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Pizza Hut: Half of 'Online' Orders Now Come from Mobile

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. 

Amazon, eBay Dominate Retail App Usage

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:

Selected Leading Retailers: Unique Visitors by Platform and Percent of Time Spent  - Browser vs. App

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. 

The Case Against "Shipments" and in Favor of Actual "Usage"

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. 

IDCtabletforecast

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.

Xmas Numbers Roundup: 48% of Traffic Mobile, Chromebook's 20% Enterprise Surprise

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.  

Forecast: Mobile Makes Facebook Number Two Digital Ads Platform after Google

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." 

Amazon May Buy GoPago and Go into Mobile Payments

Mobile merchant sites can already offer "pay with Amazon" as an option beside PayPal or their own checkout flow. However Amazon may now be preparing a bigger push and more direct competition with PayPal, Square and others in the mobile payments arena.

The Wall Street Journal is reporting that "Amazon.com may be nearing a deal to buy payments startup GoPago." GoPago is a JP Morgan Chase backed payments startup aimed at the small business market. The company provides a range of payment services including a free "Square register"-like terminal and POS system

In the fairly noisy payments market I wouild speculate that GoPago has struggled to gain traction and its investors may be looking for an exit. By the same token it's natural for Amazon to embrace mobile payments more fully. 

Amazon has roughly 200 million consumer credit cards on file. While this is quite a bit less than Apple it's more than PayPal. And although I haven't seen any survey data on this question I suspect that Amazon has a more trusted consumer brand than PayPal. Thus Amazon is a logical candidate to enter mobile and smartphone-based payments directly and could be a major player in the segment.

In a move to bolster its own mobile and e-commerce position PayPal acquired Braintree for $800 million in September.

Apple is another very logical candidate for mobile and online payments given its massive database of consumer credit cards. Indeed Apple CEO Tim Cook keeps teasing this idea by repeating the number of consumer accounts and credit cards Apple has, now at or near 600 million.

If Apple were to power app-store payments and mobile transactions for third parties it could both remove friction from mobile commerce -- with Touch ID as the equivalent of Amazon's 1-click buying  -- and potentially add meaningful revenues to its bottom line. 

Update: PayPal acquires StackMob and gets more serious about being the mobile payments platform of choice for developers. 

New Auto-Play Video Ads a Boon for Both Facebook and Brands

Users may become annoyed by the insertion of new auto-play video ads into their Facebook news feeds. However brand marketers are going to love the new ad units. And Facebook's investors are going to love the revenue -- especially from mobile. 

Facebook is promoting video in the news feed as a potential source of "high quality" ads for users. While that might be true in some cases, it's all about giving brand advertisers new ways to "tell stories" on Facebook -- and Facebook new ways to generate revenue across platforms with TV-style video advertising.  

It will work on both the PC and, most importantly, in mobile. Here's how the ads will operate according to Facebook:

  • Rather than having to click or tap to play, videos will begin to play as they appear onscreen - without sound - similar to how they behave when shared by friends or verified Pages. 
  • If the video is clicked or tapped and played in full screen, the sound for that video will play as well.
  • At the end of the video a carousel of two additional videos will appear, making it easy to continue to discover content from the same marketers.
  • On mobile devices, all videos that begin playing as they appear on the screen will have been downloaded in advance when the device was connected to WiFi – meaning this content will not consume data plans, even if you're not connected to WiFi at the time of playback.

Facebook is carefully trying to balance advertiser and user interests here. Most notably there's no sound when the videos start to "auto-play." This is a key decision to minimize user backlash. In addition the "no data-plan impact" of mobile ads is also critical. 

These ad units -- assuming that there's no sustained user uproar -- will bring significant new revenue to mobile for Facebook. They'll also give brand advertisers a potentially compelling and simple way to reach mobile users. The genius of these ads is that they automatically work across platforms and marketers won't need to change the creative to address the mobile audience.

The decision to keep the sound off is smart both to minimize the backlash, as I said, but also to indicate true engagement with the video units -- users will have to click to hear the sound. But these units will also likely have a "brand effect" and influence even if the sound is not engaged.  

I've argued in the past that video is a key format for mobile ads. If I'm right, Facebook may have just created its "killer" mobile ad unit.  

Expect Labs' MindMeld App Showcases Dynamic 'Assistant' Technology

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. 

By 2016 Mobile Will Be the World's 4th Largest Ad Medium

Earlier this week ZenithOptimedia released a new global ad forecast that argued "Advertising is set to see the strongest sustained period of growth in ten years." The firm identified mobile as the "principle [sic] engine of this growth." 

According to the agency mobile is expanding overall media consumption, "without cannibalising any of the other media platforms." That's not exactly true. Mobile and mobile video are fragmenting audiences, which makes it more complex for marketers to reach them as well as to track the efficacy of different channels and media.

Cross-platform and multi-device shopping is an example of this phenomenon.  

ZenithOptimedia explained that notwithstanding its mobile ad growth figures, it only contributed 2.7% of global adspend in 2013. By 2016 that number will reach nearly 8% (7.7%) according to the forecast. If that indeed comes to pass mobile would become, according to Zenith, the "world’s fourth-largest [advertising] medium." It would then exceed traditional radio, magazines and outdoor advertising. 

For purposes of the forecast "mobile advertising" is considered to be any ad shown on a mobile device whether or not the ad was specifically purchased for mobile distribution. Accordingly the sheer number and usage of smartphones and tablets -- and their anticipated growth -- is driving up ad revenue attributed to mobile. 

Surprise: Nokia Developed "Forked" Android Device, Will It Survive?

I've argued a number of times in the past that had Nokia from the beginning embraced Android it wouldn't have had to sell to Microsoft. It turns out that Nokia had/has developed an Android handset, apparently code-named Normandy. It uses a customized or "forked" version of Android much like what Amazon has done with Kindle devices, taking them out of the realm of Google standards and control. 

Reportedly it's a low-end device designed for emerging markets, where Nokia has had some success with its pseudo-smartphone Asha devices. Other details are scarce.

Microsoft bought Nokia's hardware business (for $7.2 billion) for multiple reasons. One of them was clearly defensive; it wasn't only about "bringing hardware and software together." 

Nokia sells most (80% or more) of the Windows Phones on the market today. The continuing strength of the Nokia brand in Europe is responsible for Windows Phone's roughly 10% market share there now. Had Nokia embraced or "diversified" its lineup with Android devices Microsoft might have felt the potentially negative sales impact as Nokia split its focus and marketing. 

The conventional wisdom is that Microsoft will kill the Normandy device when the acquisition formally closes -- it has been approved by regulators. Some are making the argument, however, that Microsoft might not immediately terminate the project because the version of Android being used is outside Google's control. 

That remains to be seen. Yet the existence of Normandy lends further credibility to the theory that Microsoft bought Nokia's phone business to prevent it from turning to Android.  

Indoor Location Examples Show Improved Customer Experience

According to an article appearing in the Wall Street Journal, The Future of Privacy Forum has estimated that roughly 1,000 retailers are using some form of indoor location for analytics and/or customer experience purposes. That will only increase because the benefits to retailers and shoppers are too significant to ignore. 

Companies mentioned in the WSJ article include: 

  • Prism Skylabs
  • Forest City
  • Euclid Analytics
  • Shopkick
  • Swirl
  • Macy's
  • Walmart
  • HomeDepot
  • Timberland
  • Kenneth Cole

More interesting is the discussion of some of the use cases in the article: 

  • Moving items from lower traffic areas in stores to more high traffic areas; moving hot selling items to less busy areas to relieve in-store congestion.
  • Better managing check out lines
  • Moving items to rear of store in apparel boutique where data showed customers tended to spend the most time (this was an SMB)  
  • Opening restaurants in mall earlier to better accommodate hungry late night/early morning shoppers on Black Friday based on prior year's data showing a mall exodus at 6 am (presumably for food)  
  • Creation of a "virtual Santa queue" where smartphones are pinged at an appointment time to enable consumers to keep shopping rather than waiting in line for hours. 

The article also contains the requisite discussion of privacy and concerns over "tracking." Those concerns can be managed through disclosures, opt-in apps and education that explains the benefits of indoor location to consumers. The virtual Santa queue is one such example that will immediately be understood and resonate with consumers looking to avoid lines. 

Among many others, Forest City (and Path Intelligence) and Euclid Analytics were speakers at our Place Conference in October. See our recap and session videos

Apple iBeacon Deployment Lends Further Cred to Indoor Location

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. 

China Mobile Gets the iPhone, US Smartphone Growth and 'Nokisoft' Approved

Yesterday the Wall Street Journal reported that China Mobile and Apple had struck a long-anticipated deal to offer the iPhone to China Mobile's massive customer base (estimated by the publication at 7X Verizon Wireless). Neither company has confirmed the deal.

China Mobile is the largest carrier in the world's largest mobile and internet markets. The company has more than 750 million mobile subscribers. According to several estimates Apple has about 5% of the Chinese mobile market. Various flavors of Android are by far the dominant mobile platform in the country, with nearly 80% share. 

Many financial analysts think that the iPhone 5s and 5c are too expensive for China. However there appears to be a meaningful appetite for Apple's devices there. Apple's "greater China" revenue this past quarter was $6.8 billion. That number could easily double through the China Mobile deal -- if it's confirmed. 

October OS share

Back in the US comScore released September smartphone market share data. The firm estimated that 149.2 million American adults now own smartphones. Comscore's figures put smartphone penetration at or just under 64%, generally in agreement with Nielsen's estimates. 

Apple, Samsung and Motorola were the top three smartphone OEMs in the US. HTC and LG lost share and BlackBerry is out of the top five. Android is the top OS, gaining nearly half a point. Apple and Windows Phone also gained modestly. 

I was surprised not to see more of a bump for the iPhone given all the discussion of iPhone sales momentum. However it hasn't really materialized in comScore's data.

In the US Windows Phone share is 3.2%, growing but very small. By contrast, in Europe, Windows Phones now enjoy a 10% share across the EU5 (driven by UK, France and Italy) according to Kantar survey data.

Windows Phone's success in Europe is due almost entirely to Nokia and it's continued brand strength, which doesn't equally exist in North America. Nokia sells the overwhelming majority of Windows Phones globally, which is why Microsoft bought the company -- also to prevent it from starting to make Android handsets. 

That largely defensive acquisition has now been approved by US regulators, with European regulatory authorities likely to follow and permit the transaction. 

Report: Big Increase in iPads After Black Friday Weekend

There has been a near avalanche of shopping data released over the past several days, much of it documenting the rise of mobile devices in driving traffic and e-commerce purchases. Various estimates ranged from 23% to nearly 40% of traffic coming from mobile over the course of the weekend. 

One of the clear winners of the Black Friday weekend shopping bonanza was the iPad. Apple and other retailers offered gift cards as incentives to buy the devices. In combination with general consumer demand that strategy seems to have paid off for Apple. 

According to Localytics, which looked at over one million devices before and after Black Friday weekend, the iPad Air in particular saw very strong growth: 51% vs. the week before. So did the Mini and iPhone 5c. Admittedly the iPad Air is growing from a smaller base, although the device had a very strong launch

The data in the chart above also don't reflect iPads purchased as holiday gifts and not yet opened/activated. So there are probably many more that were purchased than what's represented on this chart. 

The top Android tablet was the Kindle Fire, which saw its own aggressive $50 discount from Amazon. The only other Android tablet to show growth is the Galaxy Tab 2, which was heavily discounted online and at several retail stores.

In October Apple announced that 170 million iPads had been sold to date. Given the momentum being reported, it's very likely that Apple will sell 20 million iPads (collectively) in the holiday quarter. 

Steve Jobs Was Right: People Aren't Searching in Mobile Like on the PC

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.

Most popular mobile apps

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. 

Report: the iPad Drove Nearly $500 Million in E-Commerce This Weekend

It makes sense that traditional retailers would handily beat their online only counterparts (save Amazon) this past weekend. That's according to data from Adobe.

We now live in a multi-platform, multi-device world. People move between PCs, tablets and smartphones just as they move from online to stores and back. They also generally prefer the tactile and social experience of shopping offline. Roughly 95% of retail spending happens in physical stores according to the US Census Bureau. 

According to Adobe's data, "Traditional brick-and-click retailers are outselling their online-only competitors so far this year at nearly a 3-to-1 ratio." That's because they offer more trusted brands, and online shopping experience and a way to physically examine and immediately buy products and gifts offline. 

Location analytics company Placed offered the following data on the most-visited offline stores on Black Friday:

Screen Shot 2013-12-01 at 7.43.02 AM

Consistent with others, Adobe reported that 24% of online sales this past weekend took place on mobile devices. The iPad was the preferred "shopping companion device, representing nearly half a billion dollars ($417 million) in sales during these past two days, followed by the iPhone and Android phones at $126 million and $106 million, respectively." 

Adobe estimated that Thanksgiving and Black Friday saw just under $3 billion in online spending, which was an increase of 30% over last year. The company projects that e-commerce sales today, "Cyber Monday," will exceed $2 billion ($2.27 billion). 

Mobile Devices Drove Nearly 40% of Online Traffic Black Friday Weekend

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: 

  • Mobile devices drove more than 39% of online traffic (smartphones 24.9%, tablets 14.2%)
  • Mobile e-commerce was 21.8 percent of total US online sales on Black Friday (tablets: 14.4%, smartphones: 7.2%)
  • iOS devices generated 28.2% of mobile traffic; Android 11.4%
  • iOS was responsible for 18.1% of overall e-commerce sales vs. 3.5% for Android

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:

  • PC: 63%
  • Smartphones: 23%
  • Tablets: 14% 

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:

  • iOS: 84%
  • Android: 16%
  • Other: 1%

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.

HP Tablet Will Be $89 on Black Friday

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.

With iBeacon Adoption, Macy's, Apple on Vanguard of Indoor Marketing

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. 

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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.

Isis Mobile Wallet Launches, Most Americans not Interested

Last week, Isis, the NFC-based mobile wallet initiative from a joint venture of mobile carriers, launched nationwide. It only works on smartphones with an NFC chip, which essentially excludes the iPhone.

While most people expect mobile payments to become mainstream at some point, the outlook for Isis in particular is murky at best, if new survey data from Harris Interactive are reflective of general public opinion. 

Harris Interactive surveyed 2,577 US adults in September about their attitudes toward "mobile payments," generally. Scenarios described in survey questions included Square-like smartphone card swipes and "tap-to-pay" NFC systems. Broadly the firm found that more Americans were exposed to and had used some form of mobile payments vs. previous years.

A majority of respondents said they believe that mobile will replace cash and card payments "within five years." However a substantial minority (34%) believe that NFC systems (tap-to-pay) will never become mainstream. Among those who expressed a lack of interest in mobile payments, a "lack of compelling motivation" was cited as the main reason:

Among those not interested in using a smartphone to process payments, a simple lack of compelling motivation remains one of the top factors impeding interest, with 53% saying they don't see any reason to switch from cash or payment cards. This also holds true for smartphone users where a majority (58%) don't see any reason to switch from cash or payment cards either . . .

Simply put, large numbers of people don't see mobile payments, especially NFC-based approaches, as solving a problem. The people behind Isis are conscious of this and are trying to overcome consumer indifference by offering discounts, coupons and cash-back rewards for using it. For example, Amex is offering a 20% cash back award (up to a maxium of $200 total). 

However before Android (and Windows Phone) owners can start using Isis they'll need to get an enhanced SIM card. Then they need to download and install the app. Then they need to find merchants with NFC-enabled point of sale systems. 

The Harris survey data also reflect that interest in mobile payments in the US has fallen somewhat since last year. Security remains a top concern among a majority of survey respondents: "62% listed the fact that they don't want to store sensitive information on their phone as a reason for lack of interest."

Still the fact that most people believe mobile payments in some form are inevitable means there will eventually be consumer acceptance and adoption. As we've argued before the entry point for mobile payments is not these broad "horizontal" payment platforms but "point solutions" and vertical scenarios featuring a stored payment card (e.g., Uber, Amazon, Starbucks, AirBnB, OpenTable, parking, etc.). 

In such situations the convenience and efficiency of paying with an app are obvious to the end user. Indeed, the missing "compelling motivation" is present. Those vertical payment scenarios or point solutions will be the ones that familiarize people with mobile payments, ultimately paving the way for more horizontal payment systems. 

The question for Isis is whether it can survive until that day comes or whether it will have to change its approach or otherwise broaden its capabilities to attract more users, especially iPhone users.