According to new data released by Flurry apps have solidified their hold on mobile user behavior, claiming 86% of all time spent on the mobile internet. Early prognosticators believed that mobile apps were a temporary bridge to the mobile web and would eventually give way to the "open internet."
That obviously hasn't happened. Perhaps years from now things will be different.
Earlier this year, consistent with Flurry's report, Nielsen found that about 89% of all time spent in mobile is with apps; 11% on the mobile web. Yet, despite this massive time-spent imbalance, the mobile web still has greater audience reach than mobile apps.
Among mobile apps, gaming is still the single largest category with 32% of time spent according to Flurry. However Facebook (including Instagram) is by far the dominant individual app, accounting for 17% of all time spent. By comparison YouTube captures 4% and Twitter 1.5%. Apple's Safari browser grabs 7% of time spent and Google's browsers 5%.
Ad spending in mobile is growing quickly as brands and marketers race to catch up to consumers. According to the chart below Google claims a disproportionate share of ad spend, while Facebook is more or less in balance. By comparision the long tail of apps fail to capture their share of ad spend -- suggesting significant future growth for in-app advertising.
An app developer and publisher survey conducted this year by App Annie found that only 42% monetized with display advertising.
Live Webcast: Wed., April 30, 2014 - 1:00pm ET / 10:00 am PT
Beacons are hot. Once dismissed by many, they are now being widely deployed in retail and grocery stores, stadiums and entertainment venues. Apple’s support for Bluetooth (iBeacon) has put the technology on the map and driven its growing adoption.
While many people have read about iBeacon, they don’t clearly understand what beacons can and can’t do. Join Opus Research Senior Analyst Greg Sterling and Steve Hegenderfer, director of developer programs at Bluetooth SIG, for an informative and interactive discussion about all things beacon.
Bluetooth SIG is the group that oversees the standards and licensing of Bluetooth. We assure you Hegenderfer will speak plain English during a presentation aimed at marketers, agencies and business decision-makers.
In this accessible, non-technical session you’ll learn:
From the beginning, after Nokia announced that it was embracing a third party mobile operating system (Windows), I argued that Nokia should have also released Android devices. And in something of a surprise, we learned late last year, after the $7+ billion acquisition of the company's hardware division by Microsoft was announced, that Nokia had been secretly working on an Android handset.
Chinese and other Asian regulators have delayed the closure of the Microsoft-Nokia transaction, which has now been pushed to the end of April. But it still should be approved and close.
Earlier this year we got to see the Nokia-Android handset, the Nokia X (and its kin). The company created a Windows Phone-like UI and overlaid it on top of a semi-forked version of Android. The idea is to bring low-end buyers into the Nokia fold with a Windows-like Android UX and Microsoft services and then upsell them into a true Windows-Phone experience.
Intended to be highly affordable the Nokia X has now rung up 10 million pre-orders in China. These are not actual sales (yet) but reservations to buy the phone when it becomes available in the near future. This impressive level of demand indicates that had Nokia been building Android phones all along it might now be in a very different position and potentially wouldn't have had to sell to Redmond.
Of course Microsoft, heavily dependent on Nokia, recognized its own vulnerability and essentially bought the Finnish company's devices division for defensive reasons. Had Stephen Elop made different OS choices, Nokia might today be vying neck-and-neck with Samsung for position as the top global Android OEM.
Yesterday on the conference call discussing the $2 billion acquisition of Oculus VR, Facebook CEO Mark Zuckerberg also told the audience that it now had one billion mobile users -- quite a milestone. The company previously reported in its Q4 2013 earnings that it had 945 million "monthly active" mobile users, as of December 31, 2013.
Daily mobile users are now probably around 600 million on a global basis.
Ad revenue from mobile devices in Q4 was "approximately 53% of advertising revenue ... up from approximately 23% of advertising revenue in the fourth quarter of 2012." That means the mobile ad-revenue number will likely be 65% or greater by the end of the year. Twitter gets roughly 70% of its ad revenue from mobile, based on its most recent earnings report.
Even though mobile experiences, advertising and marketing are still relatively young (since 2007), Facebook is looking beyond mobile to the "next computing platform." For Zuckerberg that's virtual reality.
He's potentially right.
However much depends on whether and how virtual reality can be translated into a mainstream experience. It's not unlike taking original IMAX and turning it into a smaller but more "accessible" cinematic IMAX for popular film releases.
Beyond gaming, which is Oculus' current pursuit, Zuckerberg articulated the idea of bringing people (virtually) into places, events and experiences in a more immersive and direct way. There are both commercial and non-commercial scenarios. Many of them, however, are straight out of science fiction or dystopian novels and movies (see, e.g., Matrix, Demolition Man, Strange Days).
Paradoxically, the Oculus acquisition brings Facebook more into the "real world" (away from 2D internet) but also offers new potential opportunities to create internet-like experiences for users, into which they can enter. One such example might be strolling down a virtual shopping street, like a character in a 3D game, where people can "touch" and examine products in a holistic 3D experience.
It's fascinating to contemplate an internet of the future that might be radically different than what we know today.
The notion that retail apps or mobile sites should primarily be a shrunken ecommerce experience is misguided. That idea, however, is promoted in February survey results from RSR Research. The survey data reflect how retailers regard the role and value of mobile.
The results divide retailers into "winners" (market leaders) and "all others" (presumably laggards). Among the winners, the top use case for mobile is "an ecommerce site that can extend into mobile." That's followed by "downloadable shopping app, "public WiFi in stores," and "employee assisted selling mobile capability."
It's a bit unclear what these secondary responses mean. However I assume they all pertain to an offline or in-store role for retail apps or sites.
Source: RSR Research
RSR celebrates the notion that the primary role for mobile is to extend ecommerce into mobile: "an eCommerce site that can extend to mobile is the best technology approach for their customer-facing mobile strategies." I disagree with this philosophy.
Although most smartphone users have conducted transactions on their handsets, this is not the primary shopping-related use of smartphones. The overwhelming majority of ecommerce transactions that involve mobile, start on a smartphone and end in stores or on a tablet/laptop later.
A recent ShopVisible survey illustrated that while mobile devices drive 30% of ecommerce/retail traffic, they're only responsible for 15% of purchases. But beyond this the data show that smartphones only generate 4% of "mobile orders."
There are range of surveys with different percentage findings about mobile transactions. But directionally they're virtually all the same: consumers use smartphones as a critical part of the shopping research process but when it comes to buying they do so on PCs, tablets and, overwhelmingly, offline in local stores. (Internet influenced offline spending is probably worth more than $2 trillion annually, many times larger than ecommerce.)
We don't argue with the idea that mobile apps and sites have an important role to play in ecommerce (tablets especially). Despite this, smartphone retail apps should be thought of primarily as a tool to aid the offline shopper. Most of the current deficiencies of the offline retail experience (lack of competent in-store personnel, inability to find products, additional product information) can be mitigated or addressed with a strong in-store app experience.
It's also possible to "have it both ways": to emphasize ecommerce when the user is far from the store but use location detection (and opt-in) to offer a in-store experience that features shopping lists, product information, buying incentives and in-store maps/navigation (where appropriate).
Juxtaposing ecommerce and offline commerce is something of a false dichotomy. Offline shopping support should not be neglected, however, because retailers are focused on trying to drive mobile-commerce transactions (because they misunderstand consumer behavior). Retailers should provide an ecommerce catalog in mobile while still recognizing that there's far more value and opportunity in supporting the real-world shopper.
There have already been several surveys that show consumers are interested in the benefits of indoor location and will share their personal data or opt-in when they're clear on what those benefits are. See, for example:
A new survey (n=1,024 US adults) from OpinionLab shows that consumers are skeptical about indoor "tracking" and only want to participate in indoor location and marketing programs if they're opt-in. In an article about the survey Fortune sensationalizes the findings "Consumers hate in-store tracking (but retailers, startups and investors love it)."
That headline overstates the degree to which consumers are hostile to being located in stores. It's very fair to say they're ambivalent and cautious about indoor location, though most haven't had any experience of indoor location at this point and are speaking only in the abstract.
The use of the word "track" is very charged and that's the framing here -- "In your opinion, is it acceptable for retailers to track shoppers’ in-store behavior via smartphone?":
An alternative question such as "would you be willing to share your location with retailers for benefits X, Y, Z" would have produced a different result. Indeed, how surveys present these issues to consumers really matters (see, e.g., Majority Of Shoppers Want Cross-Channel Personalization.) Accordingly survey results can be manipulated to serve agendas in favor of or against indoor location.
Another question in the OpinionLab survey similarly predisposes the outcome -- "If one of your favorite retailers were to implement a tracking program in their stores, would you participate?":
This survey found that consumers are open to indoor location if the programs are entirely opt-in (even with the "tracking" framing) -- "In your opinion, what is the best way for retailers to approach in-store tracking?"
Consistent with earlier surveys, consumers say they would opt-in for discounts and other incentives -- "What incentives would motivate you to participate in a retail tracking program?":
What this survey, like others before it, shows is that consumers have real privacy concerns about indoor location and tracking. However, the word "tracking" is one that triggers an immediate, negative response and associations (i.e., "surveillance," "spying"). By contrast, discussing the benefits of indoor location produces a very different set of findings (see other surveys).
Yet the OpinionLab survey also shows that uncer the right circumstances consumers will share their location where retailers ask for permission (opt-in) and the benefits are sufficiently enticing and clear.
Despite my criticisms of the framing of the OpinionLab survey I think it does illustrate that there are clear risks for retailers around indoor location if they don't respect consumer privacy and don't get the messaging to consumers right.
At the upcoming Place Conference Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will moderate a session on consumer privacy: "Indoor Location & Privacy: Steering Clear of the ‘Creepy Line.'"
Last week Google announced Android Wear, its smartwatch platform. Later in the week Nielsen released consumer research asserting that 70% of US consumers are aware of “wearables" and roughly 15% currently own some type of wearable technology today.
Among the 15%, Nielsen found the following breakdown:
The Nielsen survey probably overstates the number of Americans that actually own/use wearables currently; 15% of adults would translate into roughly 36 million people. Nielsen also found (I tend to believe this): "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." We found in our own research that roughly 40% of smartphone owners were interested in smartwatches.
An article in Mashable speculates about the role that advertising might play on wearable devices. The article correctly notes that consumers will be far less accepting of "interruptive" ads on wearables. As much as smartphones are perceived to be "personal," this goes 2X for something like a smartwatch.
So-called "native" advertising may have a role to play in the context of a stream of news or other content, delivered on a smartwatch. But most if not all "advertising" on smartwatches will need to be opt-in marketing. These could take the form of location or time-based alerts or notifications (this could extend into indoor location and marketing as well). These types of marketing could prove to be very effective -- emphasis on the word "could."
The bottom line is that all marketing on wearables (mostly smartwatches) will need to be highly sensitive to user privacy and almost entirely permission based.
According to Bloomberg, Burger King is readying an app upgrade that will allow users to pay with their smartphones. Little detail is provided beyond that.
There are already app-based payments using the chain's "Crown Card," a stored value card that can be reloaded and can be presented physically or virtually via mobile phone (like Starbucks). It's not clear if the Bloomberg report is referring to this or a new options to upload and store a credit card in the Burger King mobile app.
Regardless, the move will motivate fast-food rivals to similarly adopt in-app, mobile payments. Mobile ordering for in-store pickup (a la Chipotle) is expected to later roll out. The rationale behind the move is obvious: more efficiency, more customer data and greater overall customer satisfaction.
As I've argued elsewhere mobile transactions and self-service ordering will eventually eliminate many thousands of low-skilled cashier and service worker jobs in places like Burger King.
Finally this is another example of mobile payments being introduced in a very specific context. Broad, horizontal payments tools and platforms such as Google Wallet and Clinkle are struggling while in-app or stored card payments are taking off in more narrow contexts (e.g., Uber, OpenTable).
It's likely that Burger King's mobile payments will be widely adopted by loyal and regular customers. However it's not clear this will improve the company's competitive position vis-a-vis McDonald's. I suspect McDonald's will follow with its own mobile payments functionality in the relatively near future.
Update: QSR chain Wendy's has now also announced that it's rolling out mobile payments.
Long anticipated, Google and several partners today announced Android Wear (smartwatches). Immediate partners are Motorola, LG and Fossil. HTC and Samsung are also on that list (although Samsung previously appeared to abandon Android for operating system Tizen in its Gear 2.0 smartwatches).
Several designs were teased by Motorola and LG but no actual products were formally announced, nor were prices revealed. We also don't know if these watches will need the connectivity of an owner's smartphone. I suspect they will but it remains to be seen.
It appears that the UI and functionality of all of these Android Wear smartwatches will be the same or very similar. Thus design and price really matter for differentiation among watch makers. Accordingly, there are lots of "smartwatch wars" headlines now going up. Apple is also supposed to release a smartwatch this year if rumors are correct.
Google said in its promotional videos that it designed a new UI to accomodate the small form factor. The user experience will be based on voice search ("OK Google") and Google Now/notifications.
Not trying to do too in a smartwatch much is critical. Samsung's Gear 1.0 watch tried to do and be too many things. Furthermore, Google benefits from having developed a UI/UX for the very small and awkward form factor Glass.
Unlike Google Glass, however, smartwatches have the potential to become a mainstream consumer success. In a survey we conducted last year (n=1,000 US adults) 40% of smartphone owners were interested in a smartwatch in the abstract. An actual product with a compelling design will boost that level of interest.
Most smartphone owners in the survey, who expressed interest, indicated they wanted a watch using the same OS or brand as their current phones.
An article in HBR today discusses what we've known and been writing about for some time now: location analytics is a major "must-do" opportunity for retailers and others (airports, hospitals, casinos, colleges, mall owners, entertainment venues). See also: Report: "Mapping the Indoor Marketing Opportunity."
The HBR piece discusses various provider-vendors (RetailNext, Placed, Euclid) and retail scenarios (operations, staffing, merchandising) that will benefit from indoor and offline analytics. However one of the major issues in the space is privacy and consumer acceptance. The article neglects to discuss privacy at all, although many of the comments raise the issue.
Location analytics can be done in such a way to avoid any PII collection while giving customers the ability to opt out of any indoor tracking (save closed circuit TV). The Future of Privacy Forum has introduced an opt-out (a kind of do not track indoors) website SmartStorePrivacy.org. This is a voluntary thing at the moment, though with many analytics firms signing on. But it will likely become mandatory at some point in the near future.
Despite ominous portrayals of indoor location by some journalists, it's not a very scary thing when you actually see it in action. Surveys conducted by Opus Research and others have found that most consumers will happily opt-in to location tracking when there's a value exchange that they understand.
Affirming this again, Swirl released some new consumer survey data (n=1,000 US adults) that found:
Whether or not these specific findings are replicated at the same levels by other surveys, their general sentiment is: consumers are receptive to in store promotions and content and happy to share location information with a clear value exchange.
Where indoor location and privacy become potential issues is when there is no consumer experience: if retailers or others are simply collecting data without offering value in return to consumers. Under such circumstances (where opt-out is offered or later required) we might see substantial numbers of consumers opting out of indoor location/tracking.
My belief is that ultimately the FTC will compel explicit disclosures and signage where location analytics and tracking are present giving consumers the ability to opt out. Burying a notification such as "by using our WiFi you agree to let us track you" in terms and conditions isn't going to fly for much longer.