Searching for Profits in Mobile

MARCH 17, 2014, 9:00 AM  Comment

Searching for Profits in Mobile

By QUENTIN HARDY

Maybe the problem of making money in mobile is getting easier, using the same basic technique that was used for the web. Or for that matter, for junk mail.

Optimizely specializes in A/B testing services for Web companies — a popular method of making design and content choices on the web. The idea is that instead of developing a theory about what might work, a company sends out several versions of, say, an ad or a photo spread, and the most popular one becomes a standard, at least until the next test.

On Monday, Optimizely said it will introduce the same capability for mobile services, with a goal of generating revenue from mobile marketing and games.

“This enables production managers and designers, marketing people, the ability to change a mobile app as much as they want,” said Dan Siroker, co-founder and chief executive of Optimizely. “The feedback loop is tightening, and they’ll know faster what is working.” The particular focus, he said, is mobile marketers, including ads and offers.

Another company, Kii, said recently that it would also add this kind of testing to its cloud-based mobile application and game development platform.

At any given moment, Facebook is carrying out dozens of different A/B tests across its site. So is Google, which popularized the method a decade ago as a way of telling, often within two weeks of a product’s introduction, whether it would be successful.

Mr. Siroker, who worked at Google, was later the director of analytics during President Obama’s 2008 campaign. He started Optimizely after that. In 2012, both the Obama and Romney campaigns were Optimizely customers.

In mobile, the customer’s test might be something like changing the font size on a special offer, or sending two different colored images of a couch. Difficulty levels in games, like how easily a bird flaps across a screen, could also be easily adjusted.

The “test as you go” method goes back at least as far as junk mail, or if you prefer, direct marketing. Marketers would experiment with envelope size, wording of a pitch letter and many more things, sometimes with five or more versions at once.

On the web, though, there are no postage costs, and the audiences are frequently so large that testing 1 percent of the audience can yield statistically significant information. And the other customers don’t know anything is changing. So far, it has not been a standard in mobile development.

Big companies with sufficient technical resources, like Google and Facebook, are already doing A/B tests on their mobile platforms.

Optimizely, which has 6,000 customers, including Starbucks and Disney, provides an easy-to-use way to make design changes, look at them on a single computer, then launch them as a test. So far its customers have run over 437,000 experiments for five billion views. Kii, which was founded in 2007, says it has something over 5,000 developers using its service.

“A lot of apps and games are still developed purely on gut feeling,” said Phani Pandrangi, chief product officer at Kii. “This way, they can change around game design, difficulty and look. Developers can see if the conversion is the same at $2 a game as at $5 a game.”

The Kii product works for both Apple’s iOS and Google’s Android systems, and will be offered as part of its service, which is free to $200 a month, depending on usage.

Optimizely’s product, which began development last summer, is out only on iOS so far, but there are plans to make an Android version. Optimizely’s pricing is expected to be “in the ballpark” of its web product, which runs between $20 and $400 a month, depending on traffic, said Chrix Finne, senior product manager at Optimizely.

“Our customers started getting decent data on their websites about five to eight years ago, and wanted to start turning it into action,” Mr. Finne said. “We started seeing a lot of demand for a mobile product about a year ago. Now they want to be optimizing for every point of their business.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: