Data And Forecasts

Millennial Media Offers 2009 'Year in Review'

Millennial Media has compiled a number of top lists from 2009 and put them together in a year in review report. The data are drawn from Millennial's own network and associated ad campaigns but the company says "Millennial Media is the largest mobile ad network, [so] we anticipate much of this data is fairly representative of the mobile ad industry as a whole."

Here are a few of the lists (covering all of 2009):

Campaign distribution by objective:

  • 70% brand
  • 30% performance 

Growth of mobile sites/applications (YoY): 117%

Advertiser growth (YoY): 54%

Top handsets by share of impressions:

  1. iPhone
  2. BlackBerry Curve
  3. BlackBerry Pearl
  4. HTC/Google G1
  5. BlackBerry Storm 

Percent of advertisers using rich media in mobile: 17%

Top ad spending "verticals" in 2009:

  1. Portals & directories
  2. Entertainment
  3. Telecommunications
  4. Dating
  5. CPG
  6. Retail & restaurants
  7. Finance
  8. Travel
  9. Automotive
  10. Health 

Compare the IAB's top online spending categories/industries:

 Picture 37

Here's Millennial's December report for comparison.

Retrevo: 20% Under 35 Click Mobile Ads

Electronics comparison site Retrevo conducted an online survey (n=1,000) of US adults earlier this month, regarding mobile shopping and receptiveness to mobile advertising. The data are generally consistent with our data and other information in the market; consumers increasingly use their phones as shopping aids/tools but are ambivalent toward mobile advertising. (One note: attitudes and behavior don't line up in the discussion of mobile ads.)

Younger users were generally more "advanced" in their behaviors and receptive to mobile advertising. To see the full results and Retrevo's discussion go here

Q: Have you ever used a mobile phone to research products, compare prices, find retailers or to shop?

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Source: Retrevo (2/09, n=1,000)

Q: Have you made a purchase using a mobile phone?

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Source: Retrevo (2/09, n=1,000)

Q: Have you ever responded to an advertisement on your mobile phone?
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Source: Retrevo (2/09, n=1,000)

The top chart, about using the handset during shopping, is the one to focus on. We can qualify all the findings as perhaps being not entirely representative of the mainstream shopper, etc. However, we will see huge numbers of people using handsets for research and other information (looking for deals?) during the shopping process. 

Much of the so-called "mobile commerce" is going to be about finding the right product for less online: I confirm I want it in the store and buy it for less on Amazon, for example. This scenario may eventually become a problem for retailers and boost e-commerce, ironically. 

Ads that are relevant and timely (think coupons, deals, discounts in shopping) will also succeed despite apparent consumer hostility. 


Related: Shopping by Mobile Will Grow to $119 Billion in 2015

This forecast apparently consists of virtual goods payments and actual mobile buying of conventional goods. The former is a big market getting bigger. The latter will grow but the $119 billion figure is very aggressive. Dominant scenario is reflected the first chart above: using the phone to research, check prices -- not buy via mobile. 

Facebook the King of UK Mobile Media

Metrics firm comScore and the GSMA last week reported figures for UK mobile Internet visits, time on site and so on. Consistent with some of the other data in the market, Facebook is the winner across categories, followed by Google.

As you can see from the chart below, and unlike in the US, the carrier portals have a presence in the top 10:

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Compare the Nielsen "top 10" US mobile sites, which put Facebook at number five:

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See related post: Facebook's 100 Million Mobile Users.

Mobile High on Marketer 'To-Do' List but Confusion Remains

Again and again we see surveys that suggest or otherwise argue that mobile is now in the mix, that reflect advertisers and agencies' increasing interest in mobile. But they're still a little foggy about what to do and exactly how to do it.

Take the following as another example of the above; conducted by digital marketing services firm R2i a survey fielded in January (sample size unknown) showed that many marketers now consider mobile "important" but are vague about strategy and tactics:

How important is "mobile marketing" to your overall marketing strategy for 2010?

  • Very important: 22%
  • Important: 26%
  • Somewhat important: 28%
  • Not important: 8%

(76% consider it at least "somewhat important." But that leaves 16% unaccounted for; presumably they're in the "no" or "N/A" category.)

Main reason for executing a mobile marketing campaign:

  • Company awareness: 41%
  • Lead generation: 33%

What constitutes success?

  • Quantifying ROI: 43%
  • Increase in customers: 49%

Impediments to executing a mobile marketing campaign

  • “not knowing how to develop the business case": 32%
  • “not enough analytics to measure the ROI": 30%


The release reported that "63% of respondents said they’d only allocate up to 15% of their budgets on mobile marketing." On the one hand this is a generous number for a new medium; however it also indicates that people don't really know what the appropriate amount is (it would be campaign and objective specific of course).

Campaign and marketing focus

  • Mobile website development: 52%
  • Mobile app development: 42%

Importance of smartphone platforms (those indicating "very important")

  • iPhone: 59%
  • BlackBerry: 40%
  • Android: 8%

This is a single survey but I would imagine fairly representative of the following issues:

  • Growing advertiser interest
  • Confusion over how to quantify and measure success
  • Where to spend/invest in mobile
  • What the objectives of campaigns should be 

No longer do mobile networks and firms need to educate marketers about why to do mobile as much as they need to promote concrete examples and best practices to show them how -- especially the role that mobile can play in the context of other traditional and digital marketing and advertising.

New US Mobile Numbers from comScore

Based on activity of US mobile subscribers 13 and older, comScore put out data today that covers September through December 2009. While comScore counts 234 mobile subscribers, CTIA claims 271 million US mobile subscribers. The four major US carriers report approximately 250 million. 

Here are the charts reflecting the comScore data: 

Picture 188

Google/Android doubled its market share during the Q4 period, while Palm, RIM and Windows Mobile all lost share. These Palm devices, notwithstanding the "plus" versions debuting at Verizon have clearly stalled. 

Here's "mobile content usage" according to comScore: 

Picture 189

The 27% number for "used (Internet) browser" is very consistent with survey data well pulled in 2009.

What that number translates into in terms of "mobile Internet usage" depends on whether you think the base is 234 million or 250 million users. In the former case, the number of US mobile Internet users would be 64 million; in the latter it would be just over 68 million (a number consistent with Nielsen's figure).

The social network figure (15.9%) translates into 39.7 million social network users (with a 250 million base).  

IDC Contradicts Nokia's Smartphone Claims

IDC has released its smartphone numbers and marketshare data for Q4 and FY 2009. After last week's discussion about whether Android had "tarnished" or slowed Apple's iPhone, these IDC numbers show strength for the Apple handset (growth outpaces competitors). Nokia remains number one followed by RIM and then Apple.

Here's what Nokia said about its own estimated marketshare in its most recent earnings release:

  • Nokia estimated mobile device market share of 39% in Q4 2009, up from an estimated 37% in Q4 2008 and 38% in Q3 2009. The full year 2009 estimated market share was 38%, down from 39% in 2008.
  • Nokia grew its converged device market share to an estimated 40%, from an estimated 35% in Q3 2009.

IDC contradicts that assertion with its own data and estimates, saying that the device maker's smartphone share is 38.9%, down from 40% a year ago. Here they are:

Picture 176

The smartest thing that Nokia can do in the near term to restore growth is to cut prices, which it is doing. It has also made its Navteq-supported mapping and navigation software free, prompting a huge number of downloads (one per second) since the announcement.

Pew Millennials Data Shows Mobile a Critical Medium for Reaching Youth

This may sound like data you've heard time and again (and it is): mobile phone ownership among younger people is nearing saturation. According to Pew, 75% of teens and 93% of 18-29 year-olds in the US have mobile phones.

New survey findings underscore that mobile is a critical medium (and by extension SMS because of its ubiquity) for reaching younger audiences. Here are some mobile-specific excerpts from Pew's recent millennial social media survey data:

  • Among teen cell phone users, more  than a quarter (27%) say they use their cell phone to go online . . . 35% of adults report that they access the Internet using a cell phone or other handheld device.

Extrapolating from the 35% number, which is admittedly self-reported survey data, that would mean something approaching 80 million US adults are accessing the Internet on mobile phones. Nielsen's number is 68 million; our survey data from 2009 argue that 27% to 29% of mobile users are accessing the Internet on mobile handsets.

Here's demographic data regarding US "wireless" Internet access by device category and age: 

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Daily teen activities, showing the primacy of SMS:  

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Related (per Nielsen): "American teenagers are using 3,146 messages a month, which translates into more than 10 messages every hour of the month that they are not sleeping or in school" 

Satisfaction Higher for eReaders than Netbooks

An NPD Group survey has found (n=1,000) that 93% of eReader owners are “very satisfied” or “somewhat satisfied” with those devices. The survey didn't break out the devices (or at least what I saw). However most of those devices are going to be Kindle or Sony tablets at this point. 

From the publicly released portions of the report:

  • 60% of owners said wireless access was their favorite feature on their e-Reader; touch was mentioned by 23% of owners (these folks are not the Kindle owners)

Suggested improvements:

  • more book title availability -- 42%
  • longer battery life -- 39%
  • color screens -- 34%

The survey also found that "about three-in-ten owners say they use at least one another device for reading e-books, such as a PC or a smartphone." 

Compare this to a Q2 2009 survey of netbook owners by NPD: 

  • "58% of consumers who bought a netbook instead of a notebook said they were very satisfied with their purchase, compared to 70% of consumers who planned on buying a netbook from the start."
  • Among those 18-24, "65% said they bought their netbooks expecting better performance, and only 27% said their netbooks performed better than expected."

This higher level of dissatisfaction among netbook owners goes to expectations of buyers who anticipated more than what they actually received. There were undoubtedly different and fewer high expectations of eReaders. However the iPad may face very high expectations. By the same token it addresses some of the "wish list" of features above.

NPD in August last year also put out survey findings that asserted 37% of consumers were interested in purchasing an eReaders. Other surveys closer in time to the iPad launch showed much higher demand/interest.


Related: Amazon Said to Buy Touch Start-Up (to better compete with iPad)

Only 43 LBS Apps Offered Across Platforms

Skyhook Wireless has done a very interesting analysis that seeks to reveal how many of the thousands of location-enabled apps are available across multiple smartphone platforms. Curiously there are only 43 it turns out. According to the report:

There are nearly 6,000 iPhone location apps, 900 on Android and 300 on BlackBerry. Only 43 of these apps are available in all three stores. Of these, only six are paid. Each of these six paid apps, detailed on the next page, has a distinct per-platform price point. These apps are always significantly more expensive on Blackberry than the counterpart versions of the same paid app on iPhone and Android. For example, Wikiango is offered for free on the iPhone and for $19.99 on Blackberry.

The most fascinating aspect of this, beyond the lack of overlap, is variable pricing for the same apps. BlackBerry users are getting stuck, it would appear, with much higher prices for the same apps. Here are three "case stuides" from Skyhook showing these price differences by platform:

Picture 375

As shown above, there's a $10 difference between the cost of the Zagat app on the iPhone/Android ($9.99) and BlackBerry ($19.99). Why is that? It may have to do with the demographics of the RIM user population and its legacy "enterprise user" base. Developers may simply believe they can charge more. There may be another explanation, but it's not evident.

More generally Skyhook also shows a comparison of free vs. paid apps across the three platforms. In the aggregate the iPhone has the most paid LBS apps, which is partly a function of having more apps in general:

Picture 376

Millennial Media: Portals & Directories Become Top Category by Ad Spend

Millennial Media's December/Q4 SMART report reflects some interesting trends, but mostly incredmental changes from November. The top ad spending category is now "portals and directories," which includes major Internet players (e.g., Yahoo, MSN). Travel moved up from category number 10 to number eight, as well.

Here are the highlights, as reported verbatim by Millennial:

  • The U.S. Mobile Web: Decreased slightly to 66.6M users, according to Nielsen (Nov.)
  • For the first time since S.M.A.R.T™ was first published in March ’09, Entertainment was not the top advertising vertical.  Portals and Directories took the top slot in Q4. Telecom, Finance, Entertainment and Dating round out the top 5.
  • Engagement: Average monthly page views per user increased to 125 in December from 113 in November; and, average user session times increased from 5:02 to 5:09 (min:sec).
  • Devices: Samsung represented approximately 23% of our network’s impression share in Q4. But the iPhone was the leading smart phone on our network with 41% of our network’s U.S. impressions. 

Picture 137

We don't know all the specific advertisers in these categories but I would argue that at least five (maybe six) of these categories are substantially or mostly concerned with local "on their face":

  • Entertainment
  • Dating 
  • Retail/restaurants
  • Travel
  • Automotive 

Turning to handsets and OS market share, here's what Millennial is seeing on its network:

Picture 138

Compare AdMob's smartphone share numbers (North America) from December:

Picture 139

In both cases the iPhone is has the largest share, but on Millennial RIM is second, while AdMob's network shows Android handsets second to the iPhone. Among the top 20 mobile handsets appearing on Millennial's network, the G1 is the only Android handset reflected to date. 

Could IDC Be Really Wrong on Android?

IDC's recent prediction that Android would be the second most numerous smartphone OS in the world by 2013 has garnered much uncritical coverage. Here are the IDC bullets:

  • Symbian will retain its leadership position worldwide throughout the forecast period. Due primarily to the strength of Nokia in markets outside of the United States, Symbian continues to lead all other mobile operating systems.
  • Android will experience the fastest growth of any mobile operating system. Starting from a very small base of just 690,000 units in 2008, total Android-powered shipments will reach 68.0 million units by 2013, making for a CAGR of 150.4%. Android will benefit from having a growing footprint of handset vendors supporting it and will finish second to Symbian in shipments by 2013.

Before IDC Gartner made the same prediction, but by 2012. Both of these firms could turn out to be wrong -- very wrong.

It makes sense that Android will continue to gain, given the number of OEMs building and releasing devices with the OS. Indeed, Google SVP Jonathan Rosenberg, on the Q4 earnings call, said "Android started 2009 with just one device and is now at 20 in 48 countries." And the Verizon Android Droid is credited with dampening some of the iPhone's recent sales momentum: the iPhone sold "only" 8.7 million units vs. the 9.1 - 9.5 million that some of the most bullish Wall Street analysts had anticipated. 

OK, Apple sold 8.7 million iPhones in the most recent quarter, but it also sold sold 21 million iPods. The company doesn't break out iPod Touch sales. But while iPod sales are declining, iPod Touch sales are up. At the end of the last quarter there were almost 60 million iPhone OS devices around the globe (including the iPod Touch). Morgan Stanley estimated the number at 57 million in early December. 

So let's assume that 5 million of those 21 million iPods are iPod Touch devices. That would put the combined sales of the iPhone OS units at more than 70 million today. So the iPhone OS (not the iPhone itself) has already beaten the IDC Android unit sales projections for 2013. 

What happens tomorrow with the iPhone is important for the future success of the platform in the US market. Regardless of whether there's a new iPhone OS or 4G device, if Apple announces that AT&T exclusivity is through and that the handset will be available from Verizon and/or others, we're likely to see Android momentum falter. If not, Android will continue to gain steam.

Apple executives made some comments yesterday, however, that suggested AT&T exclusivity may not be done. They expressed confidence in AT&T and its ability to "fix" network problems that have frustrated and infuriated iPhone users. That kind of remark doesn't sound like one from a company about to walk away from its exclusive relationship with AT&T. But we'll see. 

If Apple fails to "cut the chord" tomorrow and broaden iPhone distribution in the US it will cede millions of users to Android. I would be happy using the Nexus One rather than switching to AT&T, with its network's mortally wounded reputation, to get the iPhone (I have an iPod Touch). And while it's not as intuitive or "elegant" as the iPhone, and the apps are not as polished, the N1 generally substitutes. Its speed and screen are better than the current iPhone as well. And the voice-text input features are compelling. 

Apple may not see this timing issue as critical. It will exit AT&T exclusivity at some point. If it does so now, it will establish itself on a trajectory to become the dominant smartphone in the US market and Android's rise will be blunted (though perhaps not RIM's, the current market leader). If it waits for 2011, US iPhone prospects will likely have moved on or set their sites on other handsets. All the defectors that are going to head to AT&T for the iPhone have already done so. 

As suggested, RIM is a wild card in this discussion and so is Windows Mobile, which is declining now but could get a big boost from WinMo 7. Nokia, regardless of Symbian UI upgrades, will continue to lose share in the US and Europe in the coming 12-18 months. It will remain strong in Asia, Latin America and Africa -- emerging markets that seek lower-cost handsets. Palm, I'm afraid, will be largely an also-ran in this race. 

The market for smartphones, however, is very much evolving and in flux. What happens tomorrow (from Apple) could be very significant for both the iPhone and for Android's future in the US. It might be that Apple makes the wrong choice, falters and Android benefits. The thinking that Android will automatically grow to be the world's number two, however, is simplistic. 

Little Overlap in Top Apps on Mobile Platforms

App store analytics provider Distimo has released its latest report profiling activity in the various app stores. The report points out, among other things, that app prices are highest in Europe and on the BlackBerry. It also shows that the majority of apps in the Android market (65%) are from US developers, presumably catering to the US market. However that will change as Android gains momentum in other markets.

Interestingly, the charts reflecting the top free and paid apps don't show much overlap on the major platforms. Below are graphics from the Distimo report about the top free apps:

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Here are a few casual observations. Facebook is universally popular, voice search tools show up across platforms (Bing, Vlingo, Nuance/Dragon). Weather is there a couple of times (RIM and Android). Barcode scanners are also popular. Not reflected above, RedLaser is the top paid app for the iPhone, and two scanners are in the top 10 for Android, according to these data. 

Some of the differences in app popularity may have to do with timing. Pandora was released first on the iPhone and was the most popular app that year. Later it rolled out to other platforms and became popular accordingly, while its popularity in the iTunes store declined.

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Price Remains Barrier to Mobile Web Usage

One of the mantras at Internet2Go is that price drives behavior. A study released last week about UK mobile Web adoption and usage again affirms this fact but also shows a population resisting the mobile Internet to some degree.

The study (n=2,000 UK mobile subscribers 16+) by firm Essential Research found that 76% of mobile users don't access the internet on their handsets. The chief reasons cited for this were: connection speed, cost of mobile Web access, as well as handset battery life. Here are more findings: 

Half of non-mobile-Web users not interested:

60% of UK mobile users claim to not even own a mobile with internet access and just 30% of these are interested in getting one . . . even for upwardly mobile internet users and owners of smartphones, one third (31%) have never used their phone to connect to the internet, a quarter (24%) use it less than once a week and 8% tried it but don’t intend to do so again.

Social media a driver of adoption:

Almost as many daily mobile internet users (70%) use social media services including social networks, instant messenger, blogs and forums on their phones as they do on their computer (79%).

Non-mobile-Web users interested in offers/coupons:

The ability to perform everyday activities such as checking real time travel updates (33%) and tracking in-store offers, coupons and vouchers (31%) were the most interesting to those that don’t currently use mobile internet.

Internet2Go's 2009 survey data show that 27%-29% access the mobile Internet on their handsets. These numbers would be larger today. Connection speeds will improve greatly with 4G (and so will handset battery life) but pricing is an issue that may or may not improve for consumers.

Aggressively priced "all you can eat" data plans are now the single greatest variable in mobile Internet adoption and usage (now that handsets and the mobile Web experience have improved dramatically). However US carriers want to get away from these low-cost plans and move toward tiered pricing based on usage, which could inhibit consumers because of cost uncertainty. 

Social adoption of the mobile Web will also motivate people to get data plans. If all my friends are online on their handsets I will want to be too; social networking adoption on mobile devices may accelerate this phenomenon as well. 

Geo Most Commonly Used Targeting Feature

I was reading the Rubicon Project's Q4 market report and it cited and reminded me of a September Millennial Media mobile ad survey of "100 leading [US] agencies" and brands. The Millennial report presents a picture of increasing investment in mobile marketing but also, a lack of resources and knowledge to effectively mount mobile campaigns in some cases.

Here's an excerpt from the executive summary:

Mobile spending is expected to increase next year, with 31 percent of agency respondents stating that they will invest between $100K and $249K. More than 15 percent (15.4 percent) plan to invest more than $1 million. More than half of Q4 mobile campaigns will represent between 1 percent and 10 percent of their clients’ total spending, but, for a few, that number will be a whopping 40 percent - 50 percent. Current participation remains high with nearly ¾ of the 100 leading agencies that responded to “The State of the Industry” stating that they have developed mobile campaigns for themselves or a client. Meanwhile, 28 percent have not taken the plunge.

It's worth revisiting and showing a few of the graphs:

Targeting approaches utilized:

 Picture 119

Campaign objectives and success metrics:

 Picture 120

Barriers to mobile ad adoption: 

 Picture 121

Arguably this final slide is the most important, with many agencies and brands not being sure where to begin, as well as being intimidated by what they perceive as complexity (also fragmentation) in the market.

It's very curious, however, that half of the agency respondents say they have "no internal resources" to deal with mobile. Many of the big holding companies bought mobile agencies (e.g., Publicis/Phone Valley). But, beyond that, isn't it their job to deal with important emerging channels? One would think so. 

As platforms and exchanges emerge to make it easier to buy across the ecosystem or single networks with enough reach (e.g., Goog-Mob)  are established we'll see many more brands and agencies move into mobile. This year and early next, we'll see rapid advancement of mobile advertising.

GroundTruth Emerges to Challenge comScore

The mobile analytics segment is starting to mature and rapidly becoming more competitive. M:Metrics has been arguably the strongest player in the segment for the past few years. The company was acquired by comScore in May, 2008. Since that time new players such as Pinch Media and Flurry have arisen, among others, to measure the smartphone apps marketplaces. These two firms merged in December.

But there are a slew of others out there trying to help marketers gauge where to place their mobile ad dollars. Today a company called "GroundTruth," based in Seattle and founded by one of the co-founders of Medio Systems, Michael Libes, emerged from "stealth mode."

According to the release out today:

To date, estimates of Mobile Internet traffic have varied markedly, making decisions difficult for publishers and advertisers.  Publishers have been unable to validate their audiences or use the information to understand their competitors.  Advertisers have struggled to justify media buys or effectively evaluate mobile marketing campaigns.

Ground Truth data comes directly from mobile operators and other data providers to report aggregate mobile data usage, on any visited mobile site.  What the company has found using this superior methodology dispels many commonly held beliefs about how consumers interact with the Mobile Internet. 

The company argues by implication that its analytics are much more accurate than competitors (read: comScore). GroundTruth is getting its data mostly from mobile carriers (probably by paying for it or cutting some sort of barter deal). The company received $2.6 million in venture capital funding to date. And GroundTruth's data set consists of 2.5 million mobile users.

As a teaser GroundTruth put out "Top 10 Mobile Web Sites"* for the first week of 2010 (January 4-10, 2010)
(Ranked by total Page Views)

  1. MySpace
  2. Facebook
  3. Google
  4. Mocospace
  5. FunForMobile
  6. AirG
  7. Yahoo!
  8. Cellufun
  9. Mbuzzy
  10. Myxer

*Not including pages served by operator portals

This is very different, for example, than Nielsen's Top Mobile Sites list for most of 2009:

  1. Google Search
  2. Yahoo! Mail
  3. Gmail
  4. Weather Channel
  5. Facebook
  6. MSN Hotmail
  7. Google Maps
  8. ESPN
  9. AOL Email
  10. CNN News 

Libes told Moconews some other observations about the market, based on its data:

  • Ad mob is/was the largest mobile ad network "by far." Quattro was/is number two
  • Most of the top-10 mobile sites (see list above) are mobile only sites
  • 64% of all mobile page views are for social networks
  • Carrier decks have about 10% of all internet page views

I'm actually skeptical of the top 10 list provided by GroundTruth. I assume this list is "everyone" and not simply smartphones or feature phones. I'm eager to talk to the firm about its methodology.

As popular as MySpace remains, I'm doubtful that it's truly the most visited mobile website. And while Mocospace has been around for some time, I'm also skeptical that it actually ranks as well as the GroundTruth list argues.

Consider the following list from Opera for November, 2009, which is based on actual usage rather than survey data: 

 Picture 131

Regardless, GroundTruth is a potentially strong and direct challenger to comScore (and Nielsen) because of its claims of greater accuracy and methodology based on actual usage and behavior rather than sampling or surveys. 

Google’s Q4 Earnings Call Comments: Mobile

Mobile is one of the areas on Google's Q4 earnings call that received the most attention and interest during the Q&A session. Here are verbatim comments (from the transcript) about mobile. I have grouped all of a particular individual's comments together though they may have been made at different times during the call.

CEO Eric Schmidt:

Everybody knows about the success of Android, our search traffic increased 5 times in the past two years. The Droid and Nexus One show the power of the Android approach. Great devices, multiple partners, great features, [lost] for use cases. Again, a pretty clear success at this point . . .

There the most obvious one in terms of growth rate would be mobile and a lot of that depends on the competitive dynamics of the industry, how successful the new AFMA product from us is, the AdMob acquisition if that comes through. We have a lot of evidence that people are moving to these data friendly mobile devices very, very, very quickly. Our search traffic growth rate is quite a bit faster than on PCs. We expect that to continue. So for lots of reasons 2010 will be a year of significant mobile revenue growth for the whole industry. I am sure we will be able to play a major part of that.

CFO Patrick Pichette:

As we enter 2010 we are very excited about the opportunities our core business, display, mobile and apps and so you should expect us to continue to drive real investment in significant ways in the areas we believe have real long-term opportunities for Google and that will accelerate our pace of innovation.

Product SVP Jonathan Rosenberg:

Personalization is also getting more important and we think mobile is a big part of that. More users both for search and other products are accessing us from mobile devices. With all the capabilities these phones that are coming out have like GPS, cameras, we think there is the potential to actually make this mobile web better than the PC web...

[W]e are starting to see . . . that advertisers are getting better at figuring out what kind of ads work on the mobile devices. The simple addition, for example, of things like including a phone number or an offer is substantially increasing the click through rates and the ROI for the subset of advertisers who are correctly optimizing their mobile campaigns. So we are certainly seeing very strong growth there . . .

I am not going to give specifics on mobile RPMS versus desktop RPMs but I think the main thing we can say is the new formats, the targeting tools and the reporting we are giving the mobile advertisers is making the huge difference. I mentioned Click to Call putting phone numbers in the mobile ads making a difference. Try something like auto insurance on your phone and you will see that the Progressive ad on the phone actually shows the phone number while on the PC it doesn’t. Nikesh gave the Razorfish example in his opening remarks and we are also letting the advertisers target high end devices, specific devices or specific carriers and we have also launched the reporting with analytics to the mobile phones. We are starting to see much improved monetization in general across mobile.

Head of Sales Nikesh Arora:

Finally with the trends that Jonathan mentioned, the penetration of smart phones and other mobile devices our sales teams are continuing to work with advertisers who can reach and target their customers through mobile advertising like never before.

One campaign of specific note was done by Razorfish, an agency partner of ours, who used a targeted mobile campaign to improve conversion rates towards monetary retail clients by approximately 10%. So we continue to see promise in this area.

Finally, regarding Apple specifically . . .

Eric Schmidt:

With respect to Apple it is probably better to say that Apple, I as a former board member have a special spot for Apple in my heart but I will tell you Apple is a very well run company. They have a lot of very good stuff coming. We have a couple of very good partnerships with them and we also compete with them in a couple of areas. My guess is that is a pretty stable situation for awhile . . .

We are not going to speculate on the market share of Apple mobile products. That is for Apple to discuss with you. As far as I can tell our business structures with Apple are quite stable. I am not going to speculate on any deals of any kind, rumored, true, not true, you name it we are not going to talk about it.

Report: 'NetTabs' to Sell Millions This Year

Consulting firm Deloitte contends that ''NetTabs will be purchased by tens of millions of people in 2010." NetTab is an awkward term coined by the firm to refer to the emerging category or tablet or slate computers.

In September last year electronics shopping site Retrevo published the results of a US survey (n=771) that asked about eReader buying intentions:

Planning to buy an eReader this year?

  • 21% yes (Males vs. females: 26% vs. 17%)
  • 79% no

What brand are you going to buy?

  • 62% Amazon Kindle
  • 32% Sony
  • 6% Other 

The Kindle and Sony devices are not Internet access devices at this point. Many new tablets/readers (including the Nook) have been introduced since this survey was conducted. However it's not clear to me that what Deloitte is arguing will come to pass. Much remains to be seen, including whether the Apple Tablet can be a mainstream device and "market maker."

Tablet computers have actually been around for a long time but failed to catch on. The new category of "bigger than a smartphone, more convenient than a netbook or laptop" is what we're talking about here. So far, however, none of the devices introduced are all that exciting (other than the pure eReaders like Kindle). Accordingly there's no indication that the category that Deloitte is talking about will take off -- at the moment. 

Gartner: $6.2 Billion in Mobile Apps in 2010

Gartner is predicting that mobile app downloads will be worth $6.2 this year: 

Consumers will spend $6.2 billion in 2010 in mobile application stores while advertising revenue is expected to generate $0.6 billion worldwide, according to Gartner, Inc. Analysts said mobile application stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end users.

Gartner forecasts worldwide downloads in mobile application stores to surpass 21.6 billion by 2013. Free downloads will account for 82 per cent of all downloads in 2010, and will account for 87 per cent of downloads in 2013.

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I haven't independently tried to calculate or verify these numbers. However, the paid-free ratio that Garnter uses is relatively conservative; the firm assumes 18% of apps are paid. In 2013 that number goes down to 13% in the Gartner forecast. As another datapoint, there are roughly 6 million iPhone apps now downloaded on a daily basis according to simple math (see Apple Insider). That's more than 2 billion on the iPhone alone annually. 

The lion's share of apps revenue will be on the iPhone; however RIM and Android are a growing component. One variable to consider in all this is that more publishers and developers may shift from apps to mobile Web for several reasons: single "platform" across smartphones, no approvals (in the case of the iPhone). If there's a large developer and publisher shift in that direction it would mean diminished revenues vs. the 2013 Gartner projection.

On the other hand, deeper smartphone penetration could potentially mean more app downloads and revenues accordingly. Nielsen has boldly predicted 50% smartphone penetration in the US by 2011. Those numbers are very aggressive however. Right now we stand at between 15% and 17% smartphones in the US market. 

Apple takes a 30% of all paid apps. 

What's also at stake with the debate surrounding apps vs. mobile Web is the focus and placement of mobile advertising. More apps means more ads in apps. Fewer apps or a weakening apps ecosystem over time would mean more attention and ad revenues would shift to the mobile Web. Of course ads will be in both locations. 

Kids, Mobile Phones and eReaders

Last month Mediamark released survey data on kids with mobile devices as well as demographic data on the 2.1 million owners of eReader devices in the US. Mobile phones are now deeply penetrated in the tween segment and eReaders are for the affluent according to the data, which follow. 

First kids and mobile devices . . .

The data come from the company's "2009 American Kids Study, with approximately 5,000 participants from households included in the Survey of the American Consumer." Here were the top activities among kids on their mobile phones:

  • Call my parents: 88.1%
  • Call friends: 68.1%
  • Emergency Purposes: 55.7%
  • Text Messaging: 54.1%
  • Play Games: 49.0%
  • Take Pictures: 47.8%
  • Listen to music: 34.4%
  • Picture messaging: 24.2%
  • Download ringtones: 16.5%

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Mediamark says there are approximately 2.1 million US adults who own eReaders. The firm said that owners are "more likely than the average adult to be well-educated and have high incomes . . .They are also far more likely to be heavy Internet users." This of course makes sense, given that these are largely luxuries or "frivilous" devices right now. 

Percent More Likely Than Average U.S. Adult to….

  • Have accessed the Internet outside the home via WiFi or wireless connection (in last 30 days): 199%
  • Have household income of $100,000 or more annually: 87%
  • Have accessed the Internet with a cell phone or other mobile device (in last 30 days): 154%
  • Be a Heavy Internet User: 116%
  • Have a Bachelor’s or Post-Graduate Degree: 111%
  • Be between the ages of 35-54: 20%
  • Be male: 16%

According to Mediamark:

At 56.3% of e-reader users, men outnumber women (43.7%).  Adults ages 35-54 are the “sweet spot” for this product, as they are 20% more likely than the average adult to own an e-reader.

These data from from MRI's Fall 2009 Survey of the American Consumer, which is based on 26,000 interviews of US adults. 

Gartner Predicts Mobile Web Beats PC by 2013

Among the many Gartner IT-related predictions the company asserts that mobile Web usage on a global basis will exceed that of the PC by 2013 -- three years from now:

By 2013, mobile phones will overtake PCs as the most common Web access device worldwide. According to Gartner's PC installed base forecast, the total number of PCs in use will reach 1.78 billion units in 2013. By 2013, the combined installed base of smartphones and browser-equipped enhanced phones will exceed 1.82 billion units and will be greater than the installed base for PCs thereafter.

Mobile Web users are typically prepared to make fewer clicks on a website than users accessing sites from a PC. Although a growing number of websites and Web-based applications offer support for small-form-factor mobile devices, many still do not. Websites not optimized for the smaller-screen formats will become a market barrier for their owners — much content and many sites will need to be reformatted/rebuilt.

There's no question this is true in developing countries. However it's unlikely to be the case in the West.

Today there are approximately 198 million Internet users in the US; there are just over 70 million mobile Internet users. It's very likely that number will grow to 100 million at some point this year. Accordingly the mobile Internet audience will be roughly half of the PC Internet in the US. The numbers are probably comparable in Europe.

But the lesson is not whether the Garnter prediction is technically accurate. The lesson and takeaway is: prepare for the mobile Internet today. Because there will be a time relatively soon when a substantial amount of traffic -- if not the majority -- is coming from smartphones and other mobile devices.