The mobile payments space is a little like the local market: lots of promise, lots of money but very hard to crack. Yesterday a young entrepreneur and his payments startup Clinkle received a $25 million vote of confidence from a group of celebrity investors.
This was reported to be the "largest seed round ever." Whether it is or not $25 million is a lot of money for yet another mobile payments app. While it's true that nobody in mobile payments has "broken through," Clinkle will have a tough slog as it tries to build both merchant adoption and consumer usage.
Once again it's the "cold start" or "chicken and egg" problem.
However, according to the NY Times, there's no merchant hardware requirement for Clinkle and the go to market strategy involves a Facebook-like focus on college campuses and surrounding businesses. That may be a key decision and help the startup gain some quasi-critical mass in selected markets among students.
Beyond the hardware issues surrounding NFC adoption, the central issue with mobile payments has been a lack of perceived need among consumers. Mobile payments are being used in selected contexts and commerce situations (e.g., Starbucks) but the public at large hasn't seen the need to replace plastic payment with app-based payment that relies on stored credit cards or bank accounts.
That brings me to indoor location and marketing. When discussing these topics, and the absence of technology standards, I often use mobile payments as an analogy. Yet there is a critical distinction. The difference between the two segments is that while mobile payments still largely requires a shift in consumer behavior, indoor marketing does not.
Large majorities of consumers are already using their smartphones in stores to look for price information, product reviews and coupons. The idea of brands and retailers communicating with them in stores will be built on this existing behavioral foundation. Accordingly indoor marketing won't require consumers to adopt new technology or approaches to shopping -- unlike mobile payments.
The "heavy lifting" in indoor marketing is on the merchant side, where WiFi or other sensor infrastructure needs to be in place. Fortunately in most major retail environments the rudimentary infrastructure already exists.
But don't take my word for it. We'll be discussing the competing indoor location technologies and hardware requirements for indoor marketing (as well as their accuracy) at Place: The Indoor Marketing Summit this fall in San Francisco. It will be an event anyone in the mobile or location-based marketing space won't want to miss.
BlackBerry posted a "suprise loss" (based on analyst forecasts) in fiscal Q1 of $84 million. The company announced that it had shipped 6.8 million smartphones. However of those only 2.7 million were BlackBerry 10 handsets (Z10 and Q10).
The much-touted Z10 all-touchscreen phone seems to be a complete flop. The more "traditional" Q10, with its hardware keyboard, may wind up being more successful; it has only been on the market a few months.
These phones, it now seems clear, won't save the company. And BlackBerry is becoming increasingly marginalized in the smartphone and tablet world -- even in the enterprise it's traditional stronghold.
In terms of tablets BlackBerry said that it shipped 100,000 Playbooks in the quarter. BlackBerry CEO Thorsten Heins has dismissed tablets as mere fashion. He doesn't think the devices will exist in five years. While the iPad may not reign forever tablets will continue to exist certainly. Heins is mistaken.
The Playbook won't be getting an OS update and is effectively dead in the water. In North America it delivers less than 1% of overall tablet traffic, according to ad network Chitika. The chart above reflects the "tier 2" tablets that lag the iPad, Kindle and Galaxy in terms of web traffic. (The iPad delivers 82% of North American tablet traffic.)
Gartner's global OS projection for 2014 shows BlackBerry having an almost non-existent market share.
Source: Gartner (6/13)
The hard question to answer now is "what next?" The transition-turnaround story clearly won't play to investors anymore. The stock is off 27% following the earnings releas.
Selling the company or taking it private are two options. But who would buy it? (Certainly BlackBerry would be acquired at the "right price.") Microsoft has flirted with the idea but it probably wouldn't serve Redmond because BlackBerry hardware isn't prized in the market and would be unlikely to advance Windows Phones.
Another "nuclear" option would be to start putting out BlackBerry Android-powered phones. However that would turn the company into a commodity provider of Android handsets without any meaningful differentiation. That was what Nokia was concerned about (although Nokia would have had more success with Android.) And it would be almost impossible to compete with Samsung globally.
The company is almost out of options.
Nokia paid for product placement in the wildly popular Dark Knight films and released a special Batman-themed Lumia 900 when The Dark Knight Rises was released. The short answer: no, it didn't really "work."
Nokia Windows Phones (Lumia 925) also appear several times in the also extremely popular Man of Steel. Apparently in the alternate reality of Metropolis Nokia-made Windows Phones are the only smartphones in existence. However even the Man of Steel with all his remarkable alien abilities and strength probably won't do much for Lumia handset sales.
The Superman film is opening in China this week and Nokia is offering a Chinese "Superman Limited Edition" Lumia 925 with the "hope" (S) insignia on the back. Depending on how excited the Chinese are by Man of Steel there may be some sales lift. However the Chinese market is dominated by Android devices.
Meanwhile over in the Marvel universe (Superman is a DC Comics character), Iron Man's Robert Downey Jr. is reportedly being paid $12 million in a two-year deal to promote HTC smartphones. It doesn't look like the Iron Man character is part of the deal or will appear in the ads.
Downey is a recognizable and popular celebrity but he probably isn't powerful enough -- at least without the Iron Man suit -- to compete with Samsung's Galaxy juggernaut (The Avengers might collectively have a shot at defeating it). The Korean company spent over $400 million in 2012 to achieve and maintain its Android smartphone lead. That compares with HTC's $46 million and Nokia's almost non-existent $13 million.
If you're not already aware, Google is compelling all AdWords advertisers to adopt Enhanced Campaigns by July 22. It's mandatory. And it signals big changes for Google and for search marketing in general. Google dominates paid-search, which is the biggest single chunk of online advertising.
The high-level shifts brough about by Enhanced Campaigns, if you don't already know, are the following:
Google's rationale is simple: simplification. Google told us a few months ago that it wanted to make cross-platform campaigns easier to execute and easier to manage. But that means marketers give up some amount of control over bidding and can no longer implement mobile-only campaigns.
There are many people who accept and agree with that justification. However there's a much more cynical view circulating in parallel, which is that Google is mostly trying to boost mobile CPCs and thus overall mobile revenues -- to compensate for declining desktop CPCs in some cases.
Increase in CPCs for tablet and mobile campaigns on Google
Like all such competing explanations, the truth lies somewhere in-between.
Historically mobile and tablet CPCs were lower and thus a better value for marketers. Now Adobe's digital marketing arm is saying that will definitely change under the new Enhanced Campaigns regime. Adobe based these remarks on "the latest search marketing and cost-per-click (CPC) trends across nearly 100 major US advertisers representing more than $100 million in ad spend from March through May 2013."
The data come from the clients of the former Efficient Frontier, which Adobe acquired in late 2011 for roughly $400 million.
As the graphs above reflect, mobile CPCs have already begun to rise for advertisers implementing Enhanced Campaigns, while desktop CPCs are stabilizing. According to Adobe:
With the introduction of Enhanced Campaigns, the historically lower CPCs for tablet campaigns should increase to reflect desktop CPCs. We’re only just beginning to see this trend materialize . . . The overall CPC trends across all devices including desktops also show strong growth. Google CPCs increased more than 6% over the last three months alone — a significant jump . . .
One other trend we noticed is that CPCs on Google have stabilized. For the past two years, Google CPCs fell on a year-over-year (YoY) basis due to the increase in mobile and tablet traffic where CPCs were lower. However, for the first time in seven quarters, the CPCs on Google are flat YoY and we anticipate that CPCs will rise on a YoY basis again starting next quarter . . .
Seeking to rebut the perception that the company has successfully manipulated the system to boost its own revenues, Google disputes the assertion that rising prices are inevitable. The company told Search Engine Land earlier this week:
There have been many speculative reports, but it's far too early for any of them to be reliable. Advertisers will choose their bids and adjust their spend based on the value they see in their campaigns.
By now you've no doubt read about the comScore data that showed (or argued) just over half (54%) of PC display ads are never seen by users. The finding turns the old Wanamaker "Half the money I spend on advertising is wasted . . ." quote on its head: digital advertising is just as "wasteful" (if not more) than traditional advertising.
Last year, using the same "viewability" methodology, comScore reported that "31% of ads were not in-view, meaning they never had an opportunity to be seen." So the problem is apparently getting worse.
The IAB said that display ads (not counting video) in 2012 represented 21% of the $36.6 billion in US online ad spending. They contributed $7.6 billion at least to the overall pie. If half of that is wasted because ads cannot be seen or are never served it means $3.3 billion is being flushed down the digital toilet, so to speak.
Comparing the impact of PC vs. mobile display advertising across key brand metrics
Source: Dynamic Logic
Enter mobile advertising. I've argued multiple times in the past that mobile is a superior "branding" medium to online for various reasons, not the least of which is improved performance metrics over PC-based digital ads (see graphic above). The chief problem is that most of mobile display features weak ad creative, compromising the potential efficacy of the ads.
To counter this the IAB is releasing a mobile creative "manifesto" of sorts that hopes to instruct brands and agencies about the importance and hallmarks of effective mobile ad creative: A Mobile Manifesto: Creative Leaders on the Art of Successful Mobile Brand Messaging. It features hypothetical examples of best and worst practices.
Here are the broad strokes of the report's recommendations:
Many of these recommendations are merely "common sense." However even now many mobile display ad campaigns are perfunctory at best with converted or automated ad creative from PC campaigns. Thus marketers and brands are missing out on the true potential of mobile advertising by not making a "sincere" effort to maximize the value of mobile campaigns.
A new study jointly conducted by Millward Brown and mobile loyalty platform SessionM finds that consumers want a clear "value exchange" or "tangible benefits" for their time and attention to mobile ads. The study was fielded earlier this year among two survey groups of 500 US adults and combined with qualitative follow-up interviews.
A primary finding of the study, which echoes Nielsen "consumer trust" data from previous research, is that only 9% of users have a favorable view of mobile ads. Despite their typically superior performance on brand and other KPIs, consumers generally report unfavorable views of mobile advertising in surveys such as the SessionM-Millward Brown study:
The study argues that mobile ads need to deliver "tangible value" in order to gain consumer engagement. When they do they can outperform other types of digital and mobile advertising. SessionM says that tangible value has three components: "being useful, entertaining and worth the time it takes to engage."
What this means as a practical matter, according to the study, is offering a literal reward for consumer attention (e.g., coupons, points), although people respond to other types of "incentives" as well as ads that are more "relevant" (e.g., local, personalized).
The following were the preferred reward types according to the survey:
Essentially people are saying they want to be paid to look at and engage with mobile ads. It's important to note that the study argues in favor of the types of advertising and marketing that SessionM provides: incentive and reward-based mobile loyalty programs. However other data show that consumers do respond to coupons and discounts at higher rates than other categories of mobile advertising.
In April Harris Interactive conducted an online consumer survey about "showrooming" and related consumer attitudes about online and offline buying. The survey had 2,114 respondents, 824 of whom said they had showroomed: "ever visited a brick and mortar store to examine a product before purchasing it elsewhere online."
Accordingly 39% of the April 2013 survey population had engaged in showrooming at some point. That's actually down from 43% in November 2012 according to Harris.
Best Buy, Wal-Mart and Target are the three major US retailers that are most often "victimized" by showrooming, though the order is different for men and women. This compares to a study (tracking actual store visits) with slightly different results, conducted in February by Placed:
According to the Harris study Amazon is by far the most-used online comparison point for in-store smartphone shoppers. A relatively small percentage also or alternatively consult eBay.
Harris also found that price-matching strategies being adopted by retailers are likely to succeed in combatting showrooming. A large majority of those who said they had "showroomed" also said this policy would make them more likely to buy in stores:
Source: Harris Interactive (4/13)
Survey respondents simultaneously indicated they like the option to "buy online and pick up in store." In terms of same-day delivery from an e-commerce provider, however, a majority (77%) said they would NOT be willing to pay more for the service. For those willing to pay the majority (56%) said between $1 and $5 was a tolerable range.
The survey also affirmed many of the familiar reasons that people prefer to shop locally vs. online:
Being able to "talk with a salesperson" in stores was only valued by 57% of survey respondents. Indeed, a majority (60%) strongly agreed that they "would rather use [a] smartphone to search for information about a product than ask a salesperson for help."
I suspect the latter finding is a result of years of experiences with low-paid and generally poorly trained salespeople in retail stores.
Microsoft has been in a kind of "double-bind." It has been trying to use Office integration with Windows Phone and Surface tablets to differentiate those products vs iOS and Android. However they haven't been selling particularly well (save in a few isolated countries). Yet the longer Microsoft held Office back from iOS (and Android) the more it faced the prospect of people getting used to alternative software or (Google) docs in the cloud.
Rumored for a very long time, today Office officially comes to the iPhone in app form (though not the iPad). In order to use the app iPhone owners must be subscribers to Office 365. It also requires iOS 6.1 as well and works on the iPhone 4 and above.
The product appears to require a SkyDrive account in addition but that may be a built-in feature of Office 365. (I'm not a subscriber.)
The new iPhone app allows users to view and edit Word, Excel and PowerPoint documents. However you can only create Word and Excel documents on the app. Users will also be able to edit docs "offline" and they will sync when the connection is resumed (think airplane flight). Microsoft promises that "formatting and content remain intact" on the iPhone and back to the 365 documents in the cloud.
As mentioned, there's no Office for iPad app but that will ultimately come in all probability. For the time being iPad users can access Office 365 through the browser. So effectively Office is available for the iPad.
There are now hundreds of millions of iOS devices in the market globally. This year more tablets are expected to ship than laptops and by 2015 more tablets than PCs in general. In the aggregate there will be more "mobile device" users than PC users in the very near future. Thus Microsoft was all but compelled to bring Office to iOS (Android users can access via the browser).
After Windows, Office is Microsoft's most important and lucrative product -- generating rougly $25 billion in revenue last year. The rise of mobile devices puts enormous pressure on both product lines. However the arrival of Office for iOS means there's less reason to buy a Surface tablet.
Last year, according to the IAB, mobile ad revenues came in just under $3.4 billion in the US. On a global basis eMarketer (aggregating a range of third party data) estimates that mobile advertising was worth $8.8 billion. Of that Google was responsible for a staggering 52%.
In 2013 eMarketer argues that Google's share of global mobile advertising will continue to grow to 56%.
Impressively or shockingly, nearly 66% of global mobile ad revenue in 2012 was concentrated in the top five companies according to eMarketer. In 2013 that figure is expected to exceed 75%.
The eMarketer forecast is that this year mobile advertising will be worth nearly $16 billion worldwide. In other words, roughly $12 billion of the world's mobile ad revenue will be concentrated in the top five US-based companies -- and most of that at Google.
By comparison, the top 10 PC-based online advertising companies in the US control 72% of the revenue, while the top 50 control nearly 90%.
The eMarketer numbers may well be off. For example their YP figures are incorrect and underestimate the company's mobile revenues for 2012. However directionally the numbers are accurate and indicate the "concentration of mobile weath" in a small number of companies -- as well as the dominance of Google as the world's largest mobile ad company. (In terms of total digital advertising globally, Google controls 33%.)
Facebook is really the only other player currently in a position to challenge Google for mobile ad revenue and reach.
The forthcoming iPhone 5S wil reportedly have the same screen size as the current iPhone 5. This will be a significant disappointment to some and potentially cause them to skip the update and wait for the iPhone 6, which is supposed to deliver a larger 4.8 inch screen. That could have a meaningful negative impact on iPhone 5S sales.
A recent survey from Retrevo shows that iPhone owners/buyers want a larger screen than the 5/5S has to offer:
The survey also showed that a significant percentage of would-be iPhone buyers have a "wait-and-see" attitude about buying their next iPhone. This is becoming a problem for Apple as media-fueled rumors of better hardware in the future cause people to delay purchases, unlike Android buyers apparently:
Despite the wait-and-see approach and yearning for a larger screen iPhone buyers are paradoxically much more loyal, according to the survey, than Android owners. This has been confirmed by other, previous surveys (e.g., ChangeWave) as well.