Revenue streams and willingness to pay for social messaging on smart devices

Abstract

Within less than six years, Smart Devices have disrupted the way we communicate while "on the move". They are the new Dominant Design for mobile communication. Their presence as a Disruptive Innovation to the Alphanumeric Mobile Phone has affected the Telecommunication Industry, because of the open innovation scheme that allows to develop installable software, which in most cases, are better than the services, like the SMS, monopolized by the Telcos. The technological barriers to entry are minimal. Successful developers, like the creators of the "WhatsApp" service, a direct competitor to the SMS, have attracted tens of millions of users worldwide to their messaging service. Such migration of users have affected the revenue of the Telecommunication industry with estimated losses amounting 13.9 billion Euros in 2011. Communication between users is the main driver for the increasing adoption of Smart Devices, whether through messaging services or on social networks. Such adoption is also affecting time invested on Desktop Personal Computers, which until recently were the primary access devices for online activities. Consequently, this event is also affecting revenues from online advertisement, because the larger resolution of a Desktop PC monitor allowed to insert advertisement banners around the communication activities from users and still get profitable "clicks" from the advertisement revenue streams. A similar saturation of elements on the smaller screens from Smart Devices is not adopted by users, therefore avoiding the flow from advertisement revenue streams. At the moment there is no dominant design for integrating advertisement on the messaging activities of users on smart devices. The revenue loss for the online advertisement industry is calculated to be between 13 and 38 Billion EUR per year. The motivation for this study is to find out which elements are relevant for messaging activities and based on a proposed model, for integrating advertisement into the messaging activities on Smart Devices, I aim to offer hints for designing services in order to capture the latent revenues. An innovative approach to Entrepreneurial Marketing is applied based on the article "An efficient algorithm for constructing Bayesian optimal choice designs" simplifying the process for Choice Based Conjoint Analysis. Each Stimulus is supported with Video Simulations. As result, Importances and Utilities are presented, as well as a the design of an ideal messaging service which incorporates advertisement as a revenue stream.