Patrick Kennedy on the companys shift away from D2C.
Last November, Sidebar launched an Android application designed to recommend apps, videos, games, music and news articles to users, along with other mobile content. It was praised for its innovation, as was the subsequent BlackBerry version.
However, the company has since shifted its focus away from these consumer-focused apps, and towards a more B2B strategy, where it provides its recommendation technology to operators and other retailers of mobile content.
“Frankly, we saw the costs of acquiring a lot of content into a consumer service and marketing it as luxuries for a startup of limited funds,” says CEO Patrick Kennedy, who joined Sidebar last year from Sony Pictures Digital.
“The intelligence of our system is in the back-end, learning what content users like, and being able to accurately predict what content will be interesting to them. We had a number of enquiries from potential business partners wanting to use our technology. So we’ve shifted to focusing on using that predictive engine to create intelligent content merchandising for retailers and app stores.”
It’s probably a good time to be touting this kind of technology, particularly as the industry gets set for a second wave of app stores from operators and other brands, trying to find an edge to compete against the existing stores from Apple and rival handset makers.
A key aspect of Sidebar’s new strategy is that it’s not just focused on smartphones in the Western world. “We are language-independent and globally relevant,” says Kennedy.
“We’re also not limited to smartphones: we can work on any web-connected device. In North America that’s smartphones, but in India and Latin America, it’s a different story.”
Last week, Sidebar announced the first big deal since its strategic refocus: a partnership with Indiagames. It’ll be using Sidebar’s ‘Smart Menu’ technology to offer personalised recommendations on its portals, and Kennedy says it’s just the first of several deals to be announced in the region. “If we can make money in India, we can make money anywhere,” he says.
“As a young company, we want to get into emerging markets early, for two reasons. First, we want to cut our teeth somewhere and have proven statistics for when we go to the Verizons and Sprints of the world later. And second, we are looking to lock up real-estate in markets where there is relatively less competition now, but which will continue to grow in terms of [mobile] population and ARPU.”
How effective is Sidebar’s recommendation technology in getting people to buy more mobile content? Kennedy doesn’t have stats to share at this point, but it seems the Android and BlackBerry apps were valuable in helping Sidebar to tweak its engine before taking it B2B.
He admits that recommendations are much more effective when they’re built into the fabric of a store or portal, rather than tacked on at a later date.
“The first deals we’re doing are very deep integrations, working with what are either rebuilds of stores, or launches of new stores,” he says. “There is this blank sheet of paper where we can work actively together with the people who are designing these experiences.”
Kennedy doesn’t expect store-owners to use Sidebar’s technology in every single part of their stores, but he hopes that over time as they see an increase in sales from the sections where they do use it. “We believe every piece of the menuing system should be personally merchandised,” he says, although he also thinks there’s still a role for store-owners to promote certain apps or content within that system.
The exact details of Sidebar’s recommendations engine are, naturally, secret. However, it’s been presented as being based mainly on an individual user’s behaviour: what content they’ve chosen to download OR not to download affects what they’re recommended on an ongoing basis.
What about social recommendations? ME wonders if Sidebar is planning to build friend recommendations into its platform – either active (content that friends specifically recommend to one another) or passive (the ‘your friends downloaded this...’ model).
“We will be building social networking in with partners where it’s available,” says Kennedy. “We can build it into our prediction model, but I have no data on whether or not that has any relevance to purchasing. Friend recommendations are great for introductions to products, but that doesn’t mean you’ll buy it when you go into a merchandising setting. We believe in exploring that though.”
Is Sidebar well out of the consumer recommendations space? On iPhone, apps like Chomp, Chorus and Appolicious have all gone D2C, and while Kennedy declines to comment specifically on the outlook for their businesses, it’s clear he sees it as a tough space to prosper.
“We’re very happy with where we sit in the value chain at the moment,” he says. “We don’t want to build the company to be sold on some kind of flash value, and it’s difficult for me to see how we would compete in the consumer sector while generating the kind of returns we are looking for.”
One last question about that value chain: how is Sidebar coping with the fact that some of its customers may also be content providers? For example, Indiagames runs portals, but it also publishes games which are likely to be available on the app stores of future Sidebar customers.
If a Verizon or a Sprint signs up to use Sidebar's tech, might people worry about the business relationship with Indiagames skewing its impartiality?
“I completely understand your question, but we have a recommendation engine which is truly mathematically based, with AI,” says Kennedy.
“There isn’t a human intervention that would let us put our thumb on the scale for any one of the content providers. We’re trying to provide our customers with just the facts, rather than to be in the business of editorialising.”
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