Earlier this afternoon Apple announced quarterly earnings. The company reported record revenues of $57.6 billion, as well as record iPad, iPhone and Mac sales. However iPhone sales figures disappointed financial analysts, who were seeking higher numbers.
Apple sold 26 million iPads, 4.8 million Macs and 51 million iPhones during the quarter.
During the earnings call Apple CEO Tim Cook was asked about his company's interest in mobile payments. Cook praised TouchID as a security feature of the iPhone 5s that does trigger digital content payments today. He added that Apple was “intrigued” by the mobile payments broadly -- although he's called the space immature before. But he said Apple saw it as a “big opportunity on the platform.”
This seems to lends further solidity and credibility to recent reports that Apple is actively pursuing mobile payments.
Apple has roughly 600 million consumer credit cards on file in iTunes.
Apple CFO Peter Oppenheimer also discussed iBeacon on the earnings call. He mentioned Apple's intended rollout at all the company's 250+ retails stores and described a number of use cases and applications based on indoor location awareness.
While mobile payments and indoor location aren't necessarily overlapping, they're certainly related. For example, location can be used as an added security measure to verify a shopper's presence in the store and provide additional transaction security (along with other factors, such as TouchID).
As I've argued I think Apple will initially get into mobile payments via an API that allows third party developers to incorporate a "pay with iTunes" capability into their mobile apps. This would likely extend to developers with apps that service or cater to "offline" users.
A new study from Cars.com and location analytics provider Placed offers some very interesting insights into how car buyers are using smartphones both before and during visits to dealer lots as part of their research process. I wrote generally about the study this past weekend.
At the highest level the report shows that a large majority of new car buyers are activly using smartphones. Indeed many more smartphones than PCs are being used in the process now.
Among the many interesting findings in the report, which is based partly on survey data and partly on behavioral observation, is the fact that smartphone owners are doing almost exactly the same things on dealer lots that they're doing in retail stores: price comparisons, looking up reviews and so on.
Below is the hierarchy of research activities happening on dealer lots, according to the study:
For purposes of this post, I want to focus in on a particular aspect of the study: the role of mobile advertising in influencing these shoppers.
The Cars-Placed report found that 52% of what I'm calling auto-showroomers left the lot they were on to visit another dealer (within 24 hours) based on information discovered on the smartphone. That's a very high percentage; and for 33% of these people mobile ads were a key factor.
Below is the hierarchy of sites and mobile apps used by these auto-showroomers on dealers lots. Vertical sites and apps such as Cars.com and AutoTrader lead the way with 56% of users consluting one or more of these sites. That's followed by carmaker sites, dealer sites, search engines and consumer review websites. Although it's close the mobile web was preferred by a small margin over apps.
It's striking though not surprising that search engines were used by only a minority of these car buyers. Vertical and specialized sites offer more immediate access to information and a better overall experience than Google on a mobile device.
The sites list above is a potential guide for mobile advertising by dealers and automakers. And very likely that's one of the objectives of the report: to suggest where marketers in the automotive space should be spending their mobile ad dollars. However if the data are sound then the implied advertising recommendations are reasonable. Selected mobile ad networks (specializing in location) should probably also be included.
In all smartphone-enabled car buyers are doing more research than others, including on the dealer lot. I would expect sophsiticated auto dealers and even OEMs to start incorporating geofencing and conquesting into their mobile ad strategies and tactics -- if they aren't already.
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.
Offline analytics and indoor location will change the way that retailers, venue owners, manufacturers and brands think about operations, marketing and the customer experience. Opus Research predicts the market for indoor location and place-based marketing and advertising to surpass $10 billion by 2018.
To see a preview and view the Key Findings of "Mapping the Indoor Marketing Opportunity" (an Opus Research report authored by Greg Sterling, Senior Analyst) click here.
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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).
In partnership with ShopKick, American Eagle (AE) Outfitters is outfitting 100 US stores with iBeacons to power deal notifications when shoppers enter stores. ShopKick also has a similar but much more limited partnership with Macys.
Right at-the-door notifications are the full extent of the ShopKick-AE indoor marketing functionality. But later it will become more precise by area or zone within the store.
Outside of Apple's own chain-wide deployment of iBeacons this is the largerst and most visible iBeacon launch to date. Clearly Apple's credibility and support of BLE and iBeacons is propelling the technology. However it's important to point out that iBeacons don't work with older iPhones and it only work with a few Android phones currently.
Over time that will change. But iBeacon is not a stand-alone or complete solution.
The rise of iBeacon argues that it will potentially be one of several "winning" indoor location technologies. But there won't be a single technology standard that emerges. Retailers and others will need to employ a layared or hybrid approach to provide store coverage and accuracy.
WiFi and closed circuit TV are the foundational in-store analytics and location technologies -- but WiFi in particular. Acousitc, LED lighting and magnetic may also make gains as retailers and venue owners come to see they need multiple approaches for success. For example, Rouse Properties has adopted acoustic technology from Sonic Notify to power indoor location awareness and marketing within its network of 34 malls in the US.
While indoor analytics are driving the market, companies are quickly stepping up with consumer-facing solutions -- such as ShopKick-AE. And while consumers widely use their smartphones in stores and are generally interested in things such as deals and personalization, retailers will need to be careful about annoying or spamming consumers with too many messages.
For example, research from ISACA suggests that an education process and gradual roll out of indoor marketing are in order. Too much, too soon may have the opposite of the desired effect:
We've reached a potent new mobile milestone: half of Americans own tablets or e-readers. That's according to new data from the Pew Research Center.
Specifically Pew says that 42% of American adults now own tablets and 32% own e-readers. Some own both. Pew says its survey was based on a representative sample of 1,005 adults (18 and over). It was conducted in early January -- so after the holiday.
The iPad is still the dominant tablet, driving roughly 76% of all North American tablet traffic according to ad network Chitika. The following traffic-share figures were captured just after the holiday:
There are roughly 242 million US adults according to census data. If we can extrapolate the Pew survey data to the entire US population of adults it would mean that there are roughly 102 million tablets and 77 million e-readers in the market, owned by 121 million adults.
Notwithstanding some anomalous comScore data, the overwhelming body of evidence is that tablets are much more commonly used for e-commerce purchases than smartphones. Consumers shop on smartphones but much more commony buy on tablets.
Tablets will out-ship PCs this year. Pew says its survey revealed that 75% of US adults own PCs (desktops or laptops). That number is flat.
We may reach a point in late 2015 when there are an eqivalent number of tablets and PCs in the US market. The web design and marketing implications of this are obvious. But when one combines the number of smartphones and tablets in the market, they exceed the total number of PCs already.
We anticipate that grocery stores will be on the forefront of indoor location and especially indoor or place-based marketing. They have enormous amounts of data about their customers (via loyalty programs), they've got mobile apps, increasingly sophisticated email marketing and brand client-advertisers that want to influence in-store shoppers.
Shopping lists are the most common in-store smartphone use case in grocery stores. The second most common is seeking coupons (often from grocery store apps). Accordingly the indoor consumer smartphone usage in grocery stores is already well established.
All of the above variables represent a potent combination and one that probably means we'll see much faster and more aggressive adoption of indoor location and marketing than even in other retail segments.
Accordingly we were struck by the announcement earlier this week that inMarket was rolling out iBeacon-powered indoor location in Giant Eagle and Safeway grocery stores in three markets: San Francisco, Seattle and Cleveland Ohio. The company says that its iBeacons will be in many hundreds of stores by the end of the year.
Most media outlets covered the "iBeacon's continuing momentum" angle. Indeed, iBeacons are small, cheap to install and are backed by Apple. However we're at least as interested in the grocery store adoption angle.
The video (below) introducing inMarket's "mobile to mortar program" showcases a range of use cases for its iBeacon offering:
Point Inside is also very active in the grocery space and has a number of advanced implementations in market. We'll be presenting some of these types of case studies at Place 2014 in New York in June.
Euclid is one of the better known indoor-analytics providers in a new but increasingly competitive and crowded segment. There are well over 150 companies involved directly or indirectly in "indoor location," most of which have some sort of analytics component.
While some companies are closely identified with a particular technology (e.g., Estimote with BLE), most companies can use or do use multiple technologies to gain access to indoor smartphone positioning. It's not unusual to find companies using at least two or three technologies such as WiFi + BLE. Euclid still relies on WiFi exclusively but will likely be expanding in the future to include BLE (assuming it continues to gain momentum).
This is comparable to how outdoor positioning and mapping relies on GPS, cell tower and WiFi triangulation as a hybrid approach to compensate for the limitations of each technology.
Today Euclid took a bold step by introducing a free indoor analytics product aimed at the mid-market (e.g., specialty retailers). It's called Euclid Express and it's mostly a self-service offering. Euclid co-founder Will Smith told me that during the beta period his company has enrolled more than 400 new customers. Competitors will undoubtedly see it as a "land grab."
The product assumes an existing WiFi "infrastructure" in the store locations. If not Euclid will provide a low-cost WiFi set up.
The objective of Euclid Express is to remove friction and barriers to adoption -- including price. It offers a range of indoor analytics data, including:
All this data is provided in real-time.
Euclid's advanced product has more features and costs $100 per month per store location. The Euclid Express dashboard offers users the option to upgrade to the advanced product. Euclid's Smith also touts his company's privacy practices (anonymous, aggregate data) and argues that privacy is now a product differentiator for the company.
Below is video from the Place Conference in October: Digital Analytics for the Real World.
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.
The Wall Street Journal published an interesting overview piece on Facebook founder Mark Zuckerberg's evolution and maturation as a CEO. One of the most amazing aspects of Facebook's post-IPO growth and "turn around" has been mobile. In a little over a year the company has gone from less than $100 million to more than $800 million in mobile ad revenues.
"Taking Facebook public and reshaping it around mobile phones forced him [Zuckerberg] to grow up," assert unnamed sources in the article. The WSJ credits Zuckerberg individually with driving the transformation of Facebook's mobile business though an increasing focus on the bottom line.
In Q2 2012 Facebook reported mobile ad revenue of roughly $69 million against overall ad revenue of more than $990 million. In Q3 2013 (the most recent quarter available), Facebook advertising revenue was $1.8 billion. Mobile delivered 49% of that amount or approximately $882 million.
Facebook said in Q3 it had 728 million daily active users and 1.19 billion monthly active users, up 18 percent. Monthly active mobile users totaled 874 million on a global basis and mobile daily active users came in at 507 million.
When Facebook reports Q4 2013 revenue it's certain that mobile will account for more than 50% of total ad revenue. Overall, in 2013, it's likely that Facebook will have made about $2 billion in mobile ad revenue globally.
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.
Many analyst firms that estimate mobile device market share rely on "shipments" data. Those include IDC, Gartner, NPD and Strategy Analytics, among others. Few of these firms rely on internet traffic and actual usage or sales data to fuel their estimates and forecasts.
The reason for this is simple: shipments data are easier to get than sales and usage data. While these estimates can be "directionally" correct they're often wildly inaccurate as a practical matter. Indeed, they often misrepresent what's really happening "on the ground." Even actual sales data often don't present an accurate picture of the marketplace.
Consumer survey data, such as used by comScore, Nielsen and Kantar for market-share projections, are in most cases better and more reliable than shipments data (and in some cases sales data). Best of all is actual usage or traffic data. A very clear case-in-point is the tablet market.
IDC released an updated tablet-forecast earlier this month. It shows Android tablets with a global market share of 61% and the iPad with a 35% share.
Looking only at these estimates, one gets the clear sense that the iPad has lost momentum and its preeminent place in the tablet market -- in the way that the iPhone ceded market share to Android handsets. The only problem with this shipments-centric forecast is that it bears almost no relationship to the reality "on the ground."
Checking actual tablet-generated traffic on a global basis we see that the iPad has a 74% share vs. 23% for Android. In Europe the story is much the same. In the US the iPad has a 79% share of tablet traffic. Other traffic-data sources show a comparable if slightly lower figure.
The aforementioned numbers are from StatCounter. Net Marketshare data similarly show the Safari browser as the dominant browser (56%) among mobile devices (smartphones + tablets) vs. 25% for Android (or 33% if Chrome is included; however Chrome is used on iOS devices too). Data from ad network Chitika also show that the iPad's share of tablet-based web traffic in North America is around 80%.
What are we to make of the massive discrepancy between the IDC 2013 estimates and these three traffic sources? Perhaps it's not important to try and reconcile these figures. Rather we should be asking which data "matter"? The answer is: usage is what matters.
Usage matters to developers, publishers and marketers trying to allocate budget and resources. What if millions of Kindles were given as gifts but later sat on bedside tablets, used only occasionally or in very limited ways? The simple notion that they're "out there" is irrelevant if they're not being used.
Collectively we should reject device "shipments" (and even sales) as a definitive market-share metric. Instead the industry should look at more concrete metrics such as traffic and other usage-based data that show what's actually happening in the world.
In the end this is what really matters to everyone, including investors. Even reliable consumer survey data about device possession and usage are better than shipments figures. Actual traffic data are less susceptible to misinterpretation (or manipulation).
Usage doesn't work as a forecasting tool for obvious reasons. Here projections will need to be based on some mix of assumptions and sales trends and other data. But the degree that the media and tech industry simply pick up and run with these regular shipments numbers without comparing them to actual traffic or other usage data -- I've been guilty myself -- is sloppy and misleading.
Much like US retailers relentlessly pumping out marketing emails before, during and immediately after Xmas, marketing companies and data vendors didn't rest either. Below I've rounded up some of the recent data they released immediately before and after Xmas.
Chromebooks saw impressive sales gains in 2013 according to NPD Group. The Google OS laptops took a surprising 21% of all US enterprise notebook sales in 2013. NPD reported that overall Windows and Mac sales were down, while Chromebooks and Android tablets were up.
It remains to be seen if these numbers are accurate, based on actual usage data. Regardless, the low cost and nearly disposable nature of Chromebooks is starting to put pressure on Windows at the low end of the market. I wrote about Microsoft getting squeezed from both ends earlier this month on Screenwerk. However I would not have predicted the apparent enterprise success of Chromebooks.
When the smoke clears after January 1 we'll hear that millions of tablet devices were purchased and delivered as gifts in Q4, with iPads being the overall winner despite the higher price tag. StatCounter data show 79% of tablet-based US internet traffic coming from iPads vs. 14% from Android tablets.
Continuing an established pattern, tablets were responsible for more than twice the volume of online sales vs. smartphones. That's according to IBM which also reported that on Xmas day e-commerce sales from "iOS [devices were] more than five times higher than Android."
The company also said that on Xmas mobile devices generated 48% of all US online traffic. That's a massive number and probably where the entire internet is headed by 2015. Currently StatCounter reports that 26% of North American traffic is coming from mobile devices. We should see that number grow to 40% or more a year from now.
Finally, as indicated above, many people were deluged by promotional email on Xmas itself (e.g., "buy something for yourself"). Holiday e-commerce overall was up roughly 10% over last year with a few $1+ billion days. However e-commerce growth and spending were less than anticipated this season and something of a disappointment.
Happy New Year.
Research and data aggregator eMarketer is projecting that US mobile ad spending will be roughly $9.6 billion this year and reach a surprisingly high 22% of digital ad revenues. It's possible, given the surge in mobile in the second half, that we'll see something between $7 and $8 billion in US mobile ad spending this year. However the nearly $10 billion eMarketer prediction is too aggressive for 2013.
More interesting than whether mobile ad spending is $7.5 billion or $9.6 billion is the fact that eMarketer anoints Facebook as the second largest digital ad platform globally (behind Google) because of the rapid growth of the company's mobile revenues. And those mobile revenues will be further accelerated by Facebook's recent video-ads announcement.
Back in very early 2010 we speculated about Facebook's impending entry into mobile advertising:
Let's talk about what may be coming sooner rather than later: Facebook as a mobile ad network and one that offers location (and potentially demographics) as part of that proposition. There are currently no ads on Facebook's apps, mobile websites or SMS. I would almost bet my life that's going to change in the near-to-medium term.
Facebook will be clever and careful about integrating advertising into mobile, mindful of the potential to alienate mobile users. However the mobile ad opportunity may be at least as big for Facebook as it is on the PC.
Emarketer speculates that Facebook will make just over $3 billion in net US ad revenue this year (against global gross ad revenue of nearly $7 billion). By comparision, Google will make $17 billion in net US ad revenue. Google's worldwide gross ad revenue this year is likely to be roughly $50 billion.
Emarketer places local search and directory publisher YP in the third position regarding mobile ad revenue in the US. But because YP basically doesn't sell mobile ads (except at the margins) this once again raises the question: what is a "mobile" ad?
Most of YP's ads are simply distributed in mobile rather than being intended by the small business advertiser for specific mobile exposure. Yet this is equally true of ads that appear on both Twitter and Facebook; and Google now also "bundles" PC and mobile ads as a practical matter -- as a way to boost its mobile ad revenue.
If we define "mobile advertising" as any ad that appears on a mobile device and where simple exposure (e.g., CPM) and/or a subsequent user action (e.g., CTR) triggers a billable event then we're going to see mobile ad revenues grow extremely quickly and put up some pretty big numbers. That's because in this context mobile ad revenue becomes largely function of mobile adoption/usage and how much of that usage is "monetized" through existing ad inventory.
Facebook's new video ad product or YouTube pre-roll ads for that matter are a case in point: these ads can appear on the PC or mobile without being specifically modified or even intended for the medium. Thus simple mobile distribution will grow Facebook revenues attributable to mobile. The most engaged Facebook users are on the smartphone app daily; that's going to boost ad revenues attributed to mobile very quickly.
In essence, mobile ad revenue becomes an accounting issue rather than a technology or ad-creative question. Of course the ad platform itself has to be capable of distributing and rendering those ads appropriately on the device before you can be "platform agnostic."