LocalMobileSearch

Microsoft Surface RT Tablet to Match iPad Pricing, Starts at $499

When Microsoft introduced its Surface line of tablet computers earlier this summer the burning question was: how much would they cost? While price isn't the only variable that will determine success or failure it's a big one.

Since that time several PC makers have started to announce their Windows 8 laptop lineups, with most machines coming in above $600. However today Microsoft inadvertently revealed the pricing of the devices. The screen in the Microsoft store has since come down. Below is a screen capture of the pricing page. 

The basic RT model, which is Microsoft's direct iPad competitor, starts at $499 (32GB). If you want the "Touch Cover" keyboard, it goes up to $599 and then more for greater memory. The more fully equipped Windows 8 Pro models will cost more. But they essentially are the PCs of the future; a hybrid machine that will combine on-device and cloud storage. 

The interesting question now that the RT's pricing has been revealed is whether consumers will consider it an iPad competitor or a laptop alternative. If it's the latter it will be in something of a different category and could do quite well. However if it's regarded and positioned as a direct iPad competitor it may suffer. 

TeleNav Buys Local Ad Platform ThinkNear for $22.5M

TeleNav has been generally in the business of personal navigation devices and smartphone apps. Over the past couple of years the company has also gotten into mobile advertising, taking ads from the YP and xAd networks, in addition to increasingly selling its own ads to brands and franchises. The ads are all location based or geotargeted.

TeleNav decided it wanted to get into local-mobile advertising in earnest and has announced the acquisition of ad network ThinkNear. The price was $22.5 million in cash and stock. The ThinkNear team now joins TeleNav.

ThinkNear offers precise geotargeting and what it calls "situational targeting," which is a mix of context and audience targeting:

ThinkNear helps advertisers reach consumers within 100 meters of any location, which is more precise than the zip code and designated market area (DMA) targeting typically offered by most ad networks. The ThinkNear network reaches tens of millions of customers across more than seven billion impressions per month. The precision and scale of ThinkNear allows advertisers to take advantage of the most distinctive aspects of mobile phones, which more than 85 percent of American adults now own.

ThinkNear's targeting technology also enables Situational Targeting, which takes into account where consumers are, what they are doing, and what is happening around them. For example, a sports memorabilia store can target an NFL fan with an advertisement for a nearby sale on branded jackets, blankets and umbrellas while the fan is tailgating on a cold and rainy day. Hyper-local Situational Targeting provides consumers with ads that are more relevant to their real-time needs and interests as they go about their day.

The company also announced that ThinkNear would become Scout Advertising, which includes search and display inventory. (Scout is TeleNav's smartphone app/consumer navigation brand.) ThinkNear sources some of its inventory from the various mobile "exchanges."

Scout Advertising is essentially a more complete and extensive version of the "hyper-local" ad network Navteq (Nokia) was trying to build. However Navteq appears to no longer be in the business of advertising.

In addition to the usual metrics, Scout Advertising can also tell a marketer whether the consumer actually arrived at his/her destination. Thus business models can be click, impression and arrival-based. TeleNav also says that its CTRs are "well above online and mobile industry averages, and over 40% of customers who click on an ad will ultimately take action to drive to an advertiser's location." 

While most ad networks offer geotargeting, with varying degrees of accuracy (but generally not lat-long), TeleNav/ThinkNear join a short list of ad networks that can deliver much more granular location targeting. Indeed, its current (or perhaps former) partners, YP and xAd, are now its most direct local-mobile competitors.

Teed Up: Mojiva Introduces Dedicated Tablet Ad Network

It's possible that "T-commerce" and "tabvertising" may over time become more important to brands than advertising on smartphones. Mindful of the growing number and importance of tablet devices ad network Mojiva today announced a dedicated tablet network:

The Mojiva ad network reached an estimated three million tablet devices in January 2011, grew to 25 million by January 2012, and reached 40 million tablet devices as of June 2012. The number of tablet ad requests per month on the Mojiva ad network was 119 million in January 2011, increased to 655 million as of January 2012, and reached an impressive 2.13 billion tablet ad requests per month as of August 2012 – a nearly 20-fold increase in 20 months.  

Mojiva's new tablet network will give advertisers and agencies the opportunity to purchase prime inventory and display rich media ad units across highly valuable audience channels, which include luxury goods, entertainment, news, parenting, tech enthusiasts and sports enthusiasts. 

The Mojiva announcement was being touted today as "the industry’s first tablet-only mobile advertising network." However that's not entirely accurate. Google introduced tablet-only targeting in July of last year. 

Data aggregator eMmarketer has forecast that by the end of the year there will be 53 million tablets in the US. However this estimate is probably low. It will probably be closer to 60 million or more, especially with more lower-priced tablets, the forthcoming iPad Mini and a big holiday shopping season in store for tablets. (PCs probably won't be so lucky.)

Third quarter reports from several digital agencies and marketing firms (RKG, Covario, Kenshoo) show that the tablet ad spend is growing and that ad performance outpaces smartphones and rivals the PC. In the chart below, according to Covario, the tablet share of mobile ad spend has grown to 48% from 27% a year ago. That suggests it will exceed 50% by the end of the year.

Tablet Share of Mobile Ad Spend Has Grown

Source: Covario Q3 2012 Quarterly Global Paid Search Spend Analysis

Mobile devices generated 21% of paid search clicks in Q3. While the numbers vary from firm to firm, paid-click volume on PCs is still significantly greater than mobile devices. Accordingly there's quite a lot of growth ahead for paid clicks on mobile. 

Source: Kenshoo Global Search Advertising Trends Q3 2012

Despite the fact that Internet traffic is still dominated by the PC, many data sources indicate that tablet CTRs are significantly higher than corresponding CTR rates on the PC. It's also harder to discount or dismiss tablet clicks as "unintended" the way that several firms are now doing with smartphones. Furthermore, RKG's Q3 digital advertising report shows that the revenue per click from ads on tablets is nearly as high as on the PC. 

Mobile vs Desktop: CPCs & Click-Through Rate

Source: RKG Digital Marketing Report Q3 2012

While some data indicate that the cost per click of tablet ads may be approaching or even exceeding comparable ads on the desktop, most sources still show the cost of tablet ads being lower and a better value than ads on the PC.

Mobile vs. Desktop: Revenue per Click by Device

Source: RKG Digital Marketing Report Q3 2012

The emerging challenge with tablet advertising, of course, is the varying screen sizes that are starting to take hold in the category. This is especially true with the 7-inch form factor. An equivalent of responsive web design will need to be created for advertising to accommodate the range of screen sizes coming into the market: 4-inch, 5-inch, 7-inch and 10-inch.

Half of US Homes Mobile Only or Mobile First

The US Center for Disease Control (CDC) is tracking the number of US households that are "wireless only" or primarily wireless. Wireless only means there is no landline in the house; primarily wireless means that people receive "all or almost all calls on wireless telephones despite also having a landline telephone."

My wife and I, and others we know, fall into that second category. We have a landline but rarely use it. It's a number we give out for "official purposes" and it acts as a telemarketing "spam catcher." The majority of people who call that number get voice mail. 

The last time I wrote about this data, in June, the CDC reported that just under 30% (29.7%) of American households were wireless only. Beyond this, 15.7% of US homes received all or almost all calls on wireless telephones." In total, 45.4% of US homes were either mostly mobile or wireless only. The CDC findings were based on polling data from the first half of 2011.

Earlier this week I checked back to see if the numbers had changed at all since June. They have; they've continued to grow.

According to CDC data collected between July and December 2011, 34% of American homes are now "wireless only." In addition 16% are mostly mobile, receiving "all or almost all calls on wireless telephones despite also having a landline telephone." This means that a total of half of all US households now rely primarily or exclusively on mobile phones.

The populations, according to the CDC, mostly likely to be mobile only are the following: younger people under 34, adults living alone, those without higher education and less affluent or poor families. Those more likely to be mostly mobile are: affluent adults, parents and adults with college degrees.  

Because these data lag about six months we can estimate that the current combined figure is probably closer to 55% of US homes being mobile only or mobile first.

Mobile Ad Revenues $1.2B for the First Half, Heading toward $2.5B for the Year

The IAB released its half yearly digital ad revenue report for the US market earlier today. Total "online" revenues were approximately $17 billion, compared with $14.9 billion a year ago. Search was the single largest revenue category and has been for some time. It accounted for 48% of total digital ad revenue in 1H 2012 or $8.1 billion (vs. $6.8 billion in 2011).

Mobile revenue for the first half was $1.2 billion or 7% of total digital ad revenue. That compares to $636 million for the same period in 2011. Ironically the MMA is recommending that brands and marketers devote 7% of their ad budgets to mobile. 

As might be expected, the IAB said that mobile was the fastest growing of the various digital ad categories it was tracking. 

If we extrapolate from the numbers in the report we can project that full-year US mobile ad revenues will come in between $2.4 and $2.6 billion depending on how good Q4 is this year. 

Demand for iPhone, iPad Remains High, iPad Mini: Not So Much

Several data sources over the past week have indicated very high levels of enthusiasm for the iPhone 5 and the iPad "Classic," but not as much interest in the rumored (yet forthcoming) iPad Mini.

Financial services and investment firm Pacific Crest reports that its checks reveal continuing, high levels of demand for the iPhone, which is reportedly hurting Android sales. According to a report in Fortune: 

[Pacific Crest's James] Faucette writes that he's seeing several Android-based vendors aggressively discounted previously "high-end" flagship-type products to mid- and low-tier pricing. "While the [Samsung] Galaxy SIII will continue to generate positive news flow as a viable iPhone competitor," he writes, "we continue to believe that as an ecosystem, Android's shipment levels likely peaked in the U.S. as far back as last October and are likely to see further declines in the future if the retention gap doesn't close."

Piper Jaffray found similarly high demand among US teens for the iPhone, as well as high ownership of iOS devices. Based on a survey of more than 7,000 teens the financial frim found 40% owned an iPhone, while 44% owned (or had access to) a tablet. Nearly three-quarters (72%) of those who owned a tablet had an iPad, according to the survey. 

These teens were also interested in the iPad Mini, especially if it were to be priced at less than $300. Pricing an iPad Mini creates an interesting challenge for Apple because it's new iPod Touch is priced at $299 and above. Nexus 7 and Kindle Fire tablets are priced at $199; so Apple can't go much beyond $200 in pricing the Mini. However that would potentially cannibalize sales of the new iPod Touch. 

In contrast to the Piper Jaffray survey, e-commerce site TechBargains.com conducted a survey of visitors to its site (n=1,332) in September and found only 18% of respondents were interested in an iPad Mini:

• 18% of the surveyed consumers plan to purchase the iPad Mini, while 45% of respondents planned to purchase the new iPhone
• 50% of those surveyed are not interested in buying the iPad Mini
• 32% are undecided about the smaller iPad

Among the 18% who were interested in buying an iPad Mini: 

• 14% indicated a plan to wait in line the day it is released
• Original iPad owners are the most likely to pay for the new iPad Mini with 27% of them planning to purchase the tablet
• Current Kindle Fire owners and those who don’t currently own a tablet are least likely to purchase: 16% of Kindle Fire owners surveyed and 16% of respondents who don’t own a tablet said they plan to purchase the iPad Mini

Pricing and features will ultimately determine how popular a smaller iPad tablet turns out to be.

PC Shipments to Decline -- No Surprise Here

It's no surprise that PC shipments are set to decline this year. While the enterprise market remains modestly healthy the consumer market for PCs is weak. And it's not just the economy; demand is fading.

We're in a "post PC" world now; consumers have many more device options to accomplish tasks that at one time could only be done on the PC. Indeed, MS Office is reportedly coming to iOS and Android devices. Office was the last barrier to totally giving up the PC for many people. 

IHS iSuppli has projected a 1.2% shipment (not sales) decline from 2011. But unlike shipments that never translate into consumer sales, there can be no sales without shipments. 

The company said that not since 2001 has the PC market contracted like this on a global basis: 

The total PC market in 2012 is expected to contract by 1.2 percent to 348.7 million units, down from 352.8 million in 2011, as shown in the figure below. Not since 2001—more than a decade ago—has the worldwide PC industry suffered such a decline.

When you step back and look at the broader device market, you can see how much growth lies ahead for smartphones and tablets (and who knows what other connected devices) in the future. The PC will likely chug along in workmanlike fashion but its days of robust double-digit growth are over.

Source: ITU World Telecommunication/ICT Indicators database, Gartner, Morgan Stanley (2011-2012)

Report: Smartphones + Tablets = 21% of Organic Search

Digital marketing agency RKG has released a Q3 report (based on aggregated data from its client base). The report covers search optimization, paid search, social media, email, comparison shopping and mobile. I'll focus here only on the mobile data.

The firm said that tablets (mostly iPads) and smartphones combined to drive 21% of organic search traffic in the third quarter. RKG commented that "this was nearly double the level we saw in Q3 last year." Because of the iPad and iPhone, iOS dominates organic search traffic from non-PC devices. According to the RKG report, "iOS held a 77% share of mobile organic search in Q3, an increase from 75% in Q2."

Operating System Share of Organic Search

RKG also said that "revenue per click" (RPC) was almost the same on the iPad as it was on the PC, while smartphone RPC "languished at roughly a fifth that of desktop." Part of this is because only e-commerce events are being measured and captured. RKG and its clients aren't seeing the indirect impact of smartphones on conversions or purchases that happen later on PCs, tablets or in stores. Accordingly these data are somewhat skewed. 

What's interesting to observe in a more "apples to apples" context, however, is the discrepancy between iPad owner-users and Android tablet owners: "the iPad generated an average RPC that was more than double that for Android tablets, including the Kindle Fire and Nexus 7." 

Mobile vs. Desktop: RPC by Device

From a paid search marketing standpoint tablets and smartphones cost less and outperform PC (search) advertising. The discrepancy between costs and performance was greatest on smartphones. One reason why this may be so is that many marketers and platforms aren't necessarily valuing mobile correctly because of the conversion-tracking problem. Nonetheless it's a great opportunity for those that aggressively embrace it. 

Mobile vs. Desktop: CPC vs. CTR