As mobile phones become data devices, search engines are going mobile. The big deal: mobile has the ability to take search engine capabilities - particularly advertising - to increasingly personalized levels that PC-based search can't realize. The only limits are ease of use, network readiness and very serious privacy issues
With cellphones becoming increasingly outfitted for Internet access and mobile services becoming increasingly content-driven, it was inevitable that search engine technology would go mobile. Many mobile operators have employed localized engines to help users find content on their content decks, while major search engine players like Google, Yahoo! and MSN have been on the mobile case for at least the last couple of years, with mobile versions of their search engines already up and running.
However, it's only been in the last year or so that mobile operators and handset vendors have been hooking up with Internet search engines. For example, cellcos like T-Mobile, Vodafone, China Mobile and KDDI have partnered with Google to include its Internet search engine in their wireless portals. In July, NTT DoCoMo added a keyword search to its i-mode portal that includes links to nine Internet search engines, including MSN and Infoseek, for non-official i-mode sites and the Internet.
Meanwhile, major handset players like Nokia and Motorola have started to include Google and Yahoo icons in their phones. Earlier this year, Nokia began collaborating with Chinese search engine Baidu.com to make mobile search easier and more convenient in Chinese-language markets, including mainland China, Hong Kong, and Taiwan. By perhaps no coincidence, CCID Consulting (a think-tank affiliated with China's Ministry of Information Industry) says that China's mobile search user numbers will grow an eye-catching 202% from 9.9 million last year to almost 30 million this year.
ARPU gains
There are more encouraging numbers to be had. A recent survey from JumpTap, for example, says that mobile search contributed an 8% revenue increase for cellcos in April 2006, boosted average revenue per search, generated a 4% increase in unique users and registered a 36% click-through rate. (The top search categories‾ Ringtones and adult content.)
If those numbers seem a bit on the low side, it's partly due to the fact that mobile search is still very much a fledgling app - so much so that industry analysts are a bit divided on mobile search's prospects. Peggy Anne Salz, who authored a recent report on mobile search for Informa Telecoms & Media, says that mobile search is 'indisputably' a potent way to generate value.
'Consumers find what they want, and marketers gain traffic by providing relevant offers and advertising, and mobile operators and service providers capture more revenue from increased mobile content purchases,' she says.
Gartner analyst Sandy Shen, who co-authored a separate study with Martin Gutberlet, is less enthusiastic, saying the recent flurry of partnerships between big-name search engines, cellcos and handset makers are more about marketing and brand association than serious revenue generation.
'Internet search engines have yet to prove themselves on mobiles, and the industry is still far from making mobile search into a potential money-spinner,' Shen says in the report.
Forced hand
Jawahar Kanjilal, APAC director of multimedia experiences at Nokia, acknowledges that one of the chief drivers of mobile search is the simple fact that users raised on the Internet will naturally expect the same function on their handsets.
'Search is part of the Internet experience for everyone - that's where it begins, and over time we've seen more mobile devices being used to access the Internet thanks to GPRS and 3G,' he says. 'Users aren't just accessing operator sites but also portals they're familiar with, like Yahoo.'
From the device side, he adds, having a search icon is even more crucial as devices include WLAN connectivity. 'We now have a small but growing number of devices with WLAN capability. That's another significant add-on to the behavior patterns we see.'
Another factor for cellcos, says Marieke Effting, global telecoms product marketing manager at LogicaCMG, is that the major search engine companies are forcing their hand.
'Google and Yahoo are the most dominant search engines on the Internet and they are going into mobile already, with or without them,' Effting says.
That said, Kanjilal disagrees with the suggestion that mobile search is more about marketing than real money. 'Operators get the benefit of ARPU usage from the extra traffic generated by searches,' he says.
The aforementioned JumpTap figures appear to bear this out, but the downside - according to Effting - is that this plays to the 'bit pipe' business model that 3G operators would just as soon avoid.
'The challenge for operators is facing the fact that they're becoming a bit pipe. The revenue they're getting from content delivery now will continue, but that will end eventually and they will need new business models,' she says.
Searching for revenue
At the moment, according to Gartner, the main revenue driver for mobile search is premium pay-per-event content purchases. If a user searches for a Madonna ringtone, finds it and buys it, the mobile operator, search engine and content provider each take their cut. Gartner expects this to be the main driver of mobile search-related revenue through next year.
However, the real money - at some point - is expected to be in mobile advertising. Mobile ad revenues are 'virtually nonexistent' now, says Gartner, partly because both mobile search and mobile advertising are in the early stages of development, and partly because the value chain is considerably fragmented.
'Internet search engines offer sponsored links on mobile phones on a very limited basis, and their format hasn't proved effective yet,' Gartner's Shen says. 'White-label search also offers sponsored links but hasn't been able to make money from them, because of the small amount of advertisers and the fact that the search-related advertising model is still in its trial stages.'
Serious personalization
In the near future, however, it could well be a different story. The reason many players are bullish on the future prospects of advertising revenue from mobile search is the very nature of the mobile network itself: personalization.
'The advantage that mobile operators have over PC-based search is that they know what's happening on their networks,' says Effting. 'Mobile operators log every single thing that goes on over the network, so they have far more information about their users and have a complete overview of what the subscriber does.'
Google already has the ability to deliver click-through ad placements based on a user's mobile phone. In Japan and the US, a mobile version of Google's AdWords service allows customers to place marketing messages - including clickable links - in its search results. Google is reportedly working to patent a system that recognizes the user's device and then automatically directs the user to a Web site or places a voice call, depending on whatever capabilities the handset supports.
But mobile search aims to connect not with the handset but the user. Mobile operators have the unique ability to take a user's search request and correlate it to the data in their individual profile, which would contain everything from usage patterns and preferences to billing behavior - all of which could be used to direct the most relevant ads to their screen along with their search results. From the advertiser's point of view, that's a potentially richer proposition than PC-based search, where the user typically sits behind an IP address.
'That's why companies like Google want into mobile,' Effting says. 'The mobile phone is the only device left that can target the individual.'
The cellphone can also add another detail to the profile mix: location. Localized search directories like Google Earth can take location into account by the user entering, say, a zip code or some keyword identifying the user's general location. But in a fixed-line setting, the user is typically either at home or work and planning to head to particular location. With mobile, the user could already be within walking distance of an advertiser's shop or restaurant, which would also know more about that particular user than if he were using a PC.
For example, GeoVector is touting what it calls a '3D search' technology for cellphones, which allows users to search for information by selecting objects on a 3D map generated via GPS technology and a built-in compass. Among the other apps it envisions is point-and-click m-commerce.
Keith Liu, APAC head of Internet and games experiences from Nokia's multimedia division, says the handset maker acquired mapping software company Gate5 partly with location-based search in mind. 'We definitely see adding navigation and location-based services to mobile search, where you can search for a pizza restaurant and then add that information to your address book seamlessly,' Liu says. That's clearly a great value proposition for local partners.'
This level of detail has a direct impact advertiser spending, says Effting: the more defined the target audience is, the more that brands are willing to spend. 'Mobile operators have the ability to say, there are 200, 000 users in this specific segment, so if a brand wants to spend money on that specific segment or category, operators can select that group down to the individual. No other industry has this capability.'
That capability also means a richer search experience for users, says Salz of Informa Telecoms & Media. 'Operators and content providers shouldn't short change themselves - or their users - by merely retrofitting Web search solutions for the mobile Internet,' Salz says. 'Search paired with personalization, which involves matching the right content to the right users, and recommendation is a much more powerful combination.'
In fact, they'll have to, says Shen of Gartner, if they don't want to be relegated to bit-pipe distributors in the mobile search game. 'It's doubtful whether carriers will be able to take a meaningful share of [advertising] revenue,' she says. 'Nevertheless, carriers could get more negotiating power if they build network intelligence into their searches to enable better targeting.'
And even then, she adds, mobile search ad revenues won't reach significant levels until mobile search reaches critical mass. 'More importantly, the industry needs buy-in from major advertising agencies and publishers to promote mobile search as an effective and personalized way to target individual consumers.'
Personalization gone wild
And, as you might expect, the list of challenges doesn't end there. One issue of contention is usability. White-label search solutions tend to perform better than Internet search engines like Google, Yahoo and MSN, according to Gartner (see sidebar, 'Should you Yahoo‾', p.22), but in essence, it comes down to the ease of inputting info on a PC keyboard vs a mobile phone key pad.
Nokia's Kanjilal says this is less of an issue with more advanced handsets like its N series phones. 'You don't need a browser for it. The search bar is already there, and you type in your query and off you go,' he says. 'For lower-end handsets, it might be more of an issue, but it's slow and steady as capabilities improve across more handsets.'
Mobile apps developers are already looking at ways to make mobile search easier, such as 'on-device portals'. Action Engine, for instance, has a solution that allows its customers to create portals on the phone itself, which in turn enables users to search for information much faster using '80% fewer keystrokes and trips to the network' than browser-centric solutions.
However, there are plenty of non-device related issues that will impact mobile search, says Kanjilal. 'The readiness depends a lot on the environment - the connectivity has to be there, the data charges have to be attractive and there has to be enough relevant content.'
Another factor to watch out for has nothing to do with technology and everything to do with privacy. Just because a cellco has tons of data on a customer's usage patterns doesn't automatically mean that info can be made available to advertisers. Indeed, notes the Gartner report, 'the mobile phone is a personal device, and people may not like advertisements at all. It's vital that the industry addresses issues of privacy and the security of users' information.'
This was painfully illustrated after search log data on over 650,000 AOL users was leaked onto the Internet in late July. Actual users weren't specifically identified by the data (apart from a unique ID number), but in many cases the search terms added up to some potentially embarrassing user profiles. It's worth adding that the AOL leak was the result of a third party given access to the data - a common source of personal data leaks - which suggests that just securing your own databases isn't a guarantee against privacy breaches.
As such, says Effting of LogicaCMG, the ability of cellcos to leverage user data to bolster search engine ads may be limited by relevant privacy regulations.
'In some markets, you're not allowed to target individuals at all, while others require an opt-out or opt-in mechanism, some might have no restrictions,' she says. 'Either way, operators have to take this into account.'
On the bright side, she adds, 'even without addressing the individual, there's still a lot you can do.'
Should you Yahoo‾
Mention mobile search engines, and most people automatically think of big name brands like Google, Yahoo and MSN. However, this type of mobile search engine - designed for searching the World Wide Web via WAP - isn't the only search option for cellcos.
A second choice is 'white label' mobile search - solutions designed specifically for mobile and integrated into the carrier's deck. According to Gartner, white-label offers different ways to enter search queries, to get around the limitations of the phone keypad, such as auto-completion, separate search boxes for different categories, and even SMS.
In a July report, Gartner rated white-label search vs Internet search for mobile, and found that white-label search beats the Googles and Yahoos in ease of input, results relevance, revenue model and carrier control. This last category is the strongest suit of the white-label model, Gartner says, because carriers can define the boundary of the search (on-portal only, or on- and off-portal) and prioritize results so that on-portal content or content from partner sites (such as music download services, for instance) is listed first.
In fact, some cellcos have already eschewed deals with the big guns like Google and Yahoo for smaller start-up companies like JumpTap and Medio Systems.
In fact, says Peggy Anne Salz, who authored a recent report on mobile search for Informa Telecoms & Media, operators are becoming increasingly wary of major search engines that seem intent on dominating the end-user relationship. White-label search solutions are a way around that, Salz says.
'By owning search, operators will likely be positioned to retain direct advertising revenues generated by pay-per-click and pay-per-call schemes and thus protect themselves from the disintermediation that will occur when branded search engine companies move to control the click-stream,' Salz says.
Still, there's no reason that the major players and smaller localized solutions can't co-exist, says Keith Liu, APAC head of Internet and games experiences from Nokia's multimedia division.
'We have a specific search app, a search client that allows you to do a Yahoo search, but you can also add local directory searches that are more relevant to the user,' he says.
- John C. Tanner