I have been arguing for the past two years that despite security concerns and an apparent lack of interest in mobile payments at the "national" level, consumers immediately "get it" when they find mobile payments embedded in a context whose value is self-evident. One such context is transportation.
There's been a great deal written about the disruptive impact of services such as Uber and Lyft on traditional taxis and transportation. The cheaper Uber X service, utilizing part-time drivers, is on average less expensive than conventional cabs. But I had an interesting experience recently that clearly reflected the power and value of mobile payments (convenience rather than cost) as a competitive differentiator.
The other day I got off a train from San Francisco to the East Bay where I live. At the bottom of the escalators were three taxis lined up and waiting for fares. I could have taken one immediately. Instead I pulled out my phone and called Uber X -- because I knew I wouldn't have to pay with cash or do a credit card transaction when I got out of the cab. (Uber stores credit card information and provides receipts via email.) I also appreciate the fact that I don't have to calculate and include an additional amount for a tip with Uber X.
The convience of not having to engage in a payment transaction was the consideration that made me wait five minutes rather than just get in a cab at the station. My own experience showed me the power of mobile payments as a differentiator and loyalty feature. The same will likely prove true for OpenTable as it rolls out mobile payments, giving consumers an additional reason to use the service, along with loyalty points and online reservations.
Eventually mobile payments in the form of stored credit cards will make their way into most apps -- especially if Apple enables "pay with iTunes." For now, developers and publishers that integrate early will reap competitive advantages over those that do not.
OpenTable has begun rolling out mobile payments in a test with selected restaurants in the San Francisco Bay Area. The intention to introduce mobile payments in OpenTable was first reported in July of last year.
The official announcement came in a blog post earlier today:
OpenTable mobile payments are currently being tested by diners at select restaurants in San Francisco. Over the next few weeks, we will be adding more diners to the test program and will provide you a way to request access.
Mobile payments will continue to gain momentum in "vertical" or specialized contexts such as this or Starbucks, Uber, AirBnB and a host of others. Many of these, including OpenTable, are explicitly or essentially "vertical marketplaces" where payments are increasingly integrated. The difference between these apps and something like Amazon, which has your credit card on file, is that you're paying for services in the real world.
We're bullish, as they say, on the outlook for payments through vertical-mobile apps. By contrast, "horizontal" payment apps such as Google Wallet, ISIS and even PayPal (for offline services) have little or no traction because consumers don't see the point in the abstract. However the benefits of paying through the OpenTable app are fairly obvious: no more waiting for the check; no more waiting for the card to come back to the table. It should meaningfully compress the time it takes to pay and leave a restaurant. (It will also reduce credit card theft by restaurant personnel.)
Eventually consumers will warm to the broader mobile wallets, after they've had sufficient exposure and experience with mobile payments a specific context -- such as OpenTable. Very concrete use cases with obvious benefits will help train consumers to trust and adopt mobile wallets/payments, which will eventually pave the way for services such as ISIS or Google Wallet. Apple may be an exception to the idea that consumers aren't ready for a single mobile wallet to substitute for conventional card payments. The company appears to be gearing up to offer a "pay with iTunes" capability.
Transaction data yielded by payments also offer a next level of intelligence, personalization and marketing capabilities to those providers that integrate them.
Before payments, OpenTable knew if you reserved a table and actually showed up (or were a "no show"). Now the company will potentially know what you've ordered too. That can be shared with the restaurant for diner insights and loyalty purposes (see also, Swipely) and/or used by OpenTable in several ways to more precisely segment and market to restaurant-goers as well.
Related: OpenTable also announced that it had acquired restaurant recommendations site/app Ness (sometimes also characterized as an intelligent assistant) for just over $17 million.
Yesterday Twitter, Yelp, AOL and Pandora released quarterly earnings. AOL said that mobile was one of several drivers of 50% ad revenue growth. Yet it didn't break out any mobile numbers. The other three did, illustrating the degree to which each is or has become a mobile-centric company.
Below are the mobile highlights . . .
Twitter beat financial analysts’ expectations with $243 million in Q4 2013 revenue ($220 million in ad revenue). However that strong revenue growth was undermined by weak user growth. The company said it had 241 million monthly active users and nearly as many (184 million) mobile users.
Amazingly, 75% of the company's ad revenue for Q4 came from mobile. In real dollar terms that represented $165 million for the quarter.
Yelp reported just under $71 million in Q4 revenue. There were 53 million mobile users (120 million total users). Yelp also reported that 30% of new reviews were coming from mobile devices, since it started allowing reviews to be written via mobile.
Yelp added during the earnings call that 59% of search queries were from mobile: 46% from its app vs. 13% from the mobile web. In addition, 47% of ad impressions were served on mobile devices in Q4.
Revenues for the full year were roughly $638 million. Pandora brought in just over $200 million in Q4. Of that, $162 million was ad revenue. Mobile was responsible for 72% of that ad revenue or just under $117 million. The company also said that 80% of Pandora listening happens via mobile devices.
All three companies started on the PC and have evolved into mobile-centric entities in response to user behavior. Indeed, Pandora's iPhone app is largely responsible for the company surviving and going public. Overall for these companies most of the ad growth, revenue and usage is now in mobile.
Both the NFL and Major League Baseball (MLB) will beat most US retailers to the punch when it comes to implementing "indoor location." Many major retailers are testing, piloting and experimenting with indoor location today (or planning to) but have not done any system-wide rollouts. Apple and American Eagle are exceptions in the US.
However these two major sports leagues are already deploying additional WiFi and new BLE beacons in an effort to enhance the fan experience in stadiums and to create new loyalty marketing opportunities.
In a broad article this week discussing iBeacon and some of the privacy concerns about the new location technology, the New York Times explains how the NFL has installed beacons in Times Square and at MetLife Stadium in New Jersey, where the Super Bowl is happening. Smartphone owners with the NFL Mobile app will receive game related alerts and messages tied to location:
A mobile app called N.F.L. Mobile will enable football fans who visit the New York area for the Super Bowl to get pop-up messages on their cellphones, tailored to their exact location. The system uses a series of transmitter beacons scattered through Midtown Manhattan to deliver various messages depending on the cellphone user’s location. The system will also be in use at MetLife Stadium in New Jersey.
MLB has been even more aggressive with its rollout of iBeacon/BLE technology. There will be enhanced WiFi and iBeacon technology at all 30 major US baseball stadiums this year. To participate in the new services, smartphone owners will need MLB's "At the Ballpark" app:
MLB.com At The Ballpark is your favorite mobile companion when visiting your favorite Major League Baseball ballparks. This official MLB ballpark application perfectly complements and personalizes your trip with mobile check-in, social media, offers, rewards and exclusive content. Select MLB ballparks also offer mobile food ordering and seat and experience upgrade components.
In both cases, an improved in-stadium fan experience is the stated, primary motivation for deployment of the technology. In the coming year, we'll get a great deal of information about how consumers respond to the capabilities in these sports contexts and whether they raise significant privacy concerns. Yet both leagues appear very mindful of privacy issues and are taking care (at least initially) to tread lightly.
Coinciding with the recent National Retail Federation conference, Cisco released the results of its annual Consulting Digital Shopping Behavior survey. The survey polled 1,174 US adults, "representative of the United States broadband population by age, income, and region."
Cisco grouped its survey respondents into two categories: "Digital Mass" shoppers and "Uber Digitals." The Digital Mass category had a media age of 40 to 44 and were primarily PC-based shoppers (though they possess other devices). The Uber Digitals were younger (median age 30 to 34) and were more mobile and tablet oriented. They comprised 18% of the audience, while the Digital Mass was 80% of the respondent population.
Beyond age and device preferences, a key distinguishing factor between the groups was the use of mobile devices in stores by the Uber Digitals. This group, its attitudes and behaviors are leading indicators of where the entire market is headed. Beyond this there were a number of interesting and potentially important insights from the study:
The research showed that some of the privacy and trust objections to retailers could be overcome with discounts and other incentives. Both categories of shoppers said (in nearly equal numbers -- roughly half) that "they would provide more personal information if a retailer guaranteed either a percentage or dollar savings on their next purchase."
Cisco also tested a number of shopping concepts with these respondents. Among them:
Among these the two that had the highest positive response were the 1) best personal price app and 2) in-store mobile concierge. In the latter case, here's what was presented by Cisco:
An opt-in smartphone application that greets customers as they enter the store, guides them to the items they want, and provides shoppers with interest- and location-based information and offers. With 42% of all respondents saying they would use Mobile Concierge frequently or always, it was the second most popular concept. Among Über Digitals, 66% selected this concept. The top segment was consumer electronics, at 47%.
There are some potential contradictions in the findings but basically everything stated above and in the report can be boiled down into the following ideas:
These survey findings underscore the complex and fairly nuanced road ahead for retailers, which will need to be very thoughtful about their rollouts of indoor location and policies around data collection. But the survey data also validate the role that mobile does play and could play in stores to boost sales and enhance the overall customer experience.
Last week Starbucks announced its quarterly earnings. Most interesting to us about the announcement and related conference call was the company's discussion of mobile and specifically mobile payments.
CEO Howard Schultz said on the earnings call that, "together mobile and Starbucks card payments represent over 30% of total U.S. payment." He added that roughly 10 million customers are using the company's in-app payments capability. Schultz also reported that nearly "5 million mobile transactions [are] taking place in our stores each week."
There are several things interesting about this. First the volume and scale are considerable. These are Starbuck's best customers generally speaking -- Schultz said that 50%+ of the mobile payments customers are "gold status" members -- but the convenience of mobile payments is also helping reinforce their loyalty to the chain.
Unlike "horiztonal" mobile wallets (e.g., ISIS, Google Wallet) this is the kind of scenario driving mobile payments in the market today: a very specific use case with clear benefits to consumers. On the strength of these data and general recognition of the opportunity we'll see more and more QSR and similarly situated restaurant chains adopt an app-based mobile payments model this year.
It appears the question is no longer whether Apple will break into mobile payments but when. A payments-related patent application recently surfaced that indicated Apple is quite serious -- at least over the long term -- about mobile payments. After all, it's a natural for the company.
Yesterday the Wall Street Journal reported additional details that indicate Apple may be preparing to enter the market sooner rather than later. Here are some of the key facts from the story:
These moves don't guarantee Apple will enter the space but they're strongly suggestive of it. Apple has roughly 600 million consumer credit cards on file in iTunes. It also has a consumer trust advantage over other competitors in the segment. (Wall Street would celebrate an Apple move into payments.)
Apple's fingerprint sensor could become a key security feature of a Pay with iTunes/iWallet service. However there's considerable complexity still "on the back end" with real-world retailers and merchants and their POS systems. Retailers also have their own mobile payments initiative, which could create resistance to Apple just as carriers supporting ISIS have resisted or blocked Google Wallet. Those factors would probably limit the immediate availability of an Apple payments solution for goods at major retail stores, though not necessarily at places such as QSR and fast-casual restaurants.
It would be technically easier for Apple to enter e-commerce and create a PayPal or Pay with Amazon competitor. Perhaps most likely, however, Apple could enable app developers to incorporate a Pay with iTunes capability, which would in turn enable payments for offline services (AirBnB, Uber, Dash, etc.). This is where "mobile payments" has traction today -- in specific apps or "vertical" contexts with a stored credit card.
Apple's Passbook app would probably get merged into or incorporate any Apple payments program. I would also expect that iBeacon (BLE) would be tied in to an Apple payments solution (as with PayPay Beacon). All this potentially adds up to a very powerful set of related capabilities including location awareness/indoor location, couponing/loyalty and in-app payments (for e-commerce and offline services).
An Apple payments service could also operate as a meaningful differentiator vs. Android handsets for both app developers and consumers. Google Wallet's offline payments capabilities have so far failed to catch on.
I also wouldn't be surprised if Apple made one or more (high profile) acquisitions before launching payments to bolster technical capabilities. Google would probably be motivated to compete for some of the same acquisitions -- for its own sake and/or to keep them away from Apple.
In the near term, a comprehensive mobile payments solution will probably require a hybrid approach to offer merchants and consumers a couple of ways to accept mobile payments and to pay. And while mobile payments have yet to gain mainstream adoption, Apple is one of the few companies that could really accelerate the market.
Email marketing and "mobile marketing" are now effectively synonymous -- or should be treated that way. There's no trend that illustrates the decline of the PC perhaps better than the consumer shfit from reading email on PCs to mobile devices.
In Q4 roughly two-thirds of all US emails were opened on tablets or smartphones, according to Movable Ink’s Q4 2013 US Consumer Device Preference Report. That's up from 61% in Q3 and it will probably continue to grow (perhaps to 75% by year end). Although these are US data, the trend directionally applies to other developed markets.
Source: Movable Ink
Here are some of the topline data coming out of the Movable Ink report:
Despite the steady climb in mobile email usage, far too many marketers still act as though their emails are being opened mostly on PCs. And even when HTML emails are formatted for mobile devices too often the landing pages and subsequent websites are not.
The buzz around iBeacons continues this week with a couple new hardware and software technology vendors entering the market for indoor location.
Hardware startup Sensorberg, based in Berlin, Germany, has secured $1 million in funding from Technologie Holding GmbH and undisclosed angel investors. Sensorberg offers various packages to retailers that combine setting up Beacon sensors in stores to deliver mobile marketing campaigns and location features via software developer kits and management dashboards. The prices range from as low as $120 (€89) that includes 3 mini-beacons and an SDK to connect apps to an unlimited package that offers developer resources and enterprise support.
Founded in 2013, Sensorberg began as a startup in the Microsft Ventures Accelerator in Berlin and plans to use the new funding to further develop its platform and build an extensive iBeacon network.
Meanwhile, in Los Angeles, CA, Datzing is positioning itself as a new competitor to Apple's iBeacon with an Android platform for indoor location technology. Profiled this week at The Verge, Datzing is a software-based startup with patent-pending technology to turn a Bluetooth or Wi-Fi device into a beacon. Datzing doesn’t require purchasing any special hardware to set up an access point. The company plans to launch an Android beta app in March and doesn't rule out the possibility of an iOS option down the line.
While iBeacon is getting more than its fair share of press -- notably, a partnership between ShopKick and American Eagle (AE) Outfitters to outfit 100 U.S. stores with iBeacons and Apple's chain-wide deployment of iBeacons last year -- the push for in-store marketing and indoor location is still in its infancy. This year should present a good opportunity to see how the market plays out.
For the past several years there's been speculation about whether and when Apple might throw its hat into the mobile payments ring. A new patent application (filed in Q3 2012 and discovered by Patently Apple) indicates that Apple is ready to move and introduce an iWallet.
Here's the abstract, which indicates use of two or more technologies to enable the transaction:
A commercial transaction method is disclosed. The method first establishes a secure link over a first air interface by a purchasing device. This secure link is between the purchasing device and a point of sale device. The method further identifies a second air interface, which is different from the first air interface, and the second air interface is used to conduct a secure commercial transaction.
Multiple technologies are discussed, including Bluetooth Low Energy (behind iBeacons), near-field communications (NFC) and RFID The failure to incorporate NFC into the iPhone was regarded generally as a rejection of the technology by Apple in favor of others (e.g., BLE). However the patent application suggests that future iPhones (and iPads) would potentially be compatible with it.
Apple's failure to build NFC into the iPhone is one reason it has stalled in the US. However, as the patent application suggests, NFC in the US may not be dead after all. We'll see.
The precise technologies and methodology described in the application are less important than the existence of the application itself. Mobile payments for offline services or goods are starting to happen but generally not in a "horizontal" context. They're happening today in very specific scenarios (e.g., Uber, Starbucks, parking apps, dining). Google Wallet and carrier-backed Isis, which are broad "horizontal" payments platforms, have largely failed.
Given its installed base of users and credit cards on file Apple could potentially spark widespread adoption of payments by consumers. Apple has more than 600 million consumer credit cards registered. That's quite a bit more than even Amazon and more than PayPal as well.
The payments segment will consolidate in the next 12 to 24 months and there will be a number of additional acquisitions by the major players for technology or to remove competitors from the market.
Ultimately mobile payments -- paying with smartphones for goods or services in the physical world -- will shake out as follows: mass-market/horizontal mobile wallets dominated by a few major players: potentially Apple, Amazon, PayPal, potentially Square and maybe Google. Banks are a wild card.
Otherwise individual apps (including retailers) will offer to store consumer credit card information for faster checkout or frictionless offline payments. But the payments giants will also likely be options within these app/vertical contexts as well (e.g, PayPal, pay with Amazon, pay with iTunes).
Push notifications and mobile marketing platform Urban Airship released data last week that shows how push messaging can boost engagement and app-user retention. The company, which provides notifications functionality for publishers and app developers, compared how opted-in push messaging users behaved vs. those who had not elected to receive notifications in six verticals.
Those verticals were: retail, media, entertainment, gambling, sports and games. The study covered 2,400 apps and more than 500 million push messages during a six month period. At a high level Urban Airship found:
The company also reported that on average just under half of app users opted-in to receive push notifications. Though this is logical and may be intuitive, this is the first time the impact of push notifications has been documented empirically to my knowledge.
The engagement and retention differences among those who received notifications vs. app users who did not varied by industry. But in all cases engagement and retention were boosted, sometimes dramatically.
It may be that those opting-in were more favorably inclined toward the publisher or app and thus were predisposed to be more engaged with the content. However I think it's beyond dispute that push notifications, if used judiciously and correctly, can boost app engagement.
The problem is that most requests to allow notifications come immediately upon download and often before someone has had an opportunity to see the value of an app or of notifications. I routinely opt out because I fear they'll be abused by publishers and I don't want to be constantly interrupted.
Publishers, retailers and marketers should do a better job of explaining the benefits of turning on push messages for the end and perhaps not request an opt-in immediately upon download. It would also be interesting to know, for the 50%+ who did not opt-in, what were their thoughts and rationales.
For at least a decade analysts and car makers have been discussing, debating and forecasting telematics. Until this point, however, telematics has mostly been about in-dash navigation. More recently, with Microsoft Sync and similar inititives, we've seen a move to integrate speech and smartphone-like app experiences into in-dash "infotainment" systems.
Apple, Microsoft and now Google are trying to expand their reach into the "connected car." This year's CES has featured a number of auto-related announcements. Among them -- and arguably the most significant -- is the Google-led "Open Automotive Alliance" (OAA). With the OAA Google seeks to bring Android into the car in a deep way:
The OAA is aimed at accelerating auto innovation with an approach that offers openness, customization and scale, key tenets that have already made Android a familiar part of millions of people's lives. This open development model and common platform will allow automakers to more easily bring cutting-edge technology to their drivers, and create new opportunities for developers to deliver powerful experiences for drivers and passengers in a safe and scalable way.
One can imagine that if the initiative expands and succeeds it will boost Android generally and become a new channel for Google services (i.e., Gmail, Google Maps, Music, Google Play) and advertising.
Early members of the OAA, which mirrors the earlier Google-led Open Handset Alliance, include Audi, GM, Hyundai and NVIDIA. Microsoft currently works with Ford and Toyota via its Sync system. And in 2012 Apple announced partnerships to bring Siri into the car with a number of car makers, including BMW, GM, Mercedes, Audi, Toyota and Honda, among a few others.
It's not clear to me from a technical standpoint whether auto OEMs can built multiple operating system compatibility into their vehicles or whether they'll have to bet on one. However there's much at stake in this "battle for the dash."
The operating systems that "win the car" will see a boost all around. For example, if Android beats Apple and Microsoft in the car it will help Android more broadly in the market, or vice-versa. As in-dash systems become richer and more complete, people will want their devices and apps to be compatible and accessible in the car.
The "battle for the car" also mirrors the so-called "battle for the living room" among these tech titans. It's really a battle of operating systems and ecosystems across multiple platforms.
It's amazing to think that Pizza Hut has been doing online ordering for 20 years. That would mean Pizza Hut took its first online order in 1994 -- way ahead of the curve. And when it comes to mobile Pizza Hut again appears to be ahead of the market.
Today, according to Pizza-industry publication Pizza Marketplace, roughly 30% of all Pizza Hut orders come from the internet. But half of those are now coming from mobile devices, with momentum favoring mobile (smartphones + tablets) over the PC.
The Pizza Marketplace interview is with Pizza Hut's Kevin Fish, senior e-commerce manager. He sums up the company's attitude toward mobile as follows:
It's important that we're where our customers are and that our experience meets and exceeds their needs. The app offers us the opportunity for a highly engaging and personalized experience. Meeting our consumers at their point of need is become more and more important as technology continues to advance. Our opportunity now was to provide the best experience in the industry with enhancements that meet those consumer demands.
Pizza Hut is using its app to not only deliver services but to engage and cement the loyalty of its users. The company also uses location to deliver specific local promotions and offers that aren't necessarily available in all markets nationally.
I'm not a fan of Pizza Hut pizza but the company really has the right attitude toward multi-channel marketing and engagement -- with its mobile app (and all the personalization it allows) now at the center of its "online ordering" strategy.
According to multiple sources roughly 80% of consumer smartphone time is spent in apps vs. the mobile web. However in the retail segment the story is almost the opposite. Most consumers engage with retailers through the mobile web vs. apps. That means loyalty and mobile engagement are more limited in the category.
The exceptions are Amazon and eBay. According to early December data from comScore Amazon and eBay apps dominate the mobile retail category (Apple's #3 status almost doesn't count here because of its privileged position on the iPhone).
The chart below shows leading retailers' audience reach and time spent by device categorty:
Early on Amazon and eBay invested very aggressively in mobile app development vs. traditional retailers and many other e-tail "pure plays." As a consequence consumers downloaded them "early" and have continued to be loyal to these apps.
What comScore doesn't discuss is that eBay and especially Amazon's apps are often used in retail stores to compare prices and for product reviews content. However, as the metrics firm points out, retailers without apps on consumer smartphones are at a competitive disadvantage.
While retail apps are used for buying sometimes, multi-channel retailers need to start thinking very differently about their apps and see them equally as in-store "assistants" rather than just extensions of PC websites. They will also need to expose and lobby consumers in multiple channels on the benefits of downloading their apps. Apps should be seen along with email as part of a broader, more holistic loyalty and engagement strategy.
Startup Expect Labs has launched its MindMeld app after months of being in private beta. A crude but quick way to describe it is: Google Now meets Skype. Expect Labs, founded by Tim Tuttle, describes it as a "voice assistant." But that doesn't really do it justice.
Many bloggers and tech sites are reviewing MindMeld. In a way that misses the bigger picture. The app is really a "technology showcase" or demo for something larger and more forward looking. Expect Labs, which charges $4 for the app, doesn't see MindMeld as a money maker and isn't staking its future on the success (or failure) of the app.
First, here's what MindMeld does: it listens to your conversation, with one or several people, and in real time shows you pages and websites that are relevant to the discussion. The sites and data are coming from various APIs and the internet broadly. If you and your friends are talking about going to New York on vacation, for example, it will start showing hotels, restaurants and things to do based on the specifics of your conversation.
The key challenge here is filtering "signal" from "noise" and finding relevant pages and sites. Expect Labs' CEO Tim Tuttle says that the technology has significantly improved over time and the app has changed somewhat from its inception to its launch today. For example, it used to listen to the entire conversation. However now it will pause and users are required to initiate "searching" via an "OK MindMeld" wake up phrase.
The underlying technology seeks to deliver a better search and discovery experience on devices where the keyboard isn't particularly useful or there's no keyboard. There are myriad inputs into "search results" (anticipatory search results): time of day, location and "context" broadly speaking. If you sign in with Facebook it also grabs other information about you as another relevance input.
Expect Labs' technology, while imperfect, is really the fulfillment of the vision behind Google Now: real-time, useful information that dynamically changes based on context. MindMeld is the "1.0" expression of that vision. Speech recognition is from Nuance but the natural language understanding is Expect Labs' own technology.
There are a number of enterprise use cases in development; and one can see this technology being incorporated into a wide range of general and vertical applications. Google Ventures is an investor, as is Intel. Those are two potential buyers of the company.
The technology is impressive and the major practical question for Expect Labs will be where to focus and how to fully express what the technology can do in a commercial context.
Earlier this year Opus Research held the first conference dedicated to indoor location and its marketing implications: The Place Conference. The theme of that event was how indoor location technology and mapping would change online and mobile marketing across the board, bringing the digital and offline worlds closer together.
At the event we explored the technology, marketing scenarios, privacy considerations, analytics and customer experience improvements that flowed from use of indoor location technology. Three months later we're starting to see increasing momentum in the segment, with new deployments, announcements and some acquisitions (which will increase next year).
Indoor analytics provider RetailNext, one of the speakers at the Place Conference, recently announced the acquisition of Nearbuy Systems. And earlier today AP reported that Apple was now rolling out Bluetooth Low Energy (BLE) beacons to all of its 254 retail stores. That will pressure and/or embolden other retailers to follow Apple's lead.
Under the radar, most US retailers (and others) have to varying degrees been experimenting with indoor analytics and location. However they've been hush-hush about it, for fear of being criticized as Nordstrom was when it disclosed it was using indoor analytics. But greater public discussion and education around indoor location will change the tone of coverage from "spying" to focus on consumer and B2B benefits.
Apple's March 2013 acquisition of WiFiSlam helped raise the profile of indoor location. The company's new rollout of iBeacons across its retail network will further legitimize the segment.
Indoor location is one element of a larger "ecosystem" of proximity marketing that includes geotargeted mobile advertising, notifications, analytics and online to offline ROI tracking. Mobile payments are also in this mix (see PayPal Beacon). Next year will be an eventful and exciting one for indoor location and place-based marketing.
Place 2014 is coming soon.
Roughly three years ago Steve Jobs opined that search wasn't as central to the mobile user experience as it is on the PC. That sentiment elicited dismissals as naive or self-serving and was generally disputed. This is what Jobs said verbatim:
On the desktop search is where it’s at; that’s where the money is. But on a mobile device search hasn’t happened. Search is not where it’s at, people are not searching on a mobile device like they do on the desktop.
It turns out that when you consider what he actually said, Jobs was exactly right.
Various surveys have found that search is widely used on smartphones. But it's not used as often or as centrally as on the PC. Indeed, search is a more occasional or peripheral experience on smartphones (especially the iPhone), whereas people search many times daily on the PC.
Earlier today Consumer Intelligence Research Partners (CIRP) released survey data about most frequently used mobile apps among US smartphone owners. The survey measured frequency not reach. This is very important to understand about the data. The firm asked mobile users to identify their "three most frequently used [mobile] apps."
CIRP found that Facebook was the leading and most frequently used mobile app. That was followed by Twitter, Candy Crush and Instagram. The surprise is how low Google Search and Google Maps rank on the list.
Google Maps is #12 and Google (the search engine) is #10. We don't get an analysis of usage by platform (i.e., iOS vs. Android). However I suspect we'd see different rankings on the two platforms, with Google doing better among Android users given search's prominence on the Android OS.
It's unclear how large the sample in this survey was and so we can't tell how reliable these data are. In addition these are self-reported data and not behavioral or traffic data. People often report one thing and do something else.
Having said all that, these data strongly argue that what Jobs said is accurate: "People are not searching on a mobile device like they do on the desktop." Although this has been written about at length in the past, if accurate, this more modest mobile search frequency represents an obvious problem for Google as migration from PCs to tablets and smartphones continues.
Consistent with pre-Thanksgiving weekend surveys, mobile devices (at home and in the store) played a big role on "Black Friday" and will continue to do so throughout the holiday season. Among others, IBM released a trove of US e-commerce and traffic data for Thanksgiving and Black Friday weekend shopping.
Here's a snapshot of some of the IBM data:
Separately, e-commerce analytics provider Custora reported that "almost 40%" of online buying on Black Friday came through mobile devices. I'm quite skeptical about the accuracy of this figure; it seems inflated or drawn from too small a sample. IBM's mobile commerce figure is 22%, which is more plausible.
Below is the Custora breakdown of overall US Black Friday e-commerce sales by device category:
While comScore has argued in the past that smartphones are outpacing tablets in terms of mobile commerce -- which makes logical sense because there are many more smartphones -- I'm doubtful of such claims. IBM's figures seem more (directionally) accurate: tablets: 14.4%, smartphones: 7.2%.
Custora said the following about the distribution of mobile commerce by platform:
We could look at a bunch of other reports and try to determine a consensus about how much e-commerce actually took place via smartphones and tablets. What's more important is the recognition that mobile devices are being widely used by US consumers for shopping and product research, and that serious "m-commerce" is now starting to happen (especially on tablets).
Another interesting fact from the IBM data: "on average, retailers sent 37% more push notifications . . . during the two day period over Thanksgiving Day and Black Friday when compared to daily averages over the past two months." The company also said that retail app installs grew by 23% compared with daily averages over the preceding months.
Reportedly Wal-Mart will be offering the HP Mesquite 7” Tablet for $89 on Black Friday. This is a "3.5 star" tablet but should sell out, given the HP brand and the aggressive price.
There are dozens of sub-$150 and even a surprising number of sub-$100 tablets now available. Most of them are "no name" brands and thus may hold US consumers back. That's why the HP brand matters at this price point.
Many of the low-cost Android-based tablets will be bought by parents for kids this holiday season. But the flood Android tablets, of varying levels of quality, inevitably means that the iPad's market share, with its much higher price points, will decline. That doesn't mean that iPad users won't still generate most of the traffic. Currently the iPad is responsible for more than 80% of US tablet traffic.
The tablet race in the US is between Apple, Samsung, Google/ASUS and Amazon. A quick search on Amazon for tablets reveals page after page of inexpensive Android tablets.
It's not clear right now how these aggressively priced Android tablets will impact the market, beyond bringing more users into the tablet realm (to the likely detriment of PC replacement cycles). But will they cut into iPad sales? Perhaps at the margins. Someone buying the $89 HP tablet is probably not in the market for an iPad Air or Mini, however. Such low-cost Android tablets are more likely to impact other Android OEMs such as Samsung or Kindle (Amazon doesn't classify Kindle Fire as an Android OS device).
Amazon threw down the pricing gauntlet for tablets when it introduced the original Kindle Fire for $199. Now there's increasing price pressure on 7-inch tablets (other than Apple) to enter the market at $150 or less. If this HP tablet and similarly priced others prove to be successful that $150 price point may become "institutionalized" for 7-inch Android devices.
Profits be damned.
Last week ShopKick introduced "shopBeacon," which uses Bluetooth low energy (BLE) indoor positioning technology. The company is testing it with Macy's, which has also independently been using indoor location for some time (mainly leveraging WiFi) to enhance its in-store app experience for customers. (See ShopKick demo video.)
ShopKick's adoption of iBeacon is an important move to insert the company back into the in-store shopping conversation. It had been an early pioneer in mobile loyalty, seeking to help retailers drive consumers into stores. But as indoor location has gained momentum ShopKick has largely been on the sidelines -- until now.
ShopKick has a wide range of brands and national retail partners, including Target, BestBuy, Sports Authority and JCPenneys. The company seeks to serve retailers but also "own the customer relationship." Accordingly there's some tension between working with ShopKick and providing a direct indoor-location experience, as Macy's does through its app.
A less-well-known company seeking to do something very similar for retailers is Swirl. Swirl has both a consumer-facing multi-retailer app but also powers the indoor experience for retailer apps through an SDK. Timberland is the company's best-known partner. ShopKick is now also an indoor-location enabler with its shopBeacon BLE beacons.
Apple itself is going to implement iBeacon in its own stores. There are a range of obvious and secondary use cases, including providing enhanced product information and notifications about Genius Bar appointments. Beyond an improved in-store experience, Apple hopes to boost sales through iBeacon. The product can also be used to support in-store mobile payments (see, PayPal Beacon).
It's well established that a majority of consumers have used smartphones in store for research purposes and many are interested in indoor/in-store information. However recent research from ISACA suggests that retailers will need to be judicious about how they use in-store notifications and personalization and not become too "pushy" in trying to upsell and cross-sell consumers.
Another challenge of sorts for retailers with indoor location is the fact that majorities of smartphone shoppers use retailer mobile websites. Indoor-location features are much harder to deliver via websites. Smaller numbers of consumers use retailer apps. This makes sense because apps are typically downloaded and used by a store's most loyal customers, which represent a minority of overall store shoppers.
According to NPD survey data, 71% of smartphone owners access retail websites but only 57% use apps. Many of those apps fall into disuse shortly after they're downloaded. In addition, the survey found that a majority of smartphone shopping-related research was done at home and not on the go, suggesting "that engagement on their smartphone is more of an alternative for online shopping rather than a showrooming tool."
Accordingly in-store information directed at enhancing the customer experience is a way to make apps more relevant and engaging. But as the ISACA study indicates retailers (or mall and venue owners) will need to develop information, content and indoor experiences for customers that are informational and not merely about trying to sell things.
This is a complicated arena for retailers and would-be providers of indoor location and marketing. Experimentation and testing are necessary to determine what's going to "work" for consumers, vendors and venue owners. Macy's is very smart and to be applauded for "getting out in front" of the issue and trying things, notwithstanding the potential exposure to "indoor surveillance" criticisms.