The new iPhone 3Gs is a lot more location savvy. For example:
In particular, on the last point, location in the browser means that publishers and websites can localize their content, functionality and potentially ads through the browser. They no longer have to build apps to capture the phone's location awareness. This is a big deal for both the user experience and for publishers/marketers potentially.
Users will still need to opt-in to share their location. However the experience will be simple as with the current "X would like to use your location" message for apps.
Rather than driving or boosting "local search" this will allow location to be more seamlessly integrated across mobile sites and into the broad user experience.
Coming out of its conference last week the MMA offered estimates that mobile ad spending would grow from roughly "$1.7 billion this year to $2.16 billion in 2010," according to coverage of the event in MediaPost. The MMA simultaneously released a survey in which it found that 50% of brands and agencies were doing some advertising or marketing in mobile:
Brands have reportedly embraced mobile more than agencies, half of which still view the medium as "experimental" according to the survey findings. However, despite very strong ROI metrics in the market, most respondents said they were only having "average" success with the medium according to the MediaPost coverage.
Perceptions of "average" success represent generally bad news for mobile, which has to sell itself either as a superior medium or perhaps more realistically as a way to extend other advertising and/or reach tough-to-reach audiences.
A related story coming out of the conference was this one about the need for more than clicks (or calls) to define ROI in mobile: Brands need to reinvent ROI metrics for mobile: MMF panel.
The danger in mobile is that because the click or CTR is the currency of online marketing (and so familiar and accepted by marketers) it will creep over into mobile -- it already has. But the click is generally a myopic measure of the success of a campaign and should only be used to define ROI in purely direct response contexts.
AdMob has benefited tremendously from the success of the iPhone and has introduced formats and innovations specific to the device. Most recently the company unveiled an "exchange" that enables developers to use excess ad inventory to drive more apps downloads. Now the company is adding new, richer ad units for the iPhone based on advertiser feedback and requests, according to AdMob VP Jason Spero.
The new units enable marketers to add a search box to banners or to send users directly to social media sites such as Facebook or Twitter. In a screenshot provided by AdMob, here's an example of a Zappos ad that sends a user to its Twitter account to follow the company:
The same thing can be done for fan pages on Facebook. That makes for some very interesting "cross platform" possibilities in terms of customer acquisition and loyalty (e.g., "follow us on Twitter to receive offers and deals").
A second new type of ad unit enables consumers to search directly within a banner. While this has been done for some time in rich media units on the Internet it's novel in mobile display. Here's another screenshot from AdMob showing an eBay ad:
One could imagine this being used very effectively in a vertical context as well: think travel, automotive, real estate. When I spoke to Spero yesterday I immediately thought of Bing, the new Microsoft search engine, which might want to use these units to get people to try search from their iPhones. Online Microsoft is in fact using rich media that invite peole to search Bing within the ad unit (I saw these last night but couldn't find examples this morning).
Spero agreed with my hypothetical regarding Bing but didn't confirm that Microsoft was an advertiser. It would be fascinating (for several reasons) if Microsoft were to use AdMob ad units on the iPhone to try and attract new search users to Bing. Let's wait and see.
The new ad capabilities are tied to iPhone OS 3.0.The ad units will be available for marketers in roughly a month.
Coupons, deals and offers are consistently regarded with more consumer interest and less "hostility" than other forms of mobile advertising. When you ask consumers in the abstract whether they're interested in ads on their phones they typically say "no" or "not at all." More experienced or sophisticated users with smartphones are more open to mobile advertising and generally more engaged. However the concept of mobile advertising (vs. the experience) is often distasteful to users.
In previous research Jupiter (now part of Forrester) found that 30% of consumers had some interest in mobile coupons. Last year in our own survey, we found that closer to 43% were either "somewhat interested" or "very interested" in mobile deals/offers. And SMS marketer HipCricket had almost identical results to ours in its own survey last year.
In our most recent survey (3/09) we found that 57% of respondents agreed "strongly" or "somewhat" with the statement: "I'm interested in any ad that offers me a discount or way to save money."
ValPak found dramatic results when it revamped its mobile site to make it more user-friendly. And coupon interest on the PC has been growing remarkably this past year. So there's no question in my mind about consumer interest. However, there have been many challenges with mobile couponing on the merchant side, both from an infrastructure perspective and in terms of a practical POS sale entry. There are also some residual merchant concerns about fraud, although those will disappear over time.
Mobile loyalty marketer Tetherball has just introduced something unique in the US market: RFID-based mobile loyalty/couponing. There's some complexity here but the system is very interesting. Here's how the press release explains it:
Tetherball’s unique 360˚ approach helps clients "tether" their brand to target audiences by identifying what their customers want and delivering mobile campaigns that interact with the ultimate call to action through permission based mobile coupons, mobile rewards, mobile sweepstakes and mobile notifications. Integrating traditional marketing methods such as in-store advertising, customers are engaged to sign up for mobile loyalty rewards programs offering promotional discounts. Upon joining, customers are given a Tetherball Tag™, a tiny RFID chip that is easily affixed to their mobile phones, which uniquely identifies them through Tetherball’s sophisticated technology platform. Tetherball clients are then able to send offers to their customers via standard text messaging. Offers are redeemed electronically using existing in-store RFID point of sale terminals or stand-alone RFID kiosks provided by Tetherball.
Mobiquitous™, a patent-pending real time web-based reporting system, delivers detailed visibility and analytics into coupon redemption rates and overall program performance. Whether it’s reporting at a campaign level, geographical level or for a specific period of time, Mobiquitous provides clients with “real time visibility” so that they can adjust quickly and leverage the real time nature of mobile marketing.
Essentially a customer is prompted to sign up for a mobile loyalty program (as part of that s/he affixes an RFID tag to his/her phone). She later gets an SMS message (targeted based on a range of parameters) and is given an incentive to visit a local quick service (fast food) restaurant -- a coupon. The user swipes their phone with the RFID tag in front of a physical kiosk and gets a paper coupon, which is printed out, to present at the register.
In one sense this isn't a "mobile coupon" program because the coupons themselves aren't mobile. The prompt and notification of the deal is however.
I spoke last week with Jay Highley, formerly of ChaCha, who is now President of Tetherball. He conveyed some of the results of the program, which has been quite successful and been running for some time. He said that the company has tried all the existing approaches to mobile couponing and is convinced that this addresses the deficiencies that they've found. Quoted in the release, Dairy Queen said:
Due to the success of our program, we now average over 900 members per store and continue to see solid growth in membership and redemption rates - which is making a measurable difference in our year over year traffic and revenue.
Highly says the program is really about loyalty and not about couponing. When I asked him about the challenges of getting all these kioks installed, Highly said that the cost was inexpensive and the merchants liked the kioks because it removed the confusion of mobile coupon redemption from the register line and simplified the process. He added that the kiosks themselves in the stores become marketing vehicles for the program: people wonder what they are and investigate.
Highly stressed also with me that this solves all the current challenges of mobile couponing: fraud, tracking, redemption. There can be no fraud because the system knows whether the user has already taken advantage of the offer and so on.
We're likely to see lots of innovation around RFID and mobile marketing in the next few years. But this is a pretty interesting example already in the market.
Related: Here's CBS News' piece on Tetherball.
We've written in the past about how text messaging (or barcodes) can add both tracking and a dynamic promotional element to traditional media, including newspapers, radio, TV and, in this case, outdoor. Yesterday CBS announced a new program called txt2go:
The program, called txt2go, will include a text keyword on advertiser signage that the public can use to access marketing messages from the client, including special offers and promotions. The interactive feature enhances an advertiser's ability to connect with prospects and deliver messages with more relevance and a measurable ROI, in addition to building a long-term database of interested consumers.
In launching txt2go, CBS Outdoor becomes the nation's very first out-of-home media company to provide a complete text messaging solution for its clients. The add-on feature creates an affordable new avenue for advertisers looking to package into their media features like digital couponing, sweepstakes, direct response and point of purchase. The technology will allow advertisers to track responses to their marketing in real time.
Expect other outdoor media companies to follow suit. (This is also being done with digital OOH.) Eventually most traditional media will use mobile to track effectiveness (much like call tracking has historically been used). But the interactive element adds something truly compelling, the ability to associate dynamic promotions with otherwise static media.
NearbyNow has also been doing something similar with some of its retail customers on their outdoor ads.
Ahh the coupon space . . . Newly resurgent online it represents both danger and opportunity.
I just discovered another mobile coupon provider: Coupious. The company is offering location-enabled mobile coupons as a marketing vehicle for local businesses. Right now it's only in a single market: West Lafayette, Indiana.
With slick apps for the iPhone and Android, the company's "infrastructure" is way ahead of its model/marketing. The model is CPA; local businesses only pay when coupons are redeemed. While that model is relatively easy to sell as risk free and is easy to track and prove value accordingly, the challenge is going to be sales and inventory. Cellfire (focused on nationals) has had mobile coupons forever but has yet to really gain traction because it's had very few vendors/companies providing coupons, although that may be changing. More recently it's beefed up its coupon inventory with CPG content.
Many companies have tried to crack the SMB market with coupons and it's very tough. To name just a few examples, there was Zixxo (now done, acquired by MSFT) and more recently there was Dizgo (Boulder, CO; not sure the status) and 8coupons in New York (still at it). The problem that all of these and others who cater to SMBs confront is scale. Sales generate inventory, which gets distribution and consumer attention.
Even Google has fumbled local coupons pretty badly.
Larger, more established companies are at a big advantage in the segment. Companies such as ValPak and RetailMeNot are in a much stronger position. ValPak deals with SMBs but it has what amounts to a national "feet on the street" sales force (though the business is franchised). Smaller companies need to align themselves with established companies or piggyback on others' sales channels.
There's no question regarding the opportunity and consumer demand. I recently wrote about ValPak's early findings in mobile:
I was told that for every four site visitors to ValPak.com on the PC the company sees one coupon print (25% response/conversion) on average. But in April, with a smaller base, the company saw four coupons selected/downloaded for every mobile site visitor (400% response/conversion). This grew from 200% in March.
Coupious needs to do distribution deals both for its advertisers and as a way to get other content into its apps in the near term. That's because people won't go to a party when nobody's there yet.
The Associated Press put out a release summarizing data from a year of being on the iPhone and more broadly in mobile. Here are some of the numbers from the release:
We wrote about the AP iPhone app when it launched (Verve Wireless provides infrastructure).
Steve Smith in his "Mobile Insider" column this week writes about newspaper and magazine opportunities to "re-establish" themselves in mobile:
[M]edia brands have a golden opportunity on mobile to reestablish some of the brand equity and loyalty they may have lost in the commoditized content environment of the Web. There are aspects of mobile that actually replicate the disappearing print world very effectively.
I agree and wrote something similar regarding newspapers in 2007:
Mobile now offers an opportunity for newspapers to get out in front of the market and establish the kinds of relationships with mobile consumers they probably wish they had done more proactively online . . . The analogy between the state of mobile and "the early days of the Internet" is a strong one, although there are some key differences. But getting out in front of mobile now gives newspapers a chance to rectify mistakes of the past.
In the past year most major news organizations have established themselves in mobile and even have iPhone apps in many cases.
Yahoo announced that it was going to incorporate third party ad technologies into its dynamic "Smart Ads" platform. The first two partners are Teracent and Tumri. As explained in the press release:
Yahoo!`s new Smart Ads program will help marketers to develop Smart Ad campaigns quickly and execute them at scale across personal computers and mobile phones in North America. Yahoo! will consider expanding the program to international markets in the future.
Smart Ad campaigns use ad-optimization technology to create a near-limitless variety of creative executions through a combination of offers, colors, images and messaging in real time. These combinations can be finely tuned to match customized messages with users, helping marketers to find the right ad for the right set of users and the right time. Testing of this initiative has already helped advertisers significantly improve campaign performance based on a variety of metrics, including click performance, conversion and overall return on investment.
For example, Yahoo! and Tumri worked with Hewlett-Packard to create a Smart Ad campaign that generated more than 20,000 unique creative experiences, reaching more than 140 million US users. This campaign documented a return on ad spend that was more than 20 times higher than their traditional display campaigns. HP has developed separate Smart Ad campaigns with Yahoo! and Teracent, also producing higher results than traditional campaigns.
While this is all part of Yahoo!'s YOS movement toward openness, it's not entirely clear to me why Yahoo! needs the third parties. Smart Ads was supposed to be able to do dynamic creative and targeting on the fly (from a 2007 release):
Yahoo! SmartAds is powered by Yahoo!'s leading behavioral, demographic and geographic targeting capabilities and aim to connect users with what they are looking for based on their distinctive, expressed interests. For example, if a user is browsing for hybrid cars in Yahoo! Autos and has selected San Francisco as their default location in Yahoo! Weather, Yahoo!'s SmartAds platform can assemble and deliver a display ad in real time that showcases a hybrid vehicle from a major auto brand, as well as local dealer information and current lease rates. This provides a relevant experience to the user and allows the marketer to reach a user who is likely to become a customer.
Dynamic creative and ad delivery is also being done by Placecast and is the key to truly delivering on the promise of LBS. Agencies and marketers can't create 300 separate ad units for every major city and ad copy permutation. Thus being able to deliver the right ad with the right copy on the fly is critical to creating the "inventory" required to capitalize on LBS whether online or, even more importantly, in mobile.
Here's more on how SmartAds works, with some examples, from the Yahoo! Search Marketing Blog.
In five years, more than half of mobile advertising, or 56 percent, will be spent on local search, even though local search will make up a little over 35 percent of all searches, according to [The Kelsey Group].
As bullish as we are on local/LBS and search, unless you define "search" in the most expansive way possible these numbers are incorrect. Mobile is going to see a broad and diverse array of ad and marketing spending, some of which will fall into search but it will run the gamut:
Local/offline will be a component of many if not most mobile campaigns but that doesn't mean "search" exactly.
I wrote two pieces this morning on Screenwerk of potential interest to LMS readers:
Placecast will serve opt-in SMS/MMS ads within advertiser-defined "geo-fences" supported by Alcatel technology. This is purely in the mobile context.
Both advance the cause of location-awareness and LBS advertising.
Last month Idearc launched its Superpages app for the iPhone. Now it has done the same for BlackBerry (Storm) devices, where it should see even greater visibility given the lesser competition in BlackBerry App World (Poynt is the top or one of the top LBS apps in BlackBerry right now).
In addition to the standard directory listings data, here are some of the enhanced features:
Here are some screenshots of the new Superpages BlackBerry app:
Yellow pages publishers have a great opportunity in mobile to (re)gain user adoption that to some degree they ceded to search engines on the PC.
Related: Yellowspaces launched an iPhone app (more from MediaPost).
I ran across some interesting LBS case studies from Useful Networks on the MMA site. They both involved mobile banner advertising and location, and featured a fast-food restaurant and an advertiser in the automotive vertical (a car brand) . . .
UN worked with a major U.S. Carrier and a major advertising network, who in turn worked with a major fast food restaurant chain (Trial #1) and a major automotive company (Trial #2), to launch two location-based advertising trials in the United States. The LBA Trials were centered around a Store Finder page, one of Useful Networks’ AdWhere products, and were designed to test and prove the added benefits that location-enablement brings to mobile marketing campaigns . . .The end user experience involved two call-to-action banner ads displayed on the carrier’s mobile portal enticing the customer to find the two brands’ store locations. Although both banner ads were virtually identical (except for the opt-in language featured on the location-enabled banner ad), each banner ad resulted in a different after-the-click experience.
Brand #1 – Quick Service Restaurant Vertical: ~100% of those users who clicked on the location-enabled banner ad saw the fast food restaurant’s Store Finder page. In contrast, only 28% of those users who were directed to the manual zip code entry page actually submitted their zip code and viewed the brand’s Store Finder page. Stated differently, the non-location enabled banner ad resulted in a 72% abandonment rate.
Brand #2 – Automotive Vertical: ~10% of those users who were directed to the manual zip code entry page actually submitted their zip code and viewed the automotive company’s Store Finder page (compared to ~100% of those users who clicked on the location-enabled banner ad).
The bottom line here was that the location-enabled banners drove 3X to 10X higher conversion rates. Read the full case studies here.
Similarly 1020 Placecast reported, based on A/B testing, a 50% to 100% lift in conversions, when location is added, in a recent campaign for a rental car company that featured both online and mobile components.
Last week Google announced barcode scanning for products on Android phones (right now the G1 in the US and Magic in the UK):
After you've installed the application, go back to Product Search in your browser and tap on the 'Scan Barcode' button again. Select "Use by default for this action" and tap on the Barcode Scanner option. After the app opens, center the red line over the barcode and hold the phone steady. When the barcode is read successfully, you'll see a Google Product Search results page back in the browser.
This is not to be confused with ShopSavvy for Android, which also uses barcode scanning and offers local store inventory data. Barcode scanning apparently doesn't work right now on the iPhone because of the quality of the camera (at least that's my understanding).
One of the things that I've been thinking for a long time is that the camera will eventually be used as a "search" tool -- as a way to obtain information more quickly and directly than keying in queries or even using voice. It remains to be seen but movement is in the right direction; there remains a bunch of work to be done on "infrastructure" issues, regarding standardization and pre-installed software.
But here are the forms camera-based search will eventually take:
All of these leverage the camera's ability to take in information and then potentially deliver very exact or complete data on the back end, beyond what a user could independently get with a conventional search approach.
It's potentially quite compelling as a user experience and could trump conventional search in many different scenarios. But it also illustrates the larger point that "search" on mobile phones is going to be a multi-modal experience, rather than a uniform one as on the PC. In as few as five years we're simultaneously likely to have:
The use cases will be both device specific and situational. One way to compete in mobile search is to push into these non-traditional realms more aggressively.
WhitePages is available across most of the major smartphone platforms, as well as at m.whitepages.com. Now it has "circled back" to the iPhone with an upgrade that does a few new things. In the business search realm, specifically, here are the new features:
The sponsored results I observed were from Citysearch, although Whitepages works with mutiple partners.
Finally, here's a video showing the new iPhone app in operation.
Mobile social network Brightkite and research firm GFK put out some interesting numbers around mobile advertising today. More people are seeing mobile ads:
Another number from their research regarding LBS: 14% now use one or more location based services (peaking at 38% of iPhone users).
Our recent research showed that only 11% of North American mobile users in March recall seeing advertising. However, consistent with the GFK data, the number is larger for smartphone users.
Yesterday I was attending BMO Capital Markets' advertising and marketing conference in New York. The lunch keynote was an interview with Wenda Harris Millard, former chief sales officer for Yahoo!. She spoke about the range of challenges facing advertising today and the difficulty of reaching audiences and getting attention.
In that context the "ads as apps" phenomenon we've written about in the past is fascinating. Here the ad is a piece of content or deeply integrated into the content (e.g., Kraft's iFood Assistant). Another such iPhone app from fast-food restaurant Hardee's is profiled in a piece appearing yesterday in the Wall Street Journal:
Inc., based in Carpinteria, Calif., recently tried iPhone advertising. To promote the Western Bacon Thickburger at its Hardee's fast-food chain last month, CKE launched an iPhone application called iBurger.
People who download iBurger can tap on the iPhone's screen to open a Hardee's box containing a burger photo. They can also take "bites" out of the burger by making lipsmacking sounds into their device's microphone.
The objective of the campaign is to reach 18- to 34-year-old males who are increasingly difficult to target via other media but are often early adopters of technologies like the iPhone. (However, I sat next to an elderly couple at a play recently and both had iPhones.)
Here are some screens from the app, which allows you to interact with and "eat" the burger. You actually have to verbally "munch" or chew to make the burger disappear.
The point here is to highlight the compelling creative -- if you like burgers that is. The (major) flaw is that it appears to be a pure branding campaign without a restaurant locator.
As we've discussed before, mobile ad campaigns (right now) consistently outperform other digital media (read: Internet). But those data aren't by themselves going to convince people to do mobile ad campaigns. And even beyond reaching hard-to-reach demographic segments, JumpTap's Paran Johar made the point at our Internet2Go conference earlier this year that agencies must recognize compelling mobile ad creative opportunities to get excited about mobile.
Clearly the "ads as apps" phenomenon offers that possibility.
Pandora was the top free app on the iPhone in 2008. And being on the iPhone has dramatically accelerated Pandora's exposure and business. I now see display ads with great frequency on the device while I'm listening to Pandora (Google AdSense for Mobile). I'm also struck by how many of them are geotargeted. Their "relevance" is still lacking in many cases, but I'm watching the ads get more frequent and more relevant.
MG Siegler at TechCrunch has an interesting post about how much music buying Pandora is starting to drive, especially its iPhone app:
Users are buying about a million songs a month now from these affiliate links on Pandora, CTO Tom Conrad tells me. Of those, a solid 20% are coming directly from Pandora’s iPhone app, which includes an easy link to open the iPhone’s iTunes app, and buy a track. That’s really impressive considering that it’s just one phone that a relatively small percentage of their users use.
Urbanspoon, recently acquired by IAC, owes its entire business to the iPhone and the PR it got from being on the device (even though it has a PC site). Were it not for the iPhone Urbanspoon would have been just another restaurant site. Similarly, Pandora has been "transformed" by being on the iPhone, even though it also offers other smartphone clients.
Vodafone in the UK is apparently going to end its exclusive ad sales relationship with Yahoo! and reach out to other providers/channels/networks. The two companies reportedly will continue to work together but the exclusive dimension of the relationship will end.
Yahoo! has more direct operator relationships on a global basis than its major rivals. For the time being the carriers still see the greatest reach to mobile audiences, although over time that will change as more people shift to smartphones and greater direct mobile Internet adoption accordingly.
According to a story appearing in MediaPost this morning, Interpublic's Magna Global research and forecasting unit has revised downward a mobile advertising projection. Despite this the company remains very bullish on the segment. However Magna's numbers are smaller than many other firms issuing mobile ad forecasts. Here are the numbers as presented in the article:
U.S. advertisers are projected to spend $229 million on mobile media this year, up 26% from $169 million in 2008. Those numbers have been revised downward from Magna's last forecast in July 2008, when it projected that mobile ad spending would rise 43% to $298 million in 2009. Even so, Magna now expects mobile ad spending to nearly double by 2011, when it will reach $409 million.
This forecast is US only and it's not clear what is included or excluded from the piece. It's likely that this doesn't include search ad revenue attributed to mobile. I'm trying to get a look directly at the numbers from Magna. Here's the Magna chart showing the projected revenue growth:
Update: I got a copy of the report. It does include search apparently. Here are some excerpts that speak to assumptions:
As carriers seek to drive revenues from data services, consumers will increasingly be incentivized to select smart-phones as their primary mobile devices.
Mobile ad networks represent by far the largest sub-sector within mobile advertising, and the greatest growth in absolute terms over the next several years. By aggregating billions of advertising impressions on a monthly basis, ad networks represent the most efficient way to sell the largest possible collection of audiences, and thus have become the primary beneficiaries of increasing mobile web consumption.
Other impression-based inventory (such as that offered by online portals, publishers or mobile carriers) should post solid growth, but fragmentation will hinder large-scale buying except where campaigns are intended to be highly targeted or integrated with efforts on other more traditional media. SMS advertising should perform more strongly, with long-term growth rates similar to ad networks. Text messaging platforms represents the best near-term potential for advertisers who want to use mobile devices to support broad-reaching marketing campaigns. This contrasts with slower growth rates for other more narrow-reaching types of mobile media (such as mobile search, in-call media, mobile video, mobile coupons and mobile gaming).
We absolutely agree that SMS is the entry point for most traditional marketers looking to get into mobile. I would probably be somewhat less skeptical of mobile search since there's a large, installed base already there and reasonable pent up demand from search marketers not currently doing anything in mobile:
Q: How interested are you in being able to serve geographically relevant advertising to mobile search users? (Scale of 1-5, 1=lowest, 5=highest)
Source: SEMPO/Radar Research (2009)
By now you're read it, Verizon and Apple are allegedly talking at a "high level" about bringing the iPhone to the largest US operator. According to USAToday:
The New York-based telecom entered into "high-level" discussions with Apple management a few months ago, when CEO Steve Jobs was overseeing day-to-day business, these sources say. They declined to be named because they aren't authorized to speak publicly.
Verizon CEO Ivan Seidenberg hinted at this in remarks to the Wall Street Journal roughly a week ago:
Mr. Seidenberg also addressed the notion of Apple Inc.'s iPhone ever coming to the Verizon Wireless network, saying it is more likely that Apple would be willing to work with the carrier under the fourth-generation, or 4G, network, which follows the same technology standard as AT&T Inc.'s 4G plans. He said Apple never seriously considered making a CDMA version of the iPhone because it didn't have as wide a distribution opportunity.
However on the recent Apple earnings call, COO Tim Cook seemed to reaffirm Apple's relationship with AT&T. I didn't listen to the earnings call but according to ZDNet, Cook described AT&T as “the best wireless provider in the U.S.” and further said the company does not plan to change partners.
Some people are speculating that this rumor has been floated to make AT&T nervous, given how well the iPhone has performed for the carrier. However, I doubt that's the case.
If the USAToday report were true, there would be a number of technical issues and challenges to overcome. Verizon's network is CDMA while the iPhone uses GSM. It may be that the alleged talks contemplate a couple of years down the road with LTE/4G is rolled out and the AT&T contract extension has expired.
Related: iPhone appears to drive data-plan adoption at O2 in the UK vs. other carriers.