How does a company reach 175 million users, turn mobile devices everywhere into frictionless commerce and content machines, convert those same machines into an invaluable television enhancer and then power up to a third of the ads during the Super Bowl
Here’s what surprised me about this episode: The advertising industry is watching this happen, as clear as day, and they are about to face an incredible wake up call because of companies like Shazam. Mobile is cool that way.
Rob: If you’re like me you’ve got contacts in every single possible format. Email, Facebook, LinkedIn and Twitter and it’s becoming harder and harder to stay on top of them. To help me makes sense of this mess I use Smarter Contacts the free app that automatically creates rich profiles for all of my contacts right on my smartphone. The things I love most about this app are the rich profiles it creates. I can see photos, job titles, companies details and updates form social networks all in one place all in context. This is a free app and available on all mobile platforms head to www.untether.tv/smarter to download it today.
Hello everybody and welcome to UNTETHER.tv, I’m your host Rob Woodbridge, also the founder. This is the place every day where you’re going to find some great content on the mobile industries. Some of the guys that are pioneering, some of the companies that are pioneering the way that we interact with the air, it’s the best way I can describe it. The companies and the people that are inventing as we are learning how to use these devices, the pioneers, this is the greatest time, I think, to be alive and in technologies and all of these companies are coming here to talk and explain how they do these things, why there doing these things and how you can maybe leverage a little bit for your business, understand it for your own business so you can benefit from this great, great, great industry.
Totally stocked, absolutely excited to have the guest today, as I am every time we have a guest, but you have probably used this piece of software. If you are anywhere on the planet, you know it. You’ve been sitting in a shop and you’ve heard a song come over the radio and your “What is that song?” Well, you probably launched an app call Shazam right on your iPhone, right on all of your devises and you’ve probably launched that app and because your 1 of 170 million people that have done that and I have today David Jones who’s the EVP of marketing for Shazam Entertainment to come on and talk about how disruptive this technology is to the advertising and marketing space. David, thank you so much for coming on. I really appreciate you coming and telling your story.
David: It’s my pleasure. Thanks very much for having me.
Rob: I am excited about this because I’ve done a couple of blog posts and I do something called the Mobile Minute where I’ve talked about Shazam as a complete advertising, marketing disrupter and for those people who don’t know what Shazam is, which is astounding, what is Shazam, how would you describe Shazam?
David: Well Shazam is the world’s largest music discovery company. 175 million people are around the world to answer that age old question; what’s that song? In a matter of seconds we identify it whether it’s the radio, a public place, any music source, we identify what it is and you can instantly from that point on go on to buy the song, get more information, watch the YouTube videos, it’s been phenomenal. We’ve answered that age old problem over 2.5 billion times and we just keep on growing. The tag lines are off the charts. 5 million times a day people Shazam a song and what’s fascinating to me and us as a company is that 8% of the folks go on to buy the track or the album so we sell over $100 million of digital music through iTunes and Amazon but that makes us the largest affiliate for iTunes for example.
So people don’t just discover music, they identify it, they get the lyrics, they go on to buy it, they watch YouTube videos and those types of things. That’s what were known for and then in the last year plus we’ve gotten into Shazaming television shows and television ads which essentially expanse Shazam from being a music discovery company to being a media discovery company and were on the path to the point in the future where you’ll be able to Shazam anything and everything whether it’s discovering it, whether it’ engaging or interacting with something. We’re well on our way as we move from music into television and other media to basically make Shazam the go-to app, the first app you use to engage with and discover something.
Rob: So much in there and I’m going to pull back a second, but I’ve got say that you can identify almost every form of medium because I’ll tell you when I sing into Shazam it has no idea what I’m doing. It cannot detect anything. Whatever I’m hearing in my head is different than what comes out of my mouth which is clearly different from what Shazam needs to understand what the song is. It is an incredible application and when you guys, how long has the company been in business for?
David: Founded in 2000, launched in 2002, so coming up on 11 years of actually being in the market.
Rob: But really, the inflection point was mobile obviously right?
David: Originally it was a toll-free telephone call and you got the answer as a text message. That’s the circuit back in 2002, then we were built into a bunch of different handsets and carrier implementations in the mid 2000s and then no question, with Apple and the app store that launched July of 2008 we made a bet early on to build an app for the iPhone.
It was a huge success. Thankfully, Apple shone a light on it and included Shazam in one of their television commercials and from that point on the spark led to a forest fire and we’ve been growing like crazy ever since.
Rob: So 175 million people have downloaded this application, 2.5 billion songs scanned?
David: Identified. Yeah, exactly.
Rob: And $100 million in affiliate revenue. So you said that you’re driving 8% conversion rate from the people who scan to the people who buy.
David: One thing there though, it’s $100 million in digital sales. We make a single digit small percentage of that, but it helps pay the bills and keep the lights on.
Rob: Yeah, but when you talk about value chain for Apple. You’re contributing to their bottom line. When you ask them a question they’re more likely to answer because you’re contributing that kind of flow through.
David: Yeah, we’ve been a long-term partner, driving quite a bit of gross revenues for Apple and especially their iTunes business, so yeah, we have good relationships with them and different groups and yes, we float some ideas their way, they come to us, it’s a good two-way dialogue. We’re really pleased with the relationship.
Rob: Yeah, I can imagine. It’s about influence and the conversion rate of 8% from scan to buy, are you seeing that increase as people get much more comfortable with this kind of technology, purchasing through the devices? Or has it been pretty steady?
David: It’s been fairly steady and consistent. It varies by platform, 8% is our average. It’s lower on some other platforms where there’s more friction quite frankly, where the actual buying of music means you might have to download another app or they don’t have your credit card information the first time.
Obviously, Apple has nailed this from you have an iTunes account, they have your credit card, you probably had an iPod device before you had an iPhone and so your music is all in one place, so it’s just very easy to tag a song, click one button, we take you to the right place with an iTunes to buy the track or the album or to explore other music from the artist and it’s just a password away. So iTunes has really nailed it.
Rob: Yeah they have and when you talk about mobile commerce certainly they’ve done a great job of enabling that from the device. We’re all used to this right now. I got to ask this question, was that always the revenue model, which was an affiliate or sales like this? Was that the revenue model to begin with? I know you’ve only been there since 2010, and it’s probably changed since then, but it seems logical that that was a part of the revenue model.
David: Yeah, our core three revenues models back in the core music business, we had a paid app, a premium app, which you pay $5.99 for a lifetime version of our premium app. You had affiliate revenues primarily from purchasing music, but also from ticket sales in some cases and then advertising and sponsorship and so historically advertising has been the smallest of those three revenue streams.
We’re kind of turning the pyramid upside down here and focusing much more on advertising and sponsorship and affiliate revenues and much less on the premium app. That’s one of the reasons why back in April in Android and in September for iPhone we went unlimited on our free clients, so there’s no longer a 5-tag per month limit, it’s unlimited tagging.
You can use all the features as much as you’d like and the thinking there is we want Shazam to be part of your daily lives, something you use regularly, not just for music on the radio, but you can Shazam any music to get the synchronized lyrics. You can Shazam television shows and ads. We didn’t want to be counting tag results and figuring that out, we wanted you just to use Shazam as much as possible with all these different forms of media and have it become an even stronger habit.
That’s why we shifted away from having a freemium model and really investing in the free app being a great experience. Now that you can Shazam television shows and ads I think we’ll get into this I hope, but advertisers are paying us 6 figures to make their television ad Shazamable, and so that’s a major new revenue cheering for us. It’s made possible because there are 175 million people walking around with Shazam on their phone and essentially it’s so easy to Shazam a TV ad that this a new revenue stream that’s based on the massive reach we have because of the core music proposition.
Rob: There’s so much there and were definitely going to be talking about because the evolution and I think this is where we get into the core really disruptive uses of something like Shazam. I’m very interested in and before we get past this, when you guys moved, iPad for Shazam, I paid $6 unlimited, and you moved from the premium model, is that an indication about the way the app industry is going? When it comes to this is that people used to think that you could make a lot of money and there are corner cases of people making a lot of money in the app market. Everybody uses Angry Birds and we use it here because it’s a corner case and nobody can think of second one right? And there are. But was that just a realized that we’re not going to be $100 million or $200 million or $1 billion company by selling $6 app so we have to change our model. Was that the thinking behind this?
David: We didn’t change the model because of that. The business strategy started with music and is getting into media and we realized along the way that unlimited tagging and advertising and affiliates were our core new revenue our revenue should feature. That’s how we go from being valued what we are today to being a multi-billion dollar business it to tap into some of these new revenue streams beyond music even though there is still plenty of runway if you want to do it this way. Planning a runway in music because if there’s 6 billion devices in the world we have 175 million users which is phenomenal and the fourth most downloaded app of all time on iTunes on the iOS platform yet we only have about 3 or 4% penetration into the worlds mobile devices for music so were still investing in music.
Rob: Was it a hard transition that you made? Let me check that question, I’ll come back to that. When you guys moved form a freemium or a four path with a five scan limit into a complete open what happened to your numbers at that point?
David: Well certainly the number of new users and the retention rates and the activity levels all went up and we modeled it and based on what we knew and what we could think through and it was a big risk in the sense that we forgoing future known revenue for revenues that are tied to activity and retention and total user base and that is advertising and affiliate revenues but it’s paid off, it’s an investment we made, it’s actually cost millions of dollars to ramp up the infrastructure to support the tag lines and some opportunity cost revenues but were making that up on the other revenue streams and the strategic value of an even larger user base using us every day to tag more things. So that’s all going per plan, it was carefully planned, but it’s all going very well.
Rob: I ask because often time’s companies, there looking at the revenue stream Revenue do things, focus on revenue does things to people. I believe that you need a business model and you need to be smart about this but relying on a business that you know is wrong but is generating revenue kind of contains your decision making process. You know that the pain is going to be here but you know that you capped your growth lime and you know that you got to get over here where it’s completely open and you dive into it and you can create new product and create new enjoyments, audience engagements, but it’s sometimes very hard to let go of that piece that’s driving revenue and that’s why I ask. But I seem like you guys just kind of said we know that potentials, we’ve deiced where our revenue’s going to be and it isn’t here, it’s up here and there’s a gap and were going to have suck it up and bite that and just move.
David: That’s exactly what happened and thankfully we’ve got more directors and a series of financial investors who want to be up here as you just described. A multi-billion dollar company and to get there you make certain decision.
Rob: Sometimes there tough but we got an idea, when you’ve got a plan. I wanted to take one step here. How did you end up and Shazam? You restarted Friendster back in 2006 or so, what was it about Shazam that really drew you in or how did you get engaged with these guys?
David: Yeah, me personally. My history is from the ’90s mainly consulting and the telecom industry and the internet industries as it was being born, certainly in the formative days. 2000, 2002, it blew wireless a startup and voice activated and wireless data, applications long before “apps” existed, you were still building stuff for things for mobile devices and they were white labeled or built into the phones themselves. Then from ’02 to ’06, I was at eBay, I ran the entertainment business, the entertainment and vertical there for a while which included music and television, movies and books and tickets. It was a great experience there to run the entertainment vertical for eBay for two of my four years there and some marketing rules on the buyer and seller side.
Then took on a rather tough challenge in 2006, part of the exec team that re-started Friendster after some early success but then some hiccups, we retooled the infrastructure in ’06, re- launched, actually grew it to be the 8th largest website of any kind in the world, and, of course, the number one social network in Asia, and back in late 2009, sold it off to an Asian conglomerate out of Malaysia that really valued the user base and all the activity engagement over there, tough challenge to rebuild the brand, rebuild a reputation, actually restart growth and to get it over the finish line with a quickly event and a sale, but fantastic experience for me.
Coming from Friendster, looking what’s out there, what’s next, Kleiner Perkins was interested in me staying in the portfolio of its portfolio of the company’s, I need a recruiter that was recruiting for this particular role, I had other offers, but there’s no question that Shazam was on to something. Fun industry, great business, basically, the wind at its back filling the sails and it was a great opportunity for me to come in and help take it to the next level, along with some of the other new execs that have joined in the last two years, and about half our employees are new in the last two years It’s been fantastic, love my job, don’t think of it as a job, and I’m very fortunate.
Rob: Paving the way. When you came in 2010, was the vision clear for you that you were going to move into this entertainment place, the television, the advertisements? Was that laid out or was it appealing that just the music recognition had been discovered?
David: When I joined I loved the core music business, but I was also excited about the potential for television and other forms of media. At the time we had only done a single TV ad campaign that had shown promise and they actually extended their campaign because of the fact that I was Shazamable. It was a doctor’s ad in 2010 and that was the first indication that some medium and long term strategy and thinking for the business, there might be something there.
We went on to flesh it out, worked with NBCUniversal on making Warehouse 13 and Eureka shows on the Syfy channel Shazamable, we continued to test a couple of ideas on both advertisers and shows from that point forward and here we are a year and a half later with over 50 major second screen interactive customized second screen experiences, we’ve done dozens of ad campaigns over a dozen TV shows and TV events, we’ve done movie launches, music videos with Lil Wayne and Justin Beiber that are Shazamable, I mean, all sorts of things and it’s proven, quite confidently, that the technology works for a wide variety of reasons because enough people have Shazam, already, on their phones and that it’s so easy to use, there’s no friction, you just press a button, we instantly identify what you’re listening to or watching and from there we can start a rich satisfying experience, whether it’s engaging in television show content or shopping from your couch if it’s an Old Navy commercial, for example.
Rob: I got to ask, I want to dive into this because I think from an advertisers perspective, I’d like to know what you think that Shazam is going to do to have an impact on advertising and traditional advertising in television, as you said, the commerce aspect of it as well as extending brands and conversations beyond what you’re watching on television. I’ve often said that six foot gap between you and your television set doesn’t seem like such a great distance, but it is the biggest crevice between us, it is so deep because of that two way interaction and cable companies aren’t going to change, televisions try to add touchscreen and computers to it but still something’s missing and really this is really one of those big pieces that bridge that gap.
But I have to ask, but before we get to that, here’s my trailer, my teaser. You’ve got 175 million users. That’s an insane number. There are companies out there that have 10 thousand users, 10 thousand active engaged user or 1,000. When did you look at this and think what’s our threshold for revenue generation? Where does that number have to be or what did it seem it had to be for you guys where all of the sudden advertisers like NBC or broadcasts like NBC or advertisers like Old Navy or Dockers come to you guys. Where is that turning point for you, do you remember?
David: I don’t know what the number was back then but we were trialing things with shows and advertisers along the way for the last 18 months and it became clear that enough people had Shazam on their phones. Over 30% of iPhones in the United States of Shazam on them and each and every one them was put on there by the user, it wasn’t pre-installed. So we’re in a very fortunate place in that respect. Because advertisers and television shows have tried to promote their own apps and they know how hard it is even if there taking on air real estate and inventory away from selling into an advertiser and using it to promote their own apps. It’s really tough to drive those downloads and it’s really tough once you’ve driven the downloads to have a good experience that keeps them coming back for more and retain those users.
And so, with Shazam you go promote your own app, you can go work with some of the TV check in apps at the other end of the spectrum or just checking in a saying you’re watching a show and maybe post and your tweeting about, those experiences haven’t taking off and those apps are struggling. In the middle is the sweet spot. You’ve got 60 million users in the United States with Shazam on their phone that all they have do is press one button and their off to the races. There engaging with your content, with your show or an advertiser and so it’s the reach, it’s the ease, it a lack of friction. That’s what so exciting about this frankly. You asked about television advertisers, they spend sometimes $40 million sometimes on a TV ad campaign.
The old adage of I know TV works but I don’t know which half of my budget is working, it’s true and essentially television ads have never been pickable like the performance marketing we do online whether it’s display advertising, social media, you can track all of that stuff. In the case of television, it works but you can’t track who’s actually engaging. You can see, thanks to Nielsen, who’s viewing your ads and you know where you placed your ads but you don’t know whose interacting or expressing interest in your ads.
When you put a 5 second animated graphic on a screen of an app like Old Navy and all of our advertisers do, it just say Shazam now or shop to buy, whatever might do. That little visual clue lets people know that they can Shazam the ad or the show and the engagement starts from there. So we actually know who’s actually interested in the ad, watching a given show or a given channel in which the ad airs. We know interest level not just who’s be exposed to the ad and that’s very powerful to the advertiser.
And then beyond that we even know precisely what time of day, what zip code their tagging and so were sitting on a gold mind of data as to whose interested in that advertisers ads whether it’s an ad showing in 30 Rock or American Idol or some other channel or network. So we know which as placements are performing better from an interest in interactivity perspective which will be scary to some advertisers and some agencies because this is new information to evaluate how things are going but it’s incredibly invaluable to the agencies and to the brands as to whose engaging with their acts.
But let me just back up, one key thing, up until last year TV ads were not clickable but because of Shazam we can make an ad clickable and instantly in a couple of seconds with one button pressing on the Shazam app your off to a rich experience to shop the looks of the actors and the actress in an Old Navy commercial to get a quote from Progressive or find the nearest location for a Toyota dealership to learn more about the Chevy Volt. Whatever it might be, one button, a few second later and we can drop the user wherever the advertiser wants them within the funnel.
Rob: All right. I got to ask, when we’re talking about the transition right? So Shazam has long been known as a music discovery application right? So hold it up to the speaker, you moved into lyrics, this was natural, the data that you collected must have been incredible. You knew almost immediacy from all your users what songs were popular, what songs were on decline, week over week, day over day, you could almost program radio stations with the data you were collecting right? And you could actually predict, probably, what songs would be bought, the top of the charts. I love data and when you wrap analytics it’s very valuable. So you’re known as this, a music discovery application and then now your transition over to this which is a media interactive, as you said, to make ads click. How would you describe what this is? And what was the transition, from the brand perspective, when you went out to these advertisers and networks and said we are this but were also this, was there confusion?
David: Yeah, there is. It’s natural extension to new case that people already of today which is 85% of our active users actually do Shazam television shows and ads for the music today. So there already Shazaming for the music and so it’s a natural extension to just Shazam for a different reason. We need our people to learn what those new use cases are so it’s up to us to get the word out to our users and that’s why the televisions shows and the advertisers are taking a couple of seconds to promote the fact that it’s Shazamable and giving the valued proposition actually on the screen, Shazam for a free download, Shazam for free content, Shazam for scenes for the upcoming season of Grey’s Anatomy. Whatever the call to action will be it’s got to be onscreen and they get it and they’ll take out their phone and start to use it.
So over time, more and more shows, more and more ad campaigns will be Shazamable. I hope a year or two from now it will be engrained in everyone’s physic and actions and habits that the cause to action on screen actually won’t be necessary any more but for the time being were making a market. It’s important that those experiences are satisfying experiences so they’ll come back and do it again. That’s why we’re crafting these experiences carefully with the shows and with the advertisers. Like I said, over time, I think people will know what it’s about. It’s not just discover in terms of what’s that show I’m watching or what’s that ad I’m seeing, they know that, It’s a different type of engagement. It’s not discovering what it is, it’s just going deeper. It’s experiencing more. It’s getting more information or buying the product or what have you.
Rob: So we talked about metrics a little bit before because your collecting this and I’m making the assumption, like everybody else, that this an anonymous collection and you guys adhere to all that and I think that my listeners and views know that. This is not malicious intent. You don’t grow to your sings with that. You bought up a really good point about the advertisers is that they made a lot of money, the agencies selling advertisement and with that it can’t be measured. Do you think that there hesitant to find out these metrics about really how many people are influenced by these ads?
David: They’ll be people in all the different camps. I think some people are enthusiastic, they can’t wait to see what’s happening , to learn more, to diagnose it, the performance marketer and the CMO’s out there, a lot of them are very interested in this information and how to do better over time and ready for a change. The force of the entire industry is predicated on Nielsen metrics and a world that traditionally hasn’t been clickable where interest level is hard to measure and it’s just exposure and alternate results. So I’m sure some people are hesitant and perhaps even scared. We’re working with advertisers who are excited about trying this and we have several repeat advertisers because it works and as things grow I think the industry will change and embrace these types of new metrics and ways of doing business. It’s incredibly powerful when you think about how you could spend your television ad budget much more efficiently based on where you’re at as resonating and not just whose seen it and I think that’s really important.
Rob: Everything that I have watched you guys do over the last number of years, especially with Shazam, what you’re doing with Shazam and television and advertisers, this is so disruptive and I’m not really talking about just clickable ads because if you were just doing clickable ads I think okay well, it’s nifty, it’s neat, it extends that brand, I can find out more information, I can purchase something and I think that commerce is a key component but I see at some point through services like Shazam the influence changing the way ads are made as there sold. So no longer 30 second segments or 60 second segment ads; were talking about 10 second segment 2 second segments that when the technology’s there it’s almost immediate that it’s baked into every device that there’s ambient listening, which might be fearful for some, but the advertisement industry changes and whatever it is you can get your point across in 10 seconds be the rest of it happens on the device or whatever screen I’m sitting with. Do you see it happening like that, do you see fundamentally advertising changing because of the way that you guys are allowing interaction with the television?
David: Oh I expect we’ll see many of those types of things over time. I think on the one hand it’s early days because well, it’s proven and we’ve done scores of campaigns obviously it’s not pervasive yet. I think over time you’ll see many changes. I’m not sure if it’s in the length or the format or they style, there is direct response television out there where their trying to get you to dial an 800 number, trying to get you to like them on Facebook or go to this URL or type in that code to this short code or hold up the screen to the code to a QR code, line it up perfectly and press the button, oh I missed. In essence those are all the things brands are trying to get you to do today to actually turn brand advertising into a sale, to actually get you to respond. We compete favorably with that because we use the audio to automatically do that and so frictions slows so many things down and we are over coming that friction in so many different ways in all forms of audio related advertising including television and I think it’s very powerful.
So we’ll see what happens in terms of what do things look like two years from now but I think you’ll see everyone want to take that 15 or 30 second spot and turn into a four minute engagement and Shazam can do that. It’s happening on a second screen, it’s not directly on front of you in television and it may not happen at that moment in time and it may be delayed because when you Shazam an ad, it’s saved in your tag list for later and when you’re standing in line at Starbucks or waiting for a meeting to start you can go back to that and do the engagement later and we see that happening, actually, in the numbers both immediate results as well as delayed viewing or even going back as second and third time.
So I think programming that second screen experience jumping out of the TV into your hands on to the mobile device, you’ll see a lot more of that happening. We’re looking forward to working with even more innovative advertisers and television shows to actually think about taking the mythology behind the new television show or layers of details behind the TV ad and unfolding it, if you will, on the second screen or other media besides the television is incredible and that’s the opportunity.
Rob: I like to speculate on these things because I think mobile moves industries, it certainly disrupts it and certainly people call this the third screen, some people call it the fourth screen, I call it the first screen because I certainly look at this more than any other screen except for maybe the monitor.
David: Yeah, you’ve got them all covered.
Rob: But it’s a very interesting proposition to think that at some point that adage that you said, 50% of advertising works but you just don’t which 50% works. I wonder if we’ve come to a point where it really is a one on one relationship. When I scan a song with Shazam, I tag a song; you’ve reached me one to one. My location, my spot, you know my preference, you know that I don’t know that song and then when I go through the transaction, that’s a one on one transaction as opposed to a mass broadcast where then I go hunt for it and I eventually get to a store and buy it. Could we see a point in time where entertainment is like that? Where I’m in a movie theater, I’m watching television show, there aren’t distracting ads on the TV show, there aren’t distracting ads in a movie but I look up and I’m like, “Wow that screen right there, whatever’s on that screen, I Shazam at that moment and it’s like it detects where I am in that move, detects the theater that I’m and the city that I’m at and it’s says okay that guy’s wearing Levi’s, that’ guys wearing this shirt, he’s wearing Banana Republic, those are Burberry glasses and that’s a Mac Book Pro 23.1 inch screen, and here’s the inventory of a retailer that has all that stuff inside your city, store that for later.” That kind of experience is probably the pinnacle for what you guys are building.
David: Yeah, I mean, that’s not outside the realm of possibility at all. Product placement in movies and music is just one of the types of content that you can access instantly by using Shazam. We’re doing that already in some early stage work, but it’s going to get easier and easier as all these things come together and a lot of what you just described relies on perfect access to information, the metadata exists. What is that actor or actress wearing? Or where was this scene filmed? What’s that restraint? What’s the car? All of this stuff, if we can get it together and capture that before the broadcast, or during the broadcast if it’s live, we can feed on that and drive activity around all those sorts of things. I think we talk a lot about advertising, making television ads Shazamable, there’s an entire world of new revenue opportunities for Shazam in driving, through partners, actual commerce, making it easy to buy exactly what you see on screen whether we’re taking you to their mobile optimized store front, or whether we facilitate that some other way directly, but there’s a big part of the future revenue streams for Shazam around, whether it’s fulfilling revenue share, but definitely commerce, driving that commerce and making it so easy.
Rob: I think that if mobile isn’t driving engagement, deeper engagement so that it’s brand building between a brand and a consumer, or commerce, get out of the way. You just don’t want to replicate what’s going on right now which is, “Maybe I’ll buy, maybe I won’t.” You want to be able to influence that decision. Just like that 8 percent conversion rate from tagging a song, you want to be able to say, “Listen, you know what? When somebody tags a commercial it’s a 72 percent conversion rate for those shoes,” or whatever it is.
The other side of this, which is really interesting to me, is content. So I’m a content provider here, I put out a whole lot of content every week on UNTETHER.tv, for me it’s also about how Shazam is going to disrupt things like the DVD market because if I’m watching a movie and I want extras or alternate endings or bloopers, that, to me, should be Shazamable, I should be able to Shazam it and get the deleted scenes downloaded. Maybe I pay $0.99, if I’m watching it on TV, these are new revenue opportunities that, traditionally, I had to go and spend $60 on a DVD, but now I’m watching, say, Cars on television, and they have that little blooper reel that Pixar does, I want to be able to Shazam that, pay $0.99 and get that on my tablet or something. Does that play into your revenue as well?
David: I think it will over time, in the short term we’ve been trialing different things with television shows and with movies, movie companies, and movies themselves, where some of the best content that people want to engage with when they Shazam a television show is, for example, judges deliberations in a contest show or the full performances, for the bloopers.
Rob: It is content?
David: All of that great content because, think about it, they film all this great content and show much of it ends up on the editing room floor simply because they have to cram all this great content . . .
Rob: Unless you’re James Cameron, then he just puts it all in there.
David: There you go.
Rob: Or George Lucas.
David: That’s part of, if you’re interested, if you’re a fan of a show, you can get more information through Shazam or through their mobile optimized websites. A lot of the times they would park it on their websites or mobile optimized websites, but no one was going there. Back to the friction issue, you have to remember, you have to watch browser, type in a URL, find it, that’s a lot of work. If you can just Shazam to instantly get that content, that’s great. Think of the DVD bonus content for a DVD metaphor, all of that stuff still applies for television shows and events and that’s one of the key value propositions and things that work for users.
It’s funny you mentioned DVDs, [I Believe] DVD that was released just before Christmas actually has several Shazamable moments built right into it and we worked with them on that and it’s a great way to extend beyond just watching the DVD to get the bonus content and further engagement. That was our first DVD with Shazam. We have movie trailers that are Shazamable, a great example is Chipwreaked, I love saying that word so I’m going to say it twice, Chipwreaked, Alvin and the Chipmunks, all their commercials leading up to and through Christmas was Shazam and that was perfect was of turning a 30 second commercial into a two or three minute trailer or a 4 million engagement where you can save it on your calendar, go to Fandango and buy tickets. It simply makes sense and we can do it now and Shazam is doing it.
Rob: I just think that one of the signs for me that something sticks, aside from 175 million user and 2.5 billion texts, I think you’ve got something here right? In case you didn’t know before.
David: Were very fortunate.
Rob: But it’s like when you start to see the potential the possibility about how; we talk a lot, at least on this show and a bunch of other industry websites, about frictionless commerce like making it as simple and as easy to adopt and not behavioral changing. You don’t want people to change their behavior so if I’m sitting back on my couch, I’ve already pushed my button on the remote control, and it’s not very hard to think about pushing one button to get all this information, this wealth of information on your device. I’ve seen some, you’ve alluded to it before, the QR codes, I’ve laughed at this since I’ve heard about it and some have chastised me about it but Billy Ray Cyrus, he did this made for TV movie where it was QR code scan as an engagement. They guy who did this, or the company that did this, God bless them because he tried and he’s like I’ve had hundreds of scans and its like don’t tell anybody you’ve had hundreds of scans because that means to me that it’s a failure but then again it’s a Billy Ray Cyrus move. The QR has a place and I don’t think the QR code is on television where as something you’re doing you can tag anything. What are the technologies, is there any other technology that fits this that you guys can implement that Shazam can be like it’s TV, it could be on a train somewhere, its music, where else do you see this going?
David: Let me cover a couple of these questions. First of all QR code, I applaud anyone experiments and trying to do things. I think that’s good and people should do more and not less. Having said that, I think QR have their place I think in print media, billboards, magazines, those types of things on the airplane when your flipping through whatever magazine, might be there, that’s fine. I don’t think it has its place in video and television because there are certainly better ways to do it and because of the friction involved. In the case of the QR code, holding up your camera, launching the app, lining it up perfectly, it’s just too much work when there’s an alternative out there like Shazam where you press a button, it’s audio content recognition and away you go.
Now what are some of the other technologies out there? Well, when it comes to television advertising and, I’m trying to drive engagement, yes your competing with remembering to go to a store someplace when you see it, you’re competing with typing something into Google and doing a search, remembering and URL and typing that in, remember a telephone number and calling it, your also competing with short codes and sending a text opt to a short code and then I think, finally, our QR codes are there. So that’s the realm of how television advertisers try to get you to engage and get started beyond the commercial.
I think Shazam fits in there nicely and was demonstrating that that’s easier than almost all of those combined. I hope to have more data to share here publicly that tells just how much more compelling Shazaming something is compared to those other methods. We’re proving it every day with our advertiser and our television show partners and its working.
Rob: Last questions and then I promise David I’ll let you go. When you start to look at some of the results that you’ve had, I’m not asking about results, but I’m asking about companies; you start to use Shazam and this technology, I’ve read that up to a third of the ads in the upcoming Super bowl are going to be Shazamable so obviously this is taking a life of its own, but how do companies start to work with this to enhance their brand?
David: First of all, Super bowl as one example, it’s the most expensive time slot to buy and it’s not just the biggest game for national football, it’s the biggest night for television advertising so it’s where a lot of experimentation happens but there also so expensive that some people actually want to do what they think they want to do. So I think you’ll see many Super Bowl and Shazamable. We’re working with many different companies today and we’ll reveal more once that becomes public.
What’s so powerful here is that you can take that expensive $3.5 million per 30 second spot, you can take that 30 seconds and, again, turn It into 2, 4 minutes or get people engaged with a sweepstakes or a product a getting more information. It takes that first step of a commercial and turns it into the next steps and sends you on your way. Some advertisers love it, some are hesitating, but for the most part, this is the place where people go big or go home. You’ll see pretty exciting television ads during the Super Bowl that are Shazamable.
Rob: Couldn’t you just say, “I want to tag the Super Bowl?” I don’t know if you can answer this, but I’m going to ask this. I’ll give you a fair warning and don’t feel compelled to answer this, I’d like it if you could. The Super Bowl’s one thing, but, say, CSI, I’m watching CSI, couldn’t I just, as an advertiser, with Shazam, just say, “Anytime you here this guy’s voice, just through in my ad.” Everything becomes Shazamable where I don’t need network, I don’t need an ad. I start to think about that kind of stuff, where it’s tagged. Shazam can become almost a secondary ad network for people who can’t really afford to be on TV but want to be on the second screen.
David: Let’s talk about the Super Bowl, not just select ads on the Super Bowl can be Shazamable, the game itself is Shazamable, the half time show is going to be Shazamable, these are firsts, these are new things that Shazam has launched.
Rob: Is that from the network, or was that you guys doing that?
David: We are doing that in conjunction with various players involved in putting this together. When you Shazam the game itself, you’ll be able to get stats for the game and more information about the game side by side on the second screen while you’re watching the game. Same for the half time show, it’s one of the biggest performances of the year that any artist can do. Madonna’s there, we’ll have other artists join her at some point, if past performances are any indication of what’s coming. Fantastic performance that people have tried Shazaming in the past, this time, they’re going to be able to get a rich experience around the half time show. You can go see some of Madonna’s music, download her app, some other aspects to the half time show. These are exciting things and firsts that we’re rolling out on one of the biggest nights of the year.
Rob: But that’s the Shazam ad network. When you start to get up to 300, 400 million users worldwide and, maybe, 150 or 200 million users inside of the United States or North America, all of a sudden, that’s clout and when they’re looking at deciding between three and a half million dollars for an ad and whatever’s going to cost to be in a Shazam ad with a little bit more interactivity, you guys start to move up and that’s why I think, when it comes to ad networks and agencies and broadcasters is that Shazam, if you don’t see this, it is going to be one of the biggest disruptions to traditional advertising that we’ve ever seen. That’s the way I believe.
David: Couldn’t agree more and you’re right, you could, as a brand, by a certain show, network, what have you, we have some competitive issues that we need to navigate around. For the most part, if you’re Procter and Gamble or Pepsi or Coke, and you wanted to buy your way into the Shazam results of certain shows or certain networks, that’s absolutely something we can target and support today and as things scale that gets really interesting. There’s a whole new network that Shazam, advertising opportunity, I’m not going to call it an ad network yet, but that makes a lot of sense. For an advertiser to be able to buy positioning, if you want, on these television show results, that’s very powerful.
Rob: There are so many things that are not attacking, but encroaching on traditional broadcasts and networks, and certainly advertising like this, there’s going to be a point in time where a Super Bowl like this isn’t going to be able to charge three and a half million dollars because of all the auxiliary networks that are around it that people are still getting a tremendous amount of exposure to their audience. I’m in Canada, so we don’t get the great ads, so the Super Bowl is just a football game for us, a big football game, but if I can participate in the secondary network, like a Shazam network or Shazam ads, where I get enhanced content based on my location and my proclivity to buy.
That becomes very powerful, and that’s why, when people ask me, “What’s a disruptive company? Why do you think Shazam is so disruptive? It’s music,” no, no, no. They have users, they’ve got distribution, they’ve got an ability to tag, they’re building up advertisers, they’re testing it with traditional ads on television, and at some point, these guys are going to be the biggest ad “thing”–network, whatever you want to call it–in North America, perhaps on the planet, because of their user base.
David: That’s. . .
Rob: That’s pretty cool.
David: You left one thing out, which is we have mobile. We know where you are, generally, where you opt in to tell us where you are when you tag things, and we have social. Between those two things on top of everything you said, it’s exciting times for Shazam and for the industry.
Rob: I love it. I love it. So, if you haven’t downloaded it, just go and try it. It’s a cross-platform, right? It’s available on all platforms?
David: All major platforms, yes.
Rob: So wherever you are or whatever you buy, wherever you download your applications, go there. It’s free. Send them to shazam.com?
Rob: For more information.
David: From your mobile phone browser, and we’ll redirect you to the right store. Download the core Shazam. It’s one app that does all of this. There’s no separate app, so just get the core Shazam app. Use it for music, use it for television. If there’s an ad in the future, there’ll be more coming as well.
Rob: God, I love it. David, thank you. I really appreciate you coming in. You’ve been very candid. As you can see, I’m very enthusiastic about what you guys are doing. I love it. I’m not getting paid by Shazam to be this excited about it, but when you see technology that’s going to disrupt an industry, I’ve got to bring it to you guys. I have to. And you have to understand it, so we’ll be here until you do, and hopefully, you do by now. So, David, thank you so much for being a part of this.
David: My pleasure. Thank you.
Rob: I’ve been speaking with David Jones, who’s the EVP of marketing for Shazam Entertainment. Go to shazam.com. That’s with S-H-A-zed, or Z-A-M.com. Go and look at it in any app store, app world or marketplace that your device goes to. Download the application. If you’re in the states or anywhere where there’s a shazamable ad or any kind of media, reach out. Leave a comment where you found this episode. I’d love to hear about the experience, I might even have you on. So, if you’re interested in doing that, I’d love to hear about how things are going with your experience with a Shazam ad, and I’m sure David and his team would like to know as well. Thank you guys for watching. Wherever you are, whatever you’re doing, I really appreciate the fact that you spend a little bit of time here at UNTETHER.tv, listening or watching the videos, and we’ll be back next time for another episode of UNTETHER.tv. David, thank you so much.
David: You’re welcome.
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At Shazam, David is responsible for consumer marketing, including driving customer acquisition, engagement, activity and retention through a wide variety of programs and initiatives. David is based in Shazam’s Palo Alto, California office.
Prior to joining Shazam, David held Vice President of Global Marketing and Global Product roles at Friendster where he was a key member of the executive team that re-started Friendster in 2006, built it into the largest social network in Asia and a top 10 website of any kind globally in 2008, and successfully sold it to a large Asian conglomerate in late 2009.
He has also held several marketing and general management positions at eBay Inc, including serving as the director of eBay’s U.S. media and entertainment business (including music), and roles focused on scaling the number of active members of the eBay community.
David was previously the Vice President of Business Development at Blue Wireless and an associate partner at the management and technology consulting firm of Arthur D. Little.
David holds a B.A. from Stanford University in Quantitative Economics with Honors & Distinction, 1990.