live stream had 2.1 million unique viewers, making it the most-watched sports game online. While there were limitations (such as a lack of live commercials), online streaming allowed for embedded live streams from Facebook and Twitter, further enhancing the experience with social engagement.

Social Media

And speaking of social, perhaps the biggest story of the night was in social media. Viewers are no longer relying solely on their witty Super Bowl party friends for commentary, but are turning to the second screen for live running commentary about the ads, halftime show and plays. At the end of the game, Twitter saw 12,233 tweets per second, setting a record for the highest tweet frequency during a live sports event.

Brands were prepared for viewers’ connection with Twitter, and hashtags got their fair share of airtime in the TV spots. Audi’s #SoLongVampires, Bud Light’s #MakeItPlatinum and Jack in the Box’s #MarryBacon hashtags all looked to increase engagement on Twitter. Coca-Cola’s polar bears even used the hashtag #GameDayPolarBears to comment on the game from Twitter and point users to more polar bear content on YouTube. In most cases, including hashtags in the spots seemed to work, as #MakeItPlatinum and #SoLongVampires became trending topics in mere minutes.

Coca-Cola saw success on social media even before kickoff with its Facebook event app, which asked fans to RSVP to watch the Polar Bowl – a live stream of the Coca-Cola polar bears’ reactions to the game. Before kickoff, 32,000 people had RSVPed, and the live stream received so many views that the Coke team had to add six servers to accommodate the traffic. Its Twitter feed received a whopping 12.5% increase in followers before the game even started.

The Super Bowl’s social media integration went beyond Twitter and Facebook into the location-based arena with Pizza Hut and Amex’s Foursquare offer. By checking into “Super Swarm Sunday,” Amex members got $5 off any food ordered from Pizza Hut.

The Takeaway

The 2012 Super Bowl is leading the way for digital to further enhance the TV entertainment experience and enhance engagement with advertisers. TV spots are no longer simply 30–60 seconds of impression time; they can be the beginning of an engaging experience with a brand that lasts far beyond those few, short seconds. Instead of looking at TV advertising in a silo, it can be used in conjunction with digital to begin an engaging customer journey.

December 9th, 2011
Posted by Alex Kenney

Traditionally the Monday after Thanksgiving, Cyber Monday has been stretched to Cyber Week, as online sales remained strong not just on that one day, but the entire five-day period ending December 2. Market research firm comScore reported that U.S. consumers spent nearly $6 billion online during this period, a 15% increase over 2010. Three days of the week (November 28-30) topped the billion-dollar sales mark: Monday ($1.25 billion), Tuesday ($1.12 billion) and Wednesday ($1.03 billion).

Why the Increase?

Well, for one, more people are shopping online now than they were even just a year ago. Eleven percent more people made a purchase online during Cyber Week this year compared with last. But the average purchase amount was also up by 9%, so people spent more overall online, too. The increased amount of promotional activity is most likely a driver – is it just me, or was the email bombardment consistent and constant all week? Every day, I woke up to a dozen emails from my favorite retailers, and while typically I might have unsubscribed to cut down on inbox clutter, I didn’t this year. I didn’t want to miss out on an even better offer! You’re giving me 30% off today, Banana Republic? I’m pretty sure you’ll send me one for 40% off, plus free shipping tomorrow.

Free Shipping

Speaking of free shipping, that’s a huge part of this equation, too. According to comScore, 63% of all online transactions during Cyber Week included free shipping, an 11% increase compared with 2010. In their annual holiday shopping survey, more than one-third of respondents said that free shipping is “very important,” and they wouldn’t make a purchase without it, and nearly half said they would abandon their transaction if free shipping weren’t offered. With so many retailers offering it, free shipping has become practically an expected part of the online shopping experience.

Mobile

Watching mobile’s meteoric rise this year has been fascinating, and the holiday season so far is no exception. Thanksgiving and Black Friday were big days for mobile, when people were spending time at the dinner table and with family instead of on their computers at work. According to IBM Benchmark, 14.3% of e-commerce sites’ traffic came from mobile devices on Black Friday, compared with 10.8% on Cyber Monday. And in terms of actual sales, 9.8% of Black Friday’s sales were from mobile, compared with 6.6% on Friday. This is a huge spike from 2010, when just 2.3% of sales came from mobile devices on Cyber Monday.

As marketers, we need to think of mobile, in-store and website shopping as complementary to one another, not cannibalizing, and it’s crucial to optimize the experience on each platform so that it’s intuitive enough to make that purchase easily. As shoppers – don’t be surprised if that credit card bill is higher than past years. With the ability to make a purchase anytime and from anywhere, self-control may be harder than usual this holiday season. But we don’t need to think about that until January. Happy shopping!

November 28th, 2011
Posted by Jeff Hodgson

If there’s one toy that truly captures imaginations and encourages creativity, it’s LEGO®. Sure, the simple building blocks have become more complex over the years, adding lots of new pieces, characters and even electric motors, but the fundamentals remain the same. Give two people the same bricks and tell them to make something, and you’ll most likely end up with two vastly different creations. You’ll probably also have two very entertained people.

Today, LEGOs have found a new way to amuse. Go ahead and search “LEGO” on YouTube. Then sift through the almost 500,000 videos. A few of the videos are commercials and video game trailers, but the majority of them are made by people who just love LEGOs or see them as a powerful storytelling tool. I’ve compiled a few of my favorites.

First, let’s watch the first level of Super Mario Bros. created with LEGOs. Full disclosure, LEGOs and Super Mario Bros. are two of my favorite things. Ever. So combining them automatically gets them the first spot.

Next up, we’ve got a video of a felt-tip printer created with LEGOs. This might be one of the nerdiest LEGO videos I’ve seen, which is saying a lot. But it’s also one of the coolest.

There are so many more awesome LEGO videos I’d like to share, but time and space won’t allow it. Other favorites you can look up on your own include The White Stripes music video for “Fell in Love With a Girl” and a kid telling the entirety of the original Star Wars trilogy in a little over two minutes.

Finally, I’d like to share the video that inspired this post in the first place.

This new LEGO product, called the Life of George, brilliantly brings LEGO further into the Internet age. It’s the first interactive game combining building things with real LEGO bricks and an app for iPhone or iPad. As far as I know, no other “old” toy has melded the physical and digital so well. In my opinion, the genius of it is that LEGO didn’t mess with the original in an attempt to make a cool app. They stood by the fact that building things in real life is way more fun than faking it on a screen, yet added the best of digital to make it social and engaging in a totally different way. Other brands would be smart to take note of LEGO’s success and build apps that integrate their real-world product in a new and interesting way.

As a side note, I still have two VERY large tubs of LEGOs at home. I have no intention of ever getting rid of them, because at this rate, LEGOs will never become obsolete.

November 23rd, 2011
Posted by Sarah Voges

Digital Fun for the Holidays

Merry Christmas! Happy Chanukah!

Wait, don’t groan. I know it’s still a little early, but if any of you are like me and pull out your Christmas tree the Saturday after Thanksgiving, then it’s time to get in the holiday spirit! I love the holidays, so I’ve put together a quick collection of digital coolness to help add to your merriment this season.

Fun Stuff for You

Are you planning some special meals? Allrecipes is a standard favorite, but they’ve added some fun features to their website, like a personal recipe box, menu planners and shopping lists. They have an app, too, so you can figure out what to do with the leftover turkey without leaving the couch (we know, it’s the tryptophan). And for those of us in warmer climates who can still break out the grill, Weber’s On the Grill app is also full of yumminess.

Speaking of the couch, don’t forget to download ESPN’s ScoreCenter so you can keep up with all the great rivalry games and championships this time of year. Tell them who your favorite teams are, and they’ll make sure you always know the latest play. (It’s also good for keeping husbands happy when you take them to the work Christmas party on a Saturday during football season.)

For those of you planning on entertaining lots of guests, you can find great ideas on everything from holiday decoration ideas to inventive recipes to tips for great parties on Pinterest. Since I’ve talked about this bit of coolness before, let’s move on to finding the perfect gifts.

If you’ve been put in charge of the office or family Secret Santa tradition, check out Elfster. You can create gift exchanges, invite participants, manage drawings and send wish lists. It includes social integrations, so if my Facebook friends are using it, I can see what they want for Christmas or check out gifts that other people have liked to get ideas.

If you still want help finding just the right thing, check out Mashable’s list of gift recommendation tools that use social to personalize the suggestions.

Fun Stuff from Brands

This wouldn’t be an agency blog if I didn’t touch on a few of my favorite things that brands are up to this season.

This time of year, ads change, and we begin to see all kinds of representations of holiday magic. Sometimes those ads give us great ideas for ways we might start or add to our own traditions. In the new ads from The Home Depot, they feature some cool new ways to deck the halls with ornaments, and the best part is they tell you how to do it. If you go to the site at the end of the ad, you find a video about the project that will link you to printable instructions and all the products you need.

I’m sure we all remember Target’s Christmas Champ, the lovably certifiable lady who is WAY into holiday sales. This year, she’s back with her own Twitter handle spouting tips for your shopping adventures and a YouTube page where she walks you through the finer parts of her sales-hunting strategy.

If holidays for you mean peppermint mochas and red cups, then Starbucks has a fun way for you to pass the time between shots of espresso. Their new augmented reality app lets you scan their signature holiday cups and watch the characters animate. There are also special offers and e-gifting tools available, so you can send a cup to a few of the people left on your list.

This year, when you a buy gift from JCPenney, you can get a Santa Tag with a customizable QR code. You scan the code, record a greeting or message to the recipient and put it on your gift. Then when the recipient scans the code, they hear whatever warm wishes you recorded.

Coca-Cola has a new QR code campaign that takes you to an iPhone or iPad game where you can throw snowballs at your friends. While this might be a good way to pass time at the airport during the holiday travels, it’s part of a much larger “Arctic Home” campaign from Coca-Cola to support the work of the World Wildlife Fund to protect polar bears.

Happy Holidays!

September 21st, 2011
Posted by Joe Wilson

The Web is abuzz about Amazon’s new Android-based tablet set to launch this fall. Their current Kindle-branded e-reader continues to sell to book enthusiasts and e-books remain a strong category for Amazon. In fact, earlier this year e-books passed sales of printed books for the first time ever. But a fully functional Android tablet marks a departure for the online retailer. While e-readers were a logical step for Amazon that has its roots as an online book seller, tablets are a different beast altogether. It’s not as much of a stretch as one might think, though. Amazon has been slowly expanding its cloud capabilities, introducing services like Cloud Drive and Cloud Player. At the same time, they have built excellent streaming and content delivery methods such as the Kindle Store, Amazon Instant Video and MP3 Store. All these moves point to a very strategic entry into the tablet market. Amazon has thought this through, and they mean to compete head-to-head with Apple for the hearts and minds of mobile consumers.

Dethroning the iPad from its place atop the tablet world will be no small feat. As our own Jill Krumsick documented early this year, Apple has a staggering lead in tablet market share. While competitors Samsung, RIM and Motorola have leveraged their experience and brought considerable marketing budgets to bear, they still find themselves falling far short. Nobody has even made a noticeable dent in iPad dominance. Many people believe that where so many others have failed, Amazon will succeed. It could be said that Amazon’s current Kindle is already iPad’s stiffest competitor, even though it’s not technically an apples-to-apples comparison (pun intended). While Amazon tends to be tight-lipped regarding exact sales figures, many reported numbers as high as 8 million units during 2010. Compare that to just fewer than 15 million units for Apple, and it sure looks like a solid number two in the market to me. Really, Amazon doesn’t need to depose iPad. There is plenty of room with consumers for both products. The tablet pie will only continue to grow as more users decide to go mobile and leave their old PCs behind. Competition always makes products better, and Amazon and Apple will continue to push each other to innovate.

So what about some specs on this mystery product? According to sources, the upcoming tablet release will feature a 7-inch color touchscreen with a 10-inch version planned for 2012. The tablet does support multitouch gestures similar to an iPad. It is rumored to have a mini-USB port. Alas, no camera for all you shutterbugs out there. However, the real news is that while the device is based on a flavor of Android, Amazon has forked the open-source operating system and created its own version. The interface is branded Amazon and looks little or nothing like the Android interface of other tablets. This would make sense for Amazon, which wants to enter the market on an established platform. Android already has a thriving developer community and a catalog of apps for download. But the Amazon team wants to have more control over their environment, and that is exactly what forking Android does for them. All future releases of the Kindle tablet will be based on this new source code, and if Amazon decides to incorporate later releases of Google’s software, it will be on their terms and behind the scenes.

There are several reasons why this venture into tablet computing makes sense for Amazon. First of all, the Kindle has been a huge success as Amazon’s initial hardware offering. While content remains their primary business, they have found a way to make the hardware profitable as well. Sales for the device continue to top Amazon’s electronics category. Also, Amazon has learned a great deal from the Kindle about streamlining production costs. The entry-level price point for a Kindle has continued to become more attractive, dropping to $114, which is very reasonable for the average consumer. It would stand to reason that the e-commerce giant could expect similar sales from a Kindle-branded tablet device. Rumors abound regarding the expected consumer cost for the upcoming device, but some have it as low as $250. At half the cost of the iPad, it is attractive enough for serious buyers to take a long, hard look before making a decision on any tablet purchase.

Cost is not the true advantage for the Amazon tablet. After all, Samsung and other competitors have already entered the market with prices below Apple. The edge that puts Amazon above the rest is the existing content delivery infrastructure. The success of all Apple iOS products has been largely dependent on the integration of iTunes and the App Store. No other manufacturer has such a massive content network in place to support their hardware…until now. Amazon already has relationships in place with publishers of all media types. They have a massive user base already shopping over their network. And they now have a fully integrated Amazon App Store. Amazon is poised like nobody else to compete directly with Apple at every level.

Related articles:

August 15th, 2011

Very few people would know that the Coca-Cola Company was the first corporation to offer a coupon for a free glass of Coca-Cola in 1888. The company had to provide free syrup to the soda fountains to cover the costs of free drinks. This was definitely an innovative tactic in its time, and by 1913 8.5 million Coca-Cola coupons had been redeemed.

But coupons have come a long way, and companies are looking for new and innovative ways to deliver deals to consumers. Large companies like Groupon or Living Social were born to do just that and have become so successful that others felt the need to get a piece of the pie; companies like Facebook and even Google came up with their own version of the daily deals.

A Like Has Its Benefits

In the past few months, American Express has released several loyalty programs that integrate powerful platforms such as Twitter, iTunes and LinkedIn, but most recently Foursquare and Facebook.

I have been an AmEx member since 2000 and I know that “membership has its privileges.” However, as frugal a consumer as I am, I reject all types of fees, especially bank fees. I never really saw any value in paying over $250 a year to access a rewards program of which I would never take full advantage, so I signed up for a fee-free card and I don’t leave my house without it. I am always looking for new ways to save money here and there, and that is why I got interested in two of their most recent loyalty programs.

AmEx launched their Foursquare program during SXSW in Austin earlier this year. Basically, it allows AmEx cardholders to access offers directly on their phones when checking in at a location. When the program rolled out nationally, I was ready to sign up. All I had to do was link my AmEx card online with Foursquare and I was ready to go; new deals showed up under the “Specials Nearby” option. It literally takes seconds to activate a deal and a statement credit will be applied to your account directly. See it in action here.

Another interesting program from AmEx was released earlier this month: “Link, Like, Love” on Facebook. It promises to deliver tailored, coupon-less deals based on your social graph. This is a good example of behavioral targeting with consent; you have to download the app and “allow” the content to be displayed.

With this application, you link your AmEx credit card to your Facebook account and access a selection of deals from participating merchants, such as Whole Foods and H&M. What I found most appealing is that the redemption process is as simple as it can be and takes away the coupon stigma; you won’t have to ask the waiter to scan a coupon while on a date. With the “Add to card” function, you only need to load your card with the deals you want, and once you qualify for the offer you will receive a statement credit reward within 2-3 business days…just like that!

Now let’s not forget that this is Facebook – everything on the application can be sent to your friends, liked and shared – and as your social graph evolves, the application will evolve to keep up with you to deliver new deals.

Here is a video of the “Link, Like, Love” announcement:

Check in to the Ballgame from MasterCard

This month MasterCard also released a rewards program with Facebook that integrates location-based services for their “Priceless New York” campaign. They were able to acquire some of the recently demolished Yankee Stadium seats and place them around New York City for people to find, like a scavenger hunt. Once you find the seat, you will need to scan a QR code to then be checked in on Facebook Places – this will make you eligible to win VIP tickets to a 2011 Yankee game.

This is a creative program that will only run for a month and it’s targeted to New Yorkers only – yes, they always get the fun stuff.

MasterCard’s Facebook Likes have been increasing daily as a result of the “Check in to the Ballpark” program – they are currently close to 55,000 – while AmEx Likes are over 2.1 million.

What Is the Real Value?

From my perspective, this kind of initiative brings value to all parties involved. The consumer will have easy access to more discounts and offers, which ultimately will drive trial, loyalty and frequency of purchase to participant retailers. Today, merchants are only responsible for the value of the discount, and fulfillment is transparent. As for AmEx, they will continue to enrich their customer database with more information while maintaining a good relationship with the merchants who fuel their business by providing them with tools that bring them new and repeat customers.

I also think that all this activity is probably one of the best ways of measuring and monetizing social media efforts.

August 9th, 2011
Posted by Colin Hogan

On July 14, Swedish music service Spotify launched in the United States. After years of negotiations with record labels, the doors were opened to a world of free, legal music, with more than 15 million songs on-demand. The service was rolled out to listeners in a slow launch through invites from preexisting users, Spotify.com and its partners. These rationed invitations for the free service were in such high demand that they were selling on eBay for cash. Let’s take a deeper look at the newest online radio sensation to come to America and see if it lives up to the hype.

Introducing Spotify

According to All Things Digital, Spotify is extremely optimistic about projected membership numbers, aiming to recruit 50 million U.S. users in one year. Their unprecedented free music experience coupled with complete Facebook and iTunes integration are just a few of the reasons why the company feels so confident. Here’s a list of what Spotify has to offer:

Free Experience
Of all the music services, Spotify offers an unprecedented free music experience. The familiar user interface makes it seem like someone gave you a magical key to unlock the entire iTunes library for free. The advertising is usually music-related, so most of it is pretty relevant. You can listen to as many songs as you want, for as long as you want, for six months. Then, you can only listen to a maximum of 10 hours a month and play one given track only five times a month.

Paid Subscription
If you want to listen without limits, you’ll need to eventually upgrade to one of the paid subscription plans. For $4.99 per month, you receive unlimited access to Spotify’s music library, ad free. For $9.99 per month, you also get access to your songs offline and through your mobile phone.

Social Integration
Music is easier than ever to share with Spotify. You can “send” anything you listen to with Spotify – a song, playlist or album – directly to a friend through its Facebook integration.

Mobile
Premium subscribers can wirelessly sync their playlists to their phones and listen without having to connect to the Internet. The Spotify mobile app is available for iPhone, Android, Symbian, Windows Phone and Palm mobile phones.

Discovery
If I had one complaint about Spotify, it would be the difficulty of finding new music. If you know exactly which artist or track you want, it’s easy to find what you’re looking for. You can also view the top 100 tracks and albums that other users are listening to, but it’s the in-between discovery points that are missing. Unlike iTunes, you can’t sort music by release date, genre or recommended artists.

Challenges to the Freemium Model

Every music streaming service eventually wants to convert free users into paid subscribers, no matter how much advertising revenue they earn. Rhapsody, Turntable.fm, Rdio, Grooveshark: All of Spotify’s competitors have ventured into the freemium business model before the launch of Spotify in the U.S. The question is whether users will shift from the free to the premium side of the “freemium” model. Up until now, the answer has been “no.” Before Spotify came to the U.S., it was estimated that only 5% of all Spotify users are paid subscribers.

Consumers have largely resisted paying into a system of renting music when they don’t get anything in return after they stop paying for service. A person’s choice of favorite music is a deep expression of individuality for many Americans. We wear concert T-shirts from our favorite shows, save ticket stubs and display our favorite albums in our home music collection. The resurgence of vinyl among many fans shows that we are willing to listen to less technologically enhanced music to gain the traditional, tactile experience of feeling closer to the music.

At this point, most music fans have moved to digital, but their iTunes libraries still give them the feeling that they own their music. Perhaps some form of the digital playlist will eventually become the next iteration of the traditional music collection, and we will forget that we’re really just renting it.

August 3rd, 2011
Posted by Scott Luther

Ever since Foursquare and Gowalla stole the show at SXSW 2009, the location-based services category has slowly become a part of daily life for many people. But are these services merely a novelty or are they bound for mass appeal? And if so, how are location-based services going to be useful for a mass audience going forward? Taking a look at the progression of location-based services can give us some insight into where they are going in the near future.

Early Adopters: Gaming

The first iteration of location-based services, the now ubiquitous check-in, was based on a gaming model. These services made a game out of daily activities by competing for badges and mayorships, unlocking challenges and earning points with a small group of friends or strangers. The idea was that game dynamics would entice users to engage with the app and drive repeat traffic for businesses. While this was true for a die-hard group of early adopters, this proved to be too inconvenient for most users without a more visible reward for checking in. Many services rushed to capture this market, but few remain relevant, and only companies like Foursquare with their 10 million active users, Gowalla and SCVNGR have survived the initial rush.

Market Expansion: Self-Expression

Facebook’s entrance in 2010 with Places introduced location-based services to a new segment of users by giving people a new form of self-expression. Facebook Places offers users a way to selectively share moments of their life to create the online persona they wish to effect. More importantly, Facebook shares their lifestyle with their full social network rather than a small group of techies. This change resulted in more mass appeal for location-based services, rapidly increasing awareness and adoption of the category. For businesses, a customer’s willingness to broadcast their favorite locations turned passive customers into active ambassadors for their brand.

The next generation of the social location-based service is emerging right now and foreshadows the tool’s next great change: discovery. Social location services are coming out that not only broadcast a user’s location to their current social network, they help people connect with the people around them that they might not know. Companies like Sonar and Banjo are creating services that aim to use technology to connect people in the physical world, inverting the typical social network.

Maturity: Instant Deal

The primary motivation behind the check-in has always been the promise of some tangible reward, a discount or special offer. Recognizing this, location-based services recently co-opted another cultural phenomenon – the flash deal – to create new customers for businesses rather than reward existing customers. Popularized by group-based deal providers like Groupon and Gilt Groupe, the flash deal is a limited-time offer for a specific product or service at a substantial discount. By marrying this trend with location-aware technology, companies are able to generate highly targeted instant deals to acquire customers in their area.

The major players in this space are Foursquare and Groupon, each partnering with industry players to accomplish their goal of instant offers. Foursquare has partnered with Gilt Groupe, Living Social and Groupon within its existing Explorer service to generate offers driving people to try something new. Similarly, Groupon acquired LBS Whrrl to launch its Groupon Now! product with deep discounts to local businesses for limited-time offers. Companies presenting offers to users while they are in the decision process not only increase awareness, but also place the product or service in the consideration set, with the advantage of a specific deal to entice new customers.

What if I’m Not a Local Business?

While location-based services have had the greatest adoption within the restaurant and entertainment industries, they have the potential to impact a wide range of categories through location-aware deals, as well as search and mobile display. Major retailers are taking advantage of shopping game Shopkick to serve up deals to users as they enter predetermined geographical areas, bringing the magic of Groupon Now! to products. Facebook Places now allows brands to claim individual place pages, giving big brands consolidated location information. And as Facebook Deals expands to more markets, we can expect the number of users engaging with businesses through the social network to rise.

Location-based services hold great promise for businesses large and small to engage with customers and drive new traffic to their stores. It will be interesting to see if the element of discovery, both socially and for businesses, will help drive this technology past the tipping point and reach mass adoption.