Bango says this will allow users to buy game credits, apps and other virtual goods through "frictionless operator billing, paying on their phone, without the need to register personal details."
Bango also has deals with Google (Play), Amazon, BlackBerry App World and Opera's Mobile Store. The company added that its conversion rates are higher than the industry average for carrier billing:
Conventional operator billing is expected to achieve a 40% conversion rate. Put simply, most mobile commerce customers who click ‘buy’, do not successfully buy. Billing with the Bango payment platform delivers an average conversion rate of 77%. Most users who click ‘buy’, do buy.
While carrier billing is useful in countries where there are many "unbanked" or where the specific transaction is likely to be conducted by a younger user, in the US and much of Europe credit cards are a preferred method of payment by most adults.
Carrier billing is much more widely available than other forms of mobile payments for obvious reasons. However carrier fees are much higher typically than credit card fees and settlement can take months depending on the country.
Even though Facebook eliminated Facebook Credits, which was a surprise to me, it's possible that Facebook will eventually acquire a mobile payments provider. Bango's market cap, for example, is only $118 million. Facebook could buy the company and associated revenue stream, as well as a set of global carrier relationships -- instantly.
Amazon is the king of mobile retail; Wal-Mart is the leader of offline check-ins. Last week there were two sets of parallel data released that provided some insight into how consumers are using mobile devices, both for "m-commerce" and in stores.
Data from comScore found that among US smartphone owners “4 out of 5″ are going to retail site/apps on their handsets. Some of this is in-store price and review checking.
ComScore put the total number of mobile-retail visitors at roughly 86 million. Unsurprisingly Amazon was the leading retail destination with an audience of almost 50 million smartphone owners.
These mobile-retail site visitors were both somewhat younger and more affluent than corresponding retail site visitors on PCs.
The number four mobile retailer on the list above, Wal-Mart, is the leader when it comes to in-store check-ins. According to data compiled by LocalResponse this summer from Twitter, Foursquare, Yelp and Instagram, Saturday is the most popular day to check in followed by Friday and then Sunday. Most check-ins occurred in the afternoon or early evening.
LocalResponse also found that men were more likely than women to check in. However gender check-ins by store varied, with Target being the most popular store for women. BestBuy was the most popular check-in retail location for men.
While some retailers are creating incentives for users to check-in, this should be exploited much more aggressively both to get people into stores and as a corresponding analytics tool to indicate the success of various promotions. Hashtags, offers and other mechanisms could be used to track specific promotions. In addition, users could be "messaged" (on Twitter) or otherwise notified (i.e., on Foursquare) while in stores with further promotions and rewards.
In general traditional retailers have yet to fully recognize the potential and utilize social media check-ins for in-store loyalty and sales purposes.
Apple is famous for moving people along to the next software or OS upgrade. And iOS 6 appears to be no exception.
Less than 24 hours after it became available for public download, the new mobile OS was responsible for 15% of overall Apple device traffic on the Chitika ad network.
To measure this, Chitika said it "took a sample of millions of mobile ad impressions coming out of the Chitika Ad network ranging from September 19th to September 20th 2012. The growth rate of iOS 6 was then compared to total iOS Web usage using a time series to illustrate the rate of adoption of the new OS."
I asked Chitika whether they could extrapolate and tell me how many actual devices this represented. They declined to do that.
Source: Apple quarterly reports
If we make the assumption that the 15% of Chitika traffic translates 1:1 into individual devices -- in other words, 15% of the traffic is from 15% of all the iOS devices -- then we can crudely extrapolate using the chart above.
The iPhone 4 and 4S can upgrade to iOS 6. Apple hasn't broken out the sales figures by device generation but everything before Q2 2010 was iPhone 3GS and "below." The iPhone 4 was announced in June, 2010. Since Q2 2010 Apple has sold roughly 193 million iPhones.
It's safe then to say that well over 100 million iPhone 4 and 4Ss are in the market (that's a conservative estimate). If 15% of those now have iOS 6 running that means there are roughly 15 million such devices (around the world) that have downloaded the new OS only 24 hours after launch.
These numbers could be way off but they're probably not.
Today the pre-ordered iPhone 5s are arriving and people around the world are buying them from local stores. Accordingly the number of iOS 6 phones in market could be over 20 million (downloads + sales) within a week or two.
Today iOS 6 became available for download by the public. Among the many features of the OS upgrade, Apple Maps is getting the most attention. But perhaps more interesting is Passbook, Apple's mobile wallet. Passbook isn't a full-blown mobile payments vehicle like Google Wallet or even PayPal but it could have an immediate and profound impact on "mobile payments" and mobile loyalty programs.
As I discuss in my post on Screenwerk, Passbook could soon become the most important mobile loyalty channel for enterprises and SMBs alike. Passbook will allow users to store and retrieve tickets, boarding passes, loyalty cards, gift cards and stored payment cards. It won’t allow users to upload a general credit card (like Google Wallet) or tap into their iTunes account credit cards for mobile payments. But that’s probably coming.
Also launching today is a third party platform and API from Tello called PassTools. That's going to make it much easier for brands, enterprises and small businesses to quickly start creating "passes" and coupons and otherwise utilizing Passbook, which will have an installed base of millions very soon. I discuss the features and implications of PassTools over at Screenwerk.
Passbook may help train millions of people to use mobile wallets, something no one else has so far been able to do.
Also this week Square announced a $200 million "series D" funding round at a more than $3 billion valuation. The company is on track to do more than $8 billion in transactions (gross) this year.
Finally, this morning Groupon opened up its new Square-like SMB-focused payments tools, Groupon Payments, to the entire US market. Groupon will first go after its own daily deals merchants and then try to expand its merchant customers by undercutting Square and others with lower fees. Here's what Groupon is charging to process transactions (with a Square-like card reader or keyed in):
Activity surrounding the various flavors of mobile payments in the US is intensifying. These three developments in the space of essentially two days reflects that.
While consumers remain skeptical or ignorant or indifferent -- 71 percent in our recent survey said they're not interested in mobile payments -- the growing visibility of mobile wallets and mobile payment options (especially Passbook) will likely change all that.
If you want to see a case study in poor management at a major company look no farther than Hewlett Packard. Once an exemplar of high-quality corporate culture and employee satisfaction the company is a mess. The catalog of mistakes is long. Among them the purchase, fumbling and effective shuttering of the PalmOS.
Late last week current HP CEO Meg Whitman said that the company has to get into the smartphone business -- or more precisely back into it -- because that's where the growth is in the computing market.
If you recall, HP bought the PalmOS for $1.2 billion under former CEO Mark Hurd who was pushed out for falsifying expense reports among other ethics violations. Hurd had big plans for PalmOS but his ouster scuttled them.
When the acquisition was announced in April, 2010 I wrote the following:
It's a good outcome because HP needs to have a mobile strategy and it gives Palm and the WebOS a way to continue. Chief HP rival Dell is very clear on the critical role of mobile and portable Internet devices in its future and is rolling out numerous Android and WinMo handsets later this year.
Lenovo was also taking a look at Palm and will itself be moving more aggressively into mobile.
Given HP's financial clout and resources WebOS could emerge as a reasonably strong competitor -- perhaps most directly to RIM -- in the coming months and years, especially with new form factors. And that probably includes a WebOS-based tablet.
Obviously none of that happened. As a kind of salvage maneuver, HP decided to open-source WebOS but hasn't done a very good job of rolling that out.
Had the Palm assets been better managed HP might have a viable smartphone right now and/or be offering a open-source alternative to Android. But those outcomes would have taken vision and execution, neither of which HP seems to have.
It's quite unlikely that HP can make an Android phone that will effectively compete against Samsung and HTC. It might be able to make Android tablets but it won't be able to make them very profitably given the price competition now in the market. So while there's plenty of growth in mobile (smartphones, tablets) it's unlikely to be an area of strength or profit for HP.
Even though Nokia's Windows Phone 8 handsets and all the new Android devices feature NFC capability, its absence from the iPhone 5 deprives the technology "a mainstreaming opportunity" in the immediate future. Unlike any other company in the mobile industry Apple has the ability to popularize and educate consumers about new technologies.
A case-in-point is Siri. Speech recognition and "voice search" long-predated the iPhone 4S; however Siri was able to popularize them in ways that even Google and Microsoft could not. That would also have been true of near-field communications had the iPhone 5 incorporated it.
Apple's Passbook software/app is a mobile wallet, which will enable transactions (i.e., Starbucks stored value card). However it won't be a full-blown mobile wallet that stores a credit card an enables contactless payments. That could come with the iPhone 5S or "5N" (for NFC).
Obviously "the industry" will be moving forward with NFC rollout plans: Project Oscar in Europe, ISIS and Google Wallet in the US and so on. However consumers still need to be educated about the use cases and benefits of the technology. In some isolated situations they are or have been but for the most part -- certainly this is true in the US -- they remain ignorant of the technology itself let alone what it can do for them.
On the broader subject of mobile wallets and mobile payments (NFC is only one flavor) most US consumers have little or no interest today:
Source: Opus Research (August, 2012), n=1,501
In the US market at least there's a double challenge: sell consumers on the benefits of mobile payments, which Apple can and will help do with Passbook and other third party apps, and sell them specifically on contactless, NFC-enabled payments.
Much like President Obama's speech at the Democratic National Convention, the iPhone 5 announcement today "did what it had to do." It had to deliver a 4G capability as well as a larger screen. It did both, with a 4-inch display as opposed to the current 3.5-inch display.
In addition it offers a slightly longer battery life, a better camera and it's thinner. It also uses a new chip for better performance overall. It has enhanced audio and a smaller dock connector. It doesn't include NFC. While NFC wasn't widely expected it's still a major disappointment to the industry given Apple's ability to elevate new technologies and educate consumers about them.
The handset is the same width but taller than the iPhone 4S, which might make it aesthetically awkward. I haven't seen one in person yet. On a personal note, I would have liked to see hardware that was more of a departure from the 4S but I suppose that will have to wait.
The 3GS has been discontinued. The iPhone 4 now becomes free with a two-year carrier contract. The 4S drops to $99 and the 5 costs $199 for the entry level model (which is what most people buy). In the US it's available from Sprint, AT&T and Verizon.
This phone will probably sell well -- just how well remains to be seen. Pre-orders start on Friday with delivery on September 21.
As many of the pundits remarked after Obama's speech last week, it wasn't entirely inspiring but it "gets the job done." The same can be said for the iPhone 5.
If you're interested in more detailed coverage there's much much more, about every aspect of today's announcement, on Techmeme.
Apple's rivals have been trying to get out in front of the iPhone 5 and the announcement today. Nokia held its Lumia/Windows Phone 8 event last week. Motorola (Google) announced a number of new Android handsets and, of course, Amazon had its big Kindle Fire press conference last week as well. All of these anticipated the iPhone 5 announcement today and tried to preempt it to some degree.
Last night Google's Hugo Barra casually posted some stats on his Google+ page: "Today is a big day for Android... 500 million devices activated globally, and over 1.3 million added every single day."
Android is the dominant smartphone platform in the world -- in case you forgot. And Google wanted to get that stat out there and inserted into the blizzard of articles that will be published today about Apple and the iPhone: " . . . but Android is the market leader with 500 million devices activated globally."
The iPhone 5, as I said on my personal blog Screenwerk," is a critical release for Apple because Android phones have caught up or in some cases surpassed the device (i.e., LTE support, NFC). The new iPhone today must offer a larger screen and LTE support at a minimum to maintain consumer interest.
An unintended leak on the Apple site indicates that there will in fact be LTE support. We'll see what else in less than a half hour.
Google introduced a new YouTube app for the iPhone today, ahead of the release of iOS 6 which removes YouTube from the group of pre-installed apps on the device. There are a number of feature improvements over the current built-in YouTube app.
Depending on your perspective, one of those "improvements" will be pre-roll ads. The current YouTube app didn't feature any advertising, thus depriving Google of a potentially significant mobile ad revenue stream. The new app will have ads and pre-roll.
Here are some screenshots of the new YouTube app:
Below is a side-by-side comparison of the current and new YouTube apps for the iPhone:
The new app is nice and a bit simpler visually. But what's more interesting is what it suggests about another potential Google app for the iPhone: Maps. The question is whether (or more likely when) Google will introduce a more complete mapping app for iOS.
Just as it does with the pre-installed YouTube app, Apple iOS 6 will remove Google completely from mapping on the iPhone, replacing it with Apple's new mapping application. That could mean a potentially significant loss of local query volume for Google -- unless the company dramatically improves its HTML5 mapping experience and/or releases a new iOS Google Maps app.
There's a small possibility that if Google were to submit a new Maps app to Cupertino it might get blocked as trying to replace a core feature of the device. However there are numerous third-party mapping apps that already exist for the iPhone so I doubt it. In the event Google did submit a new iOS mapping app it would ironically mean a much better Google Maps experience for the iPhone than has been the case to date. In all probability it would also include Google Navigation, which had been missing or withheld from maps on the iPhone.
Google's dilemma is that it uses Maps and Navigation for Android as something of a competitive differentiator vs. the iPhone. If Google were to provide the same functionality to Apple it would potentially remove that particular incentive to buy Android devices.
With Android increasing its dominance around the globe, the US market seems to be something of an anomaly. Measurement firm comScore reported this morning that Apple has gained share in the US.
The iPhone now represents one out of every three smartphones in the market. Android also grew its share slightly, while Windows has continued to lose share according to comScore:
The firm also said that 114 million US adults own smartphones, representing just under 49% of the mobile subscriber population (using a base of 234 million). Nielsen, Pew, Flurry Analytics and others have found, however, that more than 50% of US adults own smartphones.
Flurry asserted recently that more than 70% of US adult mobile subscribers owned smartphones.
Amazon is holding an event next Thursday to introduce a second-generation Kindle Fire as well as a new 10-inch version in all likelihood. The company is also expected to "refresh" and upgrade its lower-end Kindles as well. There's considerable speculation about all this going on right now.
I'm less interested in talking about device "specs" (the subject of most of the current discussion) than pricing.
The current Kindle Fire succeeded -- caught fire if you will -- because of the price ($199) and the association with Amazon. Since that time the device has "sold out." In reality sales have slowed dramatically in recent months. Objectively Kindle Fire is quite a mediocre tablet for use cases other than consuming Amazon content.
Indeed, Google's Nexus 7 emerged a couple of months ago to dramatically improve upon Kindle Fire. Nexus 7 is a much better 7-inch tablet at the same $199 price point as Kindle Fire. In a head-to-head match up there's no question of which tablet to buy: Google Nexus 7.
Apple is also expected to introduce a 7-inch iPad Mini next month, along with a new iPhone. The two launches will be separate in all likelihood. The iPad Mini should also be quite appealing to those interested in a smaller tablet. And it will probably be priced competitively (around $200ish). The 7-inch tablet category will thus become a battle between Apple, Google/ASUS and Amazon. Samsung may work its way in with new devices, however.
In terms of features and usability, it's extremely unlikely that the Kindle Fire 2.0 will trump either the Nexus 7 or the iPad Mini. Beyond Amazon's content ecosystem it's chief weapon is pricing -- perhaps its only real weapon now. And in an effort to gain some advantage vs. Google and Apple might we see Amazon lower the price of the new 7-inch Kindle Fire and introduce a cheaper 10-inch tablet (vs. iPad)?
It's quite possible -- even probable. I wouldn't be surprised if Amazon priced the Kindle Fire 2 at $179 and offered a more expensive model with more memory. A 10-inch model might start at just under $400 (to beat the iPad 2 price). Again, price was the main driver of Kindle Fire sales.
Amazon either breaks even or loses money on each Kindle Fire sold but then makes money on content sales and e-commerce thereafter. Accordingly it can afford to be aggressive on pricing. But it can't go much lower than it already has with Kindle Fire.
In any case Kindle Fire 2 is going to be a much tougher sell in a more crowded and competitive market.
Update: CNET is reporting that there won't be a 10-inch Kindle Fire to directly challenge the iPad but two 7-inch versions instead.
Whether or not responding to the recent Apple patent victory in US federal district court, Samsung has said it will be first out of the gate with a Windows Phone 8 device. The new device, announced yesterday, is called "Ativ S" and will be out before Nokia's first Windows Phone 8 handset. Indeed, Samsung will be formidable competition for Nokia with the new OS.
Meanwhile an analyst at Bernstein Research argues that US consumers simply aren't interested in the Microsoft mobile OS:
“Our research shows that for many years, poor sales of Windows-based phones stem from a deep and stable lack of consumer interest for the product. Despite numerous and repeated efforts of manufacturers (Nokia, but also Samsung and HTC) and Operators to develop an alternative to Android and Apple based on Windows, and despite the launch of numerous phones based on Windows with strong features, reviews and marketing support, the operating system remains cornered to less than 5% market share in smartphones.”
Currently Windows Phones' market share in the US is 3.8% according to the most recent comScore figures:
A consumer survey conducted by Opus Research in April indicated something quite similar in terms of demand for Windows Phones:
My next mobile phone will likely be . . .
Source: Opus Research, April 2012 (n=1,504)
These responses won't necessarily translate into sales figures -- Android is obviously leading the market -- however they do indicate a level of interest or demand for the various handsets and operating systems.
Both Microsoft and Nokia have high expectations for Windows Phone 8. It's not clear what will happen if consumer demand fails to materialize.
Millennial Media is out with another vertical report. Last time it was travel; this morning the ad network released a report on Entertainment. It was generated in conjunction with comScore. From my perspective, there were two pieces of interesting data in the document -- although the case studies in the report are also interesting.
One was about mobile purchase categories. The other was Millennial's "post click" campaign data for the Entertainment category. This data reflects the objectives advertisers are trying to accomplish with their campaigns.
The report said that "convenience" was the chief motivation for buying something on a mobile device (vs. online or in-person). Roughly two-thirds (63%) of smartphone owners cited this as the rationale for m-commerce. Convenience (vs. price) is typically the major reason for buying online as well.
Between 20% and 35% of US smartphone owners have ever made a mobile purchase according to several studies released in 2011 and 2012. Paralleling the data in the chart above, digital content (books, movies, apps, music) leads m-commerce overall. However we will see a broader range of e-commerce transfer over to mobile over time.
The problem of entering credit card information is a major barrier to mobile commerce today. Those vendors that have stored credit cards (in other words direct relationships with consumers [i.e., Amazon]) will see much more volume than those asking consumers to enter 16 digits. A majority of mobile e-commerce efforts will need to find some third party solution (e.g., working with PayPal, Amazon or solutions such as Card.io) if they want to generate sales from smartphones. Tablets are a different matter; entering credit card information is not as much of a barrier on those devices.
The chart above reflects campaign objectives, comparing entertainment companies (including movie producers and theaters) with Millennial's overall customer base. As might be expected, driving to a video view (e.g., movie preview) is the most common campaign objective.
Video (assuming a decent WiFi or network connection) is a very effective ad format in mobile. This is especially true for movie previews, which are regarded as content and not ads by most consumers.
In addition to video views, the other two most common campaign objectives were: driving to a social media page/site and "m-commerce" (buying tickets). Those consumers that have movie ticket apps installed (e.g., Fandango), with a stored credit card, are going to be increasingly likely to buy tickets via smartphones over other methods.
In the US smartphone penetration crossed the 50% threshold earlier this year. And two new reports show that smartphone growth and dominance are accelerating.
The first is a forecast from IHS iSuppli, which projected that 54% of mobile handset shipments in 2013 would be smartphones. This would mark the first time that smartphone shipments will dominate feature phones. It wasn't supposed to happen for three more years.
Part of the popularity of smartphones is driven by "culture," as well as the convenience and value of having a smartphone. But smartphone adoption is also being driven by price. Subsidized smartphone pricing in the US often makes the devices as cheap to buy ($49 - $99) as feature phones.
Separately, Flurry Analytics said in a recent report that 78% of US mobile phone users now own smartphones (iOS or Android devices).
This caught my attention because this figure (78%) is obviously much larger than the Nielsen and Pew numbers that show 50%+ smartphone adoption. Pew, comScore and Nielsen extrapolate from survey samples to calculate the total number of smartphones in the US market.
I exchanged emails with Flurry seeking clarification of this 78% figure and what it represented. Flurry confirmed my interpretation was correct.
The company is saying that 78% of US adults with active mobile devices are on iOS or Android devices. Flurry says that its data are based on actual usage and its population of device owners globally is in the hundreds of millions.
Flurry now says there are 165 million active smartphones in the US today. That compares to a PC Internet population of roughly 220 million.
My view about mobile payments is the following: once people have a positive concrete experience of using mobile payments they'll be sold, so to speak. Most people haven't had those experiences yet. Accordingly there's skepticism or indifference about mobile payments in the US. This, despite more than 20 companies scrambling in a kind of land grab that anticipates a glorious future right around the corner.
Several consumer surveys in the past 12 months indicate Americans are concerned about security and privacy or don't see the need for mobile payments: "see no benefit," "easier to pay with cash or credit cards" are some of the obstacles facing mobile payments adoption. Roughly 70%-75% of survey respondents say they aren't interested.
I'm the first to point out that attitudes and behavior are often two different things. The survey data are surprisingly consistent. Also consistent are findings that consumers in the 25-55 age range are typically the most interested in mobile payments. More educated, urban and usually more affluent consumers are also typically more interested.
We just completed a survey (n=1,501 US adults), which asked whether people were interested in using their phones as mobile wallets, instead of cash or credit cards. The results are very consistent with other surveys from UC Berkeley Law School, the US Federal Reserve and others.
About 29% of respondents (a decent number) say they have varying degrees of interest. Those who are most enthusiastic, however, are a tiny minority (6.8%).
Again, as people start to have real experiences of mobile payments, I believe these numbers will start to rise. But these findings reinforce the notion that there's a mountain to climb. Providers must educate consumers, reassure them on security/privacy and offer them tangible benefits for trying and using mobile payments systems.
An exception to all this is Square and its various imitators (PayPal Here, Intuit's GoPayment, PayAnywhere, etc.). In most of these scenarios the consumer isn't doing anything new; there's a familiar card swipe. The change is all on the merchant side. However as consumers develop familiarity with and start to trust these providers that becomes the basis for trying some of their "more exotic" payment services, where there is a behavior change (e.g., Pay with Square, PayPal Mobile apps).
While we believe that the mainstreaming of mobile payments is "inevitable," the timing and the specific services/platforms that will mainstream them have very much yet to be determined.
Apigee released new survey findings about mobile attitudes and usage in anticipation of Holiday 2012 shopping. The survey polled 2,200 US adults this month and was conducted by Harris.
It found that 57% of respondents "would consider" buying holiday gifts on their mobile devices. Currently the number of Americans who've made an "m-commerce" purchase stands at about 35%, according to 2012 survey data from IPSOS.
In order, Apigee survey found the following to be the most likely m-commerce categories:
The survey didn't ask about specific retailers but all of the above categories (maybe clothing excepted) are popular on Amazon, which continues to be the single biggest beneficiary of mobile commerce (perhaps after Apple iTunes).
Apigee also asked consumers about the perceived benefits of using mobile (apps):
Just over half of the survey respondents had a negative reaction to the idea that a retailer wouldn't have a mobile presence or offer a mobile app. Most damning, 19% said "it makes me think the retailer is old-fashioned" and 7% said it might hurt their loyalty to the store. Younger users were mostly likely to have a negative attitude toward retailers without mobile apps.
Clearly e-commerce isn't the only reason to offer a mobile site or mobile app. There are many other reasons, including getting shoppers into stores, CRM and providing better customer service in the store (or overall).
I wrote earlier this week about a GroupM survey that offers some very interesting insights about mobile showrooming and in-store shopping. That study suggested ways that retailers can integrate mobile into a larger strategy to lure and keep shoppers in stores and combat the showrooming challenge.
Nokia is spearheading what's being called "The In-Location Alliance." The purpose of the new quasi-trade group is to "drive innovation and market adoption of high accuracy indoor positioning and related services." The assumption is that more accurate indoor positioning will create new markets and new revenue opportunities.
According to the press release out this morning: "The Alliance will focus on creating solutions offering high accuracy, low power consumption, mobility, implementability and usability. It will create an ecosystem that stimulates innovation, enhances service delivery, and accelerates the adoption of solutions and technologies that optimize the mobile experience."
There are 22 companies listed as founding members: Broadcom, CSR, Dialog Semiconductor, Eptisa, Geomobile, Genasys, Indra, Insiteo, Nokia, Nomadic Solutions, Nordic Semiconductor, Nordic Technology Group, NowOn, Primax Electronics, Qualcomm, RapidBlue Solutions, Samsung Electronics, Seolane Innovation, Sony Mobile Communications, TamperSeal AB, Team Action Zone and Visioglobe.
The release also indicates the alliance will promote open standards and systems to allow for broad participation by non-member vendors and third parties.
There are a number of companies already operating in the indoor positioning segment, including Google, Microsoft, Wifarer, Point Inside, Aisle411 and others. Interestingly none of them are on the list above. No carrier is part of this inagural group either. However, the alliance is inviting any and all interested parties to join.
Notwithstanding the promise of new business models, that's one of the central questions: how will some of these companies make money? The superficial response is "deals and advertising." Privacy is also another major issue. However I suspect that can be addressed with an opt-in approach, much in the way that Apple does with iPhone apps requesting to use location.
On the YouTube PC site users are permitted to skip pre-roll ads after 5 seconds. This is a brilliant compromise between the need to better monetize YouTube video streams and Google's general commitment to the user experience and performance-based ads.
If users don't like the ads they skip; if they're interested they watch. The advertiser only pays for those who watch the ad after the initial 5 seconds.
It's a great system and Google has now extended it to mobile YouTube video. Google argues the approach is better for everyone and advertisers get much more value by allowing consumers to self-select the ads they watch:
With TrueView, we’ve developed a model where user engagement matters -- people can skip ads they aren’t interested in after five seconds. Giving viewers choice over ads they watch has led to a better, more engaged viewing experience, benefiting the entire YouTube community of users, advertisers, and content creators.
The argument is persuasive to me. It also forces creative types in agencies to really work to make ads more interesting and entertaining. The epitome of that is the previous Old Spice campaign ("The man your man could smell like"), which was a huge "viral" success.
In mobile, ads are either relevant, entertaining or their opposites. Forcing a broadcast, "interruption" model on mobile users doesn't make much sense. You'll just annoy or alienate your audience. Hopefully other mobile video ad providers will follow Google's lead; however I doubt it.
Electronics retailer Best Buy just reported this week that Q2 profits dropped by 90%. That's partly attributed to the weak economy and partly to the phenomenon of "showrooming," where shoppers look at products in stores and buy them later online. That phenomenon has always existed but it has been "exacerbated" by the rise of smartphones and in-store price comparisons.
As more people buy and carry smartphones they're more inclined to use them in traditional retail environments.
Consumer surveys have indicated anywhere from 50% to 80% (or more) of US mobile consumers now use their phones in stores for product and price information, as well as comparison shopping. Amazon and eBay have been big beneficiaries of this trend, but especially Amazon. Traditional retailers have in some cases suffered and in a few instances (i.e., Best Buy) showrooming has become something of a crisis.
Agency GroupM recently released some survey findings and analysis addressing the phenomenon of showrooming. Roughly 1,000 US adults were surveyed and asked about shopping scenarios and attitudes.
As one might expect, the larger the price difference between in-store items and online prices the more likely buyers said they would be to abandon the store. But somewhat surprisingly GroupM found that even a 2.5% discount could have a significant impact on store abandonment: 45% of survey respondents reported they would leave the store. If prices were 5% lower online, 60% of respondents said they would leave.
There is a difference between self-reported survey data and actual behavior. But the GroupM findings reflect the new consumer mindset.
GroupM identified the profile of a likely "showroomer": younger, female, heavy online shopper and lower income. It also found at the other end that 10% of respondents (loyal to the retailer) wouldn't leave the store regardless of online price discounts. However there's a "marginal showrooming" group that is somewhat price sensitive but can be influenced to "stay in the store."
Factors that GroupM identified to help retailers combat showrooming included the following:
Providing good in-store service, which extends to retailer apps, is a key variable here and one that might cause retail executives to balk. They have generally been de-skilling their workforces for years. However they'll suffer the consequences of poor service and indifferent consumers if they don't do something.
Beyond this, a multi-faceted approach is called for, one that implies a great deal more sophistication than what's on display for most traditional retailers today.
PayPal today announced a deal with Discover Card that will potentially bring its mobile payments services to more business locations than any of its rivals, including Square. The potential reach is reportedly seven million merchants.
The new in-store payments capability should be live by Q2 of next year. Consumers will be able to pay by swiping a PayPal card, that in turn backs onto a credit card or checking account or PayPal account balance. In that instance PayPal is no different than using a conventional credit or debit card. However for some subset of merchants (but still perhaps millions) consumers will be able to enter a mobile phone number and a security PIN on the retailer POS terminal (as in the Home Depot implementation).
That mobile + PIN scenario is potentially faster and more secure than a card swipe. Today there are roughly 16 major retailers that have implemented PayPal in stores. However number is expected to grow by the end of the year in advance of the Discover rollout.
Yet PayPal/eBay will need to educate and aggressively market the service to consumers if it hopes to drive adoption. There will also need to be incentives and rewards to get consumers to try the system. Even though the mobile + PIN approach is more secure than a card swipe consumers often express security concerns about mobile payments. There's a perception they're less secure.
The deal with Discover now vaults PayPal back to a leadership position in mobile payments. However mobile payments isn't a zero-sum game. There won't be a single winner. Several major competitors can operate and succeed. Beyond PayPal and Square the question is: who will be the other winners?
See related posts: