Mobile Advertising

Mobile Numbers from the Google Q2 2011 Earnings Call

Below are the substantive comments made by Google CEO Larry Page and other Google executives about Android and mobile from yesterday's Q2 earnings call. I've cut out all the bloat, PR spin and puffery.

Google CEO Larry Page: 

I actually have a new metric to report in Android of 550,000 phones activated a day. And that's a huge number, even by Google standards. 

There's over 400 such devices, 39 OEMs, 231 carriers in 123 countries, and over 78 open handset alliance partners. 

[D]espite the efforts of some of our competitors, there hasn't been any slowdown in any of those things. And partners and developers are continuing to expand the Android ecosystem.  

Nikesh Arora, SVP and Chief Business Officer:

One format which was launched by Susan's team called Click-to-Call or Click-to-Share has been particularly successful. Unilever is a great use case of these formats. They integrated our AdMob product into a very large campaign of launching a new product to use the banner to drive traffic to a campaign Mobile site and achieve unprecedented results with almost 700,000 unique visitors accessing their content. 

Susan Wojcicki, SVP of Ads: 

Voice Search traffic for Mobile devices is up 6x in the past year.

There are now 135 million Android devices that have been activated in total, up from 100 million just 2 months ago. There are also now over 400 different Android devices available globally. Android market is also picking up momentum. It has over 250,000 different apps, and users have downloaded apps over 6 billion times, which is double the downloads from just a few months ago.

Mobile Display is starting to take-off too with traffic on the AdMob network up more than 3.5x in the past year. 

____

The comment by Larry Page above, "despite the efforts of some of our competitors," refers to patent attacks on Android. Right now Oracle is involved in Java-related litigation with Google over Android; and Microsoft is trying to force licensing deals on Android OEM partners.

Some financial analysts have suggested that Microsoft is getting about $5 per every Android device sold by HTC though such a licensing deal. Microsoft wants Samsung, now the largest Android OEM in the world, to pay up to $15 per Android device. There's speculation that the company is using that figure partly as leverage to get the Korean company to better commit to Windows Phones. Samsung has only tepidly embraced Windows Phones. 

While both Nokia and Microsoft await the formal release of one of their jointly produced handsets both companies continue to suffer at the hands of Android.

Nokia's share is falling like a rock and Microsoft's handsets are selling here and there but not in big numbers. Licensing revenue for mobile devices is clearly "Plan B" for the company. And while it could pay off in revenues over time that's much less desirable selling actual mobile devices.

In addition the more Android devices sell, the more Microsoft loses its grip on the overall OS market. Indeed, it's less and less "important" to have a Windows-based device in the more heterogeneous cross-platform market that exists today than it was when there were only Apple Macs and Windows-based PCs. 

Android Has 16 of Top 20 Phones on Millennial Network, Tablets Cannibalizing PC Usage

Millennial Media's Mobile Mix monthly device report is out this morning. And once again I'll excerpt what I think is interesting. First here are some of the top bullets, representing trends the company is seeing on its mobile ad network:

  • The iPhone was the top individual device (for a long time now). However Android was the "leading OS on our network for the 7th consecutive month  . . . Android also had 16 of the top 20 mobile phones."
  • iOS impressions (iPhone, iPad, iPod Touch) grew 18% vs a year ago. Android impressions grew 11%.
  • Windows Phone impressions grew 31% quarter-over-quarter; RIM impressions grew 29% quarter-over-quarter.
  • Connected devices (iPod touch, etc.) and tablets (iPad) accounted for 18% of all impressions on the network

The share of impressions being generated by smartphones is basically flat. In March 2011 smartphones were responsible for 64% of the impressions on Millennial's network. Today, in July, it's 65%. 

Screen shot 2011-07-15 at 5.34.25 AM

So-called connected devices constitute 18% of Millennial's impressions. This month Millennial has included some InsightExpress data that addresses tablets. In the chart below are behaviors that have shifted to tablets or have been impacted by the acquisition of an iPad or other tablet device:

 Screen shot 2011-07-15 at 5.34.42 AM

These numbers are lower but consistent with other data showing that tablets do cannibalize some PC usage. Below are data from a Google-AdMob survey on the same question: 

 Picture 27

Nielsen offers similar data (May 2011): 

Now back to the Millennial data. In May iOS had a 27% share of impressions but was responsible for 45% of revenue on the Millennial network. This month, iOS's share is 26% but revenues generated are 49%. Accordingly from a revenue standpoint iOS continues to "outperform" its share percentage, while Android "underperforms": 54% share, 41% of revenue generated. 

Screen shot 2011-07-15 at 5.35.01 AM

Among the top 20 handsets that Millennial sees, there are three RIM devices and the iPhone. Otherwise it's all Android. This is an amazing story.

Google CEO Larry Page said yesterday on Google's earnings call that the company was activating 550,000 devices a day. The company also disclosed that there were a total of 135 million activated Android devices in the market. There are a total of 400 Android devices in the market.

As of the end of Q2 2011 Apple had sold a total of 189 million iOS devices, including iPod Touches and iPads. 

UK Carrier O2 Seeing Success with LBS Offers

UK carrier O2 (owned by Spain's Telefonica) is seeing great success with its opt-in SMS marketing program O2 More. The location-based service is powered by Placecast, which also supports a similar but more nascent program in the US for AT&T. (It's not clear how much promotional effort AT&T is putting behind it.)

O2 not long ago announced it had more than two million subscribers for More. Consumers sign up for the O2 program, specifiy interest categories and recieve no more than a single text per day. The program sees very low churn. 

Earlier this month the UK carrier touted the success of a More campaign for gym Fitness First:

Fitness First targeted O2 customers with location-based messages offering a free two-day pass and details of the nearest club. This resulted over 1,100 recipients signing up as new members of Fitness First on four month and 12 month contracts.

With average membership costing just under £300 per year, this uptake generated increased revenue around £400,000.

The best responding target audience was 18 to 35-year-old smart phone using single Londoners, who enjoy engaging through social media.

US carrier T-Mobile recently got into the daily deals market with the launch of an app called "more for me." But with much larger competitors -- and so many competitors -- it's unlikely that T-Mobile will see great success with the program.

However daily deals could be converted into SMS messages for broader distribution and differentiation. Indeed, the O2-Placecast model is a stronger bet than an app strategy for carrier advertising, and can reach 100% of the carrier's customers potentially.

Many marketers and companies tend to look "beyond" SMS to in-app ads and mobile Web advertising because SMS isn't sexy. (Just like text ads in search aren't sexy.) However the reach of SMS is 100% and the response rates to opt-in text messaging programs can be huge. 

For example, in early 2010 Placecast found the following in its US beta test of ShopAlerts (the same kind of program run by O2): 

  • 60% of participants found the location-triggered messages to be cool & innovative
  • 79% said it increased their likelihood to visit a store
  • 65% made a purchase as a result of a ShopAlerts message (this sometimes occurred on the same day and sometimes later)
  • 73% of participants would definitely or probably use the service in the future

Apple's iAd Cuts Prices but Sees Defections

There's a great deal of analysis and even schadenfreude going on over the news that Apple's iAd unit (formerly Quattro Wireless) "has cut rates by as much as 70 percent as some marquee clients are using rival services . . . signaling the company is struggling to parlay its technology leadership into success in the ad industry." 

According to Bloomberg: 

Apple has cut the minimum ad purchase from $1 million to $500,000, and it’s offering agencies deals for as low as $300,000 if they bring together multiple campaigns, the two people [familiar with the matter] said. 

What people fail to realize is that iAd is effectively a very high profile "proof of concept" for mobile display advertising. It lent enormous credibility to mobile advertising with brands and got them to bet six and seven figures on mobile, which they had not before. 

It also compelled rivals to develop richer ad formats. All of these things are good for mobile advertising in general.

I don't believe that Apple ever saw mobile advertising as a significant revenue stream for the company, however. It was more about supporting developers and enabling them to make money -- having control over a revenue stream for the iOS ecosystem. But that concern has substantially subsided. Apple's developers have access to multiple ad networks.

In the end it really doesn't matter whether Apple gets $300K or $500K up front. It just matters that advertisers are spending that money somewhere in mobile. 

Related iAd posts: 

App Downloads Show Complexity of Mobile Usage: It's Not All about Local

Many people (including some analysts) make simplistic assumptions about the mobile market: for example that mobile and local are all but synonymous. I'm obviously a big advocate of local but I see mobile usage as quite complex and defying easy conclusions about usage or the future direction of the market.

There are lots of functions and activities that people perform and do on mobile handsets that have nothing to do with their immediate surroundings or local. For example: games, news, entertainment, music, sports, social networking and so on.

A new set of Nielsen data about app downloads/usage in the past 30 days reflect that mobile is a platform that is complex and diverse in its usage. While local content and apps are well represented in the hierarcy a large number popular app categories have nothing to do with location.

Instead they probably reflect that people are using mobile as a "generic" Internet access tool. Games, the most popular category, is a phenomenon unto itself. 

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2011/06/mobile-gaming-chart-1.gif

Most purchases occur in the physical world. So most mobile ads will either direct people to actual stores or, in the case of most future display campaigns, offer a dealer or store locator -- at a minimum. Mobile will be a huge branding medium, irrespective of any localization component. And there will be many awareness ads that have a location component as secondary or perfunctory matter. 

Moreover we get into an "accounting" problem in defining what is a "local" ad in mobile.

Is a Klondike Bar ad that contains a store locator buried two clicks down a "local ad"? What about mobile click-to-call ads for a florist network, which sends users to call center to place an order fulfilled locally? Is a mobile-video brand campaign for Hilton Hotels that can direct you to the nearest property if you initiate a search or lookup?

There's a lot of gray in determining what is a local ad. We might want to "require" localization in the ad creative before we consider mobile ads as "local." Just a thought.

But just as people often fail to recognize how local or offline purchase intent permeates a great many things that happen on the PC it's equally the case that non-local activity/interest is very much tied up in mobile activity. The chart above nicely illustrates that. 

Report: Mobile Ads Show Better Performance than PC for Display -- Across the Board

MediaMind, formerly Eyeblaster, released the results of an extensive study examining roughly 230 million mobile ad impressions in Q4 2010 and Q1 2011. The company affirms or confirms that mobile outperforms PC for display advertising. There's no search data in this report but it's also true for search CTRs. However there are others who have data that contradicts these claims (e.g., iCrossing). 

Below are some of the top-level findings in the report: 

  • Apple’s iOS beat Android by 2X in terms of ad performance, RIM by 5X (this is consistent with other data in the market; e.g., Smaato and Jumptap)
  • Mobile ads saw a CTR of 0.61%, while PC banners see/saw a CTR of .07%.
  • PC activity peaks during between 9 am and 5 pm, mobile browsing soars during the evenings (there's lots of data on mobile dayparting in the market, some of it inconsistent).
  • Mobile CTR reaches its peak during the evening, but is higher than PC CTR at any time of the day.  
  • Mobile CTR is also above average between 7pm and midnight, peaking at 8pm. 
  • Top performing mobile verticals: entertainment, retail, financial, B2B (surprise), travel. Restaurants, the top local-mobile search category, was lower on the list

There's a big practical mobile advertising takeaway from the report: "Serving ads in the evening can prove much more effective as compared to earlier in the day, and can reduce the cost per click of mobile."

Screen shot 2011-07-06 at 5.42.08 AMScreen shot 2011-07-06 at 5.43.09 AMScreen shot 2011-07-06 at 5.43.23 AMScreen shot 2011-07-06 at 5.57.21 AM

Selective Zip-Level Targeting Produced 85% Lift

Mobile ad network Jumptap released its second MobileSTAT issue for June earlier today. It's very much like the Millennial Media SMART reports or the AdMob Metrics reports that began the trend. There are a range of interesting findings in the document; I excerpt and summarize some of that material below.

Among smartphone operating systems, Android leads the iPhone by a margin of 42% to 30% on the Jumptap network. This 12 point margin is consistent with the Nielsen-reported 11-point margin between the shares of the two operating systems in the broader US mobile market. 

Screen shot 2011-06-30 at 5.27.59 PM

Compare Nielsen's data released earlier today:

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2011/06/mobile-OS-share2.png

A relatively unique piece of data in the report is the "content consumption" breakdown between apps and the mobile Web (below). There's no discussion of this graphic in the report so one would need to speculate on whether this is based on where Jumptap ad impressions were served or whether this is somehow a broader measure of consumption trends on mobile devices. 

Screen shot 2011-06-30 at 5.29.18 PM

According to a recent report from mobile analytics company Flurry, which some have disputed, mobile apps have overtaken the Web (PC and mobile) in time spent. Regardless of whether that's precisly accurate, plenty of data indicate users are spending increasing amounts of time with mobile apps. 

There's also considerable data in the report about CTRs on mobile ads. The first graph immediately below shows Jumptap's CTR by smartphone OS. The Apple iOS platform shows CTRs that are almost double those of Android and other platforms except the Palm webOS. 

Screen shot 2011-06-30 at 5.29.12 PM

Mobile ad exchange/mediator Smaato offers a similar chart (global, Q1 2011), which shows Windows Phones leading the CTR pack followed by Symbian and then Apple, et al.  

Operating System Click Through Rate Worldwide Q1 2011

Jumptap also said that people between 50 and 70 years old clicked on more ads than members of other age groups. This is an interesting and somewhat curious finding. I would be interested in seeing age-CTR segmentation data by handset type. I suspect that for smartphone owners it would skew younger. 

Screen shot 2011-06-30 at 5.30.39 PM

Mobile subscribers with incomes above $50K clicked on ads quite a bit more than those with incomes under that threshold. Again I would suspect that higher incomes correlate positively with smartphone ownership and that's going to factor in to this data.

Screen shot 2011-06-30 at 5.31.08 PM

There's now a fair amount of data from various sources about what time of the day/week mobile users are most active. In the Jumptap chart below ad clicks start to grow in mid-morning (with increased mobile activity generally) and peak at about 6pm. 

Screen shot 2011-06-30 at 5.31.26 PM

Local-Mobile network Verve Wireless also recently put out findings about consumer behavior on its network. The company said that nearly 60% of page views on its network occurred during the afternoon commute hours and in the evening (between 7-10pm).

Another very interesting data set released by Jumptap is based on a mobile ad campaign with "a major auto advertiser," which targeted selected, demographically qualified zip codes "that are more likely to purchase their brand." According to Jumptap these zip-based ads showed terrific lift "over ads broadly targeted in almost every campaign" -- as much as 85%. 

Screen shot 2011-06-30 at 5.30.15 PM

The final bit of data I'm including from the report shows the "post-click activity" or objectives of advertisers. Sixty seven percent of users clicked from an ad to a mobile Web-based landing page (or site), while 18% clicked to call and 15% downloaded something (probably an app).

Screen shot 2011-06-30 at 5.31.38 PM

Because we don't now when it says "click to Web" whether these are just PC sites on a mobile browser or HTML5 optimized landing pages we can't evaluable how sophisticated these advertisers are. As a general matter however I would speculate that we'll see a movement away from "click to Web" as marketers try and maximize the effectiveness of their mobile campaigns. 

Verve: Local Mobile Spend Grew 82% YoY

Verve Wireless is a San Diego CA-based mobile ad network consisting of approximately 1200 local media sites (mostly newspapers). The company's network features both small business and national-local advertisers; and it has created and released the first of what will apparently be quarterly reports focused on local-mobile advertising and consumer behavior.

Verve is calling the quarterly report the "Local Mobile Index" (LMI). The ad inventory measured is all mobile display. Verve says the data presented in its inaugural report are a mix of "Omniture, comScore and Verve reporting." The data can be compared to what Millennial Media is doing with its SMART reports but at a purely local level.

As with all such network-based data the Verve report must be seen as a reflection of what's happening on the company's own network primarily. However it's large enough that these data are going to be directionally reflective of larger trends in the local-mobile market.

Top ad verticals

Top five local-mobile ad verticals on the Verve network (Q1 2011):

  • Autos
  • Real estate
  • Entertainment
  • Banking 
  • Health care

Compare Millennial Media's top 10 verticals by ad spend for Q1:

  1. Retail & Restaurants
  2. Telecommunications
  3. Portals & Directories
  4. Finance
  5. Automotive
  6. Entertainment
  7. Dating
  8. Education
  9. Travel
  10. CPG

Spending growth

According to Verve the local ad spend grew 82% year over year (Q1 2010 to Q1 2011) for the identical inventory in its network. This growth rate is in line or somewhat higher than general mobile spending growth. For example, here are eMarketer's mobile ad growth projections:

In the table immediately above, eMarketer said that mobile display grew 122% in 2010 but will slow to 65% annual growth in 2011. I believe it's too soon to argue that mobile ad growth will slow, however, and believe these figures are somewhat conservative. 

Dayparting

About 56% of page views on Verve's network occurred during the afternoon commute hours and in the evening (between 7-10pm). The chart below reflects mobile usage throughout the week.

Screen shot 2011-06-27 at 4.14.04 AM

These data seem to contradict other mobile data that show weekends as a time of heavy mobile activity. However this might be explained by the fact that most of Verve's sites are newspaper sites and that consumption of these sites may decline on the weekend. 

Ad performance

Verve said that in-app ads outperformed mobile web ads "by a factor of nearly 3x (2.67)" during Q1 2011. This is not a surprise given higher levels of consumer engagement with apps vs. the mobile web.

In addition, according to Verve, "rich media campaigns out performed standard banner programs, as measured by consumer engagement, by a factor of 7:1." However some rich media ads that launched video from the banner "performed worse than those without video or had video embedded in a landing page (1.61% video banners vs. 2.67% video embedded), which may indicate some reticence on the part of consumers to go straight into video without an intermediate step." 

Top cities

Perhaps the most interesting data from Verve's report is the list of top DMAs by ad revenue. Here they are and they feature some surprises: 

  1. St. Louis
  2. Houston
  3. New York 
  4. San Francisco  
  5. Portland
  6. Denver
  7. Memphis
  8. Seattle
  9. Dallas
  10. Cleveland-Akron

Texas is the top state by ad revenue in Verve's network. 

Here's a situation where the data from Verve's network may diverge significantly from larger trends in the market. It's very unlikely, for example, that St. Louis is the top overall DMA for mobile ad revenue in the US. What's more plausible is that the sales reps in that market have had great success selling mobile to their advertisers (Verve does some national ad sales). 

iPhone vs. Android

The iPhone represented nearly half of all traffic on Verve's network. However the company said that Android users were more engaged. Verve doesn't elaborate on the meaning of this statement in its report but says that "Android achieved 52% better engagement results during the quarter." 

Screen shot 2011-06-27 at 4.35.09 AM

It's also interesting that BlackBerry had nearly as much share as Android on Verve's network. This is probably a reflect of the legacy of numerous RIM devices in the market.

There hasn't been much good local-mobile ad spending data in the market prior to this. So it will be great to see these quarterly reports and assess how the market is doing based on "facts on the ground." Most of the forecasts (though not all) about local-mobile released to date have been based on very high-level data and often incorrect assumptions about the market.

T-Mobile Becomes Daily Deals Aggregator

T-Mobile USA is becoming a deals aggregator, with a new Android app called "More for Me." It's available today for any Android smartphone running OS 1.6 or higher. LivingSocial is the only deal source mentioned although the word "aggregator" implies a broader array of sources. 

T-Mobile claims that the app is the first of its kind from any US mobile carrier. AT&T (the would-be owner of T-Mobile) similarly aspires to be a major player in the deals space and has a existing relationship with Placecast to deliver geo-fenced "shop alerts." That's not the same as "daily deals," but it's location-based discounts and offers nonetheless. 

 Screen shot 2011-06-15 at 4.56.23 AM

According to the T-Mobile press release:

The T-Mobile More for Me application is customizable, enabling consumers to find the most relevant deals, closest to their exact location. Users have the opportunity to see deals from a variety of retailers, in nearly any city, with many deals tailored to meet their specific interests and preferences.

“LivingSocial works directly with merchants in all of our 260+ global markets to craft great deals that drive our valuable members through their door,” said Jake Maas, senior vice president, corporate and business development, LivingSocial. “We are excited to bring our handpicked experiences to the millions of consumers who will enjoy T-Mobile’s new More for Me app.”

What's unique here is not that T-Mobile has built a deals app or even that it's created by a carrier. Rather it's the idea that a carrier is creating an app extending beyond the borders of its own subscriber network. Given the availability of branded deal apps from Groupon, LivingSocial and others, however, it's very unlikely that More for Me will see much adoption beyond T-Mobile subscribers. 

Study: Mobile Display 'More than Doubled' in Past Two Years

ComScore did an analysis of mobile display advertising in April and said that "the number of advertisers using mobile display ad campaigns has more than doubled in the past two years." The measurement firm said that "689 advertisers used mobile display advertising campaigns to reach consumers [in April], up 128 percent from two years prior."

I would take all this as "directional" more than as a completely accurate reflection of the number of mobile display advertisers. It reflects significant growth in US mobile display, although we should see growth accelerate as more advertisers move into mobile and it becomes easier to buy online and mobile display together. 

Below is the category breakdown of those advertisers in April according to comScore: 

Screen shot 2011-06-08 at 7.26.48 AM

For comparison, here's what Millennial Media has said are the top ad categories on its network (Q1 2011): 

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

Millennial: 21% of Mobile Users Made a Purchase in Past 30 Days

There's already a great deal of data in the market that show consumers use smartphones throughout the "purchase funnel." Several studies have also affirmed that well over 50% of smartphone owners are searching or conducting product-related research in stores at the point of sale. Most advertisers, however, have yet to respond to this rapidly evolving behavior with the kind of commitment it deserves.

By the same token increasing numbers of advertisers now do take mobile much more seriously and are starting to devote meaningful budget allocations to the platform. Helping to advance the argument for mobile is Millennial Media, with new research combining data from its own network with custom comScore research that takes a look at mobile consumers and the retail vertical.

Screen shot 2011-06-07 at 7.54.48 AM

Of course the study is self-serving. But the findings are consistent -- even "conservative" in some cases -- with other third party studies. Some of the findings (mostly collected in 2010) were teased in the most recent Millennial SMART report. 

Millennial said that in Q1 2011 the market segment it calls "retail & restaurants" was the top-spending advertiser category in the US market: 

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

On Millennial's network that category saw 1342% growth from Q1 2010 to Q1 2011. According to comScore data, the number of US-based retailers doing mobile advertising went from 3045 retailers in 2009 to 6445 in 2010 -- in other words, it doubled. 

Beyond this, much of the Millennial-comScore report is devoted to consumer data and behavior. The finds reflect that the majority of US consumers accessing retail content on mobile devices (typically smartphones) are between 18 and 35 years old and generally more affluent than average mobile users.

Screen shot 2011-06-07 at 7.55.37 AM

Millennial reported that "the number of consumers who accessed some type of retail content on their mobile device in a given month jumped 74% year-over-over to 13 million (as of June 2010)." Of that group:

  • 6.5 million people accessed retail content "up to three times per month"
  • 4.2 million at least once a week
  • 2.2 million consumers almost every day 

My view is that these figures probably under-count the number of mobile consumers accessing what might be described as "retail content" on their phones. By analogy, the comScore estimate (as of Q2 2010) of smartphone ownership is 22%; but the most recent Nielsen estimates put the number of smarpthone owners at 36% of all mobile subscribers in the US. Accordingly, the figures in the Millennial document are probably "conservative."

There were additional findings about "m-commerce" and products purchased via mobile devices. The comScore data reflect that "21% of survey respondents said they had made a retail purchase using their mobile phone via a mobile browser or a mobile application in the past 30 days." The graphic below shows the hierarchy of those product categories according to comScore and Millennial. 

Screen shot 2011-06-07 at 7.55.11 AM
It's interesting to compare the above mobile purchase categories to the content categories (below) accessed by mobile users. The red/brown bar is "mobile retail users." 

Screen shot 2011-06-07 at 8.01.02 AM
In the end the data in the report affirm that mobile is a critical channel for retailers and brands. The "why" of mobile is certainly behind us; what lies ahead are all the tactical and more subtle questions about best practices and integration of mobile into larger digital and brand advertising campaigns.

Millennial: Local Targeting Continues to Grow

Millennial Media released its latest SMART report on mobile marketing trends and data. In the issue, Millennial focuses on growth in the retail vertical (compiled by comScore for Millennial) as well as its traditional range of metrics (e.g., campaign objectives, landing page composition).

In particular, the report says that "local market targeting grew 22% and represented 56% of all campaigns that used targeted reach." While targeting is growing, the majority of Millennial's advertisers appear to still be most interested in broad reach and driving awareness.  

Local can mean different things on Millennial's network: targeting by state, city, zip. However the company also said, "advertisers in the Automotive and Restaurant verticals leveraged Local Market targeting to drive foot traffic into their brick-and-mortar locations through targeted regional promotions." 

Screen shot 2011-06-03 at 6.59.38 AM

Millennial says that retail "content consumption" by consumers on mobile devices is growing in aggregate volume and frequency:

  • The total number of consumers who accessed some type of retail content on their mobile device in a given month jumped 74% year-over-over to 13 million (as of June 2010)
  • Of the 13 million, over 6.5 million accessed retail content on their mobile device one to three times per month, 4.2 million at least once a week, and 2.2 million consumers accessed some form of retail content on their mobile device almost every day

 Screen shot 2011-06-03 at 7.06.30 AM

Below is the hierarchical mix of retail advertisers on Millennial's network: department stores followed by computer/electronics retailers (e.g., Best Buy) and home & garden retailers (e.g., HomeDepot). 

Screen shot 2011-06-03 at 7.07.10 AM

Google Wallet: Some Preliminary Thoughts

It's very difficult to quickly and comprehensively analyze all the implications of Google Wallet. There are many.

I "live blogged" the press conference at Search Engine Land. For both consumers and merchants/retailers the proposition is pretty compelling: offer and loyalty card integration, single-tap payments and so on.

So far it appears that only the Nexus S phone will be capable of accessing and using Google Wallet, although there was some ambiguity around that issue. The merchants that are formally participating at launch the following: 

Screen shot 2011-05-26 at 10.34.04 AM

However any merchant that has the MasterCard "pay pass" system enabled can participate. Google has provided a merchant locator by zip.

Offers and loyalty will be a big part of this, which is where the marketing/advertising tie-in happens. The integration of Wallet with Offers and loyalty cards will be the big differentiator for retailers and marketers as well as consumers vs. other NFC payments systems. This is where Google has a big advantage over competitors including Apple, Amazon, PayPal and wireless carriers. 

Theoretically at least some of those competitors could participate in Wallet because Google says it's open ecosystem -- in the way that Android is: controlled by Google but anyone can participate. How will this affect other mobile payments initiatives, other payments startups and so on? 

That question is hard to answer at the moment. If there's fast adoption of Google's system (a la Android) many competitive efforts will be toast. But that very much remains to be seen. Because even consumers eager to participate in Google Wallet will need to buy the Nexus S right now. 

Once other NFC-enabled handsets become available, adoption should dramatically accelerate. 

See related: Square’s “Mobile Wallet” Service Sets Stage for Pay-By-Voice, Maybe

What We Still Don't Know about 'Google Wallet'

In advance of Google's press conference this morning, we already know a great deal about Google's NFC payments initiative, which will apparently be called "Google Wallet." A leaked internal memo from The Container Store showed up online yesterday:

Google will launch a test of "contactless" payment through a mobile device--so customers will be able to just tap a special device and pay with their phone in stores at POS! And this Thursday, Google will announce all of the innovative retailers who will be participating in their test--and guess who is on that list? You got it right! We are! And how cool that Google thought of us, The Container Store!

Stay tuned for many more details regarding this test of Google Wallet and the participating markets. We won't start this program September 1st, but thought that we should all have the heads up on this neat opportunity now because we expect it will receive a lot of press in the upcoming weeks when Google makes its official media announcement about this initiative.

When: this summer

Where: apparently five cities initially . . . San Francisco, Los Angeles, New York, Chicago and Washington D.C.

Partners: so far Sprint, Citigroup, MasterCard, Verifone and ViVOtech

Retailers: Container Store, Macy's, American Eagle Outfitters Inc., Subway (incomplete list) 

As I've said I'm sure there are more retailers/stores on the list of launch partners. It's not clear (to me) how many Android phones currently in the market are NFC compatible. The Sprint Nexus S clearly is; and the next-generation of Android phones now coming out are supposed to be. 

Google has more tricks up its sleeve than simply the announcement I would imagine. Accordingly I suspect we'll see offers tied in to help motivate people to use the system. 

Initially however it will be accessible to a relatively small group of people and there will probably be several months where Google and its partners are watching the consumer reaction and working through bugs and kinks. 

Simply because Google has built it doesn't mean that consumers will come; however this is sure to help accelerate the broader industry move toward mobile payments. 

Insights into Mobile Ad Responders

This headline grabbed a lot of attention yesterday: "61% of mobile users click on ads at least once a week." It was based on a survey conducted by InsightExpress at the behest of mobile ad network Mojiva. There are lots of interesting findings in the survey -- but it all must be taken with a grain of salt because the sample was very small (n=123) and respondents are not necessarily representative of the larger mobile population.

Roughly 75% of survey respondents were between 18 and 45 years old; 65% had incomes under $50,000; and only 17% had a college degree or higher. After groceries, the largest spending category was fast food/restaurants. 

In terms of devices:

  • 64% of respondents owned smartphones (42% said they had a desktop PC, 40% said they had a laptop)
  • 19% owned Android tablets
  • 9% owned iPads 

Now on to the main findings: 60% clicked on ads at least once a week, with nearly 20% doing so "several times a day."

Picture 25

Picture 26
What's not clear is whether people think about search ads  in the context of "text ads."

Retail and then restaurants (I'm ignoring weather) were the top commercial categories motivating ad clicks.  

Picture 28

In terms of post-click actions the following chart shows the activities that these respondents were most inclined to do. Somewhat surprisingly, for this modest income group, coupons are relatively low on the list at number six. 

Picture 27

Again all these findings must be taken cautiously given the survey demographics and small sample size. 

A December 2010 survey by Harris on behalf of CPA/lead-gen company Pontiflex found that 47% of all mobile ad clicks were unintentional. This flies in the face of the data above but I wouldn't give it total credence either. 

By contrast Google produced survey findings (more consistent with Mojiva) showing that just over 80% of mobile users noticed mobile ads and almost half of those exposed to mobile ads took some form of action: 

  • 42 percent clicked on the ad
  • 27 percent contacted the business
  • 35 percent went to a related website
  • 49 percent made a purchase

Google's NFC Payments: Details Emerge

One of the most fascinating areas of mobile to observe right now is payments. No one really knows how it will all turn out or which companies will ultimately succeed -- but there's tremendous activity and change is coming. For example, the recent launch of Square's new payments tools -- Square Register and Card Case -- are intended to radically change how stores and consumers pay for things at the point of sale.

Square's system doesn't rely on a new infrastructure (i.e., NFC) and the apps are simple to understand and adopt. Yet while they're innovative, these tools may not get serious consideration by enough merchants to sustain them. By the same token near-field communications (NFC) has a lot of momentum and buzz but it's not clear how soon NFC-based systems will be disseminated in the US and Europe. 

In a consumer survey MasterCard recently found that younger mobile users were comfortable with the idea of paying for things with their phones:

  • 63 percent of 18-34 year olds would be at ease using mobile phones to make purchases versus those age 35 or older (37 percent).
  • Consumers ages 18-34 (65 percent) feel more naked without their phones than their wallets, compared to 34 percent of those in the 35 and older group.

Apparently they're about to get their chance, as Google is set to announce a formal test of NFC payments with a few high-profile retailers. The announcement is supposedly coming on Thursday. Bloomberg broke the news; however it was already understood that Google was working with retailers in New York and San Francisco to lay the groundwork (with new payment terminals). 

The Wall Street Journal reports more specifics on the trial: 

The program will launch first in New York, San Francisco, and potentially other locations, followed by a broader rollout, said a person familiar with the matter. Participating retailers include Macy's Inc., American Eagle Outfitters Inc. and the Subway fast-food chain, said a person familiar with the matter. Retailers that participate in the program will have upgraded terminals at the point of sale that can read the mobile devices and provide special offers.

Other vendors reportedly involved include Citigroup, Verifone, ViVOtech and MasterCard.

It's not clear whether Google will participate directly in the transaction and/or capture any direct revenue. My guess is probably not. Rather, Google will probably use the platform to boost mobile ads and offers, as well as capture data on user purchase behavior. 

Here's the scenario: a user sees an ad (search or display) on a mobile device including an offer to be redeemed at the point of sale. She goes into the store and uses the offer, paying with her Android phone. This is a closed-loop and both Google and the retailer gain valuable data about ads that drove in-store traffic and their ultimate outcome at the register. 

Indeed, meaningful deals/offers or other incentives will need to be offered initially to get people (Android users with Gingerbread) to utilize the system. Previous reports indicated that Google was footing the bill for the upgraded payments terminals.

When the annoument is formally made there will be considerable discussion and speculation about the outlook for NFC payments in the US and Google's role in the system. I would be cautious. 

Mobile payments will definitely come; however no single approach or system is a foregone conclusion. And it usually takes quite a bit longer for new behaviors to become established than pundits expect.

While consumers are generally ahead of marketers with mobile usage, it took almost a decade longer than Forrester expected for ecommerce to become mainstream. It won't take anywhere near that long for mobile wallets to take hold. But it could still take up to five years. 

See related posts: 

Millennial: Android Top Smartphone OS, Apple Regains Revenue Lead

Millennial Media has put out its latest "mobile mix" device report, which discusses operating systems and handsets on its network. The data are not an absolute reflection of market share but reliably indicate directional trends.

As Millennial reported in March the VZW iPhone has provided a big boost for the iPhone in the US (rumors indicate it will be coming to T-mobile and Sprint in late summer). That helped the iPhone regain momentum. In addition, iOS (including iPod Touch and iPads) has returned to the top of the Millennial's list in terms of revenue generation. 

Immediately below is the December 2010 chart showing the OS revenue mix on Millennial's network: 

Screen shot 2011-05-19 at 6.26.40 AM

Android devices collectively were responsible for 55% of the ad revenue generated in December. The positions have reversed and now iOS (boosted by the iPad) is generating 50% of the revenue on Millennial's network. BlackBerry has also grown considerably, it's worth noting. 

 Screen shot 2011-05-19 at 6.24.44 AM

These data don't mean that Android has stalled by any means. The company said that Android remains the dominant smartphone OS: 

  • Android maintained its position as the leading Smartphone OS on our network for the fifth consecutive month, and increased impression share by 10% month-over-month. Android now has a 53% share.
  • Overall iOS impressions have increased 47% since January. In the same time, Android impressions have grown 19%.

So while Android is leading the smartphone category, the iPod Touch and iPad give Apple advantages over Android. It's unlikely that any of the forthcoming Android tablets will significantly challenge the iPad unless/until a much better software user experience emerges -- though Android tablets have the potential to be very successful in the sub-10" segment. 

Screen shot 2011-05-19 at 6.24.29 AM

Finally, Millennial said that for the first time all the phones in its top 20 were smartphones, amounting to 68% of all the devices reflected on its network. According to Nielsen smartphones represent 36% of all US handsets.

In December 2010 smartphones represented 60% of all devices on the Millennial network.

 Screen shot 2011-05-19 at 7.03.55 AM

 Here's what that same list looked like in December: 

Screen shot 2011-05-19 at 6.27.07 AM

QR Codes: Are They Here to Stay?

Several years ago we discussed the benefits of SMS and how a short code could go anywhere -- on any product or advertisement to make that object or ad "actionable" and to capture consumer response.

Now the same discussion and opportunity surrounds QR codes, although they won't work on any phone. There are also some challenges with their use even on smartphones: often there's a of installed software of they fail to resolve and deliver the intended data.

Despite these obstacles, QR codes can be extremely effective in extending the value and reach of outdoor, TV and print ads. They offer ways to capture leads, generate sales and provide product information to buyers and prospects "on the spot." They connect the digital and real worlds in a very efficient and immediate way.

A recent IPG Emerging Media lab study with CBS Interactive found that smartphone use at the point of sale was more about validating intent to purchase and gaining confidence than it was finding a cheaper source for the product. In other words, more information helps consumers feel more confident about buying the desired item. QR codes can be instrumental in delivering valuable information to consumers to help them make buying decisions "in the moment."

An article yesterday in the WSJ about QR codes offers several anecdotal use cases and arguments for their efficacy:

About eight months ago, the three-store chain started putting these "quick response" codes in its train ads. When customers scan the little squares with their smartphone cameras, a coffee menu pops up on their screens. Then they can order a cup of coffee on the train—and have it waiting when they arrive at one of Ethical Bean's shops.

Business has doubled since then, says Chief Executive Lloyd Bernhardt. "We catch people who are on the go and don't have a lot of time," he says.

There are lots of case studies like this, showing that QR codes can be used very effectively. The interesting question is: when NFC takes hold what will happen to QR codes? Or perhaps: how long will it take for NFC to gain mainstream adoption?

Android is rapidly on its way to becoming the top smarpthone OS. Android OS Gingerbread already has NFC support and, as a result, Google dropped use of QR codes for its Places promotional tools. Every Google OS update henceforth will support NFC. As Android grows so will the installed base of NFC-enabled smartphones. 

The next iPhone is now rumored to not have NFC support. Beyond this there are also costs and new infrastructure requirements associated with NFC. But there is a lot of momentum behind it, most notably because of increasing interest and activity around mobile payments. 

Realistically we're probably about three to five years away from meaningful NFC adoption in the US and Europe. During that window QR codes will have an opportunity to establish themselves in mainstream use. If they can QR codes may survive the adoption of NFC. 

Jumptap's $25M Round Signals New Gains

This morning Jumptap announced a new $25 million round of funding, bringing its total money raised to roughly $90 million. Participants in the round were AllianceBernstein, General Catalyst, Summerhill Ventures, Valhalla Partners and agency holding company WPP. 

Though one of the largest independent mobile ad networks the perception was that JumpTap had lost momentum, resulting in a management shakeup last year. However the funding would appear to confirm new momentum. 

The company now claims reach of 83 million consumers, 10,000 sites/apps in its network and 10 billion ad requests in April. JumpTap accommodates the full range of ad units. The company also operates intentionally in several countries. 

Below is IDC's estimate (Q4 2011) of the distribution of mobile ad revenues. No doubt this is inaccurate today but directionally it shows the relative shares of revenue in the US market. JumpTap is the smallest of the "big" players. Nokia and AOL are non-entities right now. 4INFO is a conspicuous absence in the chart below. 

Screen shot 2011-05-05 at 6.55.17 AM

JumpTap began as a search-based network and white-label provider of mobile search to carriers. When Google, Microsoft and Yahoo took over the mobile search business JumpTap shifted and became a mobile display network. 

The company was growing and then seemed to falter. CEO Dan Olschwang was outsetd last year and replaced by General Catalyst's George Bell, which seemed to indicate the network was in trouble.

However the metrics and new funding indicate the JumpTap is back on track. JumpTap will likely get acquired rather than go public; the question is for how much?

AdMob was bought by Google for $750 million (in stock), while Apple acquired Quattro for between $250 and $275 million. Online ad network ValueClick recently bought Greystripe for $75 million.

JumpTap also holds what appear to be several key mobile advertising patents.

Related posts: 

Google: Mobile Search Will Pass PC Sooner Than People Think

There's an extensive article in the New York Times about Google and mobile search. The article is mostly a feature about the evolution of Google's approach to mobile. It also discusses voice search and Goggles but there's little hard data or new numbers. 

The $1 billion mobile ad run rate is mentioned as are several previously released data points. Here are a few of the stats and observations from the article:

  • Google says mobile searches are growing as quickly as Web searches were at the same stage in the company’s early days, and they are up sixfold in the last two years. 
  • Mobile searches spike during the lunch hour and evenings, when people are away from their computers. 
  • Search for Wal-Mart on a computer and Google suspects you are probably looking for the e-commerce site or job openings. Search on a phone and Google assumes you are looking for the nearest store. Other search tools were built specifically for phones.

We've estimated, using comScore and Google's own public data that between 1.9 and 2.4 billion monthly queries on Google are coming from mobile. Google has said 33% of mobile queries have local intent. That would mean that between roughly 600 million and almost 800 million monthly queries are local-mobile.

But here's the "money quote" from the NY Times' piece: “Mobile search is definitely going to surpass desktop search,” said Scott B. Huffman, who works on mobile search at Google and leads its search evaluation team. “The lines will pass, and I think they’ll pass before anyone thought they would.”