By Julia Dimambro

YNOT EUROPE – When you combine the constantly changing landscape that is the mobile industry with the renowned innovation for which the adult entertainment industry is famous, how on earth do you identify the right business model for your business?

Let’s face it: If you’re anything like me, you are presented with a cavalcade of potential business opportunities on a weekly basis. But with mobile, most of the time you are travelling on an unpaved road. So much of it hasn’t existed before, so you have no case studies to refer to and only your gut instinct as to what you think will generate the big bucks and what won’t.

In theory, adult entertainment should narrow the scope of possible outcomes. The sheer consumer demand for adult entertainment leads us to believe that if there’s a sure bet of earning money on mobile, then adult will deliver. After all, it always has before!

In reality, however, the situation isn’t that simple. As I’ve pointed out before, the launch of the World Wide Web gave adult entertainment companies an uncensored distribution channel to sell their wares. With little more than a ‘Yes, I confirm I am over 18’ button to access +18 content, happy consumers had unlimited choice of erotic viewing without the embarrassment of placing a “Hardcore Gangbang” videocassette on the video store counter.

With mobile, things changed. Network operators control access to the end consumer, and at least in the beginning, on-deck portals were the only real way to reach them. Thus, the adult entertainment industry was restricted by the whims of mainstream, high-profile network brands. Not the best partnership of mindsets!

Now, thanks to the launch of the iPhone and a surge of other smartphones quickly finding their way into customers’ hands, the garden wall between the carriers and the adult industry has fallen as dramatically as the one in Berlin. Consumers are browsing off-deck and the adult entertainment opportunity is back on, albeit with some key differences in the scope of that opportunity.

With all the options available — and local restrictions and regulations still playing a very active role in how adult services collect money — how does one create sustainable commercial success without breaking the bank in the process?

As you beginning planning your mobile strategy, ask yourself several questions.

First off, what is your adult mobile product going to be? A mobile website? A mobile app? A video-on-demand portal? An affiliate program? A combination? How do you know which one will bring the best results for your company in relation to the investment you will put in?

Secondly, in which territories will you focus your marketing and sales? Local billing options must be considered, because there isn’t a single billing solution or company that does it all for adult.

As we all know, WAP or “on-bill” billing is by far the best converter for purchasing goods via a mobile device. In second place is premium SMS billing. The downside to both of these billing methods is that both are reliant on what kinds of adult products and services local telecoms allow. Many don’t allow billing via their networks for even the slightest glimpse of nipple.

The method with the lowest conversion rate is credit card billing, but this doesn’t necessarily mean the resulting revenues are any less than the other methods generate. Credit card billing works extremely well in some cases, because:

• You can bill customers anywhere in the world, much like on fixed-line internet, regardless of local operator restrictions; therefore, one solution fits all.
• It allows you more flexibility for charges — higher and multiple price points for subscriptions, per-minute billing for chat, etc.

Cherry Media works with two distinct types of clients:

• Mobile companies looking to add an erotic or adult component to their offering.
• Adult companies looking to add a mobile component to their offering.

In both cases, decisions about the right product and the right billing are based on a simple but proven strategy: Where and who are your current customers and what handsets are they using?

If you rely on digital traffic for your revenues, undoubtedly you already are using some great analytic tools to ensure your current services are optimized. Utilizing the same tools to scope out your adult strategy is imperative before embarking on mobile or adult projects.

Where your customers currently come from ultimately will define not only the best billing methods for your products, but also what kind of adult content you should be selling. For example, if the majority of your traffic is in the U.S., you won’t be able to bill for hardcore content via WAP or premium SMS, so you’ll need to incorporate credit card billing. However, users won’t want to go through the still-cumbersome credit card billing process for a $2 video clip numerous times, so you also want to be offering subscriptions, which account for about 90 percent of U.S. adult mobile sales. Alternatively, if you want to offer premium SMS or on-bill billing, you’ll need your content to be as soft as the lingerie section of the Sears catalogue.

In contrast, if most of your traffic is coming from the UK (where network operators offer both WAP and premium SMS behind robust age verification systems), you want to be charging per download or per view, as only 20 percent of adult mobile sales in the UK are subscriptions. However, because of the ease of adult billing, the marketplace is overrun with adult services, so your product should offer something different from the general “noise.”

If the majority of your customers are using iPhones, then forget a native app, because Apple won’t allow even sexy bikini apps in their store and there is no other way to sell iPhone apps. Opt instead for a web app (written in HTML 5) or an optimized mobile web portal for iPhones.

If current statistics are correct and you’re an adult company looking to go mobile, anything between 5 percent and as much as 30 percent of your traffic already could be accessing your site via their mobile devices. When you consider that customer interaction and experience is very different for mobile than it is for fixed-line, what experience are you giving them? Have you tried to purchase something from your site with a mobile phone? Are your conversion rates the same for mobile users of your service?

If you’re not already thinking about mobilizing your current services, then take a look at this chart from Morgan Stanley, which predicts that as early as 2014-2015, more people will access web sites via their mobile handsets than via computers.

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At the end of the day, combining adult entertainment (in whichever grading level is required) with consumer demand and mobile, which continues to demonstrate record usage growth, there is a solution for you to generate additional and sustainable revenue streams from this sector. The question is how, and that will be based on results from your current services.

As a quick initial guide, below is a chart of current “best-performing” business models (although other models are available) in the leading adult mobile territories:

(For Cherry Media Grading References, click here.)

For a no-obligation chat about how to approach your adult mobile strategy or how Cherry Media can help you, feel free to email us.

Julia Dimambro, founder and managing director of Barcelona-based Cherry Media, has spent the past 15 years in new media and digital communications with eight years specifically in mobile entertainment. After launching digital strategies and business divisions for companies including J. Walter Thompson, Deepend and Private Media Group, she set up Cherry Media in 2003 to enable brands and consumer-orientated aggregators to reach, acquire, engage and retain a receptive, high-spending and loyal client base. Cherry Media’s award-winning Cherrysauce operation is an industry leader in erotic mobile entertainment. Dimambro has been named one of the top 50 most influential executives in mobile entertainment four years running and one of the top 50 women in mobile three years in a row.