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

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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 download and view the report (“Magnetic Positioning: The Arrival of Indoor GPS,” an Opus Research report written by Senior Analyst Greg Sterling), click the link below:

Magnetic Positioning: The Arrival of Indoor GPS

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. 

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.