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Can the iPad (and the PC) Withstand the Cheap Tablet Onslaught?

The iPad Air officially became available around the world today. Supplies appear to be readily available in the US but have slipped in some international markets. In the US the 128GB T-Mobile version now has a 5 - 10 business day wait. (Update: New York is reportedly selling out of some models.) 

The new iPad Retina Mini will become available "later in November." There are undoutedly many people trying to decide which one to buy (iPad Air vs. iPad Mini Retina). 

Beyond the iPad there are the Nexus 7, Kindle HD tablets and Samsung's Galaxy Tabs. The best of that group remains the Nexus 7. However the Nexus 7 is not as polished or quite as good as the new iPads, though it is cheaper. And lower cost is a meaningful factor for many people.

These three makers form a middle tier of price and quality after the iPad.  

 

However, at the bottom, there are scores of "no-name" Android devices selling for less than $150. Many (as in the graphic above) are selling for under $100.

These super-cheap tablets are likely to have battery life and performance issues. They're not going to last little more than about a year if that (my original Nexus 7 broke twice in the same year with eventual total screen failure). Still, low pricing will make them very attractive to some. Indeed the prices are so low in some of these cases they can even be treated as disposable.

These low-end Android tablets will undoubtedly boost Android's share of the market. In the US the iPad still is responsible for more than 80% of tablet-generated web traffic. We'll have to revisit those data in Q1 2014. 

There are a couple of ways to see the potential impact of the proliferation of low-end Android tablets. They're not mutually exclusive 1) they will take share from the iPad and 2) they will expand the market for tablets to more price-sensitive groups who otherwise wouldn't pay a premium for an iPad.  

Regardless, the tablet explosion is not going to be good news for Q4 PC sales. People are likely to avoid replacing or buying new PCs in favor of smartphones and tablets. 

Google Announces KitKat, Nexus 5 and New 'Advertising ID'

This morning Google announced its new Android OS update, KitKat, as well as a new Nexus handset, the Nexus 5 from LG (priced pretty aggressively at $349). In addition the company said that it would begin indexing "deep links" to Android apps in search results (on Android devices): 

Just like it crawls and indexes websites, Googlebot can now index content in your Android app. Webmasters will be able to indicate which app content you'd like Google to index in the same way you do for webpages today — through your existing Sitemap file and through Webmaster Tools. If both the webpage and the app contents are successfully indexed, Google will then try to show deep links to your app straight in our search results when we think they’re relevant for the user’s query and if the user has the app installed. When users tap on these deep links, your app will launch and take them directly to the content they need.

Here's a screenshot provided by Google:

 

Google doesn't mention what happens if users don't have the specified app installed. Presumably users would be directed to a download page for the app (or maybe there's some kind of detection and the link doesn't appear if the app isn't installed). There's no word on Apple devices. Technically it's probably not possible for Google to do this on iOS devices.  

The other significant announcement to come out today is that Google replacing the unique Android ID (similar to Apple's old UDID) with a new "Advertising ID." The new Advertising ID is very analogous to Apple's Identifier For Advertising (IDFA). Google's new Advertising ID implicates ad tracking and targeting in apps only, not the mobile browser.

It moves mobile app advertising away from the unique device ID and "up" to an anonymous identifier that can be cleared or reset by the user at will: 

Google Advertising ID

In addition to resetting or clearing the Advertising ID (like clearing cookies in a brower), Google users will be opt out of "interest based ads" (see graphic above). This doesn't mean no ads, just no retargeted or behaviorally targeted ads.

Advertisers and ad networks on Android must migrate to the new Advertising ID after August 1, 2014: "Beginning August 1st 2014, all updates and new apps uploaded to the Play Store must use the advertising ID (when available on a device) in lieu of any other device identifiers for any advertising purposes."

Separate from Advertising ID Google is increasingly trying to get Chrome browser users to sign in so that it can track and better target them across devices (and later into stores). This is an opt-in system and users can simply not sign in if they have privacy concerns. 

Apple's IDFA approach has been very well received and Advertising ID should also be. It seeks to strike a balance between privacy and advertiser targeting interests. 

Smartphone Derby: Lumia Improves, Apple Holds Position but Samsung the Big Winner in Q3

A bunch of smartphone-related data and numbers are out today: Nokia earnings, Nielsen US smartphone figures and Samsung's global smartphone share.

First, Nokia reported Q3 2013 revenue of €5.66 billion vs €7.24 billion a year ago. Sales were off 22% YoY but there was a small operating profit due to aggressive cost cutting.

The company said that it sold 8.8 million Lumia smartphones (vs. 7.4 million last quarter and 6.3 million a year ago). Microsoft is taking over the Nokia handset business. Overall Nokia sold many more non-smartphones; however that market is decline and unlikely to be aggressively supported when Microsoft takes over. Nokia said that it sold 55.8 million non-smartphones vs. 76.6 million last year.

According to Strategy Analytics, Samsung was the big winner of the smartphone derby in Q3. Based on shipments estimates the firm said that Samsung captured 35% of the global smartphone market. By comparison Apple had a 13.4% share, which was down from just under 16% a year ago but still put the handset maker in second place.

The third place smartphone vendor was something of a surprise in China's Huawei. LG was fourth and Lenovo was fifth on this firm's list.  

Back to the US, Nielsen is out with new smartphone data for Q3 (collected prior to the iPhone 5s release). Nielsen says that smartphone penetration is now 64.7% (comScore's number is just under 61%) in the United States.

In Q3 Android handsets combined for 52% of the market followed by iPhone with a 41% share. No other company has a meaningful share of othe US smartphone market. And despite the overall sales improvement in Nokia's Q3 results, there's little evidence of momentum for Lumia or Windows Mobile devices in the US to date.

The following is Nielsen's US breakdown of smartphone market share by manufacturer: 

Nielsen smartphone OEM

Apple Sells Almost $20 Billion Worth of iPhones

Earlier today Apple announced quarterly earnings. Gross revenue was $37.5 billion vs. $35.9 billion last year. The company generally beat expectations on revenue, earnings per share and iPhone sales. Mac sales were in line with expectations. However, iPad unit sales came in slightly lower than anticipated.

Here are the top-line figures from the release: 

  • Revenue: $37.5 billion (vs. expectations of $36.8 billion)
  • iPhone sales: 33.8 million units (expectations: 31 million) 
  • iPad: 14.1 million (slightly less than expected)
  • iPods: 3.5 million
  • Mac sales: 4.6 million
  • Margin: 37%

Regionally Americas sales rose only 1% year over year. Europe was flat. China was up 6% and Japan was up 41%. Here are the revenue numbers by product:

  • iPhones: $19.5 billion (52% of total revenue)
  • iPads: $6.2 billion
  • Macs: $5.6 billion 
  • iTunes/software $4.3 billion 
  • iPods: $573 million

According to Localytics the following is the global breakdown of iPhones in market: 

Future of Privacy Forum Announces Indoor Location Privacy Rules

The Future of Privacy Forum's Jules Polonetsky was one of the featured speakers at the inaugural Place Conference. He spoke about indoor location and privacy with Jennifer King from UC Berkeley. We alloted 30 minutes for the discussion but could have easily spent an hour on it.

Privacy is the 800 pound gorilla of indoor location and the issue that challenges and potentially threatens its roll out. Ever since the negative publicity and coverage suffered by Nordstrom retailers have been scared to death of talking about what they're doing with indoor location -- despite the fact that consumers stand to benefit greatly through these innovations. 

Hoping to head off regulatory intervention and preempt more ill-informed coverage and negative publicity, Polonetsky's Future of Privacy Forum (and Senator Charles Schumer of New York) announced a code of conduct that will govern indoor analytics and seek to protect consumer privacy.

The companies involved include Euclid Analytics, iInside, Mexia Interactive, Nomi, SOLOMO, Radius Networks, Brickstream and Turnstyle Solutions. Euclide and iInside spoke at the Place Conference.

This list doesn't include all the companies involved in indoor analytics (e.g., Retail Next) but the rest will adopt and abide by the rules announced today. And retailers will follow them. Basically the new rules require clear disclosures, enable consumers to opt-out of indoor tracking, make any tracking anonymous and prevent the misuse of information gained by venue owners. 

People always forget that much more intrusive closed-circuit video cameras have been in retail environments for more than a generation.

As our panel on indoor analytics pointed out most of the data aggregated and anonymously captured by retailers will translate into in-store improvements, from staffing to store layouts. However consumers need to be educated about all of this given how new and little understood it is. This is where retailers need to step up (rather than cower) and help consumers understand why and how indoor location will benefit them. 

Hopefully this new code of conduct will enable them do that with confidence.  

_____

Below is the full text of the press release: 

New York, NY – U.S. Senator Charles E. Schumer, The Future of Privacy Forum (FPF) and a group of leading location analytics companies – including Euclid, iInside (a WirelessWERX company), Mexia Interactive, SOLOMO, Radius Networks, Brickstream and Turnstyle Solutions – today announced that they have agreed to a Code of Conduct to promote consumer privacy and responsible data use for retail location analytics.  The companies responded to privacy concerns raised by Senator Schumer and the FPF about the use of this new technology.  The code of conduct includes in-store posted signs that alert shoppers that tracking technology is being used, and instructions for how to opt out. 

“This is a significant step forward in the quest for consumer privacy,” said Schumer.  “This agreement shows that technology companies, retailers, and consumer advocates can work together in the best interest of the consumer.  There is still much more work to be done and I will continue to push for privacy rights to be respected and strengthened, but this represents real progress and I thank the Future Privacy Forum and these tech companies for their hard work hammering out this agreement.

“Today, location analytics companies have introduced a comprehensive code to ensure they have data protection standards in place to de-identify data, to provide consumers with effective choices to not be tracked and to explain to consumers the purposes for which data is being used,” said Jules Polonetsky, executive Director of the Future of Privacy Forum. “These standards ensure that consumers understand the benefit of the bargain and have choices about how their information is used while allowing technology to continue to improve the shopping experience. As we quickly approach the holiday shopping season, this is not only the right move – but a timely one as well, adding a layer of trust, choice and transparency onto a shopping experience that in 2013 is more mobile and hi-tech than ever before.”

In July, Schumer warned that major national retail chains were testing technology that would allow them to automatically track shoppers’ location through stores.  Following this warning, FPF worked with the technology companies to develop a Code to ensure that appropriate privacy controls are in place as retailers seek to improve the consumer shopping experience. These technology companies use mobile device Wi-Fi or Bluetooth MAC addresses to develop aggregate reports for retailers.   

The Code puts guidelines in place to create best data practices that will provide transparency and choice for consumers. The Code calls for the display of conspicuous signage by retailers and for a central opt-out site for consumers.

Under the Code, companies that collect data through this technology must limit how the information is used and shared and how long it may be retained.  The Code mandates that companies de-identify the data and explain in their privacy policy how they do so. Companies are required to get opt-in consent when personal information is collected, or when a consumer will be contacted. The Code calls for opt-out consent where the information collected is not personal.  In addition, this data cannot be collected or used in an adverse manner for employment, health care or insurance purposes.

"We are just beginning to see the possibilities that in-store analytics can bring to shoppers and to retailers, and yet, as with any new technology, there is the chance for confusion about the intent and possible implications of such technology,” said Steve Jeffery, CEO, Brickstream. “We applaud the Future of Privacy Forum for taking the lead in bringing retailers and technology providers together to address these important issues.”

“We would like to thank Senator Schumer for his leadership on this issue,” said Will Smith, CEO, Euclid. "Privacy has always been a priority as we've designed and built our services, and we have been working diligently with FPF to release best practices for the retail analytics industry as a whole.”

"iInside and industry partners have made it a top priority to assure that consumers are well-informed and their personal privacy and identity are protected.  The newly announced code is a major step forward in establishing and communicating clear and concise standards across our industry," said Jim Riesenbach, CEO, iInside Inc.

“The release of a Code of Conduct to guide industry practice ensures that businesses and retailers are able to enhance their customers’ experience without compromising their privacy,” said Glenn Tinley, President & Founder, Mexia Interactive. “Business and consumers also can be assured that a company listed on the SmartStorePrivacy.com website has committed to following the code.”

"Proximity and location technology is evolving rapidly, and we want to make sure it’s deployed in an open, responsible and trustworthy manner. The retail location analytics Code of Conduct is a solid step in the right direction," said Marc Wallace, Co-Founder & CEO, Radius Networks, Inc.

“SOLOMO sees privacy as an opportunity for retailers to build trust with customers,” said Liz Eversoll, CEO, SOLOMO.  “We’ve collaborated to develop the Code of Conduct to ensure transparency and empowerment for retail customers.   Indoor location technology will offer customers new in-store experiences, special deals, and localized services as retailers introduce it in their stores.  Everyone wins.”“Turnstyle Solutions is pleased to partner with the Future Privacy Forum in the development of this Code of Conduct. We are confident the code lays the foundation necessary to protect sensitive consumer information, while offering retailers and consumers services that enhance their shopping experience," said Devon Wright, Co-Founder, Turnstyle Solutions.

New iPads Coming Today Amid Intensifying Competition

Later this morning Apple will introduce at least two new or updated iPads. It's widely expected that Apple will offer a 5th generation full-sized iPad that incorporates design features of the Mini and will be thinner and lighter. In addition the company will likely introduce a "retina" display iPad Mini. There are likely to be other announcements tied to Macs and the Mavericks OS update. 

However the iPad will be the center of attention.

This update is important as Apple faces intensifying competition from Google, Samsung and Amazon. There are also a host of "no-name" tablet makers pushing the price of smaller tablets down. Intel, for example, believes that there will be reasonable quality $99 tablets for sale this holiday season. Accordingly it will be interesting to see whether Apple adjusts the pricing of its iPads in any way. 

According to data from Localytics, the most popular iPad is the iPad 2, which has 38% of the global iPad market. The 4th generation iPad has only 18% and the iPad Mini has 17% according to the firm. Among Android tablets it's a three way race between Samsung, Amazon and Google/Asus. 

Global Tablet Share by Model2

On a global basis Samsung is the Android leader with 55% market share. In the US however Amazon Kindle tablets have outsold Samsung. Overall, according to Chitika in June, the iPad drives 84% of tablet-based traffic in North America. The ad network is set to update these numbers today.  

Gartner and IDC continue to forecast the decline of the PC, with tablet growth continuing. However, thus far, Microsoft has not produced a competitive tablet to stem its falling OS and device market share. 

On Friday the Pew Research Center offered new data showing that 43% of Americans over 16 owned a tablet or an e-reader. That makes for a total of just over 100 million people in the US with one or both devices. Among them Pew said that 35% owned tablets, which I calculated was roughly 84 million people. 

Tablets and ereaders 

In-Store Behavior: EU5 vs. US Smartphone Owners

Yesterday comScore released data about in-store smartphone usage from the EU 5: UK, France, Germany, Spain and Italy. The top in-store shopping activities across the region were:

  1. Take picture of product
  2. Send picture of product to family/friends
  3. Text/call family/friends about product
  4. Scan barcode
  5. Compare prices   

This compares with our survey of US in-store shopping activities: 

  1. Search for coupons or offers
  2. Price comparisons
  3. Make and use shopping lists
  4. Seek/look at product reviews and related information
  5. Send pictures to friends/family re their opinions
  6. Search for nearby stores offering same product
  7. Ask product-related questions or post pictures on social networks
  8. Buy the product through the phone

Source: Opus Research n=1,050 US smartphone owners (9/13)

There are several US surveys regarding showrooming and what consumers do in stores with smartphones. They show slightly different things. Basically, however, the top three activities are: compare prices, get product reviews, find coupons.

We can't assume the comScore data are the final word on European in-store behavior but it's interesting to note that the top activities all involve asking for input or advice regarding what to buy. That behavior is evident among US smartphone owners but further down on the list. There may be a cultural explanation or it may be a function of the framing of survey questions. 

There are roughly 150 million smartphones in the US and between 140 and 150 million in Europe. Penetration rates are comparable. In Europe the leading handsets are Android based, whereas the iPhone is the top smartphone in the US. 

Study: 47% of Mobile Autos Lookups Lead to Purchase

Recently xAd and Telmetrics released more data from their UK "Mobile Path to Purchase" study conducted by Nielsen. This time the focus was on consumer behavior in the automotive vertical (car purchases and servicing). The big takeaway, once again, is how mobile devices now play a critical role in the pre-purchase research process.

The UK study is something of a mirror of the earlier US version, with some differences.

Perhaps the most important finding, the UK study discovered that 30% of UK automotive researchers used mobile devices exclusively. Tablet owners were more likely to be at home when conducting research vs. smartphone users (82% vs. 41%). In addition to price comparisons (popular with with both smartphone and tablet owners), smartphone owners are more often seeking location and contact information for dealers and service locations whereas tablet owners were doing more review checking.

In order of popularity and volume here's what UK auto mobile users are looking for or researching:

  • New or used car purchases (72%)
  • Car servicing (28%)
  • Car parts (19%)

The following are some additional data and details from this slice of the UK study: 

  • UK mobile auto searchers are more price sensitive than US automotive buyers -- 53% of UK auto searchers conduct price comparisons vs. 43% in the US
  • 47% of smartphone lookups ultimately lead to a purchase; 41% of tablet searches 
  • The mobile web has greater reach with UK auto searchers; however "nearly half of smartphone searchers and 29% of tablet searchers have used an auto app"
  • 60% of UK automotive searchers plan to purchase within a month or longer. However 32% plan to purchase within a 24 hour period (the latter is probably service or parts related)

Location was a critical factor for mobile users: 40% sought or expected business locations within 5 miles. Finally only 30% of these automotive researchers knew specifically what they were looking for. Thus there's a significant opportunity for marketers to influence these consumers' purchases though mobile marketing and advertising.

What Is Indoor Location Really Worth?

There are a number of analyst firms in the market that seem to exist to generate forecasts, many (or most) of which turn out to be inaccurate. In that context I'm quite skeptical about ABI's latest forecast regarding indoor location. The firm says the market is going to be worth $4 billion by 2018.

While it's almost certain that over time indoor location will be worth billions, it's too early to say with any precision or accuracy how much the indoor location market will be worth. Ironically ABI's numbers are probably too small (the firm is usually the source of inflated forecasts). As the market evolves there will be a number of revenue streams and indoor location will touch a wide array of of consumer purchases. 

First, there's licensing revenue generated by retailers and venue owners to indoor location vendors. There's also IT-related spending for "infrastructure upgrades" to support indoor location. That includes WiFi, bluetooth low energy and a range other approaches. There's no technology standard and unlikely to be one for some time. These numbers are quite small right now, unless we consider historical spending on WiFi as part of all this. 

Then there are a range of in-store marketing angles: in-store couponing, mobile advertising, apps, digital kiosks that interact with smartphones and so on. Though inevitable indoor marketing is generally speculative at the moment. Over time it will be worth several billion dollars. Currently brands spend billions to secure favorable positioning in stores and market to consumers at or near the point of sale. Some of that will inevitably shift to digital, indoor marketing. The question is how much?

Then there's the value of digital influence over offline purchases. A majority of US smartphone owners (and increasingly European smartphone owners) use their devices in stores to help make purchase decisions. There's a direct impact on purchases (deciding to buy or not buy) from this indoor smartphone research or "showrooming." 

I've estimated in the past that the Internet's influence over offline shopping is approaching $2 trillion. Using this type of lens, smartphone "showrooming" is impacting (positively and negatively) offline buying probably to the tune of billions already. Should this be part of an indoor location forecast? Not necessarily but it should be included in the discussion to show how much is at stake for retailers and others in the ecosystem. 

ABI is directionally correct that the market is worth billions -- it's already there if you consider smartphone influence over offline transactions -- but precisely how much and where the money will come from is still to speculative to predict reliably. 

Offering PayPal Provides Modest Conversion Lift to E-Commerce

Digital marketing platform Monetate recently tested whether a site offering the option to buy through PayPal saw any conversion lift vs. not offering PayPal. Using A/B testing and data from a single client the company said there was a modest roughly 1% sales lift by offering PayPal: 

Adding this simple reassurance to product detail pages not only lifted average order value by 1.03%, but it also reduced cart abandonment by 1.21%. Not a huge lift, but not shabby either . . .

We recently asked 1,250 US adults which entities they trusted most to handle mobile payments. The following was the order of results:

  1. My credit card company
  2. PayPal (eBay)
  3. Amazon
  4. Google
  5. Apple
  6. Other (included "my bank") 

Square and Facebook were not on the list of choices. However Facebook is testing its own mobile payments service with some consumers and retailers (stored credit card and details).  

As the survey data above indicate PayPal is in a very strong position to become the dominant mobile payments company (especially after its Braintree acquisition) if it can establish and reinforce its brand and user experience as being the simplest and most secure. 

Apple could quickly enter the mobile payments arena; however so far it has held back. And while Amazon has a presence in mobile payments it's not particularly strong or developed.

Google, for its part, has failed to establish Wallet among consumers. Square is in a decent position but it doesn't have the reach that PayPal currently has. Facebook has massive reach but is not going to be trusted with payments by most consumers without a Herculean education and marketing effort. 

So currently it's PayPal's market to lose really, as mobile payments take hold.  

Report: 103 Million People in US Have Tablets or eReaders

One still gets the sense that there are marketers who treat the rise of mobile devices as something of a novelty. The idea that mobile devices have supplanted PCs in many use cases hasn't quite sunk in for many.

There are nearly 150 million smartphones in the US today, with many of them being used as primary internet devices. Now, according to Pew Research Center data released this morning, there are nearly 103 million people in the US (over 16) who who tablets or e-readers. Eventually tablets will replace e-readers for most. 

A survey of more than 6,000 people in the US (over 16) conducted between July and September found that 35% of Americans own tablets and 24% own e-book readers. Combined, a total of 43% of Americans own one or the other or both. After Q4 the tablet number will be at or above 40%. 

Tablets and ereaders

Source: Pew Research Center 

Here's the breakdown in terms of real population numbers by category -- if the Pew data are reliable: 

  • Tablet owners: 84 million
  • E-Reader owners: 57.6 million

Apple is scheduled to announce new iPad models next Tuesday at an event in San Francisco. While Android tablet shipments (and presumably sales) have been growing the great majority of tablet traffic in North American is still from the iPad.  

Ad network Chitika reported in late June that the iPad was responsible for 84% of all tablet traffic in North America. The company is currently updating its numbers and will release new data next week. 

However this is what the tablet landscape looks like (until further notice) in terms of actual tablet-based traffic to websites:  

June iPad traffic

Source: Chitika 

GOOG: 40% of YouTube Traffic Now from Mobile

Yesterday afternoon Google reported third quarter earnings. The company beat financial analyst consensus estimates. Total "consolidated revenues" (including Motorola) were $14.89 billion, representing 12% growth vs. the third quarter in 2012. 

US-based revenue was 45% of the total compared with 55% from outside the US.

Paid clicks grew 26% across Google sites and its extended network. However average prices paid for those clicks decreased 8% vs. last year. This is likely due to an ongoing shift to mobile usage (more clicks coming from mobile, with lower prices paid for them). Indeed, earlier this week comScore reported that US search volumes were down (again likely because of mobile): 

 search volumes

Despite the release of its elegant and innovative Moto X phone, Motorola Mobility's loses increased. The unit saw Q3 revenues of $1.18 billion (vs. $1.78 billion last year). And there was a loss of $248 million (vs. $192 million in 2012). 

On the earnings call, Google CEO Larry Page said that "Almost 40% of Youtube’s traffic now comes from mobile, up from 6% two years ago." It was also mentioned that there are "more than 40 million calls driven by Google ads every month." That's roughly 2X vs. 2012. Many of them are coming from smartphones.

Report: 33% of Google's Paid-Search CTRs Now Coming from Mobile

Paid search marketing firm The Search Agency released its Q3 "State of Paid Search Report" for the US market. The report is based on a large volume of client data and discusses paid search trends by search engine and several industry segments. The headline is that a third of Google's paid search clicks in the US are now coming from smartphones and tablets. 

The following are some of top-level data released in the report:

  • Google average CPC was up across all 3 device types, with the largest growth occurring in tablets, which grew 14.2% YoY.
  • Google’s distribution of clicks continued to shift away from desktops toward smartphones and tablets, which now make up more than 1/3 of the search engine’s clicks in Q3.
  • While clicks on desktops were flat YoY, search clicks on tablets increased 63.4% and clicks on smartphones more than doubled.

The following charts show the percentage of paid-search clicks by device category.

In the aggregate, Google saw 33% of paid clicks in Q3 coming from smartphones and tablets, with the greatest growth coming from tablets. Bing saw about 18% from mobile devices, since it has a much smaller and less visible mobile presence.  

Is Video the Killer Mobile Advertising Format?

Putting aside search marketing, the overwhelming majority of mobile ad creative leaves much to be desired. However video may turn out to be the "killer" mobile ad solution in many instances. That's according to new data from video marketing provider Unruly.

Based on a review of several thousand client campaigns Unruly found that mobile video outperformed video ads on PCs:

  • Average CTR for mobile campaigns (13.64%) is almost three times that of desktop (5.45%)
  • In the last two quarters, CTRs on mobile were more than 2X for desktop (11.18% vs 4.25%)
  • Month-on-month mobile replay rates fluctuated throughout 2013, but year-to-date figures have still been one-and-a-half times higher than desktop rates

There are clearly issues with relying primarily on mobile video as a mobile ad format. Network speeds may be slow, videos many not load and playback may be disrupted. In addition, those with more limited data plans may be inclined to avoid video on mobile devices. 

All Media Video View Rate Adobe 2012

Generally however mobile video consumption is growing. A recent study from the Pew Research Center found that 41% of respondents watched video on mobile phones. Indeed, consumers are increasingly watching video on smartphones and especially tablets.

Mobile (smartphone + tablet) "video starts" constitute roughly 10 percent of digital "video starts" according to Adobe. The Adobe data in the chart above reflect video viewing rates in Q4 2012. Mobile video ads also offer unique social sharing opportunities and are generally effective (or potentially effective) brand advertising vehicles. 

There are plenty of data that reinforce the growth of mobile video viewing. Of course video advertising is arguably best suited for video content. But video could be incorporated into display ads of all types. I don't favor "involuntary" video that starts to play once a site loads, as sometimes happens on PC sites. That would be too annoying and have a negative impact on consumer attitudes and receptiveness. 

However considerably more information can be communicated through video than the tiny text in most display ads. Video, rich media and landing pages can all be used together to create ads that showcase brand messages as well as direct response elements (e.g., maps and directions, click to call, etc.). Mobile video ads can also generate higher CPMs for publishers.

Ultimately mobile ad formats that include video are going to be much more successful from a creative and messaging standpoint than most current mobile display ads, even most rich media ads in apps.  

Google to Build Opt-In Mobile Panel for (Offline) Analytics

According to a report (rumor) in Engadget, Google is preparing to build an incentive-based mobile panel to track browsing and app usage behavior. The initiative is called "mobile meter" according to the blog and it would be directed toward iPhone and Android users. 

Google would offer some incentive (points, rewards, etc) to motivate users to opt-in and allow their usage to be anonymously tracked. This would be nearly identical to the system currently used by Nielsen. 

In addition Placed uses a panel to track mobile and exposures and their impact on store visits. The Placed app (with opt-in consent) watches where users go in the real world and extrapolates their data to estimate the offline impact of mobile campaigns. 

Google recently announced Estimated Total Conversions that will track the impact of search ads across devices and, eventually, into stores. The primary methodology relies on signed-in Chrome browser users. 

A Google mobile panel would complement that approach and, like Placed's panel, provide data to advertisers -- offering a more holistic view of their campaigns, especially the impact on offline store visits.  

PC Market Continues to Limp Along

The third quarter US PC shipments figures have been coming out. While there was a mild recovery for some of the PC makers, the numbers overall remain very weak.

Both IDC and Gartner see PC shipments off from 7.6% to 8.6% overall vs. last year. In addition shipments don't equal sales. Consequently the actual sales figures may be weaker than suggested by the shipments numbers. 

The market has structurally changed. Smartphone and tablet usage has replaced PC usage in many cases. Smartphone and tablet growth will continue to gain for the next 3 - 5 years, generally at the expense of PCs. We're also not likely to ever see high-end ($1,000+) PC sales at any volume in the consumer market again.

 

While Apple has been able to maintain higher desktop and laptop prices, most PCs now sell at sub-$500 levels (they're effectively disposable). And once consumers make that leap psychologically they'll want to spend even less (hello Chromebooks).

There's also less and less urgency to replace or upgrade older PCs. Consumer indifference to Windows 8 also compounds challenges for the PC industry.

The "aha" about the Q3 Gartner and IDC PC shipments estimates above and below are that the back-to-school shopping season did almost nothing to boost sales. HP, Lenovo and Dell saw modest growth while other PC makers saw significant double-digit declines. 

 

Meanwhile tablet (and hybrid phone-tablet) devices continue to grow. Roughly 34% of the adult US population now own tablet devices according to earlier 2013 Pew survey data. Those numbers are likely to be above 40% and perhaps as high as 45% after Q4 2013. 

Pew tablet ownership 

The thing separating the PC from more precipitous declines is arguably Microsoft Office. If a functioning version of Office comes to non-MSFT tablets or if the cloud based version of Office is more widely adopted, PCs will be even less "necessary" for consumers than they are today.  

Is a Google Smartwatch Imminent?

In the frenzy of speculation leading up to Apple's iPhone announcement last month, there was lots of discussion of smartwatches. Apple supposedly was developing an "iWatch" and would be announcing it along with the new handsets. Samsung, wanting to beat Apple to market, rushed out its Galaxy Gear watch, which has met with scathing reviews as an "unfinished product." 

Google was also rumored to be working on a smartwatch. The 9to5 Google site has some additional information on the potential release of a Google smartwatch at the end of this month: "Details are slim but the person seemed to think that Google Now functionality would be at the center of the product."

The idea is that Google would take its technology and learning (thus far) from Google Glass and put that in a watch. The emphasis on Google Now is interesting and appropriate -- the watch as a kind of notifications center. Samsung tried to cram too much half-baked functionality into Galaxy Gear.

There's considerable consumer interest in smartwatches (much more than Google Glass). Just over 40% of survey respondents in a recent survey we conducted (n=1,024 US smartphone owners) said they were interested in a smartwatch. Not surprisingly respondents were most interested in smartwatches that were made by the same maker as their current smartphones.

The right mix of features and pricing are key here. Undoubtedly Apple will develop an "iWatch." And Google, as the rumor suggests, will probably roll out a watch itself, given its new commitment to "wearables." But these initial products may not get the mix right: simplicity, aesthetics, functionality and cost.  

The optimal price is probably $99 to $199. But $299 would be OK if the watch were a great product. At $299 and above, the Galaxy Gear is simply to flawed and too expensive for what it delivers. Now we'll see what Google can come up with.  

Place 2013 - Agenda & Presentations

Place 2013 brought together the entire spectrum of companies building the indoor location ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors attended this unique, one-day event at the Palace Hotel in San Francisco and was the first-of-its-kind anywhere.

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Agenda & Presentations

8:45 AM - 9:00 AM
The Consumer Foundations of Place-Based Marketing - The majority of smartphone owners are already using their devices in stores to find product and price information, as well as coupons. Opus Research will present proprietary findings on in-store behavior, privacy attitudes and consumer receptiveness to indoor promotions.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation

9:00 AM - 9:45 AM
The State of Indoor Location - For the past several years online mapping giants and technology providers have been laying the groundwork for indoor location. What is the current state of the infrastructure? What technologies are already deployed and how accurate are they? What indoor consumer and advertiser scenarios are possible today and what might be possible within three years?
Speakers:
Joseph Leigh, Head of Venue Maps, Nokia
Leslie Presutti, Mobile, Location and Computing Business Unit, Qualcomm Atheros
Zack Sterngold, VP of Americas, Boingo Wireless
Avinash Joshi, Chief Technologist, Wireless LAN Group, Motorola Solutions

9:45 AM - 10:25 AM
Keynote: Why Indoor Location Will Be Bigger than GPS or Maps - The explosion of smartphones with built-in sensors, accelerometers, GPS and WiFi is making indoor positioning not only possible but also inevitable. The emerging indoor opportunity for venue owners, retailers and technology providers is potentially massive. Google’s Don Dodge, an investor and close observer of the space, will explain why he believes indoor location and marketing is going to be huge and potentially larger than GPS and maps.
Speaker: Don Dodge, Developer Advocate, Google

10:45 AM - 11:05 AM
Case Study: Point Inside - Point Inside was one of the early consumer-facing apps in the indoor location space. The company has since shifted its focus to enterprises and enabling retailers to take advantage of indoor location. The company will present a new case study featuring a major home-improvement retailer.
Speaker:Todd Sherman, Chief Marketing Officer, Point Inside
View slides from this presentation

11:05 AM - 11:30 AM
Featured Case Study: Forest City and Path Intelligence - Forest City Enterprises are many years into using mobile device monitoring and advanced indoor analytics to help create a better environment for their shoppers and their retailers. Hear from the project sponsor and partner Path Intelligence on how they have transformed asset management, leasing, and marketing.
Speakers:
Stephanie Shriver-Engdahl, VP, Digital Strategy, Forest City
Cyrus Gilbert-Rolfe, VP, Path Intelligence
View slides from this presentation

11:30 AM - 12:15 PM
Digital Analytics for the Real World - Using a variety of technologies to identify when and where smartphone shoppers are in stores, retailers can now leverage "big data" previously reserved for Internet companies alone. These "real world analytics" hold profound implications for everything from in-store merchandising and staffing to consumer marketing. Leaders in the segment will offer views on opportunities and potential pitfalls for indoor analytics.
Speakers:
Jon Rosen, Executive Vice President, iInside
Will Smith, CEO, Euclid
Alexei Agratchev, Co-Founder, RetailNext
Michael Healander, General Manager, GISi Indoors

1:15 PM - 1:55 PM
Retail Spotlight: Aisle411 & Dick's Sporting Goods - Aisle411 will discuss current retail deployments and their impact on operations, consumer loyalty and marketing. Dick’s Sporting Goods will share how it’s thinking about indoor location, privacy issues and the overall opportunity. And Bob Rosenblatt, former COO of Tommy Hilfiger Group, will outline the intriguing business opportunities for retailers in develop- ing indoor marketing strategies.
Speakers:
Nathan Pettyjohn, Founder & CEO, aisle411
Rafeh Massod, VP, Customer Innovation Technology, Dick's Sporting Goods
Bob Rosenblatt, CEO, Rosenblatt Consulting
View slides from this session from aisle411

1:55 PM - 2:15 PM
Using Store Visits and Data for Advanced Retail Intelligence - Online to offline has been the dominant but largely invisible paradigm of Internet-driven spending. Using mobile to better target and influence store visits is only the beginning. PlaceIQ CEO Duncan McCall will offer a major retail case study fo- cused on measuring store visits after mobile ad exposures. He will also discuss how to connect online, nearby and indoors for a more complete picture of the customer journey.
Speaker:Duncan McCall, Co-Founder & CEO, PlaceIQ
View slides from this presentation

2:15 PM - 3:00 PM
Ad-Tracking to the Point of Sale - Panelists will discuss the current and future use of indoor location as a way to demonstrate ROI and sales lift on a per- campaign basis. What is the current state of the art in matching store visits to ad exposures? And what are the broader implications of connecting online ads and offline data?
Speakers:
Monica Ho, Vice President of Marketing, xAd
David Shim, Founder & CEO, Placed
Ameet Ranadive, Director of Product, Twitter Ads Team
Michael Shevach, SVP Ad Solutions, Retailigence
Duncan McCall, Co-Founder & CEO, PlaceIQ (moderator)

3:20 PM - 3:50 PM
Opt-in or Opt-out: Indoor Location & Consumer Privacy - Indoor location has already gained the attention of members of Congress and been called "troubling." While not everyone agrees about the level of concern, there are obvious consumer privacy issues raised by in-venue smartphone tracking. How should the companies be addressing these issues today and what might regulation require tomorrow?
Speakers:
Jennifer King, School of Information, UC Berkeley
Jules Polonetsky, Executive Director & Co-chairman, Future of Privacy Forum

3:50 PM - 4:10 PM
Case Study: Meridian/Aruba Networks - Meridian, who was recently acquired by Aruba Networks, will offer two indoor case studies, one involving a small business (Powell’s Books in Portland) and another involving a major U.S. apparel and housewares retailer.
Speaker: Jeff Hardison, Vice President, Meridian
View slides from this presentation

4:10 PM - 4:55 PM
Microfencing: Targeting In-Aisle Shoppers - Billions of dollars are spent each year by brands and manufacturers trying to influence consumer buying in stores. A percentage of that money will migrate to indoor digital marketing. What conditions must first exist and what will those brand-consumer interactions look like? The panel will explore these questions as well as the contours of the broader indoor marketing experience.
Speakers:
Neg Norton, President, Local Search Association Ben Smith, CEO, Wanderful Media
Melissa Tait, VP of Technology, Primacy
Erik McMillan, CEO, BrickTrends
Asif Khan, Founder, Location Based Marketing Association (moderator)

4:55 PM - 5:30 PM
Reality Check: Assessing the Indoor Opportunity - The other sessions explored major opportunities (and challenges) of indoor location and marketing. Now it’s time for a fun, yet sober assessment of whether and how soon these scenarios will come to pass. Is there real demand and who will own the “indoor channel”? Where will the "place-based market" be next year, in three years?
Speakers:
Jeremy Lockhorn,VP, Emerging Media, Razorfish
John Gardner, Partner, Nokia Growth Partners
Chandu Thota, Engineering, Google
Wibe Wagemans, IndoorAtlas

Report: US Mobile Ad Revenues Up 145% to $3B in 1H 13

This morning the IAB released Q2 and 1H 2013 mobile ad revenue figures for the US market. Total revenues were $20.1 billion compared with $17 billion a year ago. Mobile ad revenues were just over $3 billion vs. $1.2 billion during the same period in 2012. 

That represented growth of 145%. Mobile was 15% of overall digital ad revenue in the first half. 

Total mobile advertising in 2012 was just under $3.4 billion. This year mobile advertising should come in at over $6 billion. The holidays should give mobile advertising a substantial boost however it's likely to remain about 15% of total online advertising for 2013. 

The IAB has stopped trying to estimate subcategories of mobile as it did in 2011. Mobile search is the largest ad sub-category of mobile spending and probably exceeds 50% of the total. Display is second followed by video and other ad categories (SMS based advertising or marketing continues to fade). Search and mobile display represent the mobile ad spending. 

While consumers spend 80% of their time in apps, apps don't represent 80% of the mobile ad spend -- given the dominance of mobile search, which mostly happens via a mobile browser.  

The top three overall online advertiser categories were Retail (20%), Financial Services (14%) and Automotive (12%). 

Android Hits a Wall in US While iPhone Climbs

Yesterday comScore released its US smartphone market share report for August. The interesting thing is that these data do not reflect the release of the iPhone 5s and 5c. Apple was the single most popular handset maker, with just under 41 percent of the market. Samsung was second with 23 percent. 

In terms of operating system share, Microsoft gained 0.2 points while Android lost 0.8 points. The iPhone saw a 1.5 percent gain. It certainly will be interesting to see what the September numbers are, post iPhone 5s. 

  August OS share 

In the aggregate Android devices represent just over half the smartphone market in the US (now 64% of mobile users). However it appears that may be the ceiling for Android -- at least for the time being. 

Depsite this it appears from comScore's data that Google has achieved nearly 100% (92%) smartphone reach in the US through a combination of apps and mobile search usage, though Facebook remains the top individual mobile app: 

top mobile apps August

According to research conducted by investment bank Canaccord Genuity the iPhone 5s was the top selling mobile handset at each of the four major US carriers in September, with the 5c taking second place at AT&T and Sprint and third place at Verizon. 

Notwithstanding its second place finish, the 5c is quite a bit less popular than the 5s. Hitwise (Experian) reported that search queries for the iPhone 5s were 4X more than the 5c in early September.

top-five-iphone-search-terms 

This basically mirrors our survey finding correctly predicting the enormous popularity of the 5s and lesser interest in the 5c:

iPhone survey

Source: Opus Research, n=1,508 US adults (Sept 16 - 19 2013)

Elecontrics retailer Best Buy is offering a $50 instant discount on the 5c, which effectively cuts its contract-subsidized price to $50 for the entry level device. Wal-Mart by the same token has cut the 5c's price to $45 "permanently." This should help boost sales of the 5c considerably in the short term.