Data And Forecasts

Tablets 'Shipment' Numbers Inconsistent with Traffic Reality

I'm a big opponent of using "shipments" as an indicator of market share. It may be a directional indicator of market share in some cases. But there are times when "shipments" is simply the wrong metric. IDC's latest tablet numbers offer a case-in-point.

The firm reported the following tablet shipment figures globally for Q1: 

  • Android -- 56.5%
  • iOS -- 39.6%
  • Windows -- 3.3%
  • Windows RT -- 0.4%
  • Others -- 0.2%

Basically the positions of Android and iOS tablets have reversed since last year. Shipments are put forward as a proxy for market share by IDC. However that's a dubious proposition at best. Shipments do not equal sales, let alone usage.

The following chart reflects North American tablet traffic share as of March, according to Chitika. After the iPad's 82%, Kindle Fire has a 7% share of traffic. Samsung Galaxy tablets come in at 4.3%. Needless to say these actual traffic data show a massive discrepancy vs. IDC's shipments estimates.

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Below is StatCounter data from 2012 (via Royal Pingdom) -- I was unable to find more recent global traffic data. These data reflect something very consistent with the Chitika data above.

In these various geographic markets the iPad is generating around 80% or more of tablet traffic. Even if we assume iPad share has fallen by 10 points since last year, these data are still a radical departure from the IDC figures. 

 tablet OS faceoff

Undoubtedly lower-priced tablets and the sheer proliferation of devices will necessarily diminish the iPad's "shipments share" over time. But it remains to be seen how actual usage is impacted. For the moment market share (as measured by consumer usage and traffic data) looks nothing at all like IDC's projections.

Facebook's Q1 Mobile Ad Revenues: $373.5M

Facebook announced Q1 revenues of $1.46 billion and net income of $219 million. Most usage and engagement metrics were up: daily, monthly and mobile active users. On the latter point Facebook announced 751 million mobile active users, up from 680 million in Q4 2012.

Mobile only users were 189 million vs. 157 million in Q4 2012.

Total ad revenue in Q1 for Facebook was $1.245 billion, which was 85% of total revenue. Of that $1.245 billion ad revenue, 30% was mobile. That's up from 23% in Q4. What that means, as a practical matter, is that Facebook made $373.5 million in mobile ad revenue in Q1.  

Facebook Q1 revenue 

Facebook mobile users

Facebook COO Sheryl Sandberg characterized Facebook is a “mobile-first” company and offered several examples of the company's mobile success during the earnings call. For example, she said that "3,800 mobile app developers used these ads to drive nearly 25 million downloads."

Facebook's FY 2013 global mobile ad revenues will probably land somewhere between $1.6 and $1.9 billion.  

Within 24 to 36 Months Mobile Internet Penetration Will Overtake the PC

The T-Mobile-MetroPCS merger is now complete. The newly combined company, which is majority (74%) owned by Germany's Deutsche Telekom, debuted on the New York Stock Exchange today under the ticker symbol TMUS. The stock was up about 6% in early trading.

Post-merger, here are the most recent subscriber counts for the four major US wireless carriers: 

  • AT&T -- 105 million
  • Verizon -- 99 million
  • Sprint -- 54 million
  • T-Mobile -- 43 million

That makes a total of 301 million accounts, not including smaller regional carriers.

There are approximately 312 million people in the US. Some percentage of the 301 million are obviously second accounts. Measurement firm comScore counts the total US wireless population at 235 million, whereas CTIA says that, as of Q2 2012, there are 321.7 million "wireless subscriber connections."

The "right" number is probably about 250 million. Smartphone penetration is 57% according to comScore and roughly 60% according to Nielsen. Accordingly the US market is closing in on 150 million smartphones. Total US internet penetration stands at 221 million according to comScore. 

Within three years (perhaps 24 months) there will be more "mobile devices" and wireless internet penetration than PC internet users. Just under 40% of total media time is now spent on mobile devices (including tablets). However current mobile ad spending is only 9% of the US digital total according to the IAB. 

Apple Sells More iPhones, iPads than Wall Street Expected

Apple has just released earnings. The company reported quarterly revenues of $43.6 billion. Second quarter revenues in 2012 were $39.2 billion. Total 1H 2013 revenues were $98 billion. 

There were better-than-expected iPhone and iPad sales in the quarter. Gross margins came in at 37.5%. This compared to 47.4% last year.

Now the device numbers:

  • iPhone: 37.4 million (vs. 35.1 million a year ago)
  • iPad: 19.5 million (vs. 11.8 million a year ago)
  • Macs: "Just under 4 million" sold last year (vs. 4 million a year ago)
  • iPods: (5.6 million; iPod Touch represents 50%+ of sales)
  • iTunes: $4 billion (new sales record) 

On cheaper devices: There were lots of questions during the earnings call about Apple's competitive position and ability to compete in markets around the world. CEO Tim Cook repeated several times that an aggressively priced iPhone 4 is the crux of Apple's strategy to attract first time smartphone buyers in developing markets. 

This is a product, however, that's two generations old. While Apple says it won't make "cheap products" it's very likely that Apple will develop a less expensive iPhone to compete in those markets where "first time buyers" can't afford the state-of-the-art iPhone. 

On mobile payments: Tim Cook was asked about getting into mobile payments. Cook responded that the market was in its infancy, implying that Apple would be waiting to enter it in earnest (if at all). 

On the prospect of a larger iPhone screen: One of the financial analysts asked about a larger iPhone display. Cook respondend, " The iPhone 5 has the absolute best display in the industry." However he acknowledges that "some customers" value screen size. He explained that larger displays require trade-offs in quality. He then said that the company won't ship a larger iPhone display "while these trade-offs exist." That in turn implies that a larger display may be on the iPhone 6 or a later model. 

Report: Samsung Sees Almost 70% of Android Ad Impressions

Samsung is the undisputed ruler of the Android roost. On a global basis it's the dominant handset OEM and there's no real challenge in sight -- other than the iPhone. Samsung continues to eclipse fellow Android manufacturers LG, HTC and Google's own Motorola in terms of sales and market share. 

In that context one might expect Samsung to dominate Android-based advertising. Indeed it does. Mobile ad platform Velti has released data that show that Samsung mobile devices see nearly 70% of all Android ad impressions in the US market. This refers to display advertising but it probably extends to search impressions as well.

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However on the tablet side, Samsung is second behind Amazon in the US market. There Samsung has had much less success and has yet to product a breakthrough device -- although its Note "phablet" has done well.

The following chart shows Android market share by ad impressions. 

Screen Shot 2013-04-23 at 1.04.39 PM

Yet when it comes to ad impressions on tablets the iPad and iPad Mini control more than 95% of the market according to Velti's network data. Chitika, another mobile ad network, puts the iPad's traffic share at about 82%, significantly lower though still dominant.

Screen Shot 2013-04-23 at 1.05.14 PM

There has been some "cannibalization" of the iPad by its younger and smaller sibling. The Mini is less expensive and has lower margins than the iPad. Indications that the larger iPad's sales have declined in favor of the Mini have, to some degree, contributed to investor anxiety about today's Apple earnings (coming up shortly) .

Mobile Payments Growing but Still More Hype than Reality

Mobile payments -- as in buying things in a retail store with a mobile device -- still appear to be years away. Two weeks ago the IAB and InMobi released survey data that showed a range of payment and financial-related activities in mobile.

The survey, conducted in Q1 this year with roughly 1,200 US adult respondents, showed that there were pockets of mobile-financial activity: people capturing coupons, buying digital content and paying selected bills via smartphones. But the road to in-store mobile payments adoption is much longer (say 3 years or more).

In contrast to other types of "mobile payments" and financial services, mobile banking has taken off more rapidly than financial institutions anticipated. However mobile banking is really a case of people accessing information via tablets and smartphones that they already get from a PC. There's essentially no new behavior here, with the exception of mobile deposits (not yet widely performed). 

Are you aware of any mobile financial services features from your bank?

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Source: IAB, InMobi (n=1,242 US adults)

Capturing and redeeming mobile coupons was the most popular financial-related activity among this pool of respondents (57%). There's no surprise in that finding; mobile coupons are hugely popular.

There's also a significant amount of mobile bill paying (probably credit-card bill paying) according to the survey (46%). Mobile phone bill payment is also popular (42%). 

In terms of in-store/offline mobile payments, 34% of these respondents said they had conducted such a transaction. This number is probably higher than the "real" number if we were able to look at a nationally representative sample of mobile users. I suspect the number is much closer to 10% or 15% perhaps (unless everyone is talking about a loyalty app such as Starbucks).  

Have you ever used your mobile phone to make a payment? Screen Shot 2013-04-22 at 2.02.33 PM

Source: IAB, InMobi (n=1,242 US adults)

It would also be useful to get some additional insight into what "Paid a business for real-world goods/services by mobile" actually means. Unfortunately the survey doesn't further unpack the finding. For example, is it PayPal usage; is it use of a credit being accepted or read by a Square dongle? Is it a loyalty app, as I suggest above? 

Among financial-related apps, PayPal is easily the leader. (The company is now rolling out its in-store payments system through the Discover network.) In the chart below 37% of survey respondents said they had PayPal on their phones. The survey asks about "downloads" rather than active usage. Thus we don't know how often or whether people actually use these apps. 

Downloads without more insight into active usage is an almost meaningless statistic.  

Have you downloaded any of the following apps to help you make payments or keep track of your finances?
Screen Shot 2013-04-22 at 2.02.44 PM

Source: IAB, InMobi (n=1,242 US adults)

Square, which is probably the only other mobile payments brand known by consumers, stands at 8% penetration. This of course is not Square the credit-car-reading smartphone dongle, but the "Pay with Square" app that permits a "contactless" payment where both sides have a Square account. (The "Paid a business for real-world goods/services by mobile" answer probably includes use of the Square dongle.) 

Google Wallet seems completely stalled at 7%. The widespread availability of NFC in Android and Windows Phones is unlikely by itself to jump-start NFC payments in North America. However that could change if the iPhone 5S were to include the capability.

The data above present a picture of increasing, incremental usage of mobile financial services and "payments" by the US smartphone population. That will continue as more services adapt to mobile and consumers become increasingly comfortable with using their mobile phones for a range of transaction types.

However the much-anticipated day when everyone is carrying a digital wallet and using it to buy goods and services in the real-world is still much more hype than reality. 

IAB: US Mobile Ad Revs $3.4 Billion in 2012

Consistent with what could be projected from the 1H numbers the IAB released, the trade group reported this morning that mobile ad revenues in the US for 2012 were just under $3.4 billion. This number is below what many other firms had projected but still represented more than 100% growth.

Overall, mobile ad revenue constituted 9% of total internet ad revenues for the year, which were $36.6 billion. Retail and financial services are the top two ad categories. And over time more of that digital retail ad spend should migrate to mobile. Within a few years, we should probably expect that about 20% to 25% of the overal digital spend should go to mobile. That will still lag consumer behavior but be more in line with it. 

The following are the breakdowns by category and format for US online advertising as a whole: 

Screen Shot 2013-04-16 at 8.04.50 AM

There was no sub-category breakdown provided by the IAB for mobile. However search dominates, followed by mobile display. The full report, which isn't yet out, may provide further insight into the division of revenues. 

Low Awareness, Lack of Interest Plague BlackBerry, Nokia

It turns out that despite lots of media coverage and celebrity personality Alicia Keys as "creative director" most North Americans don't know about the launch of BB10. That's according to a survey commissioned by MKM Partners. The poll of 1,500 adult consumers (conducted during the past three weeks) asked about device adoption and future purchase intentions. It found, consistent with other data, much higher recognition and interest in Apple and Samsung. Others generally fared poorly.

The survey found that 51% of respondents owned smartphones, with 39% saying they bought their in the last six months.

Ownership breakdown by handset OEM: 

  1. 33% Apple
  2. 28.3% Samsung
  3. 9.9% LG
  4. 9.3% HTC
  5. 9.3% Motorola
  6. 4.4% other
  7. 3.4% BlackBerry
  8. 1.6% Nokia 

Current mobile OS:

  1. 55.1% Android
  2. 31.3% iOS
  3. 6.4% Windows Phone (higher than other surveys)
  4. 3.4% not sure
  5. 3.1% BlackBerry

Future purchase intentions:

  1. 44.5% “not sure” of next phone
  2. 19.6% said Samsung (Android)
  3. 17.7% iPhone
  4. 5.9% BlackBerry
  5. 4.4% Motorola
  6. 3.7% HTC
  7. 3.1% LG
  8. 0.7% Nokia

Asked about BlackBerry 10, 83% of respondents indicated they weren't aware of the launch. Asked about Windows Phones, 61% lacked awareness of the OS. When asked about interest in BB10/BlackBerry or Windows Phones the majority of respondents indicated indifference.

Not interested:

  • 68% not interested in BlackBerry
  • 63.9% not interested in Windows Phone

Separately investment firm Piper Jaffray conducted another wave of its research among US teens about device ownership and future intentions.

piper_jaffray_teen_survey_apr13

Notable findings include the following: 

  • 51% of surveyed teens owned a tablet
  • 50% owned smartphones

In both cases iOS was dominant. However Android has made slight gains in both smartphone and tablet categories since the previous survey was conducted last fall. And aggressive pricing, especially in the tablet category, may drive Android penetration up vs. iOS among younger users.

Mobile Display Ad Estimates: Social Sites Beat the Networks?

A week ahead of the actual mobile ad numbers from the IAB IDC has released its estimates of 2012 US mobile advertising, as well as projections for 2013. The company says that mobile ad revenues were $4.5 billion in 2012 and will reach $7 billion this year. Our view is that the actual 2012 number will come in just under $4 billion. 

According to IDC, search advertising represented 61% of mobile ad revenues in 2012 or $2.8 billion, while display brought in $1.7 billion or 39%. Directionally those numbers are right though the precise proportions may be off. For example, IDC's estimates of Google's share of search advertising is 79%, which is too low. It's more like 94%. 

The most interesting part of IDC's figures and analysis is its juxtaposition between social networks (publishers) and mobile ad networks. Here are IDC's 2012 mobile ad revenue estimates for the major social networks/publishers (Pandora isn't a social network obviously):

  1. Facebook: $234 million
  2. Pandora: $229 million
  3. Twitter: $117 million

And here are the IDC-estimated mobile display ad-network revenues:

  1. Google: $243 million
  2. Millennial Media: $151 million
  3. Apple: $125 million
  4. Jumptap: $90 million

The argument is that publishers/social networks have beaten the mobile ad networks. Online publishers essentially lost out over time to the ad networks on the PC internet because of traffic fragmentation and limited reach of most publisher sites vs. networks. The question is: will this happen again as real-time bidding and mobile exchanges become established? Or will major sites/publishers retain their ability to capture and control significant mobile ad dollars? 

One point to be made here is that sites like Facebook and Twitter offer a multiplatform solution (and so does Google) that enables marketers to reach users on the PC and mobile simultaneously and usually with a single buy and single ad creative. That represents an efficiency advantage over most ad networks. 

Assessing Dueling Mobile Ad Forecasts: $27B vs. $16.8B

Two mobile ad forecasts were released last week almost on top of one another: one from eMarketer and another from BIA/Kelsey (BIA). (IDC is slated to come out with theirs very soon.) The figures they project for mobile advertising in four years are $10 billion apart. 

In one way or another most forecasts turn out to be wrong. Forecasts typically either fail to anticipate technology shifts or they have the opposite problem. They are often aggressive in assuming how quickly technology adoption will happen or change the market. Think about past predictions regarding the rise of digial advertising and the erosion of traditional media. It's happening but years after many thought it would.

I've certainly been guilty of incorrect predictions and aggressive forecasts in the past. So I now generally prefer the IAB's methodology, which reports on actual revenues after the fact.

Mobile ad spending emarketer

Let's take a look at and compare the eMarketer and BIA mobile forecasts, which are strikingly different. BIA says that US mobile advertising in 2013 will be worth $5.4 billion and $16.8 billion by 2017. By comparison eMarketer is much more bullish, saying that US mobile advertising will be $7.3 billion this year and $27 billion by 2017. The 2017 number is almost certainly way too aggressive.

New York-based eMarketer pegged 2012 mobile ad revenues at $4.1 billion. However my view is that when the IAB numbers come out we'll see something closer to $3.5 - $3.8 billion. However it's possible that eMarketer has it right. Google told financial analysts several months ago that the company's mobile "run rate" was $8 billion globally (including non-ad revenue). 

Local vs National mobile ad spend BAI Kelsey

BIA has raised the amount of its overall forecast from last year considerably but dialed back somewhat the portion allocated to local. That's because the firm began to recognize marketers weren't buying local fast enough. SMBs aren't buying mobile ads directly and brands have only recently started to explore local targeting in earnest. Depending on several variables that may accelerate in the next 12 - 24 months. 

YP said that it had $350 million in mobile-ad revenue today. It's not selling mobile advertising directly to the company's mostly small business advertiser base. Rather this is how the company is allocating or attributing revenue from ads that appear on mobile devices but are originally sold as part of a broader package. 

The local portion of BIA's forecast is dominated by search advertising, which has been the major contributor to local-mobile ad revenues. BIA maintains the assumption that search will continue to dominate local advertising throughout the forecast period. And mobile paid search is consistently expected to have more than 2X local ad revenues vs. mobile display in the BIA forecast.

Share of Mobile Local Ad spend by Format BAI Kelsey

Yet there are many more display impressions (in apps for example) than search queries. I don't know ratio off the top of my head but it's quite significant. If we're going to see billions in local-moble ad revenue it can't all come from search queries on Google. (Almost all paid search revenue in mobile [95%+] will go to Google for at least the foreseeable future, if not indefinitely.)  

Today paid search represents just under half of all PC-based ad revenue. It's likely that will track with mobile over time. 

I do believe that location will increasingly be used by mobile display advertisers, networks and exchanges. But it will also be used together with other variables as a way to reach particular audiences. Location will be both simplified for advertisers and incorporated into larger mobile ad-targeting concepts ("context"). Thus location will be a layer, among other variables, in mobile display and probably not remain a single targeting methodology -- except in geofencing and related "conquesting" scenarios.

Emarketer projects that the majority of mobile revenues will be controlled by a small number of companies: Google, Facebook, Twitter, Apple, Pandora, Millennial Media and "other." Other includes a large number of companies, including Microsoft, Yahoo, mobile exchanges/DSPs and still others. 

mobile ad revenues by company emarketer

The collective "other" category above is probably much too small. However I do agree that a relatively small group of large companies with significant scale will control and collect the lion's share of mobile advertising in the US, just as on the PC. Google, Facebook and Twitter will certainly be among them. 

Google is accelerating the growth of mobile ad revenue with its recent introduction of Enhanced Campaigns, which will push more AdWords advertisers into mobile at higher CPC rates. And by bundling PC and tablet advertising together paid-search on tablets will also grow much more quickly. Location-based ad targeting on tablets is a bit of a wild card: location matters somewhat less on tablets than smartphones but the "ad canvas" is much richer on tablets.

Facebook has also been dialing up the amount of ad revenue it generates from mobile, simply by showing more ads in its apps. Home is a wild card and may or may not favorably impact mobile ad revenue for the company. 

What qualifies as a "mobile" ad may become murkier and more of an attribution question as in the YP example -- such as combined tablet and PC ads in search or Facebook ads that appear equally in mobile and on the PC. And what qualifies as "local" ad in mobile is also a bit of an issue. I would argue a local ad in mobile is one that includes an explicit location mention in the ad creative (or landing page). A "local ad" can also be one that has no location mention but uses explicit location targeting at a DMA level or "below." Ads that target by state, province or region should probably not be considered "local."

Google's Enhanced Campaigns and related simplification of media buying and location targeting will significantly boost ad spending attributable to mobile. I think however the eMarketer numbers for 2016 and 2017 are still too high. I also believe the BIA position that most mobile ads will be localized is also incorrect -- unless the definition of local is radically enlarged. 

Low-Cost Tablets to Accelerate Decline of PC Market

Last week there was a Reuters report asserting the next Google-ASUS Nexus 7 will have an improved screen and may cost as little as $149. The current entry level Nexus 7 is $199. Reuters also said that if it's not the new Nexus 7 than the existing tablet's price may be reduced. The current entry level Kindle Fire from Amazon (with ads) costs $159.

As this all indicates there's a kind of "race to the bottom" going on that may radically depress margins on Android tablets. Furthermore we're likely to see a decent $99 7-inch Android tablet in the next year.

Screen Shot 2013-04-07 at 7.19.32 AM

The growth of smartphones and the emergence of these reasonable-quality low-cost tablets such as the Nexus 7 are accelerating a trend toward mobile device adoption at the expense of PCs and further extending PC replacement cycles. In developing countries PCs will likely never reach penetration levels seen in North America or Europe.

In its latest device forecast Gartner joins the party, affirming what we already know about PC erosion in favor of smartphones and tablets on a global basis. In its projection Gartner sees Android as the big winner, effectively replacing Microsoft as the dominant OS on tablets and smartphones.  

Screen Shot 2013-04-07 at 7.02.46 AM

The particulars and timing of this forecast will undoubtedly turn out to be wrong. However the direction of the forecast is probably accurate. With its resistance to matching price competition (probably wisely) Apple iPads will not reach tablet penetration levels of low-cost Android based tablets (though the company is considering a lower-cost iPhone).

So far, Microsoft's "2.0" efforts in mobile, Windows Phone and Surface tablets, have only made modest gains in selected markets. However Microsoft still makes money from Android OEMs via patent licensing fees. If it has to rely on licensing the company's future will be pretty grim.

If these figures are anywhere near accurate tablets are poised to become the primary computing (and advertising) platform. Yet we're likely to see quasi-converged devices (i.e., tablets with keyboards like the Surface Pro) become laptop replacements in the near term.  

Despite Android's OS Lead, Safari Dominates Mobile Web Traffic

Here's another one of those surprising and paradoxical Android vs. iPhone reports: according to January comScore data Android's US smartphone share was 52.3% to the iPhone's 34.3%. However Safari's mobile browser share of US web traffic is now 62%.

This represents the combined smartphone and tablet market share for iOS, according to Net Applications. By comparison the Android browser had roughly 22%. Chrome (which may be on iOS as well) had about 2.5%. 

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Source: Net Applications

By comparison, according to StatCounter, the iPhone and iPod Touch combine for roughly 52% US mobile browser market share. Android has 37%. The iPad is not included in these data however. So it appears the two sources are generally in alignment. 

Screen Shot 2013-04-03 at 3.19.31 PM

Source: StatCounter

Despite Android's continuing market share gains and lead its users are much less active on the mobile internet than iPhone users. This is probably because the Android user base is more economically and demographically diverse than iOS users. 

On a related note, Google changed the way it calculates Android version share on its developer website. It has moved from total activations to Google Play visits to reflect more active and engaged users.  

More than Half of Twitter Ad Revenue from Mobile

A new forecast from eMarketer estimates more than half of Twitter's ad revenues (53%) will come from mobile advertising this year, up from virtually no ad revenue from mobile in 2011.

In total, eMarketer estimates global ad revenue at $528 million for 2013, pushing upward to $1 billion for 2014.

But ads on mobile devices are driving incremental growth over the next two years. By 2015, Twitter is expected to pull in $1.33 billion in worldwide ad revenue, more than 60% of which will come from mobile advertising.

TwitterMObile

The rapid growth in mobile ad revenue is due in part because "Twitter has ultimately benefited from the increased focus on mobile by competitors like Google and Facebook, which have both expanded their own mobile ad offerings and worked to convince advertisers to shift dollars to mobile devices," says eMarketer. Advertisers are clearly showing more interest spending money on mobile ads.

The report shows Twitter ad revenue is slowly shifting globally with 83% of 2013 ad revenue from the U.S., down from 90% in 2012.

iPhone Tops in Satisfaction Again, Nokia Beats Samsung

As Apple reportedly prepares to release a less expensive, plastic version of the iPhone to boost sales in the developing world, it's trying to strike a balance between cost and quality. It will simultaneously have to make the phone appealing (perhaps with a slightly different design and color) while not cannibalizing its flagship.

The perception of higher quality is one of the few remaining advantages that the device has over Android rivals, who over the past three years have dramatically closed the quality and features gap. Despite these gains, the iPhone has consistently beaten its smartphone competitors in customer service ratings from JD Power. The latest survey is no exception. 

Screen Shot 2013-03-22 at 6.33.48 AM

JD Power surveyed nearly 10,000 US smartphone owners. The satisfaction criteria, in order of importance, were the following:

  1. Performance
  2. Physical design
  3. Features
  4. Ease of operation

This is the ninth consecutive time that the iPhone has ranked #1. JD Power said the Apple device did particularly well in the areas of design and ease of operation.

In a bit of a surprise, Nokia edged Samsung in the survey. However Nokia has many fewer users (by an order of magnitude) than Samsung, whose Galaxy smartphone line is the best-selling Android handset in many markets around the world.

It's interesting that LG performed so poorly given the success of the LG-made Nexus 4, which repeatedly sold out and to date remains overall best Android handset on the market. In contrast, among feature phone OEMs, LG performed best, which is somewhat curious. 

Screen Shot 2013-03-22 at 6.34.07 AM

Apple iOS Devices Continue Market Dominance in Mobile Advertising

Mobile advertising and platform exchange firm Velti has released its monthly snapshot on the "State of Mobile Advertising" for February 2013.

Among the interesting tidbits, the report found Apple iOS devices accounted for a whopping 8 out of the top 10 mobile devices serving ad impressions. iPhone devices had a 37.4% share, while iPads comprised 17.2% of all impressions served in February.

And while Samsung Galaxy devices comprised less than 5% combined market share, the report speculates the release of Galaxy S 4 might significantly alter the mobile ad market in the coming months.

Velti_DeviceShare

In terms of market share by OS, Apple still clearly shows an advantage holding steady at around 65% for the month of February 2013.

Velti_iOSshare

One noteworthy datapoint in the report highlighted how weekends continue to see the highest levels of app usage, with Sundays accounting for 15.7% of all impressions served. The report stated: "Publishers and marketers should keep in mind daily usage patterns as an important factor in getting the highest return on clicks, and ultimately revenue, for their specific site or app."

Velti_DayofWeek

Velti’s "State of Mobile Advertising" report gathers data from the Mobclix Exchange and is provided on a monthly basis.

Report: iPhone Traffic Still Roughly 2X the iPad in North America

Recently there have been several reports starting to show that tablet (iPad) traffic is beginning to overtake smartphone traffic. For example, a report last week from Adobe found that, on a global basis, tablet traffic now exceeds smartphone web traffic (8% to 7%).

A new report from ad network Chitika, however, says that at least in North America the iPhone still generates roughly 2X the web traffic of the iPad. The iPad dominates tablet-only traffic with more than 80% market share. 

In late February, Chitika looked at traffic distribution from "250,000+ publisher websites." The company found that "iPhone users still generate more than two times the traffic of [ ] iPad users."

Screen Shot 2013-03-16 at 3.09.48 AM
The iPhone was responsible for 61.5% of North American web traffic from iOS and the iPad for just under 31%. The iPod Touch drove roughly 8% of iOS-generated web traffic according to Chitika. 

The Chitika report didn't look at engagement or time on site. The earlier Adobe report found that "on aver­age inter­net users view 70% more pages per visit when brows­ing with a tablet com­pared to a smartphone."

As tablet penetration grows, we should see its share of iOS and all web traffic commensurately grow. The interesting question is whether tablets are substituted in the home for smartphones or PCs. A recent Google-Nielsen report found that 77% of smartphone search activity happened at home or in the workplace (when people typically have ready access to PCs).

Users Prefer Apps to Mobile Sites But High Expectations Burn Developers

Many developers and digital marketers still cling to the assumption that HTML5 and the "mobile web" will eventually win out over native apps. There's a kind of logic to that position. However they may be waiting a very long time for that to happen.

As has previously been written, the overwhelming majority of consumer time spent with mobile devices is spent in apps ("4 out of every 5 mobile minutes," per comScore). And according to a new survey from Compuware the majority of international respondents (85%) preferred apps over mobile sites.

The survey had a total of just over 3,500 respondents from the US, UK, France, Germany, India and Japan.

Screen Shot 2013-03-14 at 12.12.02 PM

Despite the positive news for app developers the survey also had some harsh findings. For example 59% of respondents said that an app should load in two seconds or less. In addition, poor user experiences result in app abandonment, switching to competitors' apps, negative word of mouth and erosion of brand perception -- among other negative consequences.

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The most common problems encountered were freezing/crashing (62%) and slow load times (47%), as well as the more generic "didn't function as expected" (37%). A majority of users had encountered one or more of these problems in using apps. Users expect apps to load faster and perform better than mobile sites: "78% expect mobile apps to load as fast as — or faster than — a mobile website."

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Nearly 80% of the survey respondents said that they would give an app one (maybe two) more chances if it didn't work correctly the first time. And app-store ratings are being taken very seriously by users: "84% users say app store ratings are important in their decisions to download and install a mobile app."

The survey report cited third-party data for the proposition that the average number of apps on users' smartphones is 41.  

US Teens Go Online 'Mostly' through Mobile Devices

The key figure from a new US "teens and technology" survey by the Pew Internet Project is this: 50% of teens who own smartphones primarily access the internet that way. According to Pew (the data are from Q3 2012) 78% of US teens overall own cell phones and nearly half (47%) of them own smartphones.

I suspect if the data were from 2013, smartphone penetration would have easily crossed 50% because of Q4 holiday gifts. Among all teens (including those who don't own a cell phone), 37% own smartphones.

Pew teen mobile users

Part of the reason that US teens may rely more heavily on their mobile phones (and tablets) for internet access is that some do not own PCs or share PCs with their families. Thus mobile devices are more private and personal because they're not shared. Regardless teens' orientation to the internet is more mobile than their parents'.

The survey also found that 23% of US teens owned tablets (compared with 25% of US adults).  

As these teens "grow up" it will be interesting to see if they adopt a more "balanced approach" and access the internet equally from PCs, tablets and smartphones. I suspect their bias will remain toward mobile devices, with tablets taking the place of PCs for non-smartphone access. 

An October 2012 survey (n=7,700 teens) by financial firm Piper Jaffray found that Apple held an advantage among US teens:

  • 40% owned iPhones (representing a majority of smartphones)
  • Next phone: 62% were going to buy an iPhone, 22% Android
  • 44% reported owning tablets (72% of those were iPads) 

A Report for Those Who Doubt Mobile ROI

This morning Google released the results of an extensive study conducted among US mobile users with Nielsen in Q4 2012. The survey explores mobile search behavior in particular and uses a combination of interviews, online survey data, diaries and search query logs to get a holistic picture of search activity on smartphones. Tablets weren't part of this research. 

Among the many interesting findings there are two big ones that stand out: 77% of mobile searches happen at home or work, even when there's a PC nearby. And 55% of mobile-search related conversions (call, store visit, purchase) happen within "one hour or less" of query completion.

Screen Shot 2013-03-13 at 7.26.10 AM

These two stats illustrate two larger "truths" about mobile. The first is that mobile devices are increasingly "primary" for people as a method of internet access. Speed and convenience were cited by respondents as reasons for substituting a smartphone for a PC in a search context. 

Marketers need to be cognizant of the fact that large numbers of people will be using their smartphones (and tablets) at home to search for things, whereas before they might have used a PC. At work people may be motivated by other considerations, such as privacy, to use mobile devices vs. corporate-provided PCs. 

The other "truth" is illustrated by the 55% figure: conversions often happen very quickly after a mobile search. This reinforces the notion of the focused, "need it now" mindset of many mobile search users. Mobile searchers take a variety of actions after completing their queries. They go to websites and do additional research, they make phone calls and they go into stores. They buy things. 

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But marketers can't see most of that activity, hence the complaints about mobile ROI. Most marketers get confused and "lose the trail" when users go offline. You can track calls and site visits, you can capture email addresses and you can monitor e-commerce transactions via mobile. However it's challenging to get complete visibility on all the ways that mobile is influencing purchase behavior.

The slide above illustrates the range of activities mobile search triggers. But more importantly, Google and Nielsen found that 45% of mobile search queries were undertaken to help make a purchase decision -- so-called "goal oriented" searches. And most of these will result in a conversion, often offline. 

The totality of the data released in this study (download the pdf) show that mobile users are more focused and are typically farther down "in the funnel" than PC users. Mobile (search at least) is clearly driving lots of conversions. Marketers just need to open their minds about what constitutes a "conversion" and get creative about ROI and attribution. 

Otherwise, they're not seeing what's really happening with their customers and how critical a role mobile is playing in the overall marketing and sales process.

Report: Tablets Mostly Beat Smartphones for Ad (CTR) Performance

Many of the Q4 reports released by the ad networks and major agencies showed the growth of tablet-related ad spending. That's a trend that will further accelerate under Google's new "Enhanced Campaigns" regime in which tablets are grouped with PCs for paid-search advertising purposes. In other words, marketers cannot separate PC and tablet paid-search campaigns. 

Last week Adobe reported that tablets had passed smartphones for share of global traffic.  

13926_di_global_traffic_deviceIn many ways tablets are the new PCs, taking their place for many at home use cases. Tablet owners tend to behave more like PC shoppers, including displaying a greater willingness to covert online. By contrast, smartphone owners typically don't convert on the small screen making ROI harder to track for marketers targeting those devices. 

Because online conversions are more likely and prevalent for tablet users, the "danger" is that marketers will neglect smartphones or that smartphones will be "ghettoized" and considered good for only a limited number of purposes. In fact mobile/smartphone advertising is great for both DR and branding purposes. 

Mobile DSP Adfonic now offers data that show, across most categories, tablet advertising appears to outperform smartphone ads in terms of CTRs (though ultimate influence on conversions isn't measured).

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As the chart above reflects, "tablets achieve especially strong CTRs for advertisers in the Style & Fashion, Lifestyle & Health, Entertainment & Media, and Travel verticals." Smartphones are stronger in other categories such as retail and automotive. People tend to use tablets in the evenings and on the weekends. 

Over time marketers will determine which devices are better suited to which types of advertising. However companies need to have a comprehensive strategy that recognizes the "multi-screen" consumer, who will move from device to device before converting. 

Although Kindle Fire and Nexus 7 are gaining, Apple tablets continue to dominate web traffic. The following chart shows North American traffic over the past three months, comparing the top-three devices on Chitika's ad network.
Changes in tablet traffic Chitika