Webcast On-Demand: Top 5 Things Marketers Need to Understand about Location and Privacy

Webcast On-Demand

Consumers are ambivalent about online privacy. Some surveys suggest outright hostility to mobile-location tracking; others argue users are happy to share personal information for clear rewards and benefits. Consumers also express a desire for greater personalization of online, mobile and shopping experiences. How can these contradictory positions be reconciled?

The privacy landscape is evolving rapidly with Apple making location privacy changes in iOS 8 and state governments getting involved in regulating privacy in the absence of federal action.

Rather than an “issue that will blow over,” privacy has become a central discussion for marketers and brands. It’s the flipside of “big data.” But timidity, passivity and denial won’t work. Stakeholders must proactively tackle the issue head on.

Join Greg Sterling, Senior Analyst with Opus Research, and Future of Privacy Forum executive director Jules Polonetsky for an informative, interactive webinar about the latest developments in location and privacy on Wednesday, July 2, 10 am PDT /1 pm EDT.

Register for this free webcast today.

Google Project Tango and aisle411 Team Up for Augmented Reality Shopping

Project Tango is Google's new 3D mapping technology. It uses the smartphone's camera, gyroscope and accelerometer to do indoor mapping (based on SLAM -- simultaneous localization and mapping).

This approach doesn't require additional hardware installation (even Beacons). It just requires smartphones to do the initial mapping. It's one of three or perhaps four such approaches now emerging. Others include Indoor Atlas and FlyBy Media (a Tango partner). 

At Google's developer conference I/O last week the company was showcasing various uses of Tango, one of which was in a retail environment through a partnership with aisle411. The latter implemented Tango in Walgreens to generate in-store augmented reality (AR) shopping experiences (see video below). 

Product locations are married to a store map, created using the Tango technology. Using a smartphone or, in the video, a tablet fixed to a shopping cart, the end user can see product locations, map shopping lists to a floor plan and see enhanced product information or coupons "pop up" on the screen. 

Aisle411 says the technology allows for accuracy "within centimeters." This is a pretty interesting variation on some of the indoor location scenarios we've been discussing and exploring. However one question is whether stores will equip shopping carts with tablets, which could be expensive and risk theft. On the other hand this AR experience is potentially less satisfying and effective on a smaller screen smartphone -- users are unlikely to hold them out as they walk down store aisles. 

Regardless it's a pretty interesting marriage of digital and real-world experiences in a shopping environment. Aisle411 will be speaking on the indoor location technology panel at next month's Place Conference on July 22 in New York. 

The Outlook for (Monetizing) Wearables

Before we can truly discuss the outlook for wearables we need to see Apple's iWatch and how much it costs. There are already a dozen or so smartwatches in the market, chief among them the Pebble and Samsung devices. Most of them have already failed.

The Pebble is a qualified success. However, there is really only one truly desirable smartwatch coming to market so far -- and we don't yet know the pricing. That's the Moto 360. 

The Samsung and LG watches ($199 and $229 respectively) shown off at the Google developer conference this week seem like decent but not great devices. As fashion items they leave much to be desired. I haven't yet used them so I can't comment on the experience. I have the Samsung Galaxy Gear Live (Android Wear). 

Nielsen reported yesterday that it tracked a "surge" in wearables adoption (fitness trackers and smartwatches) and usage between September 2013 and February 2014. The company added that "these wearable owners used their devices an average of 14 times during the month." The measurement firm also observed that smartwatch owners log a lot of time monthly accessing the internet and content on those wrist devices: 

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There's a question about whether the time is additive to existing mobile device usage or whether it cannibalizes some of that time. Regardless, the data above are very interesting, suggesting that with the right devices (mix of fashion + function + price) wearables could become a mainstream reality with fairly high engagement and diverse use cases.

The next obvious question about wearables surrounds marketing and monetization. Ad exchange TapSense announced earlier this week that it would be supporting delivery of ads to smartwatches. Those ads will likely follow the same pattern as early mobile display advertising: lackluster or perfunctory ad creative and weak or awkward overall experiences.

Most companies won't build anything like landing pages optimized for wearables. And most of these early ads will probably be for other app downloads. 

More likely to be effective are app-based notifications. For a long time SMS marketing held promise as a loyalty and location-based notifications tool. Today that promise has largely faded. However wearables may offer another go at that opportunity.

Consumers could, for example, opt-in to receive location-based notifications -- including indoor alerts -- that might contain marketing content (awareness or DR calls to action). This approach is probably going to be more effective and less awkward than ads within tiny apps on your wrist.

Paradoxically apps with ads that are too small to be noticed won't be effective and ads that are too large are likely to annoy. As "personal" as the smartphone is a watch is going to be even more personal in some respects -- and thus people may be less tolerant of conventional advertising on these devices.

Search content/ads may be an exception. Still you can't show many ads on a 2.5 inch screen. 

If Ad Spend Matched Time Spent Mobile Ads Would Be Worth $29B This Year

Earlier this week comScore reported that mobile devices (smartphones + PCs) were responsible for 60 percent of total digital media time in the US (chart at right). Traditional TV is still the king in the US in terms of overall consumer time spent. 

More specifically, comScore said that US users spend 51% of all their digital media time in mobile apps. The firm reports roughly 83% of mobile media time is app-based (vs. the mobile web). Nielsen puts the number at 89%. 

I spoke to comScore at some length about these numbers. We agreed that ad dollars would eventually follow the consumer traffic migration. The question is how long it might take. For the past few years mobile ad spending in the US has roughly doubled YoY (per the IAB):

  • 2011: $1.6 billion
  • 2012: $3.4 billion 
  • 2013: $7.1 billion 
  • 2014 (projection): $14 to $15 billion 

Total digital ad revenue in the US for 2014 will probably be around $49 billion. If time spent and ad spend were aligned mobile would capture more than half of that number (and in-app advertising the bulk of that). Accordingly mobile ad revenue would be $29.4 billion and PC ad revenue would be $19.6 billion. 

That would be radical.  

Price Matters: Amazon Fire Blew It, Will the iWatch Learn from That Mistake?

There were early, hopeful rumors that Amazon's smartphone would be free. What a radical move that would have been.

That free rumor was quickly quashed by Amazon. Indeed, when it showed up last week the Fire phone was priced like an iPhone: $199 with a two year contract or $650 unlocked. I was very surprised by this "premium" pricing. 

Amazon CEO Jeff Bezos feels he's developed a premium phone and that consumers will also see it that way. True, Fire does have a number of stand-out or innovative features:  

  • 13MP rear camera
  • Firefly: Shazam for the real world.  
  • Unlimited, free cloud photo storage
  • Deep integration of the Amazon content and services ecosystem 
  • Free “MayDay” video customer service
  • Dynamic perspective: a kind of 3D experience on the home screen and for games
  • Free year of Amazon Prime for new customers

Yet one can't escape the feeling that this device has been designed almost entirely to promote Amazon, its content and e-commerce. The user is somehow secondary or merely a vechicle for the realization of Amazon's broader mobile ambitions.

The early reviews have been very mixed. Consequently few iPhone buyers will switch and the same is probably true for those loyal to Samsung Android devices. Amazon's loyal customers are the likely buyers of this handset. While that's millions of people it's not enough to make the phone a true hit. 

Had the phone been more aggressively priced, as the Kindle Fire tablet was when it launched, the story would be very different. In all but a very few cases price matters. An unlocked $199 Fire or, ideally, unlocked $149 Fire would generate significant sales. Then, I believe, Amazon would have had a massive potential hit on its hands. 

Consider that Motorola sells the 4G Moto G Android phone for $179 -- unlocked. Between the Amazon phone and the less flashy but still well-equipped (and much cheaper) Moto G, the choice is obvious: Moto G. 

As with the Fire, now destined for disappointing sales absent a price cut, the price of Apple's forthcoming iWatch matters. The device (or devices) will be released, according to reports in October.

Financial firm Piper Jaffray surveyed 100 people (too small a sample) and asked about interest in a $350 iWatch. Apparently only 14% (or 14 people) said they were willing to buy a $350 iWatch. The survey extrapolates limited demand from those findings. 

The conclusion of that there's only limited interest in smartwatches is wrong. There's considerable interest in the market. Surveys by Opus Research, Nielsen and others suggest a potential market in the US of more than 100 million people. There are two key variables however: design and price.

The Samsung Galaxy Gear watches failed not because of price ($299) but because they were ugly and poorly designed. We can expect Apple's iWatch(es) to be well designed but the price is an issue.

If Apple can price these devices below $300, and preferably below $250, they're likely to see considerable sales volume. But above $300 the market will be more limited, as the Piper Jaffray data suggests.  

Apple needs another hit product so it would do well to take a lower margin on the iWatch in favor of boosting sales and making it more accessible and affordable for a larger population.  

Beacons Found to Increase App Usage and In-Store Engagement by Nearly 20X

Beacon marketing provider inMarket released some data drawn from its shopper/store base that show Beacons and associated content/offers can increase app usage, retention and brand engagement.

The company looked at a sample of 25,000 in-store shoppers across its app network during April-May of this year and found the following averages:

  • Interactions with advertised products increased by 19x for users who received a beacon message.
  • In-store app usage was 16.5x greater for users who received a beacon message.
  • Shoppers who received a beacon message were 6.4x more likely to keep an app on their phone, versus those who do not.

These findings reinforce others that already exist and highlight the potential to improve the in-store experience and boost sales both for retailers and brands.

We'll get a drill down and more in-depth look at in-store Beacon usage/engagement data from inMarket partner Hillshire Brands and its agency BPN Worldwide at the Place Conference coming up July 22 in New York.

This kind of data is a counterweight or argument against the notion that consumers are hostile to indoor location, which several surveys and media reports seek to portray.

Mobile Ad Revs Over $2B in Q1, Could Hit 30% of Total for 2014

This morning the IAB put out a press release that reported $11.6 billion in digital ad revenue for the first quarter of 2014. However the trade association did not indicate how the numbers were broken down by channel and category. 

In 2012 mobile advertising represented 9% of total US digital ad spending. In real dollar terms that was roughly $3.3 billion. In 2013 mobile advertising grew to be 17% of total digital ad revenue or nearly $7.1 billion. 

Mobile advertising could double again in 2014 and reach between $14 billion and $15 billion. If so, by my calculation, it would represent nearly 30% of total US digital ad revenue -- assuming a full year 2014 projection of roughly $49 billion.

In Q1 mobile ad revenues were probably in excess of 20% of the total. In Q4 2013 they were 19% (though 17% for the full year). At 20% mobile ad revenue would represent $2.3 billion of the Q1 2014 $11.6 billion.  

Report: Weather Apps Have Highest Retention, Games the Lowest

App retention is getting better, according to Localytics. The company said that only "20% of apps are used only once, an improvement of 6% over four years." The data in the report were collected from 1.5 billion devices and 25,000 apps using the Localytics platform. 

Localytics attributes increased retention to better developer-publisher "understanding of and focus on user engagement that has enabled developers to create more useful and personalized apps." Here are the aggregated topline data: 

  • 20% of Apps are only opened once, improving from 26% four years ago
  • During the same period, the percentage of apps used 11 or more times increased 13% and now comprises nearly 40% of all apps.
  • Sports and Games apps have the highest app abandonment rate, whereas Weather and Social Networking apps have the lowest

overall chart

In a worrying development for iOS developers, Localytics says that iOS showed weaker app retention than Android:

In 2013, both Android and iOS had the same percentage of apps (34%) with 11 or more sessions. Now, Android has surpassed iOS in app engagement by increasing to 45%; nearly half of Android apps are opened 11 or more times, whereas only a third (34%) of iOS apps are.

The company speculates that "iOS users may be suffering from app overload. With the relatively larger number of apps installed on iOS devices, competition for an iOs user’s time increases and can weaken retention." 

platform chart

As indicated, weather and social apps showed the highest retention while sports and games had the highest percentage of one-time usage. Localytics observes that social networks are filled with personalized and highly dynamic content.

Yet sports apps have dynamic, changing content (e.g., scores) too. Perhaps personalization is a missing element or, alternatively, sports content may be highly "generic" and widely available, making any individual app less compelling. 

category chart

Report: "Magnetic Positioning: The Arrival of Indoor GPS"

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Precis

IndoorReport_cover

Technologies for indoor location and offline analytics differ substantially in their costs, capabilities, accuracy and longevity. But these technologies remain largely undifferentiated in the minds of many brands, retailers and venue owners who’ve had limited exposure to them in the real-world. In this report, Opus Research delves deeply into one such technology, magnetic positioning, to understand how it differs from its competitors in offering precision accuracy without any hardware requirements and a relatively low total cost of ownership.

To see a preview of “Magnetic Positioning: The Arrival of Indoor GPS,” an Opus Research report written by Senior Analyst Greg Sterling, click here

Featured Research is available to registered users only.

For more information on becoming an I2G client, please contact Pete Headrick (pheadrick@opusresearch.net).


Forecast Shows Google Losing Mobile Search Share While Yelp Gains

A new report from eMarketer argues that Google is leaking mobile search revenue to apps. The forecast in the document says that US mobile advertising in total will reach $17.73 billion this year and search revenue will constitute just over $9 billion of that total. 

Last year the IAB reported $7.1 billion in US mobile ad revenue, roughly double the year before. If mobile ad spending were to double again it would reach between $14 and $15 billion. Getting to nearly $18 billion is a stretch. However eMarketer casts a very broad net around mobile advertising, including email and services like "site optimization" that don't involve any media spending. 

Mobile search share

Regardless of definitions, the consumer tendency to use apps rather than the mobile web is apparently taking a toll on Google’s mobile ad dominance. According to the forecast, Google's mobile search ad share was 83% in 2012, dropping to 68.5% last year. These numbers are somewhat deceptive because Google's mobile revenues are still growing and the company continues to have the largest individual share of global mobile ad spending. 

What's happened, however, is that more money is flowing into mobile generally (and mobile search advertising) and some of that money is being spread around to places other than Google. Among them, YP and Yelp are called out in the report.  

YP has been one of the (surprise) top five mobile ad companies in the US. However eMarketer projects that YP will lose share (though potentially grow overall revenue), going from 7.6% of total US mobile search revenues in 2013 to 4.1% in 2016. By comparison Yelp will grow from 1% in 2013 to 1.9% of search ad revenue in 2016.