Data And Forecasts

Survey: US PC Internet Adoption Has Plateaued

This past week the Pew Internet Project released a mix of data drawn from 2011 surveys. This new "Digital Differences" report reveals that 20% of US adult population does not use the Internet for a range of reasons ("no need," etc). These are mostly older, less educated or less affluent people. These findings are not surprising. 

However the data argue more strikingly PC-based Internet adoption in the US has reached something of a plateau. While that could change over time, it's further evidence of the "post-PC" era we're now in. 

Internet adoption

Pew also found that about 60% of PC-Internet users had a "broadband" connection at home. Like the PC-Internet adoption curve, broadband adoption has hit a ceiling and may even be seeing a downward trend, with a decline in the number of home-based broadband connections in the past year.

Broadband and dial up adoption

Many people who do not have a broadband Internet connection at home are using smartphones as their primary way to get online. While many seniors and other older adults will probably continue resist smartphones, several groups that are among the 20% are adopting them.

Pew found that "young adults, minorities, those with no college experience, and those with lower household income levels who owned smartphones were more likely to say that their phone was their main source of internet access." About 25% of Pew's smartphone-owning surey respondents said that their mobile devices were their primary Internet access method.

Gadget ownership over time

Indeed, a portion of the 20% of US adults that don't have PC-based Internet access at home are getting online now through smartphones. However this "mostly mobile" Internet group includes adults who do have at-home Internet but prefer their mobile phones for Internet access for one reason or another. 

In a recent online survey we conducted (n=1,502 US adults) we found a slightly lower percentage (17.6%) of respondents who preferred mobile devices as their primary Internet access method:

  • Laptop computer -- 44.7%
  • Desktop PC -- 35.2%
  • Total mobile: 17.6%
  • Smartphone -- 9.3%
  • Tablet (iPad) -- 8.3%
  • Other -- 8.4%

Perhaps the most interesting observation is how smartphone ownership and Internet access impacts overall digital media usage. According to Pew people who use mobile devices to go online become much more active and engaged Internet users, including creating more content:

Once someone has a wireless device, she becomes much more active in how she uses the internet–not just with wireless connectivity, but also with wired devices. The same holds true for the impact of wireless connections and people’s interest in using the internet to connect with others. These mobile users go online not just to find information but to share what they find and even create new content much more than they did before.

Survey: 8.5 Million US Teens Have iPhones

Fortune's Philip Elmer-DeWitt reports on the results of the latest teen survey by investment firm Piper Jaffray. The survey polled 5,600 American teens, evenly divided between genders. The average age was 16. 

The following are a couple of the questions and answers from the survey:

  • Do you own an iPhone: 34% yes (vs. 17% a year ago)
  • Do you own a "tablet computer": 34% yes (vs. 22% a year ago)  

While the sample is very large, the question is: how representative of all US teens is this survey?

There are somewhere between 25 and 30 million teenagers in the US, depending on how "teen" is defined, according to the US Census Bureau. Thirty four percent of 25 million would be 8.5 million teens with iPhones. That seems plausible. Another 8.5 million teens have tablets/iPads by the same extrapolation. 

According to comScore's most recent figures 13.5% of US mobile subscribers own iPhones (or roughly 14.04 million people out of a total smartphone population of 104 million). These data points are from different sources but the numbers suggest that more US teens than adults own iPhones. That doesn't seem correct.

What's not exposed is the degree to which teens aspire to ownership of any other type of smartphone. Also not discussed is whether the tablet 34% of teens claim to "own" is actually theirs or owned by a parent. It would be interesting to know whether there are multiple iPads/tablets in the house. 

But Why Do iPhone Owners Use WiFi More than Android Users?

Beyond its February US smartphone marketshare data, released earlier today, comScore also exposed some additional, interesting data about WiFi usage among Android and iPhone owners in the US and UK. In general iPhone owners are apparently much heavier users of WiFi than Android owners. And UK residents are also generally bigger consumers of WiFi than their US counterparts.

In the US the percentage of Android WiFi users is half as large (32% vs. 71%) as iPhone WiFi users. But why?

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As someone who owns both devices I can speculate about why this may be.

More Android handsets operate on 4G networks, whereas the iPhone is limited to slower 3G networks. The move to WiFi alleviates some of the frustration of being on slower networks for iPhone owners. Beyond this, on Sprint and Verizon in the US, iPhone owners can't access voice and data at the same time. Where WiFi is available they can. 

In addition, whenever a new WiFi network becomes available iPhone owners get a prominent, even disruptive, notification that takes over the screen. iPhone owners are thus much more likely to be aware of the presence of WiFi than Android owners. The process of connecting to WiFi is also faster and easier on my iPhone than it is on my HTC Android phone. 

Android at 50%: Is the Platform Surging or Stumbling?

There are two contradictory memes in the market about Android. One is that the platform is surging toward world domination; the competing narrative is that Android is losing adherents and is faltering.

ComScore boosted the first narrative today with a release (based on survey data) that shows Android crossing the 50% threshold in February. In other words, 50% of US smartphones now are Android handsets. 

Interestingly comScore's data show only 44% US smartphone penetration, while Nielsen shows 50%

In addition, Nielsen and financial analysts from Canaccord Genuity claim that the iPhone is "clawing its way back" among recent purchasers and closing the gap with Android. The Q1 2012 Appcelerator also appears to show mobile app developers losing some interest in Android. 

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These indicators suggest Android is losing some momentum, although the comScore data directly contradict that assertion. Regardless, it's clear that Android is on its way to replacing Nokia as the leading smartphone platform globally.

The comScore report also confirms the accelerating decline of RIM and shows that US consumers are not buying Windows Phones. We'll see what happens after the massive marketing campaign that's about to be unleashed by AT&T, Nokia and Microsoft. 

Study Illustrates Problems with Offline Mobile Conversion Tracking

Earlier this week Marin Software released some very interesting aggregated data on mobile search trends. The report sees dramatic growth for mobile paid-search. It projects that smartphones and tablets will combine to generate 25% of all Google’s paid-search clicks and 23% of paid-search spending in the US by the end of this year.

Among the other data the report assembles are click-through (CTR), cost-per-click (CPC) and conversion rates in mobile. It compares them to comparable metrics in desktop paid search. The numbers are averages based on client campaigns.

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Smartphones show higher CTRs and lower CPCs than PC search campaigns. But they also show lower conversion rates and thus higher per-conversion costs than either tablets or PCs. 

The smartphone conversion data appear lower likely because most conversions are happening offline and they're not being accurately tracked. Marin says as much in its recommendations for marketers about offline conversion tracking:

Mobile searches often result in conversions that happen via a call or a physical store. Unfortunately, most marketers lack the ability to glue these clicks together into a unified conversion funnel. Marketers should look to estimate their mobile-influenced revenue through the use of popular mobile ad formats such as click-to-call and store-locator. By combining the typical conversion rate for in-store and phone-based transactions with the average revenue per transaction, marketers can estimate a revenue per click for mobile devices, and adjust their mobile CPCs and budget accordingly.

Whether paid search or display ads, marketers need to track calls and have landing pages where "secondary actions" like store locator or map lookups can be tracked to see whether consumers are acting on the ads. If the tracking isn't set up properly then you're going to see fewer conversions or no conversions and the ROI data will be distorted. 

The conversions are there, they're just not visibile in many cases. 

Nielsen: US Smartphone Ownership Now 50%

Although the Pew Internet Project was the first to report that at least 50% of US mobile phone owners had smartphones, Nielsen waited until today to make the same statement: "Almost half (49.7%) of U.S. mobile subscribers now own smartphones, as of February 2012." This compares with 36% a year ago. 

However if smartphone ownership is segmented by age and income, the numbers are much higher than 50% for some categories. 

SmartPhone_income-and-age

Nielsen says that Android's share of smartphones in February was 48% while Apple's was 32%. However among 90-day recent buyers, the numbers are much closer (48% vs. 43%), reflecting the popularity of the iPhone 4S and its availability from mulitple carriers. 

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All others, including RIM and Microsoft are under 20% collectively. However the trend is away from these platforms among recent buyers. Microsoft is hoping to reverse that with the expensive and high-profile launch of the Lumia 800 at AT&T next month. 

Report: Newsstand iPad Apps Generating $70K per Day in Revenue

In a new report on the iPad and related user behavior just released by app-store analytics provider Distimo finds that news publications and magazines on the iPad in the US are generating $70,000 daily (among the top 100 newsstand apps). The top five grossing US publications in order are Murdoch's The Daily, The New York Times, The New Yorker, National Geographic and Cosmopolitan. 

The report also says that China is now the largest market in the world for free iPad apps, but it's not among the top five countries for paid app revenues. Distimo reported that the top 200 paid apps globally are generating roughly $2 million per day in revenues. The top iPad app-revenue countries are US, UK, Canada and Australia.

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The iPad has far more tablet-specfic apps than any of its competitors. The company says that Samsung tablets have roughly 32,000 apps available for various screen sizes. According to Distimo:

However, only a small proportion of applications in Google Play are optimized for tablets. When we look at the Samsung Appstore . . . we see that roughly 32K Android applications are available in the device stores for tablets (Galaxy Tab 10.1, Galaxy Tab 7.0 and Galaxy Tab). The majority of applications are available for the Galaxy Tab and Galaxy Tab 10.1 only, but there are also a substantial 4K applications available for the Galaxy Tab 7.0, which has a different screen ratio. 

I'm quite surprised by the finding of 32K apps for Android tablets. In my roughly 9 months of 10-inch Galaxy Tab ownership I found almost zero apps for the device. This paucity of tablet-optimized apps is one of the reasons for the failure of Android tablets generally. It's the same catch-22 scenario I discussed yesterday regarding Windows Phones and the lack of apps: because most Android tablets haven't sold, developers so far aren't creating tablet-optimized apps for these devices (Kindle Fire may be an exception). 

Given the success of Kindle Fire and Nook it appears that Android tablets will mostly focus on the 7-inch form factor. And at that size smartphone apps are not as glaringly ill-formatted as they are on the 10-inch screen. 

Distimo also identified most popular iPad app categories (by downloads) in pink in the chart below:

Screen shot 2012-03-28 at 8.29.11 AM

The gray bar on the right indicates the number of available apps in the category. Where the pink bar exceeds the gray bar, Distimo says there's high demand vs available supply and a corresponding developer opportunity.

Mobile 'Showrooming': E-Commerce's Best Friend

Even though increasing numbers of consumers are starting to transact on smartphones, m-commerce hasn't taken off. Trust, security and credit card entry issues still need to be resolved for most e-commerce merchants (though not Amazon).

But there is another way in which smartphones are helping e-commerce -- so-called "showrooming." That's where consumers visit stores to examine and verify products and then order online (mostly from Amazon). This problem has been especially bad for stores like Best Buy but it's a problem that all traditional retailers are starting to grapple with. 

Recent survey data from ClickIQ (via Internet Retailer) confirms this pattern: 

29% of consumers who use a smartphone to research a product while in a retail store end up purchasing the item online, many from Amazon.com . . .

Of consumers who used a smartphone to research in-store and then purchase online, 55% were men and 45% were women, says the survey of 406 U.S. consumers who have researched a product while in a store and purchased that product.

Recently the Pew Internet Project issued similar findings about Q4 smartphone shopping behavior. 

Here's what the Pew survey data say about what happened after the smartphone/Internet was consulted by consumers in stores:

  • 37% decided to not purchase the product at all
  • 35% purchased the product at that store
  • 19% purchased the product online
  • 8% purchased the product at another store

What this means, effectively, is that 64% of in-store smartphone users decided not to buy on the spot -- probably because of some piece of information they accessed then and there (price, reviews, etc.).

The 19% who purchased the product online is 10 points lower than the ClickIQ findings. But both these surveys show that consumer behavior is being affected by access to the Internet in stores, with some meaningful percentage of people buying online after confirming the product is the one they want. 

There are a few things that retailers can do to combat this growing pattern:

  • Train employees and deliver much better customer service in stores (be much more dedicated to service overall)
  • Create or enhance loyalty programs that reward consumers for purchasing through that store (whether online or off)  

However it's foolish for retailers to try and prevent smartphone use in stores or rely on unique SKUs that prevent barcode-scanning based comparisons. 

Report: Large Majority of Tablet Buyers Shun Carrier Data Plans

The iPad 4G may prove itself an exception, however Chetan Sharma's latest report on data consumption and carrier revenues shows that US consumers continue to shun carrier contracts when it comes to buying tablets. The reasons are very rational:

  • Smartphone owners already pay high monthly carrier bills
  • The lower prices of WiFi tablets (the iPad in particular) makes them more attractive to consumers
  • Consumers don't want to have to worry about data-plan limits and rationing or throttling

Indeed, tablet data plans offered by the carriers are quickly used up -- in just a few hours -- by video consumption on the iPad in particular.

Screen shot 2012-03-21 at 11.15.49 AM
Consumers want to be free of carrier data plan restrictions and associated costs. However, as voice and text revenues decline, carriers will increasingly look to data plans for revenue growth. Carriers will need to be very creative because users will be seeking to escape their efforts to extract more data fees from consumers.

Are Developers Suffering from 'Android Fatigue'?

The Q1 2012 Appcelerator developer survey is out and it contains some interesting findings. The data are based on a survey of 2,173 Appcelerator developers from January 25-27, 2012. 

Among the findings, HTML5 is being widely embraced: "79% of developers [are] saying they plan to integrate some HTML5 into their mobile apps that they build this year." In addition, a significant minority (39%) of developers "say the network effects of Google’s total assets (like Google+, search, Gmail, Android, Android Market, etc.) are more important to them than Facebook’s social graph." However developers in this survey demonstrate limited understanding of how to fully leverage social in their apps. 

In terms of platforms, iOS remained at the top of the developer interest graph (below). Windows Phone gained some mindshare since Q4 but, surprisingly, Android seems to have lost some mindshare among developers. This comes at a time when Android's OS market share on a global basis continues to gain. 

Screen shot 2012-03-20 at 8.44.59 AM

Here's what Appcelerator had to say about what might be called "Android fatigue" (due to monetization challenges and platform fragmentation): 

This quarter, interest in Android phones dropped 4.7% points to 78.6%, and Android tablets dropped 2.2% points to 65.9% from the previous survey. Although close to or within the margins of error, these drops are consistent with the trend of small but steady erosion in Android interest over the last four quarters, even as enormous growth in Android unit shipments continues.

RIM is one of the big losers in the chart above, with developer interest all but falling off a cliff since last year. RIM will be forced to "double down" on the Android app ecosystem or be totally marginalized. But that's already happening in the US market. Elsewhere RIM has greater strength. 

Finally, most developer-respondents in this survey indicated that they had a reasonable but not great understanding of social and how to fully utilize it within their apps, and as a tool for app discovery and marketing. 

Screen shot 2012-03-20 at 8.46.16 AM

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Report: Half of Teens Have Used a Mobile Phone to Access the Internet

Roughly one in four teens (23%) has a smartphone according to a new report from the Pew Internet Project. An equivalent number of teens have no phone at all. Therefore the actual number of smartphone teens is higher if considered only in the context of all mobile users. Rougly 54% of Pew survey respondents report having a conventional mobile phone or not knowing the type of their phone. 

The survey was conducted in mid-2011, so some numbers might be different today.

Interestingly, unlike adults, "There are no differences in ownership of smartphones versus regular cell phones by race, ethnicity, or income." Older teens are more likely to have phones and smartphones in particular, with 31% of those aged 14-17 saying they owned smartphones. 

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The volume of texting for teens has gone up, but voice calling has declined. "[V]oice calling with friends on cell phones has declined in the past two years, from 38% of teens calling friends daily on cells in 2009 to 26% two years later," the report explained. This is apparently true for landline communication as well. One question to consider is: will this no-calling behavior carry over into the lives of these teens as they become adults?

Here are some additional findings from the survey: 

  • The median number of texts sent on a typical day by teens 12-17 rose from 50 in 2009 to 60 in 2011.
  • Older girls remain the most enthusiastic texters, with a median of 100 texts a day in 2011, compared with 50 for boys the same age.
  • 63% of all teens say they exchange text messages every day with people in their lives. This far surpasses the frequency with which they pick other forms of daily communication, including phone calling by cell phone (39% do that with others every day), face-to-face socializing outside of school (35%), social network site messaging (29%), instant messaging (22%), talking on landlines (19%) and emailing (6%).

Another interesting finding: "29% of all teens exchange messages daily through social network sites," which is more than the 19% who talk on landlines daily. 

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The chart above indicates the methods that teens use to get online. Roughly half (49%) had used a "cell phone" to access the Internet within the past month, while 16% had used a tablet. 

 

Pew: Almost 30% Getting News on Smartphones, Tablets

According to a sweeping report from the Pew Reseach Center ("State of the News Media 2012"), 27% of the US adult population now gets its news on smartphones and tablets. The report says that "70% of desktop/laptop owners report getting news on their computers. Half of smartphone owners (51%) use their phones for news. A majority of tablet owners (56%) use the devices for news." 

Mobile news consumers, especially users of news apps, are more engaged than their PC counterparts: "People spend more time per session with news on mobile devices than they do on computers, and read more articles per session and more articles per month." 

The data were collected through various surveys earlier this year. They show that people are accessing news on multiple devices, more frequently. Mobile news consumption appears to generally be "additive" to consumption on the PC, although there's evidence that smartphone and tablet owners are shifting some of news reading to those devices.

Pew also says that "mobile news consumers are even more likely to turn to news organizations directly, through apps and home pages, rather than search or recommendations — strengthening the bond with traditional brands."

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Although people are getting news on multiple devices, 82% of survey respondents get their digital news primarily on a computer. Pew adds, however, "But much of that may mainly come from the computer being their only digital option . . . 43% of all desktop/laptop owners [do not] own another device."

Pew observed that for people with multiple devices some amount of their news consumption is shifting, "[A]s we have seen with other technology shifts, consumers are drawn to newer forms and may even make them their primary mode, but they are not abandoning older forms altogether. Instead their news experience widens and deepens."

Smartphone owners who read news on their handsets are evenly split, "46% still get most of their news on the desktop/laptop; 45% get most on their smartphone." For iPad and Kindle Fire owners, "47% still get most of their digital news via desktops or laptops, while a third, 34%, have already transitioned to consuming most of their news on the tablet." 

On the PC Web most news publishers were largely "disintermediated" by search (Google). Their brands were diluted and weakened as they were presented among hundreds of news sources for a given story. They were often out-maneuvered by aggregators and others more skilled at SEO. Mobile news apps and the move away from search as universal content gateway (in mobile) gives publishers an opportunity to reestablish a more direct relationship with the consumer -- and with that capture more digital revenue. 

Millennial: About 50% of 2011 Advertiser Spend Was for "Awareness" Goals

Earlier this morning ad network Millennial Media released a 2011 year-in-review report that highlights top trends and data from last year. The company is planning to go public in 2012 and seeking to raise just over $100 million. In an updated filing it reported 2011 revenues of $103 million.

The top categories by ad spend in 2011 were the following:

  1. FINANCE
  2. RETAIL & RESTAURANTS
  3. ENTERTAINMENT
  4. TELECOMMUNICATIONS
  5. AUTOMOTIVE
  6. PORTALS & DIRECTORIES
  7. CPG/FMCG
  8. EDUCATION
  9. TRAVEL
  10. TECHNOLOGY

Although technology was at the bottom of the "top" category it saw the highest year over year growth from 2010 to 2011, nearly 700%. 

Millennial also explained what the top "campaign goals" were for its advertisers in 2011 (chart below). The top category, "sustained in-market presence," is not a single objective but has multiple meanings: "Campaigns with the goal of Sustained-In-Market Presence drove consumers to download applications and to play branded games to promote their products and services, while increasing their brand awareness and loyalty."

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If we look at the above chart as "awareness" vs. "direct response," what we can infer that roughly 50% of the ad spend was for brand or awareness advertising.

Android was the dominant OS generating impressions on Millennial's network in 2011. Apple devices were dominant in 2010 by comparsion. 

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However compare ad network and Millennial competitor InMobi which had a different split, showing that Apple had overtaken Android on its network in North America:

The February 2012 report unveils that iOS’ lead over Android has increased, with iOS holding at 35% and Android now at 31%. This is further supported by the fact that the top three handsets in February 2012 are all Apple devices, which now make up 23% share of total handset impressions.

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Study: Consumers Open to Ads on Tablets, Least Interested in Mobile Ads

Today the Pew Internet Project put out some research arguing pretty unequivocally that consumers don't want to be tracked or targeted even if it might mean that the ads and content they see are more "relevant" or aligned with their interests. A survey released at the end of last month by Upstream and YouGov (US and UK respondents) also contains a warning of sorts to publishers and developers about advertising overload.

In this survey consumers expressed frustration over the volume ads and promotions they were receiving. Two-thirds said they received too many ads, while slightly less than a quarter of respondents said they saw the "right amount" of advertising. 

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Consumers found ads on their phones to be the "most unacceptable" vs. other media channels or devices. This is consistent with lots of survey data that show consumers are ambivalent or hostile to mobile advertising. However mobile ads typically outperform PC advertising, which is a paradox: people don't want it yet they respond to it. 

Q: Which ONE of the following electronic devices would you find it MOST unacceptable to receive unwanted advertising on?

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Interestingly these survey respondents were much less hostile to ads on their tablets. In fact, they more were accepting of ads on their tablets than they were ads on their PCs. However when a version of the question was asked in a more positive way, PC or laptop where the top choices. 

Q: How you would prefer to receive an offer or promotion through an electronic device that you use / own?

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In terms of positive features that consumers said would make them respond to advertising, the top answers were:

  1. Clearly tailored to my personal interests
  2. Specific to my location
  3. Contextually relevant to something I'd just been doing 

Q: Which, if any, of the following would make you MORE likely to respond positively to marketing messages?

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In terms of ad units or types, email was the most favorably received among several categories that included SMS, paid search, display, QR codes and augmented reality. By implication email advertising was the least intrusive of the types presented to these respondents.

Q: Which, if any, of the following types of message would you be likely to respond positively to if you received these adverts or promotions?

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In the Pew survey consumers were willing to sacrifice ad and content relevance to avoid tracking and targeting. Put another way, they declined the idea of improved relevance through tracking and personalization. In the YouGov survey respondents said they would be most inclined to respond to ads "clearly tailored to their personal interests" and that were specific to their locations.

The two surveys taken together reflect that consumers want advertising and content that is relevant but doesn't rely on data mining. In mobile -- where consumers were least interested in ads -- there's a higher burden of relevance than on the PC. But that can be achieved in ways that don't require behavioral targeting or data mining but rely on location and context. 

Marketers and publishers must be careful to respect user desires for privacy as they try and fulfill the demand for relevant and "tailored" information. This is a bit of a tightrope to walk. However the industry must walk it. 

Awaiting the iPad3 and Preparing for When PCs Are 'Just the Work Computer'

Next Wednesday Apple will reveal the iPad3 (and potentially a new Apple TV), with an improved display and Siri among other features. Mobile ad network InMobi released consumer survey data last week finding that 29% of respondents were intent on buying the new iPad, with half of those reporting they don't currently own a tablet. Many people (44% of those intending to buy one) also said they wouldn't consider another brand.

Whether or not these survey findings turn out to be accurate they reflect the momentum and mindshare of the Apple tablet, which has sold nearly 60 million units on a global basis. However, when the first iPad was introduced in Q1 2010 it was met with considerable skepticism and predictions of failure. It was seen as an "unnecessary" product, delivering a "watered-down" Internet experience; it was also "too expensive" and "wouldn't fit in your pocket." 

A year later Dell also predicted that the iPad wouldn't succeed in the enterprise. However in Q3 2011 Apple reported that 93% of the Fortune 500 were testing or deploying the iPad. By comparison Dell recently announced that it's exiting the consumer PC business. This juxtaposition is essentially a metaphor for state the PC industry as a whole. 

Increasingly, instead of buying a second computer or laptop, US (and non-US) households will choose tablets. While there's still growth in the enterprise PC market the consumer PC market is flat-to-declining. Many analysts expect Apple to sell 50-60 million iPads this year. When iPads are considered "PCs" (which they are not), Apple becomes the largest "PC" vendor surpassing HP.  

Mobile display advertising outperforms PC display according to considerable research from InsightExpress and Dynamic Logic. Beyond this, ads on the iPad and other tablets further outperform conventional mobile dislay advertising. Engagement with tablets is higher than PCs and consumers have shown a willingness to buy things through tablets in far greater numbers than they have on smartphones. There's also mounting evidence that people are spending more time with mobile devices and tablets than on the PC Internet and even with TV (in some geographies), according to recent data from Flurry and InMobi.

The totality of all this data leads to the inevitable conclusion that PCs will be outnumbered by smartphones and tablets within a year or two. PCs and the PC-Internet experience will merely be one form of Internet access and not the primary way people access the Internet (except at work). We truly are in a "post-PC" era. (That was a Steve Jobs marketing slogan that is becoming factually true.) Microsoft hopes to change the trend with the introduction of Windows 8 of course. But Windows 8 will also work on tablets. Moreover its consumer success, however, is far from certain. 

Publishers and advertisers that fail to recognize these trends and act on them in the near term will be at a significant disadvantage. (Flash should be abandoned right now, for example.) Indeed, publishers and advertisers should shift the bulk of their attention and development resources away from the "PC Internet" and toward smartphones and tablet-optimized sites. Mobile and tablet site design should guide PC website design (as recently happened with the redesign of Kayak.) This is especially true for certain categories such as retail and travel.

The notion that mobile is just an extension of the PC-centric Web, which still prevails in many companies, is completely misguided.

US Smartphone Ownership Now Over 50% -- Pew

According to new data out this morning from Pew, the US mobile market has reached an important milestone: 50% smartphone owners. In fact Pew's survey data, which the polling firm says is representative of the US population, indicates 53% smartphone ownership.

By comparison, Nielsen says the number is 48% and comScore says it's 42%. Among select segments, however both Pew and Nielsen say smartphone penetration is considerably higher than 50%. According to Pew, for college graduates, 18-35 year olds and $75,000+ earners, smartphone ownership has crossed 60%. Nielsen says for some of those groups it's even higher (75%).

The graphic below is Nielsen's US smartphone ownership chart by age and income segment. For example, if those over age 55 are excluded from the sample, US smartphone penetration rises to roughly 75%. For people between the ages of 25 and 44 and making $100,000 or more per year, Nielsen says 77.5% own smartphones. 

SmartPhone_income-and-age

The Pew findings are qualified and explained, given potential consumer confusion over what qualifies as a smartphone: 

--45% of cell owners say that their phone is a smartphone, up from 33% in May 2011
--49% of cell owners say that their phone operates on a smartphone platform common to the US market, up from 39% in May 2011

Taken together, just over half of cell owners (53%) said yes to one or both of these questions and are classified as smartphone owners.

Tracking smartphone adoption and penetration was/is really a surrogate for other things: mobile Internet access -- people with smartphones behave differently than feature phone owners -- and the mobile ad opportunity. We should now collectively shift our focus to mobile operating system share (which people are obviously tracking) and mobile Internet adoption and frequency. 

Tablets Become a Key Local Search Platform

We've known for several years how important and influential smartphones are in finding local business information, especially "on the go." However the latest Local Search User Study from Localeze, 15 Miles and comScore documents, among other things, the increasing role of tablets in the process of finding offline information.

Consistent with other consumer data in the market, the survey of 4,000 US adults found that the top reason for conducting a local business lookup on a mobile device/smartphone is the immediate need for information. Interestingly, the survey discovered that nearly half (49%) of smartphone and tablet owners were using apps for local business searches (e.g., Yelp, Urbanspoon, YP.com) vs browser-based search (e.g., Google).  

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The Local Search Study also found that while tablets were used "throughout the [local search] process," usage was concentrated in the early and middle stages (research + consideration) of the purchase process. This might be expected because of the analogy to PC usage. However comScore found that among the three groups (PC, smartphone, tablet users) tablet owners are the most engaged and active: "most tablet users conduct local business searches at least once a week . . . more frequently than PC/Laptop users and mobile phone users." 

Another interesting finding: tablet owners had increased their usage of the devices over the past year. That wasn't equally true of smartphone owners. Part of the higher levels of tablet engagement can be attributed to the fact that tablets are more "immediate" than PCs but offer a larger display for "more complete information" -- as the graphic above reflects. 

 Screen shot 2012-02-29 at 6.59.51 AM

Consistent with this heightened engagement the study found that tablet owners were more likely to make purchases after local search activity (which in this case largely mean offline transactions) and spend more money on average.

Report: Mobile Time Spent More than TV Globally

Ad network InMobi today released what it’s calling the "first wave” of a mobile media consumption study spanning 18 countries and 20,000 consumer-respondents. The results, generated in Q4 of 2011, were not broken down by region or country however.

Accordingly they should be seen as global averages and are relatively less meaningful. However they have symoblic value in highlighting the rise of mobile.

InMobi says that time spent with mobile now trumps TV: 

  • Mobile: 27% of media time 
  • TV: 22% of media time
  • PC-online: 32% of media time

Again, these figures are global. So in any individual country the data may look very different. Indeed, data from Flurry Analytics and other sources contradict the findings above for the US market, with TV capturing almost twice the amount of media time spent as mobile. 

Screen shot 2012-02-28 at 7.48.51 AM

In addition, according to Flurry (drawing upon third party data as well), time spent with mobile apps now trumps PC-online. That contradicts the InMobi finding above in the context of the US market once again. 

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What's clear is that users are spending more time with mobile and the mobile Internet. The InMobi findings are thus directionally accurate across countries/regions. 

InMobi also reported that “66% of mobile users are just as comfortable with mobile advertising as they are with TV or online advertising.” That may well be in many instances. However a recent UK and US survey from YouGov found something quite different.

Consumers were much less tolerant of ads on mobile phones than in other media: 

[The] Digital Advertising Attitudes Report warns that consumer openness to advertising is lowest on mobile phones versus any other device such as PC, laptop or tablet. The vast majority of Brits (64%) and Americans (67%) would find it most unacceptable to receive unwanted advertising on their mobile phone/smartphone over other electronic devices.

There is a further warning that mobile display advertising is not the way to go. Less than one in six (11%) Brits and 15% of Americans who have surfed the internet on their mobile phone have ever clicked on a mobile banner advert and only one in every 100 Brits who surf on their mobiles and 1 in 50 Americans click on banner adverts frequently. The vast majority of those who surf the internet on their mobiles (79% in the UK and 72% in the US) find banner advertisements on their mobiles or smartphones irritating. . . 

Report: Mobile Ad Spending Badly Lags Consumer Adoption (23:1)

For years online marketers and agencies have complained that they're not getting their fair share of ad spending, based on estimates of consumer time with media. The assumption has always been that ad spending would, as a rational and practical matter, catch up with time spent -- and it has started to after many years.

Now Flurry Analytics has developed an analysis, using its own data and third party sources, that does the same thing for mobile. Among the media channels examined, the greatest discrepancy between consumer time spent and ad spending is in mobile.

While that's to be expected because mobile is the newest and most immature of all the media looked at it's still dramatic. Consumer adoption is growing quickly while mobile ad spending (for several reasons) has not kept pace. According to Flurry's analysis, consumers are spending 23% of their media time with mobile but only 1% of ad spending is going to mobile. 

http://blog.flurry.com/Portals/41620/images/MobileAdSpend_vs_TimeSpent-resized-600.png

Traditional media of all kinds (TV, print, radio) are getting more money "than they deserve" based on time spent. Digital media get less than their "fair share" according to Flurry. 

As the chart above and experience over the past 5-10 years have shown, brands, marketers and agencies don't always (or perhaps I should say rarely) act rationally. If they did, there would be closer alignment between consumer behavior and ad spending. Accordingly, the 23:1 gap illustrated above may not close for quite some time -- years in all probability.

Flurry also talks about audiences and their value to publishers in its post. The company discusses publisher eCPM rates earned by age, gender, education and income. Those data are also very interesting.

Based on all of the data examined, the following is Flurry's analysis and conclusion regarding mobile advertising's "sweet spot":

As a total snapshot, our analysis shows that females and males, between the ages of 25 and 34 years old, who have higher levels of disposable income and a bachelors degree or higher, more strongly interact with mobile ads.  Leading sociologists William Thompson and Joseph Hickey define this class as “the rich” or “upper middle class,” comprised of highly educated salaried professionals whose work is largely self-directed.  Typical professions for this class include lawyers, physicians, dentists, engineers, accountants, professors, architects, economists and political scientists.  

Nielsen: For Those Under 55 Smartphone Ownership Now 75%

Nielsen now says US smartphone penetration is at 48% (of mobile subscribers). This data and estimate are based on a survey of 20,000 US respondents in January. However Nielsen goes on to segment the data by age and income to find penetration figures that are well over 50%.

As one might expect smartphone penetration goes up with income. But younger users are also more likely to own smartphones than older consumers, if income is removed from the equation. In addition, recent buyers are also much more likely to have purchased smartphones than others. For example, 73% of those between ages 25 and 55, who bought a handset in the past 90 days, purchased a smartphone. 

If survey respondents over age 55 are excluded, overall smartphone penetration rises to roughly 75%. And looking at those between 25 and 44 making $100,000 or more per year, Nielsen says 77.5% own smartphones. 

SmartPhone_income-and-age

As the figures above show smartphone penetration is much higher among key audiences and demographic segments. It's simply not true that feature phones are the majority any longer for these groups. 

In this context, the delay in optimizing websites, building apps and using mobile advertising is effectively a kind of "malpractice" for many agencies and marketers.