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:
The Online Publishers Association has published some new survey data (n=2,450 US Internet users) which mostly duplicate pre-existing smartphone survey research: size of user population, activities, attitudes and so on.
While the data are generally consistent with prior research, a few of the findings appear to contradict or argue with earlier findings. For example, the OPA found that its respondents spent more time "accessing content" via the mobile Web vs. apps. Comscore, by contrast, has reported that more than 80% of consumer time spent on the "mobile Internet" is in mobile apps and only 20% of time spent is with the mobile web.
Beyond this there are a considerable number of findings in the study. Because they are largely duplicative of earlier work, they're not terrifically interesting to me. You can download the entire slide presentation from the OPA site. However I'll pull out a few items that are worth highlighting.
The first is that more than half of survey respondents said they preferred using a smartphone for certain types of content or online activities to PCs and tablets. The question was, "When doing the following activities, which type of device do you most prefer to use?"
The OPA found that smartphone users downloaded an average of 36 apps over the past year. The study also found that 56% of respondents used at least half of the apps they had downloaded on a regular basis. Only 14% of those apps were paid, however.
The survey also found that 70% of iPhone "content consumers" bought paid apps but only 34% of Android users paid for content-related apps. That smartphone content-buying population is more receptive to mobile advertising and more likely to take action in response according to the OPA findings.
Owners of the iPhone were the most positive about mobile ads and most likely to act in response:
At the highest level the findings underscore that there's a very large audience out there that in some cases is more interested in content on smartphones. While there were no earthshattering discoveries in the study, it adds to the growing body of research that reflects the importance of mobile distribution for both publishers and advertisers -- and the missed opportunity for those not currently participating in mobile.
As reported by Reuters late last week PayPal is in a pilot with McDonald's France to test mobile ordering and payments:
McDonald's is testing a mobile payments service featuring PayPal at 30 of its restaurants in France. Earlier this year, McDonald's ran demonstrations of a broader PayPal mobile payments service at its franchisee conference in Orlando, Florida.
A McDonald's spokeswoman confirmed the France tests and said the PayPal demonstration at its conference was part of a booth that features "technology coming within the next 24 months or so."
The concept is that people would order on their mobile handsets and then pick-up that order in a McDonald's location via an express line. However the idea that this system might be coming "in the next 24 month or so" is problematic for PayPal. As the article points out the company is in a kind of land grab or race with other payments vendors but especially Square, which established a major beachhead with its recent Starbucks deal.
In the past this probably would have been PayPal's deal. It now legitimizes Square as a viable alternative to PayPal for larger enterprises.
PayPal has existing in-store payment relationships with Home Depot and Office Depot. Several months ago I used the PayPal system at Home Depot and was unimpressed. There was no real benefit vs. a conventional card swipe. It also didn't expedite the transaction.
However PayPal has international scale, which at the moment Square does not. It's also true that there won't be a single winner in the mobile payments segment. Multiple consumer-facing companies and apps will likely co-exist.
Unlike the Home Depot-PayPal arrangement, which offered no apparent benefit or time savings, the McDonald's trial does offer convenience and time savings to end users.
Getting a payments relationship in place is only the first step. Once these payments systems are in place they become a source of data and a basis for marketing and CRM initiatives.
Many retailers are wringing their hands over the so-called "showrooming" phenomenon, where consumers visit stores to investigate and try products but ultimately make purchases through Amazon and other e-commerce sites. There have been various articles written about how traditional retailers can combat this. Some emphasize loyalty programs while others focus on more "defensive" measures such as developing proprietary SKUs (e.g., Target) so consumers can't scan products in the store and obtain competitive pricing information.
Yet the use of smartphones in stores will only continue grow. It's important for retailers not to fight but to embrace the trend.
While a recent Google survey found only 31% of smartphone owners used them in stores (among apparel shoppers), another survey of 1,557 US adults, conducted in March by Deloitte, found that 61% of respondents used their smartphones in stores.
In addition, data from multiple sources (i.e., InsightExpress, Google, Nielsen) published last year and earlier this year indicate much higher numbers: up to 80% or more use or have used their devices in stores while shopping.
The flip side of "showrooming," the discussion of mobile consumer shopping continues to focus on "m-commerce." However mobile's biggest impact wil be on in-store sales (just as the PC Internet's biggest impact is on in-store sales and not e-commerce). The Deloitte study confirms or reinforces this notion.
The chart below mashes up data from several sources to project that mobile will influence almost $700 billion in offline shopping by 2016.
As with most forecasts these figures are likely to be wrong but it's directionally accurate to say the influence of mobile on traditiona retail will grow dramatically.
What's interesting about the first chart above is how progressively more people use their smartphones as they approach "shopping day." This argues that retailers can provide mobile sites and apps that will support and address consumer needs along a spectrum of time and need: when they're planning to shop to when they're actually in the store.
Mobile apps can provide information that supports the sales and customer service function in stores. (Store and inventory maps could help customers find products; out of stock intems could be ordered for home delivery.) These things can be combined with loyalty incentives and even (eventually) mobile payments in stores. US retailer JCPenney, for example, is ditching its current POS and cash register systems for mobile payments and new payment kiosks.
The larger point is that a great mobile retail app can improve and enhance the customer experience. Retailers don't have to fear mobile.
As Deloitte commented in its report, mobile can increase in-store sales: "Our survey shows that 85% of consumers surveyed who used a retailer’s native app or site during their most recent shopping trip actually made a purchase that day, compared to only 64 percent who didn’t use the retailer’s app or site."
Dunkin' Donuts has introduced iOS and Android apps that enable mobile payments. Ryan Kim at GigaOm used the app at one of the stores and said it worked very much like Starbuck's mobile payments app. Indeed, Starbucks is explcitly the model.
Users don't load a credit card into the app, however, they add an existing Dunkin' Donuts refillable payment card or buy a Dunkin' Donuts payment card through the app.
Below are some screens from the iOS version of the app. It includes a store locator, menu and the ability to send a mobile gift card to others. Another feature that would be nice to see is online/mobile ordering for in-store pickup.
This is yet another example of what I've called "a point solution," which will help educate consumers and bring them into mobile payments in a broader way. They get a very direct experience of the benefits of mobile payments at a famiilar business. If the experience is positive and convenient (clerks scan a 2D barcode at the register) it will help them overcome any fears or uncertainty they may have about the idea of mobile payments more generally.
Dunkin' Donuts has a global footprint with 2,600 stores in 30 countries. The company says it serves 3 million customers per day.
This morning the Wall Street Journal reported that "more than a dozen big merchants are expected to announce Wednesday their plans to jointly develop a mobile-payments network." This new network now goes up against the carrier-led ISIS, Google Wallet, bank-card sponsored systems, PayPal, Square and a range of others. What a mess.
The retailers who've agreed to participate in the new company/system (to be called "MCX") include: Wal-Mart, Shell, Lowe's, Sears, CVS, Publix Super Markets and Best Buy among a few others. They will use customer data and purchase histories to target offers and promotions as part of the system. Those discounts and promotions will also presumably be the incentive to use it vs. others (who will also have offers).
Given that these retailers have more direct relationships with customers than wireless carriers -- ISIS is destined to fail -- they have a fighting chance, provided they can get it right. How easy will it be to configure and use?
Regardless, the addition of yet another payments provider and network into the mix is both confusing to the market and will likely delay consumer adoption of mobile payments. Too many choices causes many people to stick with what they know, which is the existing card-swipe system.
I've argued that "point solutions" (e.g., Starbucks, parking) will drive consumer mobile payments adoption because people will clearly understand the benefits of paying for parking with an app or their Starbucks latte -- as opposed to a more "abstract" system like Google Wallet.
Mobile payments will happen (and are happening in pockets) but all these competing systems are highly problematic for consumers. We're in a "land grab" period right now. Ultimately there's probably room for three or four major winners unless all payment systems are equally built on and can take advantage of the same infrastructure, which NFC-enabled phones and payment terminals can in fact provide. However the NFC-merchant infrastructure isn't yet fully in place.
I won't condemn MCX before I've seen it. But when each week seems to bring a new payments initiative, I have to roll my eyes.
Late last week Google released data (captured and collected by Compete) about the role of digital media, mobile devices and video in US consumers' apparel shopping habits. Overall the data reflect the now many influences operating on consumer decision-making. It also shows how traditional media still play a meaningful role in purchase behavior: they create awareness and stimulate further research on digital devices.
But rather than identifying "which 50%" of the media spend is truly effective, it seems that it is getting progressively more complicated for marketers and correspondingly difficult to correctly attribute sales or "conversions" to specific campaigns.
Q: How soon after the last time you saw or heard each of the following types of apparel ads did you look up the advertiser online to get more information?
The Google-sponsored research, as mentioned, offers a range of findings. Below I examine some of the mobile-specific data.
Q: Which of the following online sources did you access on your mobile phone?
The largest single category in the slide above is search. Google uses this data in part to impliedly make the case for mobile search advertising. But the more interesting interpretation of this slide is that search penetration on mobile devices (in this study and apparel category) is far less than on the PC where as much as 95% of the online population uses search engines. (There are other data showing greater mobile search usage.)
In the slide below, echoing lots of other data, most mobile consumers are comparing prices, looking for deals and reading product reviews on their phones (and tablets).
Q: Which of the following did you do on your mobile device while researching or shopping for apparel?
One thing that's interesting about the findings of this Google-Compete study is the fact that most of the mobile usage happened at home vs. any other location. At least among apparel shoppers, fewer of them are using their devices in stores than other survey data have shown. In other surveys numbers have been as high as 80% - 90% of smartphone owners using devices while in retail stores for various purposes.
Q: From which of the following locations did you use your mobile device(s) (e.g., mobile phone and/or tablet) to shop for apparel?
The fact that tablets owners and tablet usage are included in these findings may account for the smaller in-store usage figures. In addition, the sample size was relatively small (n=161). Regardless, it's accurate to point out that a considerable amount of smartphone usage happens at home. Accordingly, marketers cannot and should not assume that smartphone users are always "out and about" when consulting their devices.
Though not explored in this study, it's also generally true that mobile research is followed up by online or in-store (rather than mobile) purchases.
Mobile industry and carrier watcher Chetan Sharma has pulled together mostly carrier-published data for a mid-year update across a range of topics relevant to the wireless industry. I pulled four of his slides below; however you can see the full presentation here.
The first slide below shows increasing smartphone penetration in the US and abroad. No surprise here; this has been in the survey data for months. In Q2 smartphone sales exceeded 70% of new handset sales in the US.
Outside the US smartphone penetration isn't rising quite as fast. However it will accelerate and US smartphone growth will start to slow over the next 12 to 24 months. Feature phone sales in the US are now clearly in the minority.
The next slide shows handset market share by manufacturer, with feature phone sales representing only about 30% of total handset sales this year.
Particularly striking in the chart above are the following:
The graphic above shows the relative shares of voice and data on US carrier networks. Data, in red, now entirely eclipses voice. In 2009 the two were had nearly equal shares of traffic on carrier networks.
Finally, the following chart shows the ratio of WiFi-only tablets tablet sales with carrier network connections.
I'm drawing a few inferences but it appears the data show consumers are avoiding additional carrier fees and service plans, preferring to run tablets on WiFi networks. Notwithstanding some of the new shared data plans it appears that carriers will not derive significant new revenues from the growth of tablets.
With nearly 50 million tablets in the US market, carrier-networked devices constitute roughly 8% of the total. The lure of discounted devices in exchange for two-year contract commitments isn't succeeding in getting customers to pay additional carrier fees. Beyond basic consumer resistance to new fees, the $199 Kindle Fire, Nexus 7 and potentially forthcoming 7-inch iPad, undermine the appeal of carrier discounts.
Yesterday Starbucks and Square made a big announcement. The deal is huge for Square and will make it the payments processor for US Starbucks locations. The coffee-lifestyle company also invested $25 million in Square at a $3.25 billion valuation. Starbucks CEO Howard Schultz joined the Square board as part of the deal.
Here are the basic terms:
Why is this important and what's important about it? Clearly it's a massive win for Square, which becomes the undisputed "mobile payments" leader in the US with this deal. It brings, scale, prestige, brand recognition and revenue to Square.
However there's nothing actually new here for Starbucks from a consumer experience standpoint. Starbucks has offered mobile payments through its smartphone apps for some time. That will continue.
Square's "Pay with Square" consumer app and local business directory will also become an accepted form of payment at Starbucks. This will give a significant boost to the app, which hasn't been widely adopted.
I've described Starbucks before as "The American Idol of mobile payments." That's because it's in a nearly unique position to educate consumers and introduce them to mobile payments in a specific context, where they can experience the efficiency and convenience of paying without using cash or physically swiping their credit cards.
I've also recently written that it's this type of "point solution" experience that's going to be the driver of mobile payments rather than abstract, "horizontal" apps such as Google Wallet. Ultimately, however, Google Wallet and others may be the beneficiaries of the Starbucks-Square partnership and the "education" it brings to the market.
The high profile nature of this deal may motivate similar deals or the acceleration of mobile payments at other fast-food and "fast causal" eating establishments. I wouldn't be surprised, for example, if McDonald's initiated a mobile payments pilot of some sort in the very near future.
Being a payments startup is hard, even for one funded by megabank JP Morgan Chase. The Chase-backed GoPago, which launched a mobile app in late February this year, has struggled for awareness and consumer adoption in a crowded market where most people don't even recognize the need for mobile payments.
In addition to mobile payments the consumer-facing GoPago app also provides a range of additional services, including online ordering and a number of small-business marketing capabilities. Before launching the company developed a cloud-based POS system that interfaces with established POS systems. GoPago sought to create a kind of self-contained marketplace for local businesses and consumers not unlike PayPal's mobile marketing and payments strategy.
But that didn't work -- at least not yet. Now the company is using its cloud-based infrastructure to go after SMB merchants, who are also aggressively being courted by Square, PayPal, Intuit, Groupon and others.
GoPago this morning introduced a POS terminal called "GoPago Live," which goes much further than its competitors. Rather than being simply an iPad and software (it uses an Android tablet), GoPago Live offers a complete POS system, a cash box, receipt printer, card reader and 4G Internet access -- all for free. There's also 24 hour customer support.
In return GoPago takes 2.85% per transaction, which is competitive with PayPal and Square. Payment processing is provided by Chase Paymentech. Interestingly GoPago even shields merchants from Amex's higher transaction fees. It will allow merchants to accept Amex for the same 2.85% fee.
Assuming it all works as advertised, I haven't seen a demo, this is a pretty compelling package for local merchants. GoPago told me that the company is targeting neighborhood businesses with revenues in the "low six-digit range."
The challenge once again is rising above all the "noise" in the market. But the substantial cost savings available to merchants using GoPago Live (perhaps between roughly $5K and $15K per year) should help drive word of mouth and general SMB awareness. And while the Chase connection didn't help very much in getting consumers to adopt the mobile app, GoPago may have more success using Chase to drive awareness and adoption on the merchant side.
Nielsen has identified the top mobile shopping apps for June in the US market. The list is as follows:
While eBay and Amazon have been on top of this list since its inception, ShopKick and Walgreens are a bit of surprise to me. However it's not clear precisely how Nielsen defines the "shopping" category.
While eBay had a little over 1 million more users than Amazon (13.16 vs. 12.12 million) the time spent with the eBay app was much more than Amazon users (1:04 vs. 18 minutes). The discrepancy can likely be explained in the fact that Amazon users are probably much more directed, looking up prices, reviews and product availability while eBay users probably browse and look at many more pages.
Beating both by a mile was ShopKick, with three hours, 19 minutes (3:19) on average June. That kind of engagement is truly impressive.
Last night Nuance Communications took the wraps off Nina, a virtual assistant for enterprise mobile customer service apps. The comparisons to Siri are immediate and obvious. However Nina doesn't directly compete with Siri; it's not a consumer app. Rather Nina extends Siri-like "conversational" interactions to enterprise mobile apps -- in the hope and expectation of delivering better customer care experiences.
Dan Miller has written up the announcement and what it means for mobile customer service on the Opus Research blog. The first announced enterprise to take advantage of Nina is bank USAA (launching next year). Nuance is offering a developer SDK and APIs and is enabling customization, extending to the persona/voices. Consequently one enterprise's version of Nina can look and sound very different than other's.
For purposes of this post, however, I want to focus more narrowly on one piece of the Nina experience: password voice authentication. This is unlikely to draw much coverage and will be overshadowed by the Siri comparisons and discussion.
Password voice authentication for mobile devices is a technology that has existed for some time. But there's no mainstream implementation of this capability really until now. There's also beta product called Kivox, available for Android handsets but not through the Google Play or Amazon markets. It has to be downloaded directly in a convoluted process that will elude mainstream users.
It's very painful to enter passwords manually (password and username) on a smartphone. And it has to be done again and again. While Safari and Chrome offer to remember passwords that doesn't always work. By contrast voice biometrics for password entry is an elegant solution to the small screen problem. It could also eliminate the need to create conventional passwords entirely. There would be nothing or very little to remember or write down. You'd just speak your "passphrase."
The voice authentication capability is actually part of a separate module that Nuance offers. It can be integrated into apps without the full Nina integration. I'm not an expert on voice biometrics -- Opus' Dan Miller is the leading expert on voice biometrics and chairs the VoiceBioCon event -- but this is the part of the Nina announcement that I was most excited about.
Assuming it works well, it relieves a major headache for me in dealing with passwords on mobile sites and smartphone apps. While Nina will undoubtedly be widely adopted and successful, voice authentication has the potential to be equally transformative of the user experience. So would voice-initiated payments and transactions, but that's entirely different post.
Below is a video showing a demo of Nina.
Yesterday I spoke with yet another company in the mobile payments space. It faces challenges of awareness and adoption, like most competitors in this segment. Also yesterday Google Wallet upgraded to enable any credit or debit card to be used in conjunction with the app. The problem is there are only six phones in the US, operating on the Sprint network, that are compatible with Google Wallet. Verizon, AT&T and T-Mobile either don't have Google Wallet-enabled phones or aren't permitting its use right now (i.e., Verizon).
Today TechCrunch reports on new funding and a new CEO for QuickPay, a mobile parking app. In addition to QuickPay, I have two other parking apps on my iPhone: Parkmobile and PayByPhone. I love these apps because they enable me to pay for parking very efficiently, without relying on coins or even a credit card (which was a great innovation at parking meters until mobile apps came along). With these apps I can also extend time remotely, which means I don't physically have to go back to the meter.
The superiority of the experience afforded by these apps vs. the old way of paying for parking is dramatic. This is the kind of scenario (point solutions with specific use cases) that will drive consumer adoption of "mobile payments," which won't be seen by consumers as "mobile payments" (with all the corresponding security fears) but simply as a great convenience instead.
Once consumers have become accustomed to using mobile payments point solutions such as parking apps, they'll be much more comfortable with mobile payments generally and embrace mobile wallets such as Google Wallet -- provided there's merchant adoption and general availability.