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. 

Report: More Apple-iBeacon Announcements Coming Today

Among other, anticipated product announcements at Apple's WWDC conference today (iPhone, smart home, iOS 8) the company may make some new iBeacon announcements. According to the Wall Street Journal, Apple has placed iBeacons around the conference hall where WWDC is taking place to demonstrate the BLE technology to developers.

The WSJ article gets a number of things wrong about the technology however. For example Bluetooth beacons/iBeacon cannot currently enable precise indoor location indoors so it's definitely not "indoor GPS." Indeed, this is a potential advantage because users cannot be accurately "tracked" by merchants, allieviating some privacy concerns.

It's really only one-way opt-in communication from a retailer to a consumer. However beacons require the download of an app to work. Provided the case is made (i.e., offers, better in-store experience) consumers will be receptive. 

Among a range of indoor location technologies, iBeacon has the most visibility right now. Apple has deployed iBeacons in all of its 250+ retail stores globally.

In addition several NBA teams and Major League Baseball are using iBeacons to enhance the fan experience. For example, the Golden State Warriors basketball team sold better seats and offered welcome messages and discounts on team merchandise to fans in the arena using the Bluetooth Beacons. The team says the experience was very positive and intends a broader range of use cases next season. 

In addition, retailer Alex and Ani is rolling out iBeacons in all 40 of its retail locations. American Eagle Outfitters, in partnership with retail loyalty app Shopkick, said it would install iBeacons in its more than 100 U.S. retail stores this year. And British retail giant Tesco is testing how beacons can be used to improve the in-store experience. 

For those who want more information, we provide a broad overview and discussion of iBeacons and Bluetooth based in-store marketing in our report "A Marketer's Guide to iBeacons." You can also listen to our recent webinar on BLE Beacons: Everything You Always Wanted to Know about Beacons (but were afraid to ask) featuring Steve Hegenderfer, director of developer programs at Bluetooth SIG.

But for the most comprehensive look at indoor location, offline analytics and proximity marketing register for Place 2014 in New York on July 22. Be sure to take a look at the session and speaker lineup.

GE to Partner with ByteLight for In-Store Shopper Engagement

GE Lighting is partnering with ByteLight in effort to help retailers communicate with customers in-store through networked LED fixtures. The joint solution is intended to determine the precise location of shoppers who “opt-in” through a retailer’s app.

ByteLight and GE will showcase a networked LED fixture next week at LIGHTFAIR 2014 that combines Visible Light Communication (VLC), Bluetooth Low Energy (BLE) and inertial device sensors. The combined approach will be able to communicate with any shopper who has a mobile device with a camera and/or Bluetooth Smart technology.

The partnership is significant with GE, an iconic lighting manufacturer, entering the market for indoor location services. Not to be outdone, another lighting hardware stalwart, Philips, recently announced an indoor location opportunity of its own.

Also telling is the announced "comprehensive approach" with visible light and BLE technology. With many retailers still trying to understand the myriad indoor location technologies in the market (e.g. WiFi, proximity beacons, magnetic positioning, video cameras, as well as ByteLight’s LED offering), integrating different solutions is a likely approach for retailers as they navigate how to deploy indoor location technologies.

IndoorAtlas Delivers Indoor Location Entirely without Hardware

Finnish company IndoorAtlas offers something that sounds almost too good to be true: accurate indoor mapping without the installation of hardware. In addition, its approach can be accomplished very quickly -- even crowdsourced.

The company, founded in Finland with offices in Mountain View, has been around for several years but has had some difficulty convincing people that its approach to indoor location and mapping actually works. One reason is that, unlike Bluetooth Beacons, nobody else is promoting this approach to indoor location.

People are thus largely unfamiliar with it and how it works. Some people who learn of IndoorAtlas' "magnetic positioning" argue that all the building materials (i.e., steel, concrete) must distort magnetic fields inside structures. However this is precisely what IndoorAtlas says it relies upon: structural elements that give each building or indoor area a unique "magnetic fingerprint."  

This weekend the NY Times offered a brief overview of the company and its approach. We've been writing a report on the company's technology, which will be out shortly. IndoorAtlas will also be attending and presenting at our upcoming Place Conference in New York on July 22

We are among a small handful of individuals who've actually seen the technology working live in a store environment. About a month ago we got an in-store demonstration in a major retail store. Throughout the demo and our tour of the store the IndoorAtlas app accurately maintained our real-time location (exactly or within a couple of feet) as we moved throughout the store. 

It was consistently accurate. While this was an isolated situation -- though it wasn't controlled; it was a real "big box" retailer -- we have no reason to believe that it wouldn't perform the same way in other indoor environments.  

As we've argued in the past no single indoor location technology is perfect or complete. Multiple technologies will need to be combined to do the different types of things that retailers and venue owners seek to accomplish with indoor location (analytics, marketing). For example, RetailNext combines video, Wi-Fi and increasingly beacons in its analytics solution.

But the impressive and relatively amazing thing (hence the skepticism) that IndoorAltlas does is deliver indoor-location accuracy without the installation of any hardware whatsoever. 

Roughly $500 Billion in Consumer Spending Waiting to Be Influenced by Indoor Marketing

When we published our recent "Mapping the indoor marketing opportunity" report, we estimated that roughly $10 billion in spending would be impacted directly or indirectly indoor location technology and marketing. However the market is so young that it's difficult to make a forecast with any sort of precision. 

Given that analysts routinely inflate and overestimate the value of markets and the speed of their development I was somewhat nervous about this figure. However it turns out that $10 billion number may be quite conservative.

In that number we included software licensing revenue from indoor analytics. The consumer marketing side of the equation is much more vague given that indoor marketing is still mostly speculative. The models and behavior haven't yet shown up -- though they will. 

 

Source: Nielsen (advertising and audiences report) May 2014 

However, one clue to the fact that we may have grossly underestimated the value of "indoor marketing" comes from a Nielsen chart (above) estimating how much consumers spend on grocery, personal care and various sundries annually. The numbers are almost unbelievably large.

The total spent in the US on these categories comes to roughly $500 billion annually. If even a fraction of the value of these purchases can be influenced at/near the point of sale through indoor marketing we've got a massive market on our hands.

The total value of all digital media advertising in the US last year was approximately $43 billion, according to the IAB. If even 10% of the consumer spending mentioned by Nielsen above can be influenced by indoor marketing (in one form or another) we're talking about $50 billion worth of goods annually.  

'Webrooming': the Opposite of Showrooming

Traditional retailers express anxiety and concern about so-called "showrooming," whereby smartphone owners shop for products in physical stores and then buy online for lower prices. We've shown multiple times that this is a real phenomenon; however it's generally a minority use case. 

In a sort of contrarian finding, Consumer Intelligence Research Partners said a few months ago that the large majority of Amazon shoppers are loyal to that site and not opportunistically buying online based on price. The financial research firm used consumer survey data to argue, "rather than looking for items at a physical store, then buying them online, most Amazon.com customers [80%] started shopping at the Amazon.com website." 

In our own survey data we have documented that roughly half (52%) of mobile users have (at some point) decided not to buy something based on information discovered on a smartphone while in the store. It's safe to say is that consumer in-store behavior is now more complex and smartphones are arming them with more information to help make purchase decisions -- online and off. 

Multiple surveys, including ours, have shown a range (66% to 90%) of in-store smartphone usage.

But what about the opposite of showrooming -- "webrooming" (a very awkward term I hope doesn't stick). According to an article in AdWeek, Merchant Warehouse found that "69% of people with smartphones in the 18-36 demo have webroomed, while only 50 percent have showroomed. Among 37-48 year olds, 71 percent have webroomed versus 53 percent who have showroomed." 

This is being presented as some new behavior or novel phenomenon. But it's just traditional retail buying. 

Well over 90% of all retail buying happens locally. But most internet users now do some form of online research before buying offline (depends on category/consideration). The bigger the ticket the more online "pre-shopping." 

I've previously estimated that when retail spending and local services are combined you've got a $9 to $10 trillion annual market in the US. Roughly $2 trillion or approximately 20% (or so) of that is being influenced by "online research." That figure will only grow as more people use smartphones as shopping assistants.

The bottom line, literally and figuratively, is that consumer shopping behavior is now multi-platform and more complex. But whether you call it "local shopping" or "webrooming," the overwhelming majority of buying (90%+) continues to happen offline. 

Survey: 50% Will Share Personal Info with Retailers for Deals

New survey data from PriceGrabber reaffirm that consumers will share private information -- this survey didn't specifically ask about location -- in exchange for rewards from retailers and e-commerce sellers. The survey was conducted in March among nearly 3,500 US consumers. 

The survey asked about consumers' willingness to share "personal information" online or in-stores: "personal information included age, gender, email, clothing/shoe size, and credit card number among others." Generally shoppers were more inclined to share information online (56%) than in-store though nearly half (48%) said they would do so in the latter context. 

The survey also tested various reward scenarios: price discounts vs. "percent off" choices. Most preferred percent-off to dollars-off or gift card reward options. 

Several other consumer surveys, including one conducted last year by Opus Research, indicate that consumers will share personal data and location information if they get a sufficient reward for doing so. There are numerous others that show consumers remain quite concerned about privacy and data collection. This seeming paradox might be described as consumer sharing ambivalence. 

In addition to discounts and coupons consumers have also indicated a willingness to share personal or location data in exchange for a better or more personalized shopping experience.

Smartphone Penetration in US Crosses 70%

In roughly March 2012 US smartphone ownership crossed the symbolic 50% threshold. In March of this year it reached 70%.

Media measurement firm comScore said that in March 166 million Americans (over age 13) owned smartphones. The firm says that amounts to 68.8% penetration. However historically comScore has made its penetration estimates using a base of 234 million mobile subscribers.

The number of mobile subscribers or smartphone owners hasn't declined in the past couple of years. Indeed, Pew survey data report that 90% of US adults now own mobile phones.

A denominator or base of 234 million smartphone owners divided into a numerator of 166 million translates into 70.9% penetration, not 68.8%. Since Q3 2013 Nielsen hasn't publicly released new smartphone penetration figures to my knowledge. However, in the past, Nielsen's smartphone penetration numbers have been more bullish and aggressive than comScore's figures.

All of this together suggests that US smartphone penetration has crossed the 70% line. It took two years to go from 50% to 70%. It's thus reasonable to assume that by 2016 the figure will be approaching 90%

Google Now Update for Android Shows Indoor Maps, Geofenced Product Alerts

Google is updating its search app for Android devices. As part of that update Google Now, its predictive search/intelligent assistant feature, is offering new content and capabilities. These new features do not yet extend to Google Search/Now on iOS devices. 

The feature that got considerable coverage earlier today is a parking-locator card. Google records the location of your vehicle on the street or in a parking lot. It will show you a Google Now card with a map of the vehicle's location and point you in the right direction to get back to your car. 

I haven't used it so I don't know if it works at all. But it's potentially very useful.

Google Now will also now work when your wireless network or internet connection doesn't. In other words, the Now cards will remain on the phone and not disappear.

Google Now new features

Source: Google 

Of particular relevance to our discussion of Place-based marketing, Google Now will also show indoor maps of selected malls. I suspect later it will show indoor maps of stores that it has already captured. Google has maps of roughly 50 malls and a number of retail chains such as Home Dept, Macy's, Sports Authority, Ikea and others. Coverage is uneven however. 

Most intriguing of all, Google Now will remind users about products they've searched for previously when those users are near stores that carry the same items. If you've been looking for a particular type of running shoe, for example, and a nearby store typically carries that product Google Now will indicate you're near a store that offers it. 

This capability doesn't extend to real-time inventory however. That's up to the user to check or confirm.

In addition, it's not clear how large the geofence is. Will it be a mile, 3, miles, 5 miles? I suspect Google will see how users interact with this feature and adjust the geofence radius accordingly.

In a very obvious way this "product-alert" capability could quickly become a feature of Google's PLAs and a potentially powerful marketing vehicle for retailers and brands. Today users must themselves invoke Google Now (swipe up). To be really effective and helpful, however, Google Needs to turn some of these things into push notifications. 

It's very interesting that three out of four of these new features and capabilities pertain to location and two specifically to shopping and indoor location. 

PayPal Tries to Solidify Market Position As Competitors Ready

Yesterday's Facebook developer conference didn't yield a payments announcement.) It's still a logical move for the company to make.) However it did see the introduction of a new logo/identity and the launch of a new branding campaign for payments incumbent PayPal.

PayPal is probably still the growth engine among a range of decent-performing but somewhat lackluster businesses at eBay. Here's the data from the Q1 earnings release:

PayPal net total payment volume grew 27% with Merchant Services volume up 32% and on-eBay volume up 15%. Revenue grew to $1.8 billion. PayPal gained 5.8 million new active registered accounts to end the quarter at 148 million, up 16%. Global on-eBay penetration increased to 78.9%. PayPal continued to invest in its credit offerings, providing flexibility for consumers and merchants while improving its ability to manage transaction expense and reinvest in the business to accelerate growth.

PayPal may soon face a range of mobile payments competitors in Facebook, Amazon and Apple. Google failed to vanquish the online payments incumbent with Google Wallet but it bet on the wrong strategy (NFC). The PayPal brand is not as strong as some think (perhaps even the company itself). It has name recognition but relatively weak brand affinity among consumers. 

There are some surveys that suggest PayPal is a highly trusted consumer brand and in a stronger position vis-a-vis its rivals and potential rivals. I belive that's mostly about name recognition and not actually about trust. I also think that PayPal (on the consumer side) is extremely vulnerable to "disruption" should a well-designed Apple or Amazon (or potentially Facebook) payments product come along. 

Below are the installed user-base numbers for the three companies: 

  • PayPal: 150 million approx
  • Apple: 600 million
  • Amazon: 240 million approx 

Against that backdrop PayPal introduced a new brand identity and is launching a global branding campaign featuring TV and online-video. The theme of the ad below is simplicity and convenience. 

The campaign and global push may well shore up PayPal's position by making it the most familiar non-bank/credit card associated with payments. Indeed, there's an opportunity for PayPal to more firmly establish itself as the online and mobile payments product of choice.

It will still need to improve the user experience (e.g., stop defaulting to user bank accounts as the primary payment method), crack down on PayPal related fraud and phishing (if it can) and be generally more consumer-centric and service oriented rather than simply an alternative way to pay to avoid filling out a form.