Data And Forecasts

Mobile Eroding PC Sales, Survey Says iOS-Android 'Duopoly' to Dominate

PC sales are slowly eroding -- and mobile seems to blame. One could argue that the economy has taken a toll on PC sales, and that would probably be accurate. But mobile devices (smartphones, tablets) are gaining mindshare and sales at the expense of PCs. 

Hardware watchers Gartner and IDC both said that Q4 PC sales fell -- somewhere around 1%. Macroeconomic conditions and component shortages are factors. But the big news is tablets and smartphones. Tablets (iPad, Kindle Fire, Nook) were among the most widely requested and given holiday gifts, to the tunes of millions in sales.

 Screen shot 2012-01-17 at 10.44.52 AM

EMarketer rounded up third party data and estimates on iPad and Kindle Fire sales. Hardware tear-down firm iSuppli estimated that Amazon sold 3.9 million Kindle Fire tablets in Q4. Barclay's Capital estimated the number to be 4.5 million. The reality is probably in-between.

Meanwhile iSuppli argues that Apple "shipped" 18.6 million iPads in Q4. Shipped is a bogus metric, but with Apple products sales and shipments are closer than with other OEMs. The iSuppli estimate is probably high, but we'll find out when Apple releases its quarterly revenues on January 24. 

Overall, iSuppli argues that global tablet shipments were 65 million units in 2011. Not only are tablets "sexier" but they're typically cheaper than PCs, notwithstanding price erosion in the Wintel PC market. Take a look at charts from Horace Dediu (the first one above via GigaOM), showing the decline of traditional PCs over the past couple of years. 

Separately the Yankee Group conducted a US consumer survey (n=15,000), released earlier this year, which features some striking findings:

  • 47% of survey respondents own smartphones (Android 39%, iPhone 25%) -- this is the highest percentage figure in the market to date
  • Over 80% of consumers (including current smartphone owners) say they'll buy either an iPhone or Android handset in the next 6 mos.

What that means as a practical matter is that only a small minority are considering another platform. While survey data shouldn't be taken as definitive, they indicate how people are thinking and, by implication, the challenge Microsoft and Nokia's joint marketing efforts face. Windows Phones are nice but struggling to grab mainstream consumer attention and interest. 

In terms of tablets, Windows 8-powered tablets won't be out until later this year. Rumor has it that they could be more expensive than some Windows 8 laptops (to be determined). Windows Tablets face the same "outsider" problem that Microsoft confronts in the smartphone market. By offering laptop-tablet hybrids (like the image above), Microsoft might be able to justify a higher price and grab consumer interest.

However the totality of evidence suggests Microsoft is under intensifying pressure with Windows Phones and Windows 8. Indeed, can Windows 8 "bring sexy back" to the PC market? 

Studies Find Major Brands, Retailers Slow to Adopt and Optimize for Mobile

There are two recent studies that show national brands and retailers lagging in their adoption of mobile or under-investing in mobile as a platform. Brand consultancy L2 just this week released what it's calling "Prestige 100 Mobile IQ." Basically a survey of top brands' mobile presences and their efficacy, the firm found that most top brands were not taking mobile (and tablets) seriously enough, despite increasing consumer adoption.

Roughly 30% of the top 100 "iconic" brands surveyed didn't have a mobile app and 33% didn't have a mobile-optimized website. According to the study 52% had both an app and a mobile site, while 16% had no mobile site or app -- no mobile strategy whatsoever. Overall 44% of the brands qualified as "feeble" from a "mobile IQ" standpoint. 

The top 10 brands with successful mobile sites/apps and strategies, according to the survey, were the following: 

  1. Sephora
  2. Nordstrom
  3. Macy’s
  4. NET-A-PORTER
  5. Bloomingdale’s
  6. L’Occitane en Provence (tie)
  7. Tiffany & Co. (tie)
  8. Neiman Marcus
  9. InterContinental Hotels & Resorts
  10. Estée Lauder

In a related set of findings, ForeSee Results measured consumer satisfaction with leading retailer mobile sites and compared those to online satisfaction scores. ForeSee found that most retailers and ecommerce sites' mobile ratings were lower than those for their PC websites. (Apple was the exception, with a mobile rating that was greater than its PC-experience rating.) 

It's not entirely clear, at first glance, whether these scores mean consumers found the retailers' mobile sites sub-par or whether they simply preferred the PC sites. Let's assume, however, that it's the former and consumers were expressing dissatisfaction with these mobile sites. 

If so, there will be near-term consequences in terms of lost opportunities as well as a negative brand impact among those companies that fail to optimize for mobile. Mobile and tablets are no longer a novelty phenomenon that can be addressed "later." Mobile internet access will eclipse PC internet usage in the next three to five years. Time spent with mobile apps is already greater than time spent online according to calculations from Flurry Analytics. 

 

The "takeaway" from these two pieces of research is that you can no longer simply rely on your PC site. Brands and retailers must have an optimized mobile presence. But it's not enough to have a "mobile presence;" brands and e-commerce sites must deliver a positive mobile experience to their customers, which means all of the following:

  • an HTML5, mobile-optimized site
  • an iPhone app
  • an iPad app
  • Android app (soon for Kindle Fire tablet too)

These investments are rapidly becoming "tablet stakes" and those that fail to "ante up" will suffer. 

Millennial Data Show Adverstisers Using Mobile to Drive in-Store Visits

Millennial Media is out with its latest SMART report (November, 2011). As always it showcases advertiser behavior and tactics on Millennial's network. This month focuses on the Telecom industry and its mobile ad efforts. What's interesting to me is how advertisers are increasingly and self-consciously using mobile to send people into stores and local dealers.

There are a mix of advertiser objectives on display in the Millennial document:

  • Online lead-generation
  • Brand or product awareness
  • Mobile commerce
  • Local store visits

 Screen shot 2012-01-11 at 10.38.09 AM

However Millennial reports growth in the use of store locators and local market targeting:

  • Store Locator experienced growth of 47% month-over-month, with 33% of the Post-Click Campaign Action Mix in November. Retail and Auto advertisers leveraged Store Locator to drive customers into stores and dealerships for seasonal sales.
  • Local Market targeting represented 69% of the Targeted Audience Mix in November. Restaurant and Telecom advertisers targeted customers with a variety of regional promotions to increase foot traffic into restaurants and stores where customers could redeem their offers. 

We're still in a period of experimentation with mobile advertising and best practices have yet to clearly emerge (although there are obviously some). Eventually people will figure out the best uses of mobile and what scenarios are most effective.

I think however we'll see two almost paradoxical things emerge: mobile is great for driving online-->offline visits (a kind of direct response) as well as a great brand-awareness medium.  

Mobile Internet Kicks PC's Butt in Time Spent

Last June mobile analytics provider Flurry released a startling statistic: people were spending more time with mobile apps per day than they were on the PC web. The number of people on the mobile Internet in the US is still smaller than the PC Internet (100 million-ish vs. 218 million). But the implications of Flurry's engagement data are both obvious and dramatic. 

Flurry recently updated its numbers and found the gap had widenend -- in favor of apps. According to the company Americans now spend an average of 94 minutes per day with apps vs. 72 minutes on the PC.

Here's what Flurry said about its methodology and how it calculated the numbers: 

For the web, shown in green, we built a model using publicly available data from comScore and Alexa.  For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications.  We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis. 

Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.

Assuming the calculations are accurate the implications are profound for marketers and brands. In other words, if you're not optimized for mobile and not doing mobile advertising/marketing you're going to miss a significant audience. And that audience spending more time with apps may be your target.

People invariably want to get into the apps vs. HTML5 debate; that misses the point. The real comparison is mobile (apps + mobile Web) vs. PC. The PC audience is largely flat and time online isn't growing. But time with mobile and tablets is.

Smartphones, tablets and one day "smart TV" will be where more and more consumer eyeballs go especially for non-utilitarian tasks. It's a four-screen world; get used it. 

Wal-Mart, M-Commerce and Brand Weakness

As you may recall, last April Wal-Mart bought Kosmix for roughly $300 million and turned that into the nouveau social-mobile-e-commerce initiative @WalmartLabs. Yesterday the division of the world's largest retailer acquired a Portland Oregon based mobile agency and app developer Small Society: "A highly respected mobile agency, is joining the @WalmartLabs mobile team. Small Society embodies what has made us successful in 2011 and will help us accelerate that success in 2012."

Stepping back the question is: what is Wal-Mart thinking about its strategy going forward? Sure, it's smart to set up a Silicon Valley shop that incubates social and mobile products. But what is Wal-Mart actually going to do with them? 

Wal-Mart could take on Amazon and try to become a better version of the e-commerce pioneer. While that would take enormous corporate commitment and be risky, the company could leverage mobile and social functionality being developed at WalmartLabs. Alternatively or in tandem it could try and build verticals and new initiatives that cultivate new audiences and shoppers.

Building new audiences and expanding beyond its value-conscious/price sensitive demographic is a major Wal-Mart company objective. It sees Target as a big threat in the US, which has much greater appeal to "upscale" and younger shoppers. 

This quickly brings us to the Wal-Mart brand. Yes, it's a global brand -- but it's a brand like McDonald's: low quality, high volume. Wal-Mart has also been tainted in some quarters by its discrimination class action litigation with employees. Accordingly, with certain demographic segments (affluents, higher education) Wal-Mart is seen as an exploitative employer that peddles low-quality products. 

Wal-Mart is equally often seen as destructive of local communities and small business. It's not uncommon to see grass-roots efforts to keep the store out of communities (e.g., San Francisco). This kind of anti-Wal-Mart outrage doesn't exist with other retailers, and Target in particular. 

This negative brand image and reputation is directly at odds with the mission and self-image of @WalmartLabs and will be a major impediment to success -- either via a direct challenge to Amazon or any other "2.0" initiatives that carry the Wal-Mart brand.

However, Wal-Mart could use its own brand and potentially find success over time in a head-on challenge to Amazon and other e-commerce retailers if it did the following things:

  • Created sites/apps that offered great (capital G) user experiences
  • Competed aggressively on price with free shipping all the time
  • Made a very public and sincere commitment to customer service and backed it up with action
  • Did a better job of community relations with sincere commitments to local communities
  • Integrated stores and online in a smart, channel-agnostic way

If the company were to succeeded across the board on these fonts Wal-Mart might be able to not only appeal to new audiences but it could improve the standing of the brand overall. However, any sort of specialty, vertical or category specific initiative would need to carry a new brand. 

While there's great potential in @WalmartLabs I don't think the necessary corporate-level commitment is really there. 

Mobile Predictions: 2012 Edition

Last week I put some mobile predictions for 2012 into a column at Marketing Land. However many people probably didn't see them given that it was still during the holiday. So here they are again in more compact form:

  1. 2012 ends with 65% smartphone penetration in the US
  2. Android reaches 60%+ smartphone penetration by the end of 2012
  3. Voice search: Siri expands its reach to many more third party services; Google and Microsoft beef up their competitive voice offerings
  4. Apple launches its own mapping service for iOS
  5. RIM’s co-CEOs resign in 1H 2012
  6. Windows Phones see modest but not huge success in North America, greater success in Europe/Asia
  7. Major smartphone security (hacking/virus) event happens this year (most likely on Android handsets)
  8. Mobile payments see continued growth but 2012 isn’t the “breakthrough” year
  9. Tablets galore: 100 million tablets in market by the end of 2012 (globally). The iPad represents 65% of the market
  10. Google announces mobile ads “run rate” of $4 billion (in Q4)
  11. Facebook launches mobile advertising in 1H 2012
  12. Amazon buys a mobile ad network (Millennial or Jumptap)

Will 2012 Be a 'Breakthrough' Year for Mobile Payments?

Mobile industry consultant Chetan Sharma conducted a 2012 predictions survey among "executives, developers, and insiders (n=150) from leading mobile companies and startups from across the value chain." The complete findings are available here. Many of them are interesting, but in total they indicate to me that most insiders have no great clarity on the direction of the market.

What's most interesting to me about the survey is the discussion of mobile payments. Respondents thought that mobile payments will be the "breakthrough category" of 2012. But they also believe that banks and credit card companies will dominate the emerging segment:

Screen shot 2012-01-04 at 7.38.08 AM

Screen shot 2012-01-04 at 7.38.16 AM

While it's logical to assume that banks would control mobile payments -- they control the infrastructure -- I don't agree that the "financial guys" will define the segment. For the most part the credit card companies and operaters are not going to be able to deliver a compelling user experience -- especially the operators. 

Visa, Amex and MasterCard will be the "Intel inside" of mobile payments but the user-experience front end will be delivered by someone else in my opinion (like Square). Some consumer surveys indicate that, right now, credit card issuers are more trusted than others in the emerging ecosystem (other surveys show the opposite). Credit card issuers and banks are a known quantity; they're familiar to consumers.

However mobile payments are still mostly hypothetical for most people because few have had any practical experience with it. Once various "solutions" appear and people engage with them the landscape of survey responses will likely change to favor those with the best user experience (and/or most favorable terms on the merchant side). 

Screen shot 2011-06-20 at 9.15.23 AM

Source: Retrevo (Q4 2011)

Square contradicts the "banks will dominate" assumption. The company is an amazing success already, largely because it created an elegant user experience for both merchants and consumers. This is not something that would have been done by a credit card company or bank. Ultimately a credit card company, financial entity, Intuit or eBay will buy Square, however. 

In the next few years, there will probably be a few mobile payments entry points for consumers on top of a couple of payments infrastructure ecosystems. Unless there are common standards, however, there won't be many consumer-facing players.

I don't think this means that Visa or Amex will dominate, though they will have to be involved. I also don't think that PayPal will win in the segment. I would have bet on Google in the past but the operators (at least Verizon) seem inclined to block the company's mobile wallet. Amazon and Apple are dark horses but still have considerable potential because of their installed bases of credit card accounts. 

As with the example of Square I think there's still room for startups in mobile payments, provided they don't ask users and merchants to change behavior or adopt new proprietary systems. However unlike some of the larger or more established companies they must overcome the "cold start problem" (building usage among consumers and merchants simultaneously). 

In my view this year is still about developing the ecosystem and infrastructure and not a "breakthough" year for payments. That will come in 2013 or 2014 in terms of mainstream consumer adoption.

Apps Beat the Browser, Lift Brands

It has taken some time, and longer than I would have expected, but more people are now using apps to access content on mobile devices than are doing so with a mobile browser according to comScore's most recent data release. While the number of people who "used downloaded apps" and "used browser" are almost identical this is the first time in comScore's tracking that apps have surpassed browser usage. 

The data are survey based. They likely underestimate the relative role of apps in the overall smartphone user experience. 

What these comScore data mean effectively is that mobile apps have a reach that now slightly exceeds the mobile browser on smartphones. But in terms of time spent or engagement mobile apps have for some time dominated mobile browsing (and even PC browser time according to Flurry Analytics). 

Flurry also estimated that during the Xmas to New Years Day period, more than 1 billion apps were downloaded around the world. 

Separately research has confirmed that apps can have a dramatic, positive impact on brand favorability metrics. Accordingly brands' attention to apps as interactive marketing tools should increase dramatically in 2012. And we should also see much more mobile display advertising used to build app awareness and generate downloads. 

Are Android Handsets the New Feature Phones?

It used to be that the "free" phones being given away by the carriers were very low-end feature phones. Not anymore. Now, with a two-year contract, you can get a range of no-cost Android smartphones from AT&T, Verizon or T-Mobile.

Verizon was especially aggressive during the holidays; and this morning I counted no fewer than six pretty decent Android handsets available for free from T-Mobile with a two-year contract. These kinds of promotions have helped power Android's rise. The operating system now represents about 47% of all US smartphones according to comScore. 

I don't have and haven't seen data about upgrade patterns from feature phones. But my guess would be that most smartphone upgraders are going to Android, partly because of the "free" promotions as well as the selection and ubiquity of these devices. 

InsightExpress not long ago pointed out that all smartphone owners aren't the same. They can be segmented by engagement and activity level. And while I haven't seen any data on the behavioral differences between Galaxy Nexus owners (Android flagship) and those who own an LG Optimus (entry level Android handset), there likely are some. 

How else does one explain the NetApplications data now making the rounds. These data, showing browser usage across millions of sites, reveal iOS with more than 3X the mobile browsing share of Android in December (iOS includes tablets here). 

  1. Apple/iOS: 52.1%
  2. Java/J2ME: 21.3%
  3. Android: 16.3%
  4. Symbian: 5.8%
  5. RIM: 3.5%
  6. Other: 1.1%

Given the comScore numbers above these data from NetApplications are fairly dramatic -- and curious. However, the gap isn't nearly as large in StatCounter data (global and North America below): 

Screen shot 2012-01-03 at 6.02.50 AMScreen shot 2012-01-03 at 6.03.31 AM

In North America, Apple's lead is considerably less than in the NetApplications data; and if one looks at "mobile browser" share -- the data above reflect "mobile operating system" -- Android is ahead of iOS in North America and globally. It's not clear how to explain these differences between the data sets. 

Another piece of data: last month an online and mobile shopping study found that iOS devices accounted for 92% of all non-PC sales. In other words Android users aren't very active in m-commerce. In addition the study reported that "Apple mobile devices also have a larger AOV compared to other mobile platforms ($123 for Apple vs. $101 for Android in December 2011) – and far outstrip desktop orders ($87)." 

Last year Nielsen posted some demographic data on iPhone and Android users and found them more similar than different. But in 2011 the recommendations site Hunch conducted a user survey (n=15K) and found some meaningful differences between Android and iPhone users. Chief among these differences were levels of education and affluence; iPhone users were generally older, more urban, better educated and had higher incomes according to the self-reported data.

Back to the comScore data above. Clearly Android is a more "mainstream" smartphone than the iPhone. Almost twice as many people own Android handsets in the US than the iPhone. However, looking at the rest of the data above, iPhone users are more engaged and active than their Android-owning counterparts on the whole.

As we move from a market still dominated by feature phones to one controlled by smartphones, by the end of this year, we'll see most people embrace Android as they upgrade. Apparently, however, this doesn't mean that they'll immediately begin displaying radically different behavior, though it does mean at least incremental changes.

Accordingly it might be fair to say that the lower-end Android handsets are becoming "the new feature phones." 

Pew: 43% of US Mobile Phone Users Access the Internet

The Pew Research Center’s Global Attitudes Project recently published a report on globaly technology usage. Among the findings interesting to this blog were those on SMS usage and mobile Internet access. 

According to Pew, a full 75% of mobile users on average (in 21 countries) use SMS. Mobile Internet usage is less according to the data: "more than four-in-ten mobile phone owners use their device to go online in Israel (47%), Japan (47%) and the United States (43%).

Screen shot 2011-12-22 at 12.08.25 PM

If there are roughly 240 million adults in the US and 85% of them own mobile phones that's 204 million adults with mobile phones (comScore uses a base of 234 million adults with cell phones). Pew's data then argue that about 88 million access the Internet on their mobile phones.

By contrast Nielsen's data assert that there are now 100 million mobile Internet users in the US. Certainly if mobile phone owners under 18 are included we've easily crossed that threshold. 

Millennial Seeing 'Hundreds of Millions' of Kindle Fire Ad Impressions

Millennial Media is out this morning with its latest "Mobile Mix" devices report. The report reflects the distribution of devices and corresponding operating systems on Millennial's network. Over time the percentage of smartphones on Millennial's network has grown dramatically and now stands at 70%. By contrast smartphone penetration in the US is about 44% according to the latest Nielsen figures. The other 30% of devices on the Millennial network are feature phones (14%) and so-called "connected devices" (16%): iPod Touches, Kindles, iPads and other tablets.

Connected devices are the main focus of Millennial's newsletter this time, in particular the Kindle Fire. Millennial confirms the popularity and apparently significant sales of the Kindle Fire, saying that the company is seeing a "monthly run rate of hundreds of millions of impressions":

Since its release in mid-November, the Kindle Fire has made an impact on the connected device market right out of the gate with early signs of strong consumer adoption.

On the Millennial Media platform, impressions from the Kindle Fire have grown at an average daily rate of 19% since its launch several weeks ago. We’re not just seeing millions of impressions, we’re seeing a monthly run rate of hundreds of millions of impressions.

The Kindle Fire’s impression growth on our platform has slightly outpaced that of the iPad when the iPad launched in early 2010. Though the Kindle Fire has been introduced into a more mature tablet market than the market which greeted the original iPad, the integration of Amazon’s robust digital entertainment library and the $199 price point may also have helped drive this early use by consumers. (emphasis added.)

The question raised in the excerpt above is whether "the $199 price point may [ ] have helped drive this early use by consumers." It's pretty clear the answer is "yes." The Amazon brand has certainly been critical, but it's mainly the $199 price that is responsible for the device's huge sales. The iPad created the new market for tablets and Kindle unlocked demand among those who we're more price sensitive and resisted buying "no-name" lower-priced Android tablets. 

Among the smartphones on Millennial's network, 50% are Android based handsets. However, save the Nook and Kindle Fire, Google/Android tablets have had almost no success for reasons of price and quality.

http://www.retrevo.com/content/files/images/misc/pulse_11Dec15_chart2.jpg

Retrevo presented some interesting survey data yesterday showing consumer tablet demand is greatest for the iPad, followed by the Kindle Fire and then the B&N Nook. Retrevo shows that there is a market for Android tablets -- the Kindle Fire has already confirmed that -- provided the price is right and at least $100 less than the iPad. 

http://www.retrevo.com/content/files/images/misc/pulse_11July13_1.jpg

Putting aside quality for a moment -- Android Honeycomb was a major disappointment from a UX perspective -- price is the major variable that consumers are responding to in Kindle Fire (but with the confidence of the Amazon brand behind it). The problem is that it's almost impossible for most tablet OEMs to get prices low enough to make any margin on them and be price-competitive.

If they match the iPad pricing they're perceived as imitators (e.g., Motorola Xoom, Samsung Galaxy Tab). But mobile carrier subsidies, which bring down the prices of smartphones, have not worked so far stimulate Android tablet demand -- mainly because consumers don't want another two-year carrier contract and the associated data fees. They're buying WiFi tablets instead. 

Android-based tablets that have been priced at or below $200 in the past have been made by companies that are unfamiliar to consumers and received poor quality ratings from experts and consumer reviewers alike. Even though Kindle Fire has had its share of problems and disappointed many reviewers, consumers know and like Amazon.

It was also shown that Amazon was taking a loss on the sale of every Kindle Fire, to establish a beachhead in the tablet market and because the company figured it could make up the loss and much more on content sales. 

There are rumors that Apple will introduce a 7" tablet next year to compete with the Kindle Fire, just as Amazon will go "up market" and deliver a 10" tablet.

Google, for its part, has suggested that it will respond to lagging Android tablet sales by bringing its own "higest quality" tablet to market next year. We'll see whether this is with an OEM partner or Google-branded (i.e., Chrome or Nexus tablet). Google is clearly another company -- one of the very few -- that could offer the combination of brand-instilled consumer confidence and subsidized pricing.  

Most Mobile Shopping Happening at Home

I've now written a number of posts, yesterday most recently, that point out most mobile shopping and purchase activity is not happening in stores or "on the go," but at home. Data vendor Compete last week released some findings from its most recent smartphone user survey that confirm this. 

What Compete found is that mobile "shopping" (not buying) was largely performed in the home or, to some degree, at work. What's significant here is that people are choosing to use mobile devices (smartphones typically) when they likely have access to a PC. 

A significant minority of people (34.5%) used their devices in stores (price checks, reviews, coupons) and another sizable group (28.6%) shopped while killing time. 

Below are the most common mobile shopping activities. Note that the largest category is "store information" (people preparing to visit a store location). According to Compete "made a purchase" just missed the list with 31.8% of people reporting making a purchase on mobile devices. 

http://blog.compete.com/wp-content/uploads/2011/12/mobile-shopping-activities.png

Majority of Mobile Buying Happened at Home During Thanksgiving Weekend

Of all the mobile shopping apps in the market, the company with the most data on consumer-user behavior is undoubtedly Amazon. But price monitoring mobile application ShopAdvisor also probably has a pretty good window into consumer behavior as well.

The company behind ShopAdvisor, Evoqu, released some data (based on its 100K users over the Thanksgiving-Black Friday weekend) that captures the varied ways in which mobile apps are being used by consumers. It revealed three mobile shopping behaviors (based on purchase location):

  •  in-store price checkers (11%)
  • "couch commerce" buyers (54%)
  • deferred purchasers (35%) 

Evoqu said that consumers generally placed products above $156 on "WatchLists" for later research, discussion or price drops. Price-driven alerts later caused purchases of many of the "watched" items. This was also interesting about e-commerce vs. local/offline shopping: mst of ShopAdvisors' users stayed away from local stores during that first weekend: 

Mobile users shop locally, but not so much on Black Friday. The proportion of consumers who used ShopAdvisor to find local products dropped by 50% during the busy holiday shopping weekend. In the week prior to Thanksgiving, 20% of mobile users chose a local retailer to make a purchase, but from Black Friday through Cyber Monday, only 10% of users braved the mall or other local shops.

Here are the top 10 categories by percentage of mobile shopping (not necessarily buying) activity:

  1. Toys 13.8%
  2. Tablets & media players 7.0%
  3. TVs 5.8%
  4. Xbox 360 games 5.1%
  5. Digital Cameras 5.0%
  6. Women's Shoes 4.5%
  7. Men's Shoes 4.4%
  8. Small Kitchen Appliances 2.3%
  9. Watches & Accessories 2.2%
  10. Outerwear 1.9%

Assuming that the data above (in-store, couch, deferred) reflect the actual point of purchase, what's interesting is that the minority of mobile purchases happened during in-store shopping, which may have been based in part on crowd avoidance that weekend. Most (at least 54%) happened at home, where a PC was readily available. It may also be that a sizable chuck of the deferred purchases happened at home. It's not clear. 

Regardless, this is another study that shows how assumptions about mobile behavior and actual mobile behavior are often quite different.  

Facebook Has Greatest 'Active Reach' of Android Apps

Nielsen has published data on the Android apps with the greatest "active reach" by age group (US market). Active reach means "percentage of Android owners who used the app within the past 30 days." After the Android Market app itself, Facebook is dominant across age categories. 

After Facebook, Google occupies the next four slots with slight differences by segment. But basically it goes: GMail, Google Maps, Google Search and YouTube. In the top 100 free apps in the iTunes store, Facebook comes in at #24, Twitter at #48 and Google at #61. 

Screen shot 2011-12-12 at 10.03.54 AM

In September here's what Nielsen said about overall active reach of Android apps: 

Screen shot 2011-09-13 at 5.40.59 AM

Below is a chart (UK data from 12/10) that shows how dominant Facebook is in terms of time spent in aggregate minutes: 

Screen shot 2011-12-12 at 10.13.17 AM 

Is 'The Fattest City in America' Also the Most Mobile Savvy?

The IAB put out a list this week of the "Top Mobile Shopping Savvy U.S. Cities." Here is the list:

  1. Houston
  2. New York
  3. Atlanta
  4. Los Angeles
  5. Dallas/Ft. Worth
  6. Tampa/St. Petersburg
  7. Chicago
  8. Philadelphia
  9. Washington, D.C.
  10. Seattle/Tacoma
  11. San Francisco/Bay Area
  12. Boston
  13. Detroit
  14. Minneapolis/St. Paul
  15. Phoenix

In order to come up with its rankings the IAB considered four criteria:

  • Ownership of a mobile phone
  • Propensity to be influenced by mobile coupons
  • Ownership of a mobile retail app on handset or tablet
  • Ownership of a mobile social media app

Anticipating reactions such as, "How can Houston, the 'Fattest City in America in 2009,' also be the most mobile savvy, while San Francisco is #11?" the IAB said the following about Houston and San Francisco: 

Weighting and aggregating these data and indexing the results against the U.S. national average reveals that Houston was the most mobile-shopping-savvy city in the U.S. Houston scored high across all four metrics included in the IAB index (see Appendix), and in particular had the highest mobile device ownership level of any major U.S. city. However, high rates of mobile device ownership were not sufficient to make a city mobile shopping savvy. The San Francisco Bay Area had high mobile ownership but scored low on the savviness index, while Tampa-St. Pete went the other way.

The IAB said that the mobile devices measured where "primarily" smartphones and tablets. However I guarantee you that the penetration of smartphones in Houston is not greater than in San Francisco. Ownership of feature phones, still the majority (56%) in the US, should have been excluded.

In addition "propensity to be influenced by mobile coupons" is not an indication of savvy necessarily. More likely it's an indication of budget consciousness. And finally the presence of a retail app on one's smartphone or tablet is an indication of loyalty or brand affinity more than savvy. (I have zero retail apps on my smartphone and tablets, but over 140 apps overall). Indeed, overall number of apps or apps used on a regular basis is a greater indication of savvy than the presence of particular retail apps. 

Here are two alternative views of mobile "top cities" using other critera (Houston still ranks): 

Verve Wireless' Top DMAs for Mobile Ad Spending (on its network only): 

  1. St. Louis
  2. Houston
  3. New York 
  4. San Francisco Bay Area
  5. Portland 
  6. Denver
  7. Memphis
  8. Seattle 
  9. Dallas-Ft.Worth
  10. Cleveland

These data were captured in Q1 2011.

xAD's Top Cities for Local-Mobile Search:

  1. New York
  2. Los Angeles
  3. Chicago
  4. Miami 
  5. San Francisco
  6. Denver
  7. Dallas
  8. Houston 
  9. Atlanta
  10. Jacksonville

Here are the top US DMAs (2010) according to Nielsen:

  1. New York
  2. Los Angeles
  3. Chicago
  4. Philadelphia
  5. Dallas-Ft. Worth
  6. San Francisco-Oak-San Jose
  7. Boston (Manchester)
  8. Atlanta
  9. Washington, DC
  10. Houston 

Most of the lists one might generate around things like smartphone penetration/device ownership or mobile ad spending are going to correspond to population and media spending more generally.

Millennial Media: Local Targeting Grows on Percentage Basis

The latest Millennial Media SMART report shows growth of location targeting among retailers and brands. Among other data presented in the October report, Millennial said that retailers and telecom advertisers (e.g., AT&T, Verizon) used store locators on landing pages to drive people into local outlets: 

Store Locator experienced growth of 5% month-over-month, with 23% of the Post-Click Campaign Action Mix in October (Chart C). Retail and Telecom advertisers increased their usage of Store Locator as a Post-Click Campaign Action to drive customers to stores for fall sales or to buy new mobile devices.

Screen shot 2011-12-09 at 6.28.21 AM

The use of the store locator on a mobile landing page will be the primary way that brand and national advertisers "localize" for the foreseeable future. This is in contrast to the use of dynamic creative that inserts locations into the ad copy itself. Google mobile search results will be (and are already) an exception.

According to Millennial, "local market targeting" was the dominant component (66%) of the company's "Targeted Audience Mix" (40% of its overall campaigns). However, very interestingly, the use of targeting on Millennial's network has actually declined from six months ago.

In April 48% of campaigns were targeted (vs. 40% in October). Of those, 56% of impressions served by Millennial were directed toward local markets. 

Screen shot 2011-12-09 at 6.28.56 AM

In absolute terms, then, the amount of locally targeted impressions being served by Millennial in April and October was almost identical. So while there's growth on a percentage basis, which is significant, overall local targeting in real terms remained flat. 

The fact that fewer campaigns on Millennial are targeted overall makes me wonder whether that money, especially locally oriented ad dollars, are fleeing to other networks.

Women Outnumber Men As Smartphone Owners

In the US market there are now more female smartphone owners than men according to recent data from Compete (n=535). The percentage breakdown of women to men is 53% to 47%. Men were early adopters of smartphones and now women have more than caught up. 

Indeed, while men are a valuable audience target in mobile, the "smartphone mom" may be the true prize for marketers. 

Smartphone Owners: Men vs. Women (US data)

Compete also released some other gender breakdowns, such as smartphone activities. Men watch more movies on smartphones, while women do more of almost everything else:

 Smartphone Owners: Activities by Gender (US data)

smartphone activities

It's not clear that there are any immediate tactical takeaways from this, except that targeting smartphone owners of either gender is increasingly important for marketers. 

On a related note, comScore released smartphone marketshare data today, showing that Android now how more than 46% US market penetration. 

Smaato vs. Jumptap and Why Mobile CTR Doesn't Tell Us Much

The click is a "lazy metric." Much has been written by comScore, Nielsen and others about why clicks (or the lack of clicks) are not necessarily predictive of real-world success or conversions. Recently Nielsen issued findings that argue how little clicks correlate with sales, in an online display advertising context:

Advertisers looking to build their brands online will need to look beyond traditional web metrics to determine if their investments are paying off, according to a recent study by Nielsen. In a new report, Beyond Clicks and Impressions: Examining the Relationship Between Online Advertising and Brand Building, there is emerging evidence that brand metrics – which show attitudinal response to online campaigns – can predict offline sales. The research further shows that there’s virtually no relationship between click-through rates and brand opinion or offline sales.

(emphasis added.)

Let's be clear that CTR matters in search because you can't buy anything or find additional information without a click to a landing page. But the click has for too long been the currency of online advertising across the board. It has also been used in mobile to demonstrate "success" or performance in situations where that's clearly dubious.

In January Harris (on behalf of Pontiflex) issued findings based on survey research that said nearly 50% of mobile clicks were unintended: "47% of mobile app users say they click/tap on mobile ads more often by mistake than they do on purpose." This was research with an agenda but it does reveal the uncertainty surrounding the CTR as a mobile success metric. 

While an argument can be made that higher CTR on mobile ads is better than lower CTR, the connection to ultimate sales or success is questionable. We really need to see "secondary actions" in mobile: map lookups, calls, sign-ups, check-ins/visits, etc. to get a true sense of whether campaigns are working.

Earlier this week Smaato and JumpTap both released CTR metrics as part of larger data releases. The numbers were dutifully and largely unreflectively reported by numerous blogs and media outlets.

http://www.smaato.com/img/metrics/Q32011/ctr_ww.jpg Screen shot 2011-12-02 at 8.09.58 AM

Beyond the fact that the data disagree (compare iOS on both charts) they don't tell us much of anything. The Smaato data argue by implication that Windows and RIM are better platforms for andvertisers because of higher CTRs/response rates. However yesterday I wrote about InsightExpress findings that argued Windows users were less engaged and sophisticated in many respects than other smartphone users. 

Screen shot 2011-12-01 at 11.51.34 AM

Now compare 2009 data from ad network Chitika showing mobile OS CTRs. What can we infer from this? Android is a better ad platform than iPhone? What about Palm at the time? In fact, we can't infer much of anything, just like the charts above.

http://insights.chitika.com/uploads/Clickthrough-Rate-by-OS.png

Are Windows Phone or Symbian owners better prospects or more engaged vs. owners of Android? What is the real performance of mobile advertising on these various platforms? We really can't answer that question and don't know unless or until we have visbility into "secondary actions." 

So while a CTR number may directionally indicate success or be suggestive that something is working it's not transparent enough to really declare success. Mobile offers analytics capabilities that PCs do not.

While mobile is still young the industry should learn from the mistakes of online and develop a set of alternative metrics that can be used to evaluate the true success or influence of a mobile campaign. 

All Smartphone Owners Aren't Created Equal

InsightExpress is out with some Q4 data collected during late October and early November from roughly 1,300 US survey respondents. There's a terrific QR discussion and set of case studies that I won't talk about in this post, but you can get the entire document here.

The survey showed 41% of respondents owned smartphones; Nielsen recently said that its surveys show the number to be 44%. InsightExpress then segmented smartphone users by activity level, which was generally correlated to age and device type.

Screen shot 2011-12-01 at 11.51.21 AM

It found there were four main categories of smartphone users, by increasing level of activity:

  • Those that only use mobile for phone calls on a daily basis (Only Phone group)
  • Those that do 1 or 2 activities in addition to phone calls on a daily basis (1 or 2 Activities group)
  • Those that do 3, 4, or 5 activities in addition to phone calls on a daily basis (3-5 Activities group)
  • Those that do 6 or more activities in addition to phone calls on a daily basis (6 or More Activities group)

The survey also found that 58% of those in the "6 or more" highest engagement category were 18-29 years old, while 33% of those in the "only phone" group were over 50. This makes intuitive sense, although smartphone owners have skewed older and more affluent than other types of digital consumers, at least in the past. 

In terms of devices, what InsightExpress found is that those in the "1 or 2 activities a day" category are more likely to be Windows owners (it's not clear if this includes the new Windows Phones). Smartphone owners reporting mid-level activity (3, 4 and 5) tended to own BlackBerry devices. 

Android and iPhones were more typically owned by those in the highest engagement category: "6 or more activities" per day.

Screen shot 2011-12-01 at 11.51.34 AM

Study: Tablets Are for "Couch, Bed and Kitchen"

Tablets are for fun, entertainment, relaxation, while laptops are for work says a new study from Google. The company is releasing some very interesting (and more nuanced) data today on tablet usage, which has come into sharp focus following all the post-holiday analysis.

The data in the Google study are based on self-reported dairies consumers kept over a two-week period (sample size undisclosed). Google found an emerging bifurcation between tablet and PC usage, as well as some other interesting consumer behaviors.The bottom line here is that tablets are used in the home primarily, mostly by one person for leisure activities and often along side other media. 

Most consumers in the study "use[d] their tablets for fun, entertainment and relaxation while they use[d] their desktop computer or laptop for work." Just over 90% of usage turned out to be personal (email is an exception perhaps). Google added, "When a consumer gets a tablet, we’ve found that they quickly migrate many of their entertainment activities from laptops and smartphones to this new device."

Screen shot 2011-11-30 at 12.02.44 PM

Other findings from the study:

  • The most frequent tablet activities are: email, games and social networking 
  • Usage was more compressed during the week and longer on the weekend (e.g., watching video)
  • 42% of tablet activities happened during other tasks or along side other media (i.e. watching TV). Email, games, social networking and search are the tablet activities most frequently done in front of TV 
  • Usage occurs mostly in the home, though some people use them on the commute and on vacation or work trips, “where they use them as a laptop replacement"
  • Google also discovered most tablets were used by single individuals; a smaller percentage were shared with family members

Tablets are, according to Google, “mobile within the home, with the highest usage taking place on the couch, from the bed and in the kitchen" (see first graphic above).

Google also offers some implied recommendations for publishers: “For many people, websites and apps designed for smartphones just don’t cut it on tablets" In other words have sites and apps optimized for tablets. That's somewhat ironic given how few tablet apps exist for Android -- they're mostly stretched smartphone apps (which will change hopefully soon with Ice Cream Sandwhich). 

In a parallel vein, Google said that consumers expect more interactivity from ads on tablets:

Consumers are engaging with useful, relevant and rich ads that take advantage of the touchscreen interface on tablets. Some consumers expect more interactivity from ads on tablets than they do from ads on their desktop computer.

Screen shot 2011-11-30 at 12.02.34 PM

Interestingly, most activities carried out on tablets were limited to tablets, according to Google. Only 18% were conducted across platforms (on PCs or smartphones). 

With the iPad topping wishlists and millions of Kindle Fires being sold this holiday season the influence of tablets will only grow. This seems to be further confirmed by Google's finding that tablets were mostly used by one person. This argues for subsequent tablet purchases by other family members so "each can have his/her own." 

And in a bad economy those purchases will likely come at the expense of PCs.