Data And Forecasts

Google to Build Opt-In Mobile Panel for (Offline) Analytics

According to a report (rumor) in Engadget, Google is preparing to build an incentive-based mobile panel to track browsing and app usage behavior. The initiative is called "mobile meter" according to the blog and it would be directed toward iPhone and Android users. 

Google would offer some incentive (points, rewards, etc) to motivate users to opt-in and allow their usage to be anonymously tracked. This would be nearly identical to the system currently used by Nielsen. 

In addition Placed uses a panel to track mobile and exposures and their impact on store visits. The Placed app (with opt-in consent) watches where users go in the real world and extrapolates their data to estimate the offline impact of mobile campaigns. 

Google recently announced Estimated Total Conversions that will track the impact of search ads across devices and, eventually, into stores. The primary methodology relies on signed-in Chrome browser users. 

A Google mobile panel would complement that approach and, like Placed's panel, provide data to advertisers -- offering a more holistic view of their campaigns, especially the impact on offline store visits.  

Place 2013 - Agenda & Presentations

Place 2013 brought together the entire spectrum of companies building the indoor location ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors attended this unique, one-day event at the Palace Hotel in San Francisco and was the first-of-its-kind anywhere.

Sponsors
sponsor_graphic

Agenda & Presentations

8:45 AM - 9:00 AM
The Consumer Foundations of Place-Based Marketing - The majority of smartphone owners are already using their devices in stores to find product and price information, as well as coupons. Opus Research will present proprietary findings on in-store behavior, privacy attitudes and consumer receptiveness to indoor promotions.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation

9:00 AM - 9:45 AM
The State of Indoor Location - For the past several years online mapping giants and technology providers have been laying the groundwork for indoor location. What is the current state of the infrastructure? What technologies are already deployed and how accurate are they? What indoor consumer and advertiser scenarios are possible today and what might be possible within three years?
Speakers:
Joseph Leigh, Head of Venue Maps, Nokia
Leslie Presutti, Mobile, Location and Computing Business Unit, Qualcomm Atheros
Zack Sterngold, VP of Americas, Boingo Wireless
Avinash Joshi, Chief Technologist, Wireless LAN Group, Motorola Solutions

9:45 AM - 10:25 AM
Keynote: Why Indoor Location Will Be Bigger than GPS or Maps - The explosion of smartphones with built-in sensors, accelerometers, GPS and WiFi is making indoor positioning not only possible but also inevitable. The emerging indoor opportunity for venue owners, retailers and technology providers is potentially massive. Google’s Don Dodge, an investor and close observer of the space, will explain why he believes indoor location and marketing is going to be huge and potentially larger than GPS and maps.
Speaker: Don Dodge, Developer Advocate, Google

10:45 AM - 11:05 AM
Case Study: Point Inside - Point Inside was one of the early consumer-facing apps in the indoor location space. The company has since shifted its focus to enterprises and enabling retailers to take advantage of indoor location. The company will present a new case study featuring a major home-improvement retailer.
Speaker:Todd Sherman, Chief Marketing Officer, Point Inside
View slides from this presentation

11:05 AM - 11:30 AM
Featured Case Study: Forest City and Path Intelligence - Forest City Enterprises are many years into using mobile device monitoring and advanced indoor analytics to help create a better environment for their shoppers and their retailers. Hear from the project sponsor and partner Path Intelligence on how they have transformed asset management, leasing, and marketing.
Speakers:
Stephanie Shriver-Engdahl, VP, Digital Strategy, Forest City
Cyrus Gilbert-Rolfe, VP, Path Intelligence
View slides from this presentation

11:30 AM - 12:15 PM
Digital Analytics for the Real World - Using a variety of technologies to identify when and where smartphone shoppers are in stores, retailers can now leverage "big data" previously reserved for Internet companies alone. These "real world analytics" hold profound implications for everything from in-store merchandising and staffing to consumer marketing. Leaders in the segment will offer views on opportunities and potential pitfalls for indoor analytics.
Speakers:
Jon Rosen, Executive Vice President, iInside
Will Smith, CEO, Euclid
Alexei Agratchev, Co-Founder, RetailNext
Michael Healander, General Manager, GISi Indoors

1:15 PM - 1:55 PM
Retail Spotlight: Aisle411 & Dick's Sporting Goods - Aisle411 will discuss current retail deployments and their impact on operations, consumer loyalty and marketing. Dick’s Sporting Goods will share how it’s thinking about indoor location, privacy issues and the overall opportunity. And Bob Rosenblatt, former COO of Tommy Hilfiger Group, will outline the intriguing business opportunities for retailers in develop- ing indoor marketing strategies.
Speakers:
Nathan Pettyjohn, Founder & CEO, aisle411
Rafeh Massod, VP, Customer Innovation Technology, Dick's Sporting Goods
Bob Rosenblatt, CEO, Rosenblatt Consulting
View slides from this session from aisle411

1:55 PM - 2:15 PM
Using Store Visits and Data for Advanced Retail Intelligence - Online to offline has been the dominant but largely invisible paradigm of Internet-driven spending. Using mobile to better target and influence store visits is only the beginning. PlaceIQ CEO Duncan McCall will offer a major retail case study fo- cused on measuring store visits after mobile ad exposures. He will also discuss how to connect online, nearby and indoors for a more complete picture of the customer journey.
Speaker:Duncan McCall, Co-Founder & CEO, PlaceIQ
View slides from this presentation

2:15 PM - 3:00 PM
Ad-Tracking to the Point of Sale - Panelists will discuss the current and future use of indoor location as a way to demonstrate ROI and sales lift on a per- campaign basis. What is the current state of the art in matching store visits to ad exposures? And what are the broader implications of connecting online ads and offline data?
Speakers:
Monica Ho, Vice President of Marketing, xAd
David Shim, Founder & CEO, Placed
Ameet Ranadive, Director of Product, Twitter Ads Team
Michael Shevach, SVP Ad Solutions, Retailigence
Duncan McCall, Co-Founder & CEO, PlaceIQ (moderator)

3:20 PM - 3:50 PM
Opt-in or Opt-out: Indoor Location & Consumer Privacy - Indoor location has already gained the attention of members of Congress and been called "troubling." While not everyone agrees about the level of concern, there are obvious consumer privacy issues raised by in-venue smartphone tracking. How should the companies be addressing these issues today and what might regulation require tomorrow?
Speakers:
Jennifer King, School of Information, UC Berkeley
Jules Polonetsky, Executive Director & Co-chairman, Future of Privacy Forum

3:50 PM - 4:10 PM
Case Study: Meridian/Aruba Networks - Meridian, who was recently acquired by Aruba Networks, will offer two indoor case studies, one involving a small business (Powell’s Books in Portland) and another involving a major U.S. apparel and housewares retailer.
Speaker: Jeff Hardison, Vice President, Meridian
View slides from this presentation

4:10 PM - 4:55 PM
Microfencing: Targeting In-Aisle Shoppers - Billions of dollars are spent each year by brands and manufacturers trying to influence consumer buying in stores. A percentage of that money will migrate to indoor digital marketing. What conditions must first exist and what will those brand-consumer interactions look like? The panel will explore these questions as well as the contours of the broader indoor marketing experience.
Speakers:
Neg Norton, President, Local Search Association Ben Smith, CEO, Wanderful Media
Melissa Tait, VP of Technology, Primacy
Erik McMillan, CEO, BrickTrends
Asif Khan, Founder, Location Based Marketing Association (moderator)

4:55 PM - 5:30 PM
Reality Check: Assessing the Indoor Opportunity - The other sessions explored major opportunities (and challenges) of indoor location and marketing. Now it’s time for a fun, yet sober assessment of whether and how soon these scenarios will come to pass. Is there real demand and who will own the “indoor channel”? Where will the "place-based market" be next year, in three years?
Speakers:
Jeremy Lockhorn,VP, Emerging Media, Razorfish
John Gardner, Partner, Nokia Growth Partners
Chandu Thota, Engineering, Google
Wibe Wagemans, IndoorAtlas

Report: US Mobile Ad Revenues Up 145% to $3B in 1H 13

This morning the IAB released Q2 and 1H 2013 mobile ad revenue figures for the US market. Total revenues were $20.1 billion compared with $17 billion a year ago. Mobile ad revenues were just over $3 billion vs. $1.2 billion during the same period in 2012. 

That represented growth of 145%. Mobile was 15% of overall digital ad revenue in the first half. 

Total mobile advertising in 2012 was just under $3.4 billion. This year mobile advertising should come in at over $6 billion. The holidays should give mobile advertising a substantial boost however it's likely to remain about 15% of total online advertising for 2013. 

The IAB has stopped trying to estimate subcategories of mobile as it did in 2011. Mobile search is the largest ad sub-category of mobile spending and probably exceeds 50% of the total. Display is second followed by video and other ad categories (SMS based advertising or marketing continues to fade). Search and mobile display represent the mobile ad spending. 

While consumers spend 80% of their time in apps, apps don't represent 80% of the mobile ad spend -- given the dominance of mobile search, which mostly happens via a mobile browser.  

The top three overall online advertiser categories were Retail (20%), Financial Services (14%) and Automotive (12%). 

Android Hits a Wall in US While iPhone Climbs

Yesterday comScore released its US smartphone market share report for August. The interesting thing is that these data do not reflect the release of the iPhone 5s and 5c. Apple was the single most popular handset maker, with just under 41 percent of the market. Samsung was second with 23 percent. 

In terms of operating system share, Microsoft gained 0.2 points while Android lost 0.8 points. The iPhone saw a 1.5 percent gain. It certainly will be interesting to see what the September numbers are, post iPhone 5s. 

  August OS share 

In the aggregate Android devices represent just over half the smartphone market in the US (now 64% of mobile users). However it appears that may be the ceiling for Android -- at least for the time being. 

Depsite this it appears from comScore's data that Google has achieved nearly 100% (92%) smartphone reach in the US through a combination of apps and mobile search usage, though Facebook remains the top individual mobile app: 

top mobile apps August

According to research conducted by investment bank Canaccord Genuity the iPhone 5s was the top selling mobile handset at each of the four major US carriers in September, with the 5c taking second place at AT&T and Sprint and third place at Verizon. 

Notwithstanding its second place finish, the 5c is quite a bit less popular than the 5s. Hitwise (Experian) reported that search queries for the iPhone 5s were 4X more than the 5c in early September.

top-five-iphone-search-terms 

This basically mirrors our survey finding correctly predicting the enormous popularity of the 5s and lesser interest in the 5c:

iPhone survey

Source: Opus Research, n=1,508 US adults (Sept 16 - 19 2013)

Elecontrics retailer Best Buy is offering a $50 instant discount on the 5c, which effectively cuts its contract-subsidized price to $50 for the entry level device. Wal-Mart by the same token has cut the 5c's price to $45 "permanently." This should help boost sales of the 5c considerably in the short term.  

Major Mobile Stats from the Twitter S-1

As you're aware Twitter filed its public S-1 statement this afternoon. There's a great deal of interesting material in it. The company said that in 2010 revenue was roughly $28 million. Last year it was $317 million. This year it could well exceed $500 million, reflecting triple-digit ad revenue growth. 

The following are the important mobile-related stats disclosed in the S-1 filing (mostly verbatim statements):  

  • 75% of our average MAUs (monthly average users) accessed Twitter from a mobile device, including mobile phones and tablets
  • Over 65% of our advertising revenue was generated from mobile devices (through June, 2013). 
  • 218.3 million average MAUs . . . 49.2 million average MAUs in the United States and 169.1 million average MAUs in the rest of the world

In 2010 74% of Twitter's revenue came from data licensing and the remainder from ads. In 2012 85% of revenue came from ads and 15% from data licensing, reflecting a huge shift in the sources of revenue for the company.

Given that Twitter has a still relatively small number of users in the US and internationally there's plenty of room for growth -- domestically and abroad. 

Report: Windows Phone Continues to Gain Share in Europe

Kantar Worldpanel ComTech has released new smartphone market share data showing significant gains for Windows Phone in Europe. The research firm says that Windows Phone is now within a point of the iPhone in Germany and that its growth is outpacing Android across the Continent: 

Android remains the top operating system across Europe with a 70.1% market share, but its dominant position is increasingly threatened as growth trails behind both Windows and iOS. Windows Phone has hit double digit sales share figures in France and Great Britain with 10.8% and 12% respectively – the first time it has recorded double digits in two major markets.

Kantar also says that Apple is continuing to show momentum in the US: "Apple continues to grow strongly year on year and now makes up 39.3% of sales." These data do not include the recent 9 million handsets sold by Apple upon the debut of the iPhone 5s and 5c.

Windows Phone's strongest markets are France, UK, Germany and Italy, where Nokia's brand is still relatively strong. It continues to lag in the US and China, however. 

  

Study: More than 75% of iPhones Sold Are the 5s

There was an initial surprise yesterday that Apple had sold 9 million iPhones over the weekend. Since the smoke cleared, however, there has been considerable "day two" analysis of those sales. Mobile analytics firm Localytics, for example, has done a geographic breakdown of global activations and traffic iPhone 5s and 5c devices in the past 72 hours. 

According to the company's analysis, the majority of overall new iPhone sales have been in the US, followed by Japan and the UK. 

iPhone 5s and 5c Global Market Share by Country

Though a still small market for the iPhone in absolute sales, China is significant in that the Chinese seem to be buying the 5s in much higher numbers than the 5c. This is something of a suprise considering that the price of the 5s in China exceeds $800. The now sold out gold version is selling on the grey market, according to several reports, for more than double that. 

iPhone 5s vs 5c by Country

In the US, roughly 3 out of every 4 iPhones sold is a 5s. Internationally, Localytics says that more than 80% of new iPhones sold are 5s devices.

 iPhone 5s vs 5c Distribution by Region

Our survey, conducted a week ago among 1,500 US adults, correctly predicted high demand for the 5s as well as the 5s to 5c ratios. 

What's interesting is that even in the face of massive weekend sales, the perceived weakness of the 5c is keeping Apple's stock down and fuelling the bearish Apple-investor narrative that the company has lost its old magic.

Perhaps surprising was that of the eight countries where the most iPhone 5s’ or 5c’s were sold, the highest ratio of preference for the 5s wasn’t in the United States or Japan; leading the pack is actually China.

iPhone 5s vs 5c by Country

One possible explanation: there was a lot of hoopla around the addition of the gold-colored iPhone 5s as a very attractive addition in particular for Asian markets so this hypothesis may hold true. Keep in mind the gold-colored version is only available on the 5s, not the 5c.

Other major markets also had a very high ratio of the 5s vs. the 5c. In fact, the only country that didn’t have at least a 3 to 1 ratio of the 5s vs. the 5c was the United Kingdom. With the economy in the UK still in recovery, a slightly less strong affinity for the 5s could be the result of a more cost-conscious buyer. Subsidies also play less of a role in the UK’s phone market than in the US, making the upfront cost of phones higher for consumers. Globally the iPhone 5s represented 78% of all of the new iPhone 5s and 5c devices; 76% in the U.S. and 82% in the rest of the world.

 iPhone 5s vs 5c Distribution by Region

 One possible reason why more iPhone 5s’ were sold was because of the tendency of hardcore apple users wanting to buy the top of the line iPhone on the weekend it was released. It will be interesting to see if the 5c can pick up a bit of momentum in the next few weeks.

iPhone 5s & 5c Adoption by Country

Overall, the United States accounts for 68% of all active iPhone 5s and 5c devices worldwide, with Japan in second place with 13% of 5s and 5c’s.

iPhone 5s and 5c Global Market Share by Country

- See more at: http://www.localytics.com/blog/2013/china-leads-the-pack-in-preference-for-iphone-5s-over-5c/#sthash.tVuxOsR6.dpuf

First Weekend iPhone Sales Exceed 9 Million

Apple announced this morning that it had sold more than 9 million iPhone 5s and 5c devices this past weekend. It did not indicate how many of the 9 million were 5c devices vs. 5s devices. Most of the demand globally is likely to have been for the 5s. That's what our survey showed (see below).

The market became very nervous after the 5c went on sale for pre-orders a week ago and Apple didn't issue a press release last Monday. Many institutional investors sold Apple shares. Then the very postive 5s reviews came out stoking consumer demand.

Here's what Apple said in its release this morning: 

Apple today announced it has sold a record-breaking nine million new iPhone 5s and iPhone 5c models, just three days after the launch of the new iPhones on September 20. In addition, more than 200 million iOS devices are now running the completely redesigned iOS 7, making it the fastest software upgrade in history. 

Essentially the 5s sold out of its initial supply.

demand for 5s

Source: Opus Research, n=1,508 US adults (Sept 16 – 19 2013)

Last year Apple said it had sold 5 million iPhones during its first weekend. That was a record at the time. This nearly doubles it. The company also announced this morning that since iOS7 became available late last week, 200 million devices around the world have been upgraded.

I was concerned that I would dislike or be ambivalent about the new OS. However I actually like it quite a bit. 

The iPhone 5s sellout will only fuel further demand for the device. Supplies of the 5c remain available. But the public seems to recognize the 5c as "last year's model" with a new coat of paint. While that's not entirely true (there are some upgrades) demand for the 5c has been much less than the 5s as our survey last week predicted. 

Update: Localytics now answers the 5s vs. 5c sales question, saying that the 5s outsold the other device by a factor of more than 3X in the US and an even larger margin outside the US:

Carrier market share for iPhone 5s and 5c

5s vs 5c global

Pew: 137 Million Mobile Internet Users

Today 91% of American adults own mobile phones according to new data from The Pew Research Center. More than 61% (64% per Nielsen) own smartphones. In this latest survey Pew takes a look at common activities on mobile devices (including non-smartphones).

Pew found that 81% of mobile phone owners text, the most common activity, while 60% access the internet. Just under half (49%) use maps or access location-based information on their handsets. All these percentages are higher if non-smartphones are excluded. 

There are approximately 250 million US adults today. If 91% own mobile phones that means about 228 million adults in real numbers. Of that group about 146 million own smartphones (per Nielsen's 64%). If kids and teens are added in we easily have in excess of 150 million smartphones in the US market. 

If 60% of adult mobile phone owners in the US access the internet that would be roughly 137 million people (not counting teens and kids).  

Screen Shot 2013-09-19 at 9.16.06 AM

Among the 60% going online from their mobile handsets (not including tablets) Pew says the following: 

African-Americans and Hispanics are more likely to do so than whites. Younger adults, those with at least some college education, and those with an annual household income of over $75,000 a year are particularly likely to access the internet via cell phone. Those who live in rural areas are less likely than urban or suburbanites to have mobile internet access. Among those who use the internet or email on their phones, more than a third (34%) say that they mostly access the internet from their phone. 

A recent Nielsen study found that 46% of US survey respondents relied exclusively on smartphones or tablets in conducting online research across a range of categories (i.e., retail, banking, gas and convenience). That same study found that, in the banking category, more than 50% of smartphone and tablet users did not use a PC to make purchase decisions (e.g., about credit cards).

What we're thus seeing is the emergence of a "mobile first" population in the US, which may be 50 million people on the low end and 75 million on the high end. 

Nielsen: Smartphones Now 64% in US Market

The first wave of iPhone 5S reviews have come out and they're essentially raves, exemplified by Walt Mossberg's superlative laden missive: “[T]he new iPhone 5s is a delight. Its hardware and software make it the best smartphone on the market.”

While there is some question about the early success of iPhone 5C pre-orders, the 5S is almost a sure sellout when it's released this weekend. According to a survey by Opus Research, the 5S is the most desired "next smartphone" available in the US market, while the 5C is in fourth place (after Galaxy and other Android devices). 

However according to new data from Nielsen, 61% of recent smartphone buyers chose Android devices vs. 34% who bought iPhones. We'll see how those numbers are impacted, if at all, by the launch of the 5S.

Overall Nielsen says that in the US 64% of mobile subscribers are now owners of smartphones. Those in the 25 - 34 age group have the highest smartphone penetration at 81%, with teens 13 -17 closing in at 70%. Feature phones are now concentrated among those over 55 years of age. 

Below is the current smartphone OS market-share distribution according to Nielsen:  


Charting the Rise of the 'Mobile-First' Audience

This morning the Pew Research Center released new survey data about mobile internet access. According to the findings, 93% of smartphone owners (and 63% of all mobile phone owners) go online with their handsets. Tablet usage was not part of this survey.

The most interesting finding, however, was that 34% of all those who go online with their phones do "most" of their internet browsing via mobile:

One third (34%) of cell internet users say that they mostly use their cell phone rather than some other device such as a desktop or laptop computer . . . Half (53%) of cell internet users say that they mostly go online from a device other than their cell phone, while 11% say that they use both their phone and some other device(s) equally.

Pew told me in email this number was basically the same percentage for smartphone and non-smartphone users.

Those who are "mostly mobile" include "young adults, non-whites, the less educated, and the less affluent." This is highly analogous to those who have a mobile phone but not a landine (or who essentially don't use a landline).  

Nielsen's recent Mobile Path to Purchase study (sponsored by xAd, Telmetrics) found that in certain categories the "mostly mobile" or "mobile only" internet population was nearly 50 percent (or above 50% in the case of online banking). Indeed, in specific segments or verticals (e.g., Local) the numbers may exceed 50%. For example:

  • 59% of searches on Yelp are from mobile devices
  • 50% of search on YP’s network is from mobile devices
  • As of Q4 2012 Google Maps had more mobile than PC users
  • Nearly 50% of Groupon transactions in June (for North America) came from mobile 
  • More than 50% of search traffic on Zillow is from mobile devices

What we're witnessing is the rise of an audience that may not use the PC at all in certain cases or use it purely as a secondary matter. As a counterpoint, see the recent comScore-Jumptap data that show people prefer larger screens in many instances.

Once more sites and internet experiences are better optimized for mobile devices, however, we may see an accelaration of this mobile-first/mobile-only trend. 

Time Spent Online: Mobile 51%, PC 49%

Jumptap (now part of Millennial Media) and comScore released a report last week on cross-platform device usage. The report contains considerable data about smartphone and tablet penetration, day parting and device usage by content category and demographic group.

Much of the data is from comScore and has already been released in other contexts. However there were a number of interesting data points in the report worth revisiting, including the fact that combined smartphone and tablet time online now exceeds time online with PCs.

As a general matter smartphones and tablets have increased overall time spent online rather than simply cannibalizing PC time, though there has been some of that (e.g., maps, local). 

Another interesting set of data in the document explore device share of online minutes by content category or vertical. The PC is dominant (more than 50% of time spent) in a little more than half the categories examined.

PC usage is highest in the automotive segment and lowest in "radio" (think Pandora). Retail sees slightly more mobile than PC time. 

The numbers above are aggregate data. Demographic segments are going to display different device behaviors. For example, those in the US under 30 are likely to be more involved and spend more time with smartphones than those over 50. That pattern has been repeatedly shown in our surveys and other third party data, including this report.

Below are the demographic groups profiled in the report:

Age 18 - 24: 

  • 69% own a Smartphone
  • 65% of digital users are cross-platform
  • 59% of time with digital is mobile

Women 25 - 49:

  • 69% are cross-platform
  • 67% own a Smartphone
  • 14% Mobile only (vs. 17% PC only)
  • Spend 63 hours monthly on Smartphone
  • 75% of time on social media is on Mobile

Men 25 - 49:

  • 74% of digital users are cross-platform
  • 62% own a Smartphone
  • 45% of time with digital is Mobile

Age 50+:

  • 39% own a Smartphone
  • 51% are cross-platform
  • Represent 31% of Tablet owners (only 25% of Smartphone owners)

There's quite a bit more data in the report, which can be downloaded for free.

As a broad takeaway marketers can now assume almost everyone above a certain income threshold is "cross platform." The minority are "smartphone only" or "PC only" (select younger and older users respectively).

Marketers can also reliably make the assumption that those under 45 are going to favor smartphones vs. PCs as primary devices in a wide range of categories. However people are also rational and prefer larger screens in many contexts (at least until mobile user experiences are improved).

By comparison tablet behaviors are still being established. However the tablet is typically used as a PC substitute (provided a larger screen) in the home.

Forecast: Google Mobile Revenue to Exceed $11 Billion in 2013

Last year Google brought in ad revenues of $43.7 billion. This year, thus far, the company has made roughly $24 billion. For the full year 2013 Google is likely to earn $50 billion in advertising revenue. That may be a low projection, however.

EMarketer today released some estimates on the breakdown of PC vs. mobile and search vs. display revenues for Google. According to the estimates, search will generate 82% of Google's overall revenue this year with just under 20% of search revenue coming from mobile.

By comparison 2% of display ad revenue will come from mobile. 

Over time the data aggregator sees more than 40% of Google's total ad revenues coming from mobile (search + display). 

Let's look at what these breakdowns (if accurate) would mean in real terms, assuming $50 billion in total projected ad revenue for 2013:

  • Search: $41 billion
  • Display: $9 billion

The other way to view those revenues is the following:

  • PC:  $38.5 billion
  • Mobile: $11.5 billion

If the standard US (45%) vs. international (55%) ad revenue distribution holds for mobile then the following will be the rough figures for Google mobile ad revenue by geography (approximately): 

  • US: $5.1 billion
  • International:  $6.3 billion 

Despite the above, Google's US mobile ad revenue is likely to be somewhat stronger than its mobile revenues from outside the US. Accordingly I would probably flip those percentage figures when it came to mobile. 

Last year the IAB reported that mobile ad revenue in the US was $3.4 billion. This year it's likely to hit $7 billion according to our estimates. If that's correct then the Google figure above is too aggressive.

Facebook on Track for $3 Billion in Mobile Revenue This Year

In roughly two years, Facebook has rapidly become the second most successful ad "network" (after Google) both in terms of overall revenue and mobile advertising specifically. According to its most recent quarterly data 41% of Facebook ad revenues were attributable to mobile ($656 million). It's not unreasonable to assume that by the end of Q4 nearly half of Facebook's ad revenue will come from mobile. 

Facebook's overall ad revenue in 2013 is likely to be somewhere between $6.2 and $6.5 billion (not all Facebook's revenue is from advertising). Assuming 48% of Facebook's ad revenues are from mobile that would mean between $2.9 and $3.1 billion in mobile revenue for 2013. 

Data aggregator eMarketer projects that Facebook overall ad revenue will come in at $6.36 billion this year. By contrast, Google will control more than 50% of global ad revenue in 2013 ($39 billion). Google will capture 53% of total mobile ad revenue, whereas Facebook will grab roughly 16% of the global mobile market according to eMarketer's projection. 

What's striking is how a handful of companies (publishers) are dominating mobile advertising, while dozens of others capture relatively small shares of the mobile market (which still may be over $100 million annually). 

Emarketer also projects that by 2017 mobile will be nearly half of all US display ad revenue.

By the end of the year total US mobile ad revenue (search + display) could reach $7 billion according to our estimates. The mobile display revenue figure in the chart above ($3.81 billion) is thus probably a bit aggressive. Search continues to dominate mobile advertising (55% to 60%) and nearly all of that revenue belongs to Google. 

Google's enhanced campaigns is a wild card that could boost mobile search revenue -- it's mandatory -- and raise overall US mobile ad revenues to over $7 bilion.

Data Smackdown: Two Views of M-Commerce (Smartphones vs. Tablets)

E-commerce hosting and services provider MarketLive released a mid-year benchmarketing report yesterday, covering digital marketing and commerce trends through the lens of its many clients. There are many interesting findings. I'll focus however on the mobile aspects of the report, which appear to directly contradict a comScore m-commerce report released today.

The comScore data argue that there are many more e-commerce transactions happening on smartphones vs. tablets. This was something of a surprise to me. Accordingly, comScore puts the total value of US mobile-drive e-commerce at $10.6 billion for 1H 2013; 6% is from smartphones and 3.5% is from tablets.

mobile commerce

These numbers contradict everything I've seen about conversions and commerce on smartphones and tablets. One potential explanation may be that there are nearly 2X the number of smartphones as tablets in the US market.

However the MarketLive data, as mentioned, show something much more consistent with earlier findings I've seen from many sources: tablet e-commerce conversions are higher and tablets are driving a greater percentage of overall revenue than smartphones. 

According to the very busy MarkeLive slide below, smartphones drive more overall traffic but tablets generate considerably more revenue. MarketLive says that roughly 12% of e-commerce revenue for its clients are coming from tablets, whereas only 2.7% is coming from smartphones. However 19% of traffic comes from smartphones vs. 13% of visits from tablets. 

Tablet conversions are 3X conversions on smartphones. 

I cannot reconcile the comScore data with the MarketLive data. The weight of evidence is on the side of MarketLive however. 

Kindle Tablets Lose Half Their Traffic from 12 Months Ago

Given that Jumptap has now sold itself to Millennial Media it's not clear whether we'll get many more of the company's monthly Mobile STAT reports. The August report focuses on device market share by traffic on the Jumptap network. 

It's interesting to contrast the Jumptap traffic figures with survey based market-share data from comScore. First the Jumptap numbers: 

Jumptap sees Apple devices (iPhone + iPod Touch) generating 56.8% of smartphone traffic on its network. Collectively Android devices are responsible for roughly 35% of traffic according to the slide above.

By comparison comScore (based on consumer survey data) says that Android has a US smartphone market share of 52% vs 40% for Apple -- almost the reverse of the Jumptap numbers. Millennial ad network data are more consistent with the comScore figures below.

smartphone market share june by OS

The tablet traffic data provided by Jumptap show the iPad remains well ahead of other competing devices, though the Galaxy Tab and Nexus 7 have grown since last year. The "headline" from the chart below is the dramatic decline in Amazon Kindle traffic in the past 12 months.

Compare tablet traffic data from Chitika, another mobile ad network. It shows an even greater margin (June 2013) between the iPad and its rivals.

June iPad traffic

Finally Jumptap reflects the relative traffic split between the mobile web and apps. The Jumptap data show that ad requests from apps now generate 84% of the traffic it sees vs. 16% from the mobile web. This is consistent with data from both Nielsen and comScore that show a roughly 80-20 split between apps and mobile web traffic in favor of apps. 

However 2012 survey data from Nielsen, xAd, Telmetrics reflect differing levels of app usage by category. And in retail the mobile web is used more than apps as a general matter. So despite app dominance in the aggregate, in particular verticals the story may be quite different and much more nuanced. 

Source: xAd-Telmetrics “mobile path to purchase” study conducted by Nielsen (Q2 2012), n=1,500 survey respondents and behavior observed from 6,000 Apple and Android users

Google Loses 11% Mobile Search Share in Past Year

Yesterday comScore reported that Yahoo had claimed the top spot on its Top 50 websites chart from Google for the first time since March 2011 (originally I thought it was March 2008). Following that announcement and the excitement it generated, I decided to look at some of the mobile data, using StatCounter (which is actual traffic rather than extrapolated consumer survey data).

On a global basis Google dominates mobile search and has for the past several years. A year ago it controlled 97% of the worldwide mobile search market. Today that number is down slightly to just under 94%. Yahoo and Bing have grown slightly over the last year, which accounts for the change. 

In the US market something more interesting has happened. According to StatCounter data, Google has lost more than 10 points of mobile search market share in the past year: 

August 2012:  

  • Google -- 94%
  • Yahoo -- 4.2%
  • Bing -- 1.5%

August 2013: 

  • Google -- 82.8%
  • Yahoo -- 11.8%
  • Bing -- 5.1%

It's not clear why this has happened. But it is clear that if Google were to suffer a 11% loss in online search market share, investors and pundits would be going berserk. Yet this mobile decline has passed relatively unnoticed. 

While Bing has had a strong search app for some time, Yahoo hasn't. The latter has, however, poured money and effort into developing better mobile apps and redesigned key properties online and in mobile (e.g., homepage, mail).

It may be that many of Yahoo's mobile intiatives and effort to "update" the Yahoo identity and UX as a whole have started to pay off by lifting the brand. And those things may have translated into more mobile search volume. 

Placed Introduces Offline Mobile Ad Tracking

Last week Placed introduced Placed Attribution, a mobile ads offline tracking solution. The idea is to used Placed's opt-in panel to measure the impact of mobile ad exposures on in-store visits. PlaceIQ has a similar offering using a different methodology.

Capturing the offline impact of digital ads on store visits (and potentially sales) is really a kind of "holy grail" when it comes to conversion tracking. The ratio of online to offline conversions is skewed heavily in the direction of offline. E-commerce is only 5.5% of offline retail and mobile commerce is approaching 10% of e-commerce.

Yet up to half of offline retail spending may not be impacted by digital media and the internet. Clicks are a terrible metric for mobile advertising, and secondary metrics like map views and calls are better but don't capture the entire picture for marketers.

There's a lot more "visibility" on performance when you can start to measure how digital ads impact offline purchase activity. That's the objective of Placed Attribution. Here are the kind of data to be reported:

  • Store Visits: In-store visits attributed to mobile advertising.
  • Lift – Standard: Impact of audience targeting and ad exposure in driving in-store visits as compared to the baseline population.
  • Audience Features: Demographic and geographic characteristics of audiences exposed to impressions, and those who went in-store.

Some of this will be extrapolated from a sample drawn from Placed's panel. Even so, it represents an advance over most of the ways in which marketers try to model attribution when it comes to mobile ads and offline conversions. Offline/in-store tracking will be common -- even mandatory -- for many categories of mobile ads within 12 - 18 months.

We'll be discussing "Ad Tracking to the Point of Sale" with PlaceIQ, Placed, xAd and Retailigence at the Place Conference on October 8 in San Francisco

Facebook Closing in on $4B Mobile Run Rate

To say that Facebook's mobile ad revenue growth has been impressive is an understatement. It has been, what you might call, meteoric.

In the course of a 12 month period the company has gone from less than 10% of ad revenue from mobile to 41% in Q2 of this year. By the end of this year (or very early next) 50% of Facebook's ad revenue will likely come from mobile. (By comparison, in 2012 more than half of Twitter's ad revenues came from mobile.)

Facebook mobile ad revenue growth

In Q2 '13 Facebook made more than $650 million in mobile ad revenue. If current trends continue expect Facebook to have a $1 billion mobile quarter by 1H 2014 (and possibly Q1 earnings). That would enable the company to claim a $4 billion annual mobile-ad revenue run rate.  

Based on averages and simple math, Facebook made roughly $0.80 per mobile user in Q2 on a global basis -- up from $0.50 in Q1 of this year. However developed markets offer more revenue than emerging markets and so the revenue generated per mobile user will vary considerably from market to market in practice.

Facebook monetization per mobile user

In 2010 we asked "How Long Before Facebook is a Mobile Ad Network?" and predicted that when Facebook turned on mobile ads it would immediately become the largest mobile "network." 

As formidable as Facebook is becoming in mobile Google is still dominant globally. Incredibly, Mountain View is expected to capture more than 50% of mobile revenues on a global basis this year. Facebook claims a much smaller percentage of mobile revenues, but still ranks as the number two player in mobile advertising today. 

Most Smartphone Commerce Happening in the House

As apps and websites become optimized for mobile commerce, and as the "credit card problem" is addressed (see TheFind and Jumio), there will be more buying on smartphones. Most retailers and brands currently assume smartphone transactions happen on the go or in stores (or on other devices). In the home e-commerce is supposed to be the domain of PCs (and increasingly tablets).

The conventional wisdom is that smartphones are more heavily used for shopping out of home and that's been supported by prior survey data. Yet data released yesterday by Nielsen tell a somewhat different and more nuanced story.

Americans are indeed buying things on their smartphones (24%) but they're mostly doing it at home: 72% of people making purchases on their smartphones did so at home and not "on the go," as one would have expected. Only 3% of smartphone owners buying things on their devices did so in stores; 6% did so in their cars. The remainder, 18%, fall into an unidentified "other" bucket. 

It's interesting that smartphones are so widely used for commerce-related activities (store locators) on the go but buying happens at home. Nielsen doesn't offer any real explanation however. It may be that the "immediacy" and availability of the device make it a preferred option for some. 

There's also no data about audience segments. It would be interesting to see if these at-home smartphone transactors are younger, older and whether they have other devices available to them. 

Regardless this is another "wake up call" arguing that marketers and retailers need to quickly optimize e-commerce experiences for smartphones.