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
This week at the Smarter Mobile Marketing event in New York -- I didn't attend because I was at a competing search marketing event -- Millennial Media CEO Paul Palmieri made the case that mobile ad revenues would inevitably grow to keep pace with consumer time spent on mobile devices. Accordingly he projected, based on a Gartner formula, that by 2015 US mobile ad revenues would be approximately $13.5 billion.
Palmieri also pointed out that traditional media grab a much larger percentage of ad spend vs. consumer time spent. However, the underlying assumption is that there's a seemingly inexorable or inevitable logic to the notion that ad spend will catch up with time spent.
In discussing reports that many mobile ad clicks are unintended, Dow Jones newswires cited a very casual projection earlier this year from Mary Meeker -- based on a similar time spent vs. ad spend formula -- that mobile advertising in the US was a $20 billion opportunity. While I don't think Meeker herself assigned a particular time frame for getting to $20 billion Dow Jones stated that would happen by 2015.
Meeker's slide does point out that time spent and ad spend are now almost at parity when it comes to the Internet. However that has taken essentially a decade to come to pass. And even though the mobile market is developing much more quickly than the Internet did, the notion that US mobile advetising (not all spending on mobile marketing) will be $20 billion or even $13.5 billion in three years is just too aggressive.
It's much more likely that US mobile advertising will still be below $10 billion in 2015.
Although consumers have embraced mobile in a big way, there are more than 120 million smartphone users in the US today, marketers are moving much more cautiously and seem to be slow to fully understand the implications of what's happening. There are also "mechanical" and organizational barriers to mobile marketing within agencies and corporations. These behind the scenes "politics" and culture issues are often a bigger obstacle than anything in the broader marketplace (such as fragmentation or the general absence of mobile cookies).
Recently the MMA issued a mobile ROI report that argues 7% of media budgets should be dedicated to mobile -- despite the fact that at least 10% of consumer media time, if not much more, is being spent with mobile. However at the Smarter Mobile Marketing event in New York agencies reportedly said that the 7% figure was too high and suggested that 2% to 3% of budgets was more appropriate.
Reports like the one from Dow Jones mentioned above and others that suggest mobile ad clicks are the product of consumer mistakes or click fraud merely reinforce complacency among marketers who don't want to have to worry about yet another digital platform. They've already got social media, search and display to deal with, without compounding their problems by bringing additional form factors and behaviors into the mix. And while many marketers have done something in mobile often that effort is weak or perfunctory.
The challenges around mobile tracking and attribution, the challenges of the new multi-platform environment and the cultural-organizational issues I alluded to together suggest to me that mobile ad spending and revenue will grow more slowly than the simple time spent vs. ad spend formula argues. The fact that traditional media have maintained a much larger percentage of ad spend vs. consumer time spent is another indication this will take longer than expected. Marketers understand traditional media more than they understand the much more complex digital landscape.
Though consumers will increasingly use smartphones and tablets as primary Internet devices, and while startups and innovation will continue to accelerate the mobile segment, brands and agencies won't necessarily keep pace with consumer behavior and technology development. My guess is that it will probably take at least 5 years to as many as 7 or 8 years to get to the kinds of numbers that Millennial's Palmieri and Mary Meeker are projecting.
In-app messaging provider Urban Airship has just introduced a very interesting new product: Location Messaging. This is the fruit of the company's acquisition of SimpleGeo last year.
Geofencing (Placecast) and ad geotargeting (xAd, YP) have existed for some time. However Urban Airship's new product offers very precise location targeted messaging -- with the ability to mix in other audience segmentation data as well:
As a result publishers/developers are able target specific types of users by location. There's a wide array of possibilities in terms of the way this can be deployed, for loyalty or yield management purposes or to stimulate new sales. There are two qualifications: users must have the publisher's app installed and s/he must have opted in to receive push notifications.
Urban Airship has created 2.5 million "pre-defined geofences" for publishers. However they can also define (or exclude) their own custom geofences. These can be as wide as a metro area (or larger I suppose) or as precise as a park or city block.
There's lots of hand-wringing going on about publishers being unable to sufficiently monetize mobile. However, mobile push notifications offer a terrific opportunity for brands and offline businesses to drive increased sales -- if used judiciously. Accordingly the company shared some performance data with me. It was impressive.
Urban Airship said it beta-tested Location Messaging this summer during the Olympics. The company reported on its blog that "The Official London 2012 app . . . utilized Urban Airship Location Messaging to send more than 10 million location-based push messages to people in . . . Olympic venues." In addition, "Nearly 60% of app users had location-sharing enabled and location-based pushes achieved clickthrough rates of around 60 percent."
Urban Airship CMO Brent Heiggelke pointed out that despite the potential effectiveness of Location Messaging brands and marketers must be extremely careful about the content of messages they send and their frequency or risk having their notifications shut off or apps uninstalled by end users.
I've written about this before: the discrepancy between tablet shipment/sales and traffic figures. On the one hand you have the IDCs and Gartners of the world reporting tablet "shipments," showing iPad rivals gaining. On the other are the companies reporting the actual traffic they're seeing, which indicates the iPad still dominates all other tablets by a huge margin.
IDC's Q2 market share data (based on "shipments") argue the iPad has a 68% global share. That's up slightly from Q1.
However, earlier today, digital publishing platform Onswipe put out some data that show that the iPad's share of traffic generated was about 98%. This finding was based on analysis of almost 30 million impressions on 1200 sites earlier this month.
The iPad's nearest traffic competitor, according to Onswipe, is the Galaxy Tab with 1.53% of tablet traffic.
Ad network Chitika has previously published similar numbers. Earlier this summer Chitika found, based on millions of impressions on its ad network, that the iPad "accounted for 94.64% of all tablet-based traffic." The nearest competitor, again the Samsung Galaxy Tab, had "a lackluster market share of 1.22%."
So while Kindle Fire and other tablet devices (e.g., Samsung Galaxy Tab) have sold millions of units, for some reason these devices are not showing up in the traffic logs of publishers. That could well change in the coming quarter with better Kindle Fire devices and the success of the Nexus 7. But for now there appears to be a strange gap between device sales/shipments and traffic figures being generated by tablets.
Apple and Amazon are the two major companies that could really shake up the "mobile payments" landscape. To some degree Apple is on deck to do that with its mobile wallet Passbook. However consumers remain to be educated about Passbook and its capabilities.
In addition, we're eventually likely to see iTunes stored credit cards become available to Passbook -- though the current iPhone is incompatible with NFC. Execution at the POS thus would be an issue unless Apple uses different materials in its future handsets.
Amazon is another "sleeping giant" in the realm of mobile payments. Indeed, from an "m-commerce" standpoint, Amazon is already in mobile payments with its existing "Checkout by Amazon" platform. However TechCrunch reported a rumor that Amazon was developing a Square competitor (SMB dongle). I wouldn't be surprised if it happened -- and relatively soon.
Amazon already has a developed payments infrastructure that supports e-commerce (online and in mobile) as well as a peer-to-peer PayPal rival. In addition Amazon may be second only to Apple in terms of the number of consumer credit cards it has on file.
While Apple claims 400 million consumer credit cards on file, Amazon has something above 200 million. The company could almost flip a switch (notwithstanding the POS issues) and become a major player in "mobile payments." It could also quickly enter the segment with the introduction of a Square-like dongle and/or the acquisition of another mobile payments provider (e.g., Braintree, Boku).
We should expect news along these lines from Amazon in the next six months. I would be very surprised if the company sat on the sidelines very much longer.
Far too often in tech journalism and blogging a provocative headline is betrayed by a superficial or "content-free" article. Such is almost the case with a story in the Wall Street Journal that carries a provocative headline Mobile Ads: Here's What Works and What Doesn't.
In a 1,000+ word article with such an intriguing title there's very little light shed on the subject. Here's the substance in the piece:
In fact the article doesn't do very much to illuminate (beyond search) what types of ads are truly working on mobile devices. And the big discussion that the piece neglects is ad creative. More than any other variable ad creative is responsible for the success or failure of the campaign.
There's also no discussion about various flavors of ad targeting and local targeting in particular (although that's implied in the Zillow mention). The article also says nothing about the efficacy of deals or offers as a driver of mobile ad response. Consistently deals/coupons/offers are cited by consumers as the category of mobile advertising they're most interested in.
Finally, mobile loyalty marketing (vs. media/ad buying) and mobile CRM can be extremely effective marketing tools but these too are not mentioned.
So much for "what works and what doesn't."
Nokia CEO Stephen Elop famously opined that there would have been less "opportunity for differentiation" had Nokia developed Android handsets. So it went with Microsoft -- and the two negotiated exclusivity provisions and other agreements. For example, Nokia Maps replaces Bing on the new Lumia 920. And Windows is the only software being used on high-end Nokia smartphones.
As part of the overall deal Microsoft is also giving Nokia billions of dollars in payments and support. What probably would have been better for the Espoo, Finland-based company is a deal that gave it the flexibility to develop Windows and Android devices, much like Nokia's Asian competitors Samsung and HTC.
To date Nokia has sold roughly 7 million Lumia units, with 4 million of those sold in Q2. Accordingly there is some positive momentum. But it's far from clear how Nokia handsets will fare in Q4 2012 with the iPhone 5 and very popular Samsung Galaxy 3 and Galaxy Note 2 competing for consumer attention.
Though impossible to estimate with any certainty, my speculation is that had Nokia produced its current hardware but with an Android OS version it would be looking at millions more units sold (perhaps 2X - 4X). My view is that the drag on Nokia handset sales is Windows rather than the hardware. This is especially true in the US market where Lumia sales are below 1 million units.
Indeed, comScore (see chart) continues to report declining Microsoft market share in the US. It's now below 4 percent. Windows Phone 8 is supposed to change that but there's nothing to indicate that the new devices will see an explosion of consumer interest.
It's not entirely clear why Nokia didn't reserve itself the option to produce an Android handset. Perhaps there's an unannounced "escape clause" that allows Nokia to explore alternative operating systems if the existing Lumia line fails to deliver enough sales for a long enough period of time.
Appcelerator released its Q3 developer survey. The quarterly survey this time polled more than 5,500 developers globally on their attitudes toward various platforms and future-trend predictions.
The survey result that's going to get most of the attention is the one that found 66% of developers believe "that it is 'likely to very likely' that a mobile-first social startup will disrupt the market for social applications on mobile devices and take market share from Facebook." Indeed, this describes Instagram before Facebook acquired it for roughly $1 billion.
Other top-level survey findings include the following:
The survey also indicated that developers were interested in Windows Phone 8 smartphones but that they were taking a wait-and-see approach. Only when Windows Phones crossed relatively high penetration levels would developers turn their attention to the platform in earnest. However developers were more sanguine about the prospects for forthcoming Windows 8 tablets.
It's also interesting that despite sales developers don't seem very interested in the Kindle Fire. Perhaps that will change if the recently upgraded line of Kindle tablets sell well.
Finally it's curious that despite continuing market-share gains developer interest in Android continues to erode. This must be a reflection of the challenges of making money on the platform.
Bango says this will allow users to buy game credits, apps and other virtual goods through "frictionless operator billing, paying on their phone, without the need to register personal details."
Bango also has deals with Google (Play), Amazon, BlackBerry App World and Opera's Mobile Store. The company added that its conversion rates are higher than the industry average for carrier billing:
Conventional operator billing is expected to achieve a 40% conversion rate. Put simply, most mobile commerce customers who click ‘buy’, do not successfully buy. Billing with the Bango payment platform delivers an average conversion rate of 77%. Most users who click ‘buy’, do buy.
While carrier billing is useful in countries where there are many "unbanked" or where the specific transaction is likely to be conducted by a younger user, in the US and much of Europe credit cards are a preferred method of payment by most adults.
Carrier billing is much more widely available than other forms of mobile payments for obvious reasons. However carrier fees are much higher typically than credit card fees and settlement can take months depending on the country.
Even though Facebook eliminated Facebook Credits, which was a surprise to me, it's possible that Facebook will eventually acquire a mobile payments provider. Bango's market cap, for example, is only $118 million. Facebook could buy the company and associated revenue stream, as well as a set of global carrier relationships -- instantly.
Amazon is the king of mobile retail; Wal-Mart is the leader of offline check-ins. Last week there were two sets of parallel data released that provided some insight into how consumers are using mobile devices, both for "m-commerce" and in stores.
Data from comScore found that among US smartphone owners “4 out of 5″ are going to retail site/apps on their handsets. Some of this is in-store price and review checking.
ComScore put the total number of mobile-retail visitors at roughly 86 million. Unsurprisingly Amazon was the leading retail destination with an audience of almost 50 million smartphone owners.
These mobile-retail site visitors were both somewhat younger and more affluent than corresponding retail site visitors on PCs.
The number four mobile retailer on the list above, Wal-Mart, is the leader when it comes to in-store check-ins. According to data compiled by LocalResponse this summer from Twitter, Foursquare, Yelp and Instagram, Saturday is the most popular day to check in followed by Friday and then Sunday. Most check-ins occurred in the afternoon or early evening.
LocalResponse also found that men were more likely than women to check in. However gender check-ins by store varied, with Target being the most popular store for women. BestBuy was the most popular check-in retail location for men.
While some retailers are creating incentives for users to check-in, this should be exploited much more aggressively both to get people into stores and as a corresponding analytics tool to indicate the success of various promotions. Hashtags, offers and other mechanisms could be used to track specific promotions. In addition, users could be "messaged" (on Twitter) or otherwise notified (i.e., on Foursquare) while in stores with further promotions and rewards.
In general traditional retailers have yet to fully recognize the potential and utilize social media check-ins for in-store loyalty and sales purposes.