Change begets change. In 2009, the use of social networks eclipsed the use of email. By 2015, says Morgan Stanley, the number of searches made on mobile devices will pass those made on desktop computers. The ramifications for mobile, economically, could be even greater than the initial adoption of the internet itself, says Michael Durance, President of Call Genie (TSXV:GNE). Durance, who cut his teeth at Nortel and Toshiba before taking the helm of the Toronto based mobile solutions provider, believes a generation of “digital natives” are changing the rules of e-commerce right before our eyes. And Call Genie, which has spent at least six years and nearly sixty-million dollars to develop technology that helps networks such as Verizon, AT&T contextualize and monetize their user bases, is set to become the “arms dealer” in the war for the mobile consumer. In a comprehensive one on one, Cantech Letter sat down with Durance to talk about that battle and his company’s place in it.
Michael, let’s start by talking about mobile trends. Some are predicting that the number of mobile searches will soon top desktop searches…
Yes, most researchers are now predicting that there will be a lot more searches on mobile handsets. And remember desktop searches measure in the billions per month, just in the United States alone. So that is an amazing stat. The fascinating thing about those numbers is that the value that shift it will create is going to be, if it’s conceivable, bigger than the internet, from a commerce point of view. The mobile consumer is ready to transact.
So I’m on the street and searching for something, I’m probably not idly or passively searching, I am looking for something now?
If you’re mobile, chances are you’re not surfing the web or researching papers for future use or anything like that. The yellow page industry, if I recall correctly, funded a study that showed that the average mobile consumer is 85% ready to transact. So what you’ve got is a very valuable consumer at that point. If you think of the new economy that is emerging I think mobile commerce is going to continue to manifest. Devices these days are getting so good, and they fuel the trend because they are easier and easier to use. Society is increasingly mobile. Society is also increasingly search oriented.
What do you mean by that?
There’s a demographic now emerging now that is every bit as big as the baby boomers. They’re called digital natives. This is the digital generation. This demographic does not want to be advertised to, they want to search for things. If they want something they will search for it. This has profound ramifications for mobility technology and mobile apps, it also has profound ramifications for the advertising industry. I would go as far as to say that the interrupt driven, mass-marketing model is breaking, if not already broken.
So you think “push” based advertising is on the wane?
I think it is. These days people want to search for things themselves. They’re less and less inclined to receive spam. A lot of digital natives don’t even watch TV anymore, they’re watching it online. They want their media when they want it. Now we get into the push versus pull debate. If the consumer wants to search, ergo “pull” information to them there are, in fact, opportunities for push based content to that person. But that is more on a “know me” basis. They want things personalized. Digital natives actually don’t mind being advertised to if it is relevant and contextual.
So Facebook ads that draw information from your profile, that’s not “big brother” stuff to this generation?
I think its a culture and demographic thing. Baby boomers are more concerned about privacy. But if you think about Facebook, it’s actually the opposite. This generation isn’t as concerned about privacy. Twitter and Facebook are the opposite of privacy. So you have this huge demographic beginning to move through the economy right now that some say will have even a bigger effect than the baby boomers had, and those people simply aren’t as concerned with privacy. I think the reasoning is that if you are going to be on Facebook and you’re willing to accept the fact that you are going to be advertised to on the internet, which ad would you rather have? A general rent a car ad when you aren’t looking to rent a car, or a cigar ad when you don’t smoke, or something that is absolutely relevant?
Call Genie has a partnership will Telcordia and we’re partnering with other infrastructure providers to go to mobile carriers to allow mobile subscribers to opt in to receive content. The idea is that they can create a profile they can choose the info they want, Then based on network triggers or based on parameters controlled by the end user you send them that information. I like Starbucks. To me, you give me a Starbucks coupon everyday, that’s not spam, that’s useful to me.
When you talk about the parameters being controlled by the end user, if people are really concerned about their privacy they are increasingly ways around that. There are email addresses now, for example, that expire after a single use or a single day. There a more privacy tools available to people to control that side of the equation and limit their exposure…
Absolutely. If I look at the connection between consumers and mobile content there are lot of different ways to supply the consumer with relevant information. One of the ways is they can pull it. The other is an opt in model, which ties into the “know-me” aspect of that demographic. This is not spam. The consumer has the controls to protect himself from spam, so if they want people to know them and they want relevant information, its not a bother to them at that point. Their mindset is that its actually convenient. It’s actually anticipating my needs. It’s a great thing to be on the move, searching for a restaurant and find it. But then to be able to have coupon sent to you…or the number of a taxi to get there…its moves from being an invasion of privacy to something that is highly relevant form of assistance.
I want to talk a bit about Call Genie’s history. What I want to talk about in particular is the money that you have raised and put into the technology. How much of that has a bearing on the technology that represents the company today? How much of your buildout was necessary and why has that buildout taken until now to become relevant to shareholders?
Great question. When I came on board in 2005, we got together and looked at what we had, which was effectively an IVR application for the Yellow Pages. At that point we assessed the potential for this opportunity. What we found was that the real value proposition was not in an IVR application. What we actually had was one of the first voice enabled local searches and mobile advertising opportunities. And that represented a huge and global opportunity. But at that point we had to provide a much broader array of technology than we had, to address multi-modal searches. Voice is a killer application but there is also SMS, for example. From that point on we started raising more money to invest in the opportunity.
What year was that?
That would have been 2006. There were two streams of investment. We started by building out our own technology but later, in 2008, we purchased two companies. The first was a company called Phonespots out of San Francisco, and then we acquired a company called BKS Logic out of Denmark.
Why were those acquisitions important?
Well between those acquisitions we developed in-house and those acquisitions, and I guess this is a significant statement for a small Canadian company, but I think we have the broadest array of technologies that are focused on this space. We have fully multi-modal search technologies and fully multi-modal ad serving technologies as well as a bunch of supporting services that can retrieve relevant content.
What do you mean by multi-modal?
We can serve up digital content, analog content, maps, links, anything. You can search by using your thumbs, text, data or you can search using your voice. You can, for example use a voice automated solution to try and find a local florist or a local merchant and rather than get the message played back in voice they can have it delivered by text message with a link to a map.