KGB GOES HEAD TO HEAD WITH CHA CHA ON US ELECTION INFORMATION

Because of intense national and international interest in the US presidential campaign, political information services such as Huffington Post and Politico have seen their traffic skyrocket during the campaign, and we have now seen kgb begin to compete directly with Cha Cha in the delivery of US election information. As is the case with voice directory assistance (DA), this battle pits a free service, from Cha Cha against a paid service, from kgb.

kgb has extensive experience in the voice DA battles in the US as a leading DA wholesaler, and in the UK through The Number and through other entities elsewhere in Europe. Discussions with kgb make it clear that kgb is a firm believer in a user-paid model. Cha Cha was not availalble for comment.

While the free versus paid battle hasn't been settled yet in the US, The Number's experience in the UK offers some insight into the impact of price. In the UK, The Number found itself competing against lower-cost--but not free--directory enquiry (DQ) provider Conduit when the UK market was opened to competition. The finding in the UK was that Conduit's lower price didn't attract enough additional traffic to offset the fact that The Number made significantly greater margins on each call than did Conduit. DQ calls, in some respects, are relatively price inelastic. The result was that The Number won the battle and ended up acquiring Conduit. Another key factor in The Number's success was their creative and intensive advertising which dominated the landscape. We haven't seen any advertising for kgb's new service--and the US election is of almost over so we may not see any--but the coming battle between kgb and Cha Cha is likely to involve heavy advertising--though access to capital today is far more limited than it was in the past so advertising dollars may be harder to come by.

We decided to test out kgb's new service, reached by texting to kgbkgb (542542), by sending kgb the same questions we recently sent Cha Cha.

We received a response almost immediately to our first question, asking us to reply "YES" to confirm our willingness to pay US$ 0.30 plus whatever other "std / othr" charges may apply. We dutifully complied, and after 30 minutes, we have these results to report:

Question: "What are the positions on climate change?"

Answer: none received.

Question: "What are the hours of absentee voting in Virginia?"

Answer: none received.

Question: "What are the odds, the line on the presidential race?"

Answer: "Barrack Obama is leading with odds of 1-2 according to Sportsbook. thx!"

Analysis: unfortunately, this answer is wrong--our review of Sportsbook shows Obama at 1-8, which is consistent with Linesmaker at 1-8, and in the same range as 1800-Sports at -1100.

We will report answers to the other questions, when and if they arrive. -Stuart Whitaker, Smarajit Dasgupta

ACCENTURE STUDY: MAJORITY OF US CONSUMERS NEVER USE HIGHER-END MOBILE APPLICATIONS

An Accenture mobile usage study indicates that despite rapid consumption of mobile devices in the US, the usage of higher-end applications remains low. As high as 88% of 5,047 adult respondents reported they never use their mobile phones or other mobile devices to watch videos. Moreover, 84% never use mobile devices to send email and 79% said they never employ them to play games. The survey was divided into three age groups 18 to 34, 35 to 54, and 55 and older. It was found that 18-24 year olds were more than 10 times as likely as those over 55 to use social networking sites (73% versus 7%) and seven times as likely as those 55 and olders to write blogs or contribute to online sites (35% versus 5%) using the phone.

US mobile consumers:
Never watch videos on mobile phones	88%
Never send emails using mobile phones	84%
Never play games on mobile phones	79%

source: Accenture, n = 5,047

“These survey results point to important missed business opportunities in the mobile handset and social networking arenas,” said Kumu Puri, a senior executive with Accenture’s Electronics & High Tech practice. “Clearly, many consumers are not widely embracing higher end cell phone applications. And the vast majority of older Americans, in particular, are not inspired by the social networking phenomenon. To capitalize on these market realities, consumer technology companies need to customize their ease of use and design differentiation for the different age groups. This begins with envisioning a specific consumer’s experience and delivering that through hardware, software, and services that are more compelling and enjoyable.” -Smarajit Dasgupta

SURVEY INDICATES HIGH RECALL VALUE FOR MOBILE MARKETING

A mobile response survey by HipCricket indicated very high brand recall rates for mobile marketing. More than half of 517 respondents that received mobile marketing messages within the past year could recall at least one brand. As high as 96% recalled the promotion’s call-to-action and more than one-third said the promotion made them more likely to make a purchase. Moreover, 37% reported telling a friend and 6% forwarded the promotion. Forty-seven percent of those surveyed said if they received a mobile coupon they would be “likely” or “very likely” to redeem it, with 70% of those respondents expressing interest in redeeming mobile coupons both online and in-store.

However, more than half of respondents in the survey said they never access the mobile web and only 5% said they would use their phone to click on a mobile ad. Steve Siegel, VP of Brand Solutions at HipCricket said, “Mobile advertising is a great complement to many of our multi-faceted mobile marketing campaigns and we anticipate growing interest in advertising on the mobile web as consumers continue to adopt web-enabled devices with superior online experiences, such as the iPhone.” -Smarajit Dasgupta

ADMOB SECURES US$ 15.7 MILLION IN SERIES C FUNDING, LOOKING TO EXPAND GROWTH

Mobile advertising marketplace AdMob has raised a Series C investment round worth US$ 15.7 million, led by Sequoia Capital's Growth Fund along with participation from existing investor Accel Partners. AdMob said that over the past year it has more than tripled the number of ads served on a monthly basis to 4.5 billion in September 2008. AdMob’s publisher network now includes more than 6,000 partners worldwide, including MySpace and MovieTickets.com that came on board this year. The company has plans of making significant strategic investments by boosting growth of worldwide operations by hiring local staff in key markets and adding new language interfaces, with an emphasis in Western Europe, India, South Africa, and Japan. It will also look to deepen its mobile technology platform, including its targeting, optimization, and ad serving algorithm. Additionally, AdMob plans to expand the breadth of offerings for both publishers and advertisers. Omar Hamoui, founder and CEO of AdMob, said, "We chose to raise this new round of funding to continue to grow both the mobile advertising market and AdMob's clear advantage in it by investing in the technology, operations, and team that have set the bar for the mobile industry." The company has so far raised over US$ 30.7 million in various funding rounds. -Smarajit Dasgupta