Has Internet advertising peaked? Not according to figures recently released by Morgan Stanley. In fact, far from being saturated, the online advertising market represents an unrealized opportunity.

Figures collected by Mary Meeker, managing director and leader of Morgan Stanley’s global technology research team, draw comparisons between the percentage of time spent by audiences perusing particular types of media, and the percentage of advertising spend devoted to those media. You can watch her presentation of these stats at the Web 2.0 Summit 2010 on YouTube.

One-eighth of the US audience’s time is spent reading print media, and yet a quarter of the advertising spent goes on ink. 31% of the audience’s time is spent watching TV, while 39% of advertising dollars are spent courting these viewers, representing yet another oversubscribed market. Conversely, 16% of media consumption time is spent listening to radio, while only 9% of advertising dollars are spent there, she said.

But internet advertising represents the biggest disparity: 28% of media consumption time is spent online, but only 13% of advertising dollars are spent there. According to Meeker, this equates to a $50bn global opportunity.

This post first appeared on Orange Business Live!

Here’s some interesting tips for companies engaging – or failing to engage properly – in social media. The advice is from researchers Firefly Millward Brown, who surveyed social media users (moderates and heavy users) in Australia, Brazil, China, Colombia, Czech Republic, India, South Africa, United Kingdom and the United States, about their attitudes to online brands and how they use social media.

Based on the consumer research, Millward Brown recommends 10 rules for engaging with social media:

1. Don’t recreate your homepage in social media — consumers want to see something new, fresh or different from brands – not a rehash of the same information they can get on the brand’s official Web site.
2. Listen first, then talk: create a dialogue — by far one of the biggest issues consumers have – or anticipate – with brands is that they will simply talk at them instead of talking with them. They want a conversation where brands listen to what they have to say.
3. Build trust by being open and honest — transparency is key for brands in social media and is the most critical factor in building trust. However, consumers perceive that brands would rather hide behind policies and procedures than admit to their failings or shortcomings.
4. Give your brand a face — brands often suffer in social media because they don’t have anyone that answers to the consumer, a face for the brand. This prevents many consumers from actively engaging with companies in social media.
5. Offer something of value — consumers are more likely to respond to brands that offer them something real and tangible, preferably without wanting something in return. While discounts and coupons are in vogue for brands in social media, they can create distrust. Worthwhile and exclusive content or deals or inside information on new products and services are valued by consumers.
6. Be relevant — consumers want to see content that relates to their life, their interest, their desires and their needs. Interestingly, several respondents commented on the lack of relevance for brands of ‘functional’ products like detergent, fabric softener and household cleaning products within the social media universe. In social media consumers are more critical about content that isn’t deemed relevant and feel that it’s invading their space.
7. Talk like a friend not a corporate entity — consumers want brands to communicate in simple, casual language that is conversational. They do not want technical or sales speak.
8. Give consumers some control — to operate effectively, brands must relinquish some of the control they have held for many years and be comfortable with the fact that they cannot solely dictate the message anymore. Brands that embrace consumer input and promote it will be more effective in managing the conversation.
9. Let consumers find you/come to you — another stark departure from traditional media campaigns, consumers do not want to feel that brands are ‘shouting’ messages at them. The perception is clearly that brands will use ‘intrusive’ and ‘interruptive’ advertising in social media.
10. Let consumers talk for you — brands achieve more kudos when consumers take the initiative and advocate them. The recent Toyota campaign, where real people talked about their stories on Facebook and were then selected to feature in a television ad, is a great example where the brand is not trying to overtly sell but is building relationships by encouraging customers to participate in conversations.

Some people go to great lengths to get away from it all, including climbing Everest. But now Swedish operator TeliaSonera and local player Ncell in Nepal have built a 3G base station at 5200 metres – well within altitude sickness territory. The goal is to serve climbers and residents of the Khumbu valley.

Here’s a vid of a climber talking about how useful 3G will be, compared to broadband satellite.

This does raise some issues though – with such thin atmosphere, will the signals travel for billions of miles? How do you get a steady power supply at that height? Will the snow impact performance? Will data roaming costs be sky high (ho ho), and most importantly, will excessive use of Foursquare and iPhone videoblogging from basecamp bring the network to a standstill? Answers please….

Britain lies in a lowly 20^th place in the European rankings of fibre to the home (FTTH), according to French analyst firm Idate and the Fibre to the Home Council Europe. And the picture is not improving – during 1H 2010, the UK ranked 26^th out of 36 countries for net additions to FTTH/FTTB, one place behind Andorra. Despite BT’s widespread publicity for its 21CN broadband transformation, it seems that Britain is still in a broadband backwater.

In Europe, Russia and France are the distinct market leaders in volume terms, with Lithuania forging ahead with 21% penetration.  In fact, it is the new member states (and Russia) who are making the quickest transformation, in part because of the poor standard of their copper networks which has not allowed DSL-based broadband to prosper as much as it has in Western Europe.

In absolute terms, the 36 EU countries have 3.2 million FTTH/FTTB subscribers, plus another 1.3 million in Russia, this is despite something like 25 million homes passed. (i.e the conversion rate from homes with fibre access to customers signing up is pretty feeble).

Europe does indeed appear to be in the slow lane when compared to 8.6 million FTTH subscribers in US and 43 million in Asia. However the conversion rate in Europe has improved. The homes passed increased by 6% in 1H 2010, but the subscriptions have improved by 51%.

Europe’s FTTH leader Lithuania is 5th in global ranking of penetration but pales in comparison to the 55% penetration in South Korea. Europe’s largest markets are doing very poorly in penetration terms. Italy and France are low, while Germany, UK and Spain don’t event make the Idate ranking.

BT has recently committed £2.5bn to fibre rollout, but compare this to the Australian government which is investing €30bn in its National Broadband Network. This equates to €1,428 per person.

What characterizes the deployment of FTTH in Europe so far is the number of players – Idate estimates that there are 260 FTTH projects, many of these driven by municipalities and utilities rather than incumbent telcos. Why? Incumbents have been resistant to investing heavily in national projects when faced with the threat of unbundling. But there is certainly an argument to suggest that widespread fibre deployment needs as many service providers as possible to share the load.

Why do we need more fibre in our broadband diet?

According to proponents, DSL and cable cannot deliver the speeds for game-changing broadband. Remote health care, intelligent power grid, high security network systems, personal TV, cloud apps are much more capable with pipes delivering 50mbps-1Gbps – and with this kind of bandwidth, we will be encouraged to work from home more. The FTTC Europe estimates that for 1 million fibre customers, you could save 1 million tones of CO2e emissions.

According to Ovum analyst Charlie Davies, there are demonstrable economic and cultural benefits to fibre broadband, as can be seen in this presentation: http://www.slideshare.net/ceobroadband/ftth-conference-2009-ovum-fibre-socio-economic-benefits, particularly in rural areas where it is costly to provide education, healthcare and public services.

So why can we not achieve this utilizing the copper pair in the last mile? Firstly there is the long-standing distance problem: signals degrade rapidly over copper.

Even in urban locations, copper cannot deliver the synchronous speeds necessary to facilitate a broadband economy. According to Chris Holden, president of the FTTH Council Europe, we will soon be demanding the same upload speeds as downloads. As more people want to upload HD video (such as blogs shot on Flips and Zi8s) or use HD videoconferencing from home, the need for faster upload speeds will be apparent.

This may be an issue for a minority of users at present, but it will impact the rest of us somewhere down the line. If a new consumer gadget delivers the capability to do something, but the network cannot facilitate it, we love the gadget (e.g. iphone) and vilify the network (eg. AT&T)

I’m not sure I am 100% behind this sentiment, and I believe there is life left in copper, as Nokia Siemens Networks has demonstrated by pushing VDSL to 825Mbps with phantom circuits.

But investment in broadband infrastructure – whether pure fibre or a fibre/copper/mobile mix – is high on Europe’s political agenda. The EU2020 strategy document proposes that government targets 100% of households with access to 30Mbps broadband by 2020, and 50% of which should have access to 100Mbps synchronous speeds.

It has been said time and again that the column inches devoted to the iPhone are disproportionate to the actual number of owners. As a proportion of the world’s most common electronic device (yes, mobiles are even more common than toasters and tv’s), the iPhone accounts for about 2% of the global mobile device market.

Here’s is an excellent illustration of just where the iPhone stands in the sales rankings, produced by Billshrink.com

Finding controversy in social media is like shooting fish in a barrel. This month’s firestorm concerns Malcolm Gladwell’s article on using social media for activism. The renowned pop science author argued in the New Yorker that social media was an inappropriate tool for activism and that ‘the revolution will not be tweeted’.

This provoked heated responses from social media luminaries, including Twitter co-founder Ev Williams, who argued that “Anyone who’s claiming that sending a tweet by itself is activism, that’s ludicrous — but no one’s claiming that, at least no one that’s credible. If you can’t organise you can’t activate.”

Perhaps. But that doesn’t undermine Gladwell’s core argument – that the messy, loosely-coupled nature of social networks makes it difficult to drive through change. The problem, he said, was that painful social changes such as the racial civil rights movement in the US need top-down hierarchies to be effective. Conversely, social media networks are flat matrices of chatterers that say lots, and do little that could be considered cohesive. No one changed the world by typing ‘nom nom nom’ into a status bar.

Making use of an organised mess

Nevertheless, in certain situations, such as inside the enterprise, the messy, disorganised nature of social networks could be advantageous. A CEO may not want to use a social network to organise the workforce towards a common goal (such as increasing top line revenues by 2%). But they may want to leverage such networks to encourage bottom-up thinking.

Top-down hierarchies are good for organising people around a central idea (such as civil rights reform, for example). They de-emphasise the idea of thinking for yourself beyond preset parameters. This is how many things work, from seminal protest movements through to the military film sets and commercial kitchens are organised this way. A central taskmaster delegates to others, who may delegate further, creating a tightly-organised chain of command.

Conversely, social networks are particularly good at two things: social capital, and emergent behaviour. They give people the chance to promote themselves and their ideas. Thinking outside the box is encouraged.

In an enterprise setting, hierarchical structures work when disseminating a leader’s vision and getting employees on board, but it is difficult to use them for two-way communication. For an organisation wanting to squeeze tacit knowledge out of its employee base, or to give people the opportunity to put innovative ideas in play, social networks may be more appropriate.

An employee with a passion for, say, a new product line or a way to remove half the steps from a convoluted corporate process that they know intimately may find it difficult to make themselves heard in a hierarchical structure. But given the chance to develop and run with the idea in an online corporate social network, that employee may gather supporters who discuss and evolve the concept to the point where they represent a significant movement in the company.

This is how loosely coupled groups known as ‘communities of practice’ are developed. Think of them as groups gathering around a digital water cooler, discussing possibilities for aspects of their company that they are close to, and passionate about. Groups such as these can sow the seeds for new lines of revenue, and groundbreaking efficiency measures.

Perhaps social networks are not the ideal tool for top-down activism, but they can still be used to effect radical change. Such developments could be highly valuable for a management courageous enough to give employees this sort of voice – and the technology to make themselves heard. Let’s hope, then, that management is willing to listen.

Cloud computing aims to bring new flexibility to enterprise IT: the idea of virtualizing computing resources removing them from physical hardware opens up many possibilities, not just in terms of cost cutting, but also in security and availability.

Security, availability, and integrity are all essential for enterprise IT and cloud computing promises to help businesses have access to data and applications at all times. Instead of thinking about business continuity in terms of disaster recovery, where the focus in on how quickly enterprises can restore operations, cloud computing could make the traditional concept of backups and recovery obsolete. Instead, the idea of totally-resilient operations becomes much more feasible, in which cloud-based resources are constantly replicated between sites to protect applications and data in the event of a physical incident.

“We used to focus on internal data centre redundancy. Now we’re seeing it as remote redundancy. So this idea of instantaneous remote backup is gaining traction,” explains Al Berman, executive director at DRI International, which trains professionals in business continuity. “I just came back from a meeting at the White House, and all they wanted to talk about was cloud computing and why no-one was talking about it. I said, ‘in the private sector, we’re not talking about it – we’re just doing it’.”

Mitigating risks

However, while enterprises embrace cloud computing’s ability to protect business operations, they should not enter into cloud computing relationships without first assessing and mitigating risks. Enterprises need to assess the security issues associated with virtualizing one’s data so that it becomes independent of a physical computing platform. Where is the data is to be kept? Who will have access to it? What access controls are in place to prevent the wrong people seeing it? And what technical measures are in place to prevent it being misappropriated?

“Cloud computing can be risky, which is why we are seeing the emergence of trusted intermediaries,” explains Alexandre Rigaldo, cloud computing program director at Orange Business Services. He identifies several broad risks that customers should consider when engaging in cloud computing relationships. “We are talking about a shared infrastructure, so that we have data from different people shared on the same physical machines. Also, you don’t know where your data is located, and this can be an issue in specific sectors.”

This emphasis on location stretches beyond where the data is stored into the area of accreditation. Certifications used by cloud computing providers may differ between one region and another, and what is acceptable from a regulatory perspective in one region may not be acceptable in another, he warns.

Finally, the data may be at risk if the communication mechanisms used to get it into the cloud and out again are not secure. Using the public Internet to communicate that data without encrypting it, for example, could incur regulatory risk.

“To mitigate this risk is not rocket science. The goal is to apply some basic IT security principles, and not believe in Santa Claus,” Rigaldo says. “Cloud computing doesn’t solve all of your issues. You have to be as careful when you buy cloud computing services as with traditional IT.”

One crucial step is to look at the life cycle of your information, says Rigaldo. Defining the sensitivity of specific types of data, based on the business processes that it serves, and the legal liability that it incurs, is vital when it comes to understanding how to deal with it.

Different approaches to the cloud

How an enterprise tackles these tasks will depend partly on the type of cloud computing model it is employing. Cloud computing models can be split in different ways. For example, platform as a service differs from software as a service, which is in turn a separate proposition to infrastructure as a service. All of these carry different risks in varying proportions.

It is also possible to slice the model along organizational lines. Some may prefer private clouds, where individual companies host their own data, while others may prefer a publicly available cloud service in which everything is hosted by a third party and runs from a shared platform. Alternatively, it’s possible to combine the two with a hybrid model that allows enterprises to retain some control, while still taking advantage of the economies of scale of the shared platform. All of these choices will have a bearing on the risk analysis process.

With such a bewildering array of options, how can an enterprise begin to make sense of it all?

Different organizations have published their approaches to securing cloud computing. The European Network and Information Security Agency (ENISA) recently published an information assurance framework as part of a broader report entitled “Cloud Computing: benefits, risks, and recommendations for information Security”. This framework is designed to help customers understand which questions to ask potential cloud suppliers.

The Cloud Security Alliance (CSA) also published its “Security Guidance For Critical Areas of Focus in Cloud Computing” in December, which discusses different cloud architectures and assesses how each of them can be best managed in the context of information lifecycle management, data portability, and application security. Governance featured heavily in the document, which laid out each party’s roles and responsibilities in areas such as lawfulness of content and incident response.

As enterprise IT moves firmly in the direction of a more virtualized world, in which logical resources are shunted between sites for maximum efficiency, guidelines such as these will be vital for enterprises looking to tackle the process of due diligence with service providers, or attempting to automate cloud processes within their own, private networks. In spite of the name, cloud computing should be about transparency and enterprises need to stress accountability and openness in all of their service relationships.

This article first appeared in the email newsletter we help produce for Orange Business Services called Enterprise Briefing: http://www.orange-business.com/en/mnc2/footer/news/enterprise_briefing/feb2010/technology.jsp

Little nugget I stumbled upon: 90% of the world’s population is now covered with a mobile network. And the airwaves are being sopped up – back in February, a report stated that two-thirds of the world’s population were mobile subscribers.

So that leaves roughly one-third of the world (about 2.2 billion) without a mobile phone. Two thirds of the unconnected live within a mobile network coverage – so they could be a long tail for the mobile communications industry?

It’s hardly likely. According to the World Bank, 1.3 billion people lived on under $1.25 a day in 2005. We’ve had global economic growth since then…and massive economic meltdown so the likelihood is that billions are still too poor to download a $1 iphone app, let alone purchase a $30 handset. Countless more people live within the next band of under $2 a day.

Whether super poor, that probably lack adequate nutrition, sanitation, healthcare and property, will ever be an attractive market to service providers, remains to be seen. But one thing is for sure: those that do get access to mobile communications have a much better chance of improving their health and wealth than those without, as this recent Ericsson research of the impact of mobile communications in the Millennium Villages illustrates.

The world’s leaders met in New York at the Millennium Goals Summit this week to discuss poverty reduction. Top of the agenda was the role that broadband (fixed or mobile) plays.  The Broadband Commission report posits a universal access programme with advice for how governments can implement it. As always with these things,  the public sector must create the demand first and then the private sector will come up with supply. In my view, governments do not have deep enough pockets to be able to fund this through to critical mass – but what they can do is focus on deregulation and licensing.

The cost of new fixed and mobile telecoms infrastructured is amortised over many years, which means service providers need a stable regulatory environment. They need to know which technology they can invest in, what competition they will face, the tax regime and that licenses cannot be revoked by warring political parties. Getting the balance right is extremely tough and way beyond my ken. If you want to dig a little deeper into it, try Impact of taxation on the development of mobile broadband by Telecom Advisory Services for the GSMA.

And even if the networks get built, and services rolled out, will the poor be able to afford them? According to current broadband costs, its likely that the poorest will be punished most, as my colleague Ant highlighted in a recent post on the disparity in broadband subscription costs in poor and wealthy countries. So prices will need to be regulated….just not too much.

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• Half of the World Population should Have Broadband Access by 2015: UN (taragana.com)
• ITU calls on governments to drive broadband (v3.co.uk)
• The Value of Information and Communications Technologies in Meeting the UN Millennium Development Goals (prweb.com)
• Internet users in BRICI countries set to double by 2015 (nextbigfuture.com)