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Despite Better Performance, Mobile Ads Considered Just a Notch Above Spam

Mobile advertising is typically quite a bit more effective than comparable ads on the PC. Indeed, the data show that mobile search and display consistently outperform their PC counterparts. Yet mobile ads (especially display and SMS) are viewed with skepticism and distrust and rank near the bottom of all ad categories in consumer surveys.

This is something of a paradox to say the least. For example, Marin Software's Q3 aggregated client data report indicates the following about the relative performance (CTRs) of paid search ads on the PC, smartphones and tablets:

  • PCs: 2.35%
  • Tablets: 3.22%
  • Smartphones: 5.07% 

You might be quick to respond that smartphone click-through rates could be attributable to the so-called "fat finger" problem thus distorting their true performance. This problem -- and we can debate the extent of its reality -- doesn't really exist in a paid-search context.

These clicks are from intent-based queries and thus more inclined be "real" and reflective of a buying intent. In a display context an unintended click may be somewhat more likely. However mobile display outperforms PC display advertising across the board and consistently across studies. 

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According to 2011 Nielsen US consumer advertising-trust survey data (above), personal recommendations and traditional media ads are near the top and mobile ads are the least trusted of all the major ad categories. 

A more recent Millward Brown consumer survey (Q3 2012) found much the same thing. Mobile ads were at the bottom of favorability rankings among all ad types. The list below just shows digital categories: 

Screen Shot 2012-12-12 at 11.48.11 AM

There's no easy way to explain the apparent contradiction between negative consumer attitudes toward mobile ads and their otherwise superior performance to categories more trusted or ranked more highly.  

Mobile Devices Will Outnumber PCs Very Soon

If you're inclined to believe financial analysts then mobile device ownership (smartphones + tablets) will trump PC ownership on a global basis some time next year. At some point in the next 3 to 5 years we may have as many or more tablets than PCs. These are radical changes in the marketplace that are still slow to sink in with publishers and advertisers unfortunatley.  

The essential thing to understand is that tablets are PC replacement devices in most usage scenarios. Smartphones are used both at home and on the go. They tend to complement PC or laptop usage generally speaking. To accomodate these users and usage scenarios much in advertising, mobile site design and e-commerce has to change. 

The following chart from Pew lays out US device ownership and trends over the past six years.  

Screen Shot 2012-12-11 at 9.18.20 AM

PC ownership (including laptops) has really peaked in the US at about 61% according to the Pew survey data. Mobile phone penetration is 85% (smartphones at 50%+) and tablets at 25% (after the holidays it will be greater). 

So what does this all mean in terms of real numbers? It means that if there are roughly 250 million US adults then there are:

  • 152 million laptop owners (+ some additional number of desktop PC owners) 
  • 212 million mobile phone owners (and about 108 million adult smartphone owners)
  • 62 million tablet owners 

If teens are included there are more than 120 million mobile internet users today in the US. That's just over half the total PC internet population.

A new forecast from Informa Telecoms argues that the mobile phone market will be dominated on a global basis by sub-$150 devices by 2017. Regardless of the accuracy of that prediction, prices are indeed coming down. That means more smartphone penetration and more mobile internet access.

What it also means is that PC-centric publishing, e-commerce and advertising will need to give way to a multi-platform approach and a more nuanced and sophisticated understanding of consumer behavior -- amid an even more challenging attribution environment. 

Examination of Apps Shows Small Minority Share Location

The US Federal Trade Commission (FTC) today released a study of privacy and mobile apps for kids. The report was a follow up to an earlier study issued in January. Both reports were highly critical of app developers and app stores. Both found that parents weren't given enough information to assess privacy policies and whether or how their kids' information was being used. 

The FTC looked at 400 apps (randomly selected) that were directed toward kids. The agency compared privacy policies and actual practices. It found: 

[The] industry appears to have made little or no progress in improving its disclosures since the first kids’ app survey was conducted . . . most apps failed to provide basic information about what data would be collected from kids, how it would be used, and with whom it would be shared.

In a few cases privacy policies were directy contradicted by actual practices and the FTC called these apps deceptive and potentially illegal.  

The report's findings are interesting and potentially important for the debate over mobile privacy. However the specific finding I want to focus on here has to do with the number of apps that transmitted location information to ad networks. 

Mobile apps (for kids) that share information with developers and ad networks 

 

Source: FTC 

Only 3% of apps that transmitted information back to developers and ad networks shared location data. The iPhone makes that process more explicit than does Android. But when location isn't shared there can't be any location-based ads.

Apps for kids aren't ncessarily representative of the entire universe of apps. Indeed, location may be much less of a factor in apps for kids. But the data may be directionally consistent with the market as a whole, inducating how relatively few apps today offer opportunities to display location-based ad inventory. 

Is This the 'Breakthrough Quarter' for Windows Phones?

You can't turn on the TV, Internet or open a publication without encountering an ad for Windows Phones. And there are conflicting data about whether it's working and the corresponding strength of Windows Phone sales.

Several data sources continue to indicate tepid demand in North America but there is also some evidence that Windows Phone sales may be going reasonably well in certain parts of the world. The blog WMPoweruser identifies growth in the usage of Facebook apps for Windows Phones and extrapolates an increased sales trend on that basis: 

Using the number of Monthly Active Facebook users as a guide, we can see around 627,000 MAU of the built-in Facebook app has been added since the 1st October 2012, the start of the quarter.

Last year over the same period less than 150,000 was added by the 15th December, possibly hinting at the source of Steve Ballmer’s statement that “Windows Phones are so far selling at four times the rate of the same time last year” Last year according to Gartner, who claims to measure units actually sold to end users rather than shipments, said 2.759 million Windows Phones were sold in Q4 2011.

The data suggests already 7 million Windows Phones were sold so far this quarter, and we may finally be heading to a + 10 million Windows Phone quarter.

If in fact Windows Phones were to sell 10 million units to end users it would indeed be a breakthrough for the beleaguered platform. However there's other data to suggest that Windows Phones are not doing as well as that. For example, the most recent comScore US mobile market share data show that Windows continues to lose overall share to iOS and Android:

 

There are also recent sales data from Kantar Worldpanel that show Windows Phones losing share in accordance with the comScore data above:

However in Europe Windows Phones are making some inroads, probably as a result of Nokia's promotional efforts and legacy brand strength. While the EU5 shows a 4.7 percent market share (growth of 1.7% vs. a year ago) individual countries vary widely.

In Italy, Spain and the UK Windows Phones have performed better than in Germany and France. In Italy in particular Windows Phones have gained almost 8 points and now stand at an 11.7 percent share of recent sales according to Kantar. Again, this is probably on the strength of the Nokia brand in Europe.

Elsewhere around the world Windows Phone sales appear to be modest. However in "urban China" Kantar says Windows Phones contstitute 4.2% of all recent smartphone sales.  

It is possible that all these sales combined represent several million units around the world. But while there does seem to be momentum in certain countries it doesn't yet appear that this is a 10 million unit "breakthrough quarter" for the operating system. 

Mobile Apps Challenge TV for Temporal Supremacy

Flurry Analytics has been chronicling the rise of the app ecosystem and the growth of app usage by consumers for several years. In January of this year the company released data arguing that daily time spent with mobile apps had surpassed the PC internet: 94 minutes vs. 72 minutes per day. And earlier today Flurry released an analysis of US consumer time spent with mobile apps vs. television.

Ad network InMobile asserted earlier this year that consumers are now spending more time on a daily basis with mobile media than they do with TV:

[M]obile ranks first in media consumption among Americans with 2.4 hours of the 9 hours spent consuming media on mobile devices—this is more than a quarter of time spent on mobile, outpacing TV (2.35 hours), PCs (1.6 hours) and any other channel.

However according to the data compiled by Flurry, consumers are spending 127 minutes per day with mobile apps compared to 168 minutes per day with TV.  TV time is basically flat, or slighly down according to Nielsen, while app-time is gaining according to Flurry. 

 

Nielsen itself says that people in the US spend roughly 4 hours and 18 minutes per day on average with conventional TV (vs. 168 minutes [2.8 hours] in the Flurry graph). That would be about 2X of the time spent with mobile apps, using the Flurry figures.

The question of whether time spent with mobile already exceeds TV time or closing in on it is largely symbolic. The larger point is that consumers are highly engaged with mobile devices and the mobile internet. That trend will only continue to grow and gain in the next several years. Mobile ad spending, however, is nowhere near commensurate with the kind of time and attention that consumers are spending with mobile media. The chart below (also courtsey of Flurry) illustrates the huge disparity between the two.

Screen Shot 2012-12-05 at 9.26.28 PM

Mary Meeker has argued that, based in part on this familiar time-spent formula, mobile advertising is basically a $20 billion opportunity in the US. That may be the case eventually -- though advertisers and their agencies aren't totally "rational." But in the near term are many barriers to the free flow of ad dollars into mobile right now: organizational politics and culture, lack of advertiser education, lack of budget and perhaps most of all lack of "clear ROI." 

It took a very long time for online advertising to attract the kind of ad dollars that were more or less consistent with consumer time spent online. It won't take quite as long for mobile to ramp. But it could still be a number of years before mobile marketing and advertising are significant budget items for the majority of advertisers.

For their part consumers are mostly indifferent to whether or how soon companies embrace mobile marketing and advertising. While they prefer mobile friendly sites and user-experiences they don't particularly care if marketers are fully exploiting mobile ad opportunities.

However, if marketers do not as the Thanksgiving holiday weekend has already proven, it will be their missed opportunity. 

The Most Interesting Mary Meeker Slides about Mobile

Former Morgan Stanley financial analyst, now KPCB partner, Mary Meeker did one of her patented blizzard of stats/data dump presentations at Stanford University the other evening. The slides (available here) are essentially an updated version of a presentation given earlier this year. 

You know most of the material by now. However, below are the most interesting slides I culled from a much longer set. They go to device adoption and mobile ad revenue projections. 

Screen Shot 2012-12-04 at 11.57.33 AM

The noteworthy thing about the above chart is that it argues there are 172 million smartphone subscribers in the US. If that's true it would mean a smartphone share of something like 68% or 73% depending on the base used. This is undoubtedly high. But it's not unreasonable to argue that there may be 60% smartphone penetration by the end of Q4 in the US (or early Q1). 

From the chart below: there may not in fact be 5 billion individual mobile phone users around the world. There are "only" 7 billion people on the planet. It's probably more accurate to assert there are something like 5 billion subscriptions/SIM cards (there are some dual subscriptions). Still the global smartphone growth opportunity is massive. 

Screen Shot 2012-12-04 at 11.58.14 AM

The following chart is based on Pew survey data, showing that 29% (as of earlier this year) of US adults owned a tablet or eReader. Tablets are going to be the number one electronics gift item this year. We could be looking at 80 million total tablets in the US in Q1 2013. 

Screen Shot 2012-12-04 at 11.58.37 AM

What's most interesting about the slide below is that it projects tablet ownership to pass PC ownership by the end of next year; in other words: more tablets than PCs. This may be a aggressive forecast but it's not out of the question. 

Screen Shot 2012-12-04 at 12.00.05 PM

The final slide is about mobile advertising and app revenue. There are many sources behind this projection. It envisions a $20 billion global market by the end of the year, with mobile advertising around $6 or so billion. 

Screen Shot 2012-12-04 at 11.59.17 AM

US mobile advertising was worth roughly $1.2 in the first half and is on track to be somewhere between $2.6 and $2.8 billion for the full year 2012. Globally mobile ad revenues will probably reach between $5.5 and $6 billion by the end of Q4 this year.

Nielsen: 79% of Mobile Consumer Time Spent with Apps

Social networks and social-mobile apps are undeniably mainstream at this point. Indeed, mobile is where much of the growth is happening for social media. A new report, compiled from Q2 data and issued by Nielsen, illustrates this and compares time spent and access by media device.

What the data show is that the amount of time people are spending with mobile devices (vs. PC) is growing and that mobile apps continue to be where mobile time is concentrated. Along with smartphone and tablet penetration, mobile time overall has grown vs. 2011 but growth has been concentrated in mobile apps. They see roughly 79% of consumer time with mobile media and the mobile internet. 

Mobile media time overall is now roughly 43% of the time spent on PCs as of Q2 2012. 

Screen Shot 2012-12-03 at 9.20.17 AM

Mobile use of social networks tends to show slightly higher levels of engagement than on the PC. In mobile, as on the PC, women tend to be more engaged than men. But the most engaged groups are slightly different in each category.

The most engaged group of mobile social media users is the 25 - 34 age range, whereas on the PC it's the 18 - 24 year old cohort.

Screen Shot 2012-12-03 at 9.21.20 AM

The following chart illustrates that among the major social sites, Facebook dramatically leads in terms of time spent (although Instagram isn't present on this list). In addition, time is roughly divided 85% mobile apps vs. 15% mobile web. And while the ratios are slightly different for each social media publishers the directional trend is the same -- toward mobile apps.

Screen Shot 2012-12-03 at 9.22.04 AM

Nielsen also looked at the major ways in which consumers connect to the Internet generally. It found that the PC was still the dominant way but that PC penetration was down slightly since a year ago. By contrast, as you might expect, mobile access to the Internet has grown significantly on smartphones and especially on tablets.
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Marketers who continue to ignore or only nominally address smartphone and tablet users -- especially app users -- are losing access to an increasingly large user base and may be doing their brands and reputations harm in the process.

Shipments vs. Traffic: Market Share Data that Really Matter

Numbers are everywhere as we head into the final month of 2012 -- an undisputed "year of mobile" -- and many sources have released loads of market share and device penetration figures over the past week. Some of those numbers are meaningful and some are not.

Among them ad network Millennial Media put out some monthly device figures this morning, based on ad impression share on its network. I'll take a quick look at those numbers and then discuss some of the other recent device data in the market, with an emphasis on tablets.

The iPhone is the single most prevalent device (and has been so for several years) on the Millennial Network. It generated 16% of all the ad impressions in Q3, while iOS devices in total generated 31% of all Millennial's ad impressions. Collectively Samsung devices (phones, tablets) were responsible for 24% of impressions; the second most prevalent device OEM.

RIM devices were responsible for 7% of ad impressions, which is now basically on par ith the company's overall market share in the US. There are no Windows Phones in the top 20 on Millennial's network. Windows Phones (Lumia in particular) has sold reasonably well in select countries in Europe (i.e., Spain, UK, Italy). However they have not sold well in the US. 

Screen Shot 2012-11-29 at 6.45.57 AM

While Apple is the leading manufacturer and has the leading device on the Millennial network, Android devices dominate collectively -- with 52% of all impressions, compared with 34% for iOS. This share breakdown is almost identical to comScore's September US smartphone market share data.  

Finally Millennial ranks the top tablets on its network (see graphic above). The iPad leads, followed by the Samsung GalaxyTab, Kindle Fire and others. Tablets will clearly be one of the most popular holiday gifts and the top electronics item sold in Q4. 

It's curious to see the Acer and Motorola tablets on Millennial's list. From a sales and traffic standpoint there are now effectively three tablets in the market: the iPad (and Mini), Google's Nexus tablets (mainly the Nexus 7) and Kindle Fire devices. While the Nook and Galaxy Tab have some market presence they're essentially "also-rans" at this point. The Galaxy Tab has had greater success in Europe.

A new report from ABI Research claims that the iPad's share (of shipments) fell to 55%, down 14 points in Q3. Lower-priced tablets from Google-ASUS and Amazon are driving a lot of sales to be sure. Indeed, Amazon made the claim earlier this week that Kindle device sales more than doubled over last year. 

But collectively we need to get rid of "shipments" as a market-share metric. It's widely used because it's easier for analyst firms to track than actual sales. However it's not meaningful in any sense. As an industry we need to shift to actual device sales or even other metrics such as web traffic/transactions. This past weekend's data have shown this.

What do sales matter if devices aren't widely used or are used for very limited purposes. For example Kindle Fire devices, though they're selling well, are essentially used to consume Amazon content. They don't show up very often on internet traffic reports. And while the impact of Nexus devices has yet to be fully felt, the broader notion (promoted by the ABI report) that Android tablets now constitute nearly half the devices in the market is misleading.

As widely discussed earlier this week, the iPad is the only tablet right now that appears to matter in a "real world" sense. According to this weekend's e-commerce data from IBM, the iPad generated 88% of tablet traffic on Black Friday and more than 90% on Cyber Monday. 

In Q2 ad network Chitika found that the iPad was responsible for almost 95% of the tablet traffic on its network. Other publishers and e-commerce sellers report similar results: so far the iPad is the only tablet that matters.

E-commerce site Fab.com has said that 95% of its mobile sales come from iOS devices. And tablet content platform Onswipe has said that the iPad is responsible for a remarkable 98% of all tablet-based traffic to the company's publisher partner network. Based on global web traffic data from Q2 this is what actual usage market share looks like:

tablet OS faceoff

Despite Android's dominance in terms of device penetration the majority of mobile web traffic in the US (not to mention transactions) is coming from iOS devices. And when it comes to tablet traffic alone, there is no Android surge. 

There may be a lot of Android tablets out there but engagement and usage levels are far below the iPad.

GM to Incorporate Siri into Two 2014 Chevrolet Models

As part of General Motors' MyLink in-dash telematics system (GM's answer to Ford's Sync), the Chevrolet division is incorporating Siri access into two 2014 models: Spark and Sonic vehicles.

Users with iPhones will be able to use Siri to execute a number of commands: 

  • Make calls to contacts
  • Play music on iTunes
  • Send a text message
  • Access calendars 
  • Answer several categories of questions 

Siri's full capabilities won't be incorporated at this point however. Anything that requires a visual display of data won't be available so as not to create safety hazards while driving. Siri and the iPhone connect to the MyLink system via Bluetooth. 

MyLink is designed to be broadly integrated with iPhone and Android devices. The console operates very much like a small tablet device embedded in the dash.  

The MyLink "infotainment" console is already modeled on the smartphone apps metaphor. MyLink also has a built in virtual assistant, which will operate in those models that don't enable Siri access. It will also remain available to drivers in the Siri-enabled Spark and Sonic vehicles as well for a broader array of functions than what Siri will permit.

What's perhaps more interesting than the integration of Siri is the adoption of the concept of the virtual assistant more broadly. My colleague Dan Miller is about to publish a report on "PVAs" (personal virtual assistants) and their impact on a range of use cases including enterprise customer care. Built on decades of speech processing research and technology development, as well as advances in "AI," virtual assistants are changing the way we "search" and interact with devices and technology. 

The following video demonstrates MyLink's features.

M-Commerce Cyber Weekend Gains & the Android Paradox

There's lots of news today about the role mobile is playing in the just-started holiday shopping season. Most notably IBM reported a couple of days ago that on "Black Friday," mobile buying "soared with 24 percent of consumers using a mobile device to visit a retailer's site, up from 14.3 percent in 2011. Mobile sales exceeded 16 percent [of online commerce], up from 9.8 percent in 2011."

But even more noteworthy than the increasing role that mobile is playing in holiday shopping, is the discrepancy between iOS and Android in terms of web traffic and user purchase behavior.

Source: IBM

Call it the "Android paradox." In the US Android handsets represent 52.5% of smartphone market. Apple's iPhone holds 34.3%. The share that is controlled by iOS is larger when the iPad is factored in but Android is the dominant OS in the US and globally. 

When you look at mobile internet visits, however, the relationship shifts -- with the iPhone and iOS driving much more web traffic than Android. Apple's devices also generate much more in the way of e-commerce sales vs. Android. Website Fab.com reports that 95% of its mobile sales are coming from iOS devices. 

IBM reported that 58% of consumers (of the 16% who bought something on a mobile device) used smartphones to shop for deals, while 41 percent used tablets. Here's how the traffic distribution broke down on Black Friday in the US:

Screen Shot 2012-11-26 at 1.49.07 PM

Source: IBM

The iPhone and iPad combined for the bulk of mobile shopping, while on the tablet side the iPad generated 88% of the traffic in its category. There's something very strange about the fact that iOS users generate much more internet traffic and mobile buying than their Android peers -- given that there are more Android users out there. 

There have been various attempts to explain this traffic and commerce discrepancy, chief among them the theory that Android owners are less sophisticated, affluent and engaged. While there's clearly some validity to this theory it doesn't entirely explain what's going on. 

Which Tablets Will Sizzle and Which Will Slump During the Holidays?

One of the most eagerly sought electronics products this year is the tablet. We should see millions of them bought over the holidays. Indeed, tablets will be an enormously popular gift item. But which one(s) will be successful and which ones will fade?

Today, for "Cyber Monday," Amazon is promoting the upgraded Kindle Fire (with special offers) for $129 vs. its normal $159 (reduced from last year's $199). This should generate quite a few sales.

However the Kindle Fire is not as popular on Google as the company's own Nexus 7 or the iPad Mini. According to data released by Google earlier today the following are the Top 10 Google Search Shopping Queries (today):

  1. Nexus 7
  2. Laptop
  3. iPad mini
  4. Kindle Fire
  5. Television
  6. Tablet computer
  7. xbox 360
  8. Amazon
  9. Wii U
  10. Leappad 2

Meanwhile PriceGrabber shows a somewhat different list of "most searched" electronics products:

  1. Google 7 7" 32 GB Wi-Fi Black Tablet
  2. Insignia - 42" Class - LED - 1080p - 60Hz - HDTV
  3. Latitude ST 10.1" 32 GB Wi-Fi Black Tablet
  4. Galaxy Tab 2 7" 8 GB Wi-Fi Titanium Silver Tablet
  5. iPad with Retina Display 4th Generation 9.7" 16 GB Wi-Fi White Tablet
  6. Polk Audio - Blackstone 5.1-Channel Home Theater Speaker System
  7. Galaxy Tab 2 10.1" 16 GB Wi-Fi Titanium Silver Tablet
  8. DLP Projection TV

Both of the above lists indicate the Nexus 7 is the most "searched for" tablet out there -- even the most popular product. However, over at Amazon Kindle Fire and other Kindle devices dominate the electronics bestseller list.

Finally, a recent consumer survey Opus conducted (n=1,048 US adults) asked "Are you planning to buy a tablet computer this holiday season?" Here were the results:

  1. No: 85.4%
  2. Yes, iPad (Mini or original): 6.3%
  3. Yes, Kindle Fire: 3.5%
  4. Yes, Microsoft Surface: 3.1%
  5. Yes, Nexus 7: 1.8% 

In our survey Nexus 7 was the least desired of the tablets and iPads were the most popular. All this data seems to suggest that iPad, Nexus 7 and Kindle Fire will do well, while Surface, Nook and other "no name" tablets will generally be ignored and suffer.  

Where Do Mobile Users Get Their Deals and Coupons?

There's a relatively common perception that "daily deals are dead." What's more accurate to say is that the daily deals "bubble" has burst and consumers are burned out on push email marketing, where many of the deals are irrelevant to their interests or needs. But it would be inaccurate to say that "deals are dead." 

Coupons and deals remain popular among consumers and mobile users in particular. According to data from Nielsen, xAd and Telmetrics, the three top reasons that a mobile user would engage with an ad are the following:

  1. The ad is locally relevant
  2. There's a coupon or promotion
  3. It features a familiar brand

Consistent with the findings above, "search for/receive mobile offers" (especially locally relevant ones) is one of the top three "mobile commerce" activities that users engage in according to 2012 data from the US Federal Reserve and JiWire. They also search for coupons on smartphones while in stores according to multiple surveys and behavioral studies. 

A new set of data from Nielsen tries to identify where mobile users get those deals and coupons. A majority get mobile vouchers from retailers directly (sites/apps), followed by deal of the day sites/apps.

Screen Shot 2012-11-22 at 6.27.33 AM

 

Among the daily deal apps Nielsen found that the "usual suspects" were the most often used: Groupon, LivingSocial, Google Offers and AmazonLocal (LivingSocial). Amazingly, of those who have sought out daily deals on their smartphones, 91% have done so through the Groupon app. 

Screen Shot 2012-11-22 at 6.27.46 AM    

This shows that relatively few daily deal vendors have any brand awareness and usage beyond these major sites. But among them Groupon is far and away the leader. 

Apple Devices Most Desired by US Tweens -- Especially the iPad

Apple's products constitute four out of the top five most-requested gifts by US kids (under 13) according to a recent poll by Nielsen. Among those over 13 the iPad still ranks as the most desired object for the holidays.

In the 6-12 age group, "tablet other than the iPad" shows up in 8th position but Microsoft Surface specifically appears second from last on the list, just ahead of Apple TV. In the over-13 age group, non-Apple tablet is 3rd though Microsoft Surface and Kindle Fire are lower on the list. Microsoft Surface is again second from the bottom on the over-13 list with a lower percentage of respondents interested than in the under-13 cohort. 

The sample size wasn't disclosed and the question asked isn't technically about the holidays but about purchase interest or intent "in the next six months." However these requests will probably register in December. If parents comply it should be a very good quarter for Apple. Below are the full lists. 

Kids under 13:

 Screen Shot 2012-11-21 at 7.34.18 AM

Kids 13 and over: 

Screen Shot 2012-11-21 at 7.37.37 AM

Opus is in the midst of a consumer survey asking about which tablet they intend to buy over the holidays. In our survey (still in process) 85% of respondents said they weren't planning to buy one now. However the age group most interested is 25-34; 21% say they plan to buy a tablet in the immediate future.

Overall, among those who've said they're planning to buy a tablet during the holidays, the ranking is as follows:

  1. iPad/iPad Mini
  2. Kindle Fire
  3. Microsoft Surface
  4. Nexus 7 

IAB: Smartphones Aggressively Used for Shopping, Not Commerce

The IAB just released its second mobile shopping report, including its ranking of the most "mobile savvy" cities in the US. Houston, remarkably, comes out on top for a second year. Houston is also the "fattest city in America" according to Men's Fitness magazine.

The mobile shopping study also found surprisingly high numbers of users who owned "connected devices" (tablet and/or smartphone). The numbers here are much higher than Nielsen and comScore figures for smartphone ownership. According to the data the San Francisco Bay Area had the highest smart device penetration at 78%. Among the top DMAs Detroit was lowest with 62%. I suspect these numbers are not entirely representative of the mobile subscriber population and a bit high -- though perhaps not radically so.

Screen Shot 2012-11-20 at 9.07.36 AM

The IAB report, which draws from a variety of survey and data sources, confirms that smartphone users are aggressive and engaged mobile shoppers but they generally don't buy things on those devices (tablets are different). The IAB (citing comScore) reports that 86% of US smartphone owners visited retailer websites or used retailer mobile apps in July.

Screen Shot 2012-11-20 at 9.09.23 AM

The graphic above doesn't entirely make sense (81% vs. 85.9%) but it makes the larger point that most smartphone owners are accessing retail information on their devices.

In stores smartphone owners use their devices to communicate with other people about intended purchases, check prices and product information and look for deals. However only 5% in this survey bought anything with their mobile handsets. 

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The report also confirms that most tablets are not used "on the go," while shopping. However that may change with the advent of carrier-supported 7-inch tablets and the 5-inch Galaxy Note (also obnoxiously known as a "Phablet"). 

Screen Shot 2012-11-20 at 9.08.53 AM

This is just one more set of data that underscore the importance of being "mobile ready" and fully understanding how mobile can be used for customer acquisition and customer service, even in stores. Mobile is an instrument of "showrooming" but it can also be an avenue for customer service and retention among traditional retailers. Yet most are simply not ready

Major Retailers, Etailers Unprepared for Mobile and Tablet Shoppers

Almost daily my inbox is hit with a new study or report that expresses a similar theme: businesses large and small aren't ready for mobile shoppers. However one would expect retailers to have invested and be prepared for the coming multi-screen holiday season. Not so, says an informal usability study from Keynote systems.

Keynote examined major retail and e-commerce sites on iPhones, Android devices and BlackBerry handsets. It found numerous problems and inconsistencies from device to device. The inference is that retailers aren't actually testing their own sites on the various platforms and operating systems.

Some of the problems Keynote identified are minor (copy not optimally presented) but some are major (broken search functionality). Furthermore many of the retailers didn't seem to be addressing the tablet audience. Keynote explained, "We also looked at Target on the iPad 3 and see that they probably haven’t been testing on a tablet and are content to delivering their desktop site to a tablet on good faith." 

Tablets drive actual online conversions, whereas smartphones are mostly used to check reviews, price information and locate and contact stores. Tablet conversions are as high or higher than on PCs and average order value from tablets is higher than on the PC. It's critical for retailers and etailers to address the tablet audience specifically. 

Most retailers appear to believe that their sites will "work" for tablet users. That's true in many cases but a tablet-optimized retail experience would almost certainly drive more online sales and increased user satisfaction.

According to Skava only 7% of retailers currently have tablet-friendly sites. Accordingly this year may turn out to be a missed opportunity for most retailers when it comes to mobile and tablet users. Here's Keynote's conclusion, which is simply common sense: 

Early testing of both mobile websites in preparation for the holiday season would have prepared these top retailers for the judgmental mobile shopper this season. With holiday shopping looming and ready to begin in just days, it seems that these top retailers are already running into hurdles that may affect their holiday sales goals.

Whites Lag in Smartphone Adoption

According to Nielsen, Caucasian/White Americans lag behind other groups when it comes to smartphone adoption. The data below are part of Nielsen's recent cross-media study (Q2 2012).

Based on data from many thousands of users, Nielsen reported that 70% of Asian American adults now own smartphones, while 62% of African Americans and 60% of Hispanics also do. By comparison "only" half of Whites own smartphones. 

Nielsen said, in September, that smartphones represent 56% of the US mobile market. ComScore also reported in September that the smartphone penetration number is 51%.

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The year will probably end at or very close to 60% smartphone penetration in the US. That would mean something like 150 million smartphone users, most of whom would also be mobile internet users.

TV Remains King of Time Spent but Mobile More Effective Ad Medium

TV remains the king of all US media channels in terms of time spent -- but it's not necessarily quality time. Our attention is increasingly split; simultaneous media usage is growing. In addition there's considerable reason to believe that TV advertising is now less effective than mobile advertising.

As a real-world case-in-point that is representative of larger trends, my 13 year old never watches TV shows (on Hulu Plus) without a smartphone so that she can check Instagram and text friends at the same time (during commercials).

According to a new Nielsen "State of the Media" report, "The average American consumes nearly 39 hours of content each week on the TV set, on the computer and on mobile." The bulk of that time is with TV but roughly 40% of smartphone and tablet owners are watching TV at least once a day while using other devices (i.e., smartphones, tablets) simultaneously.

Nielsen found that simultaneous tablet and TV use skews older while simultaneous smartphone and TV use skews younger. This "second screen" usage may contribute to the diminishing effectiveness of TV advertising, which has been declining since that advent of the DVR.

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It turns out that mobile video advertising is more effective than TV. A Q2 study from Nielsen and AdColony "measured the brand and ad effectiveness of the exact same 15-second [CPG] video spot in live campaigns across TV, online and mobile." What the research found was that the same ad delivered better results in a mobile context than online or on TV. 

Relatively speaking mobile video ads are dirt cheap by comparison to TV. Below are the study results comparing performance of the same video unit in the three different contexts: 

Mobile video ads:

  • 79% General Recall
  • 58% Brand Recall
  • 45% Message Recall

TV ads: 

  • 49% General Recall
  • 10% Brand Recall
  • 6% Message Recall

Online video ads: 

  • 29% General Recall
  • 12% Brand Recall
  • 8% Message Recall

In the study, the mobile ad dramatically outperformed the other screens across these traditional brand metrics. Some of this is undoubtedly the result of novelty but it's also the way in which mobile commands user attention in ways that TV and the PC internet have lost the power to do.

Report: Restaurants and Retailers Using Mobile to Drive Customers into Stores

This month's Millennial Media "SMART" report takes a closer look at the behavior and goals of mobile advertisers in the restaurants and retail vertical. Apparel retailers and fast food/national restaurant chains are the two largest categories of advertisers on the Millennial network in this segment.

Citing June comScore data Millennial reported that "Females spend nearly twice as much time on mobile Retail & Restaurant apps and mobile websites as men do."

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The main campaign goal of both sets of advertisers was to drive foot traffic into local stores. Accordingly retail and restaurant advertisers were more interested than average in getting people to store locators and maps on landing pages, as well as exposing promotions (coupons). The were also interested in generating mobile commerce. However unless there's a stored credit card on file there will probably be no m-commerce.  

These restaurant and retail advertisers were much less interested than average in driving application downloads. This apparent lack of interest in getting apps onto the smartphones of their customers and prospects reflects a misunderstanding of the role apps can play in stimulating sales and improving retention and customer service.

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Finally Millennial reported that restaurants and retail was the number three category in terms of ad spending on its network -- more than automotive, travel or CPG: 

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Google Wallet 2.0: One Plastic Card to Rule Them All

Last week the Android Police blog received a tip and some screenshots that showed what Google will soon be unveiling in its ongoing quest to penetrate the payments segment: a plastic card. Google is moving forward by going back.

While it initially seems self-defeating -- Google Wallet is supposed to get rid of plastic -- it is both an innovation to broaden Google Wallet's apppeal and an interim step that now appears necessary in the transition from plastic to true next-generation payments systems.

Google Wallet (the NFC mobile payments tool) remains obscure to most US consumers, although it has been out and operative for well over a year. A plastic card would allow Google to dramatically extend the reach of Wallet without mobile carrier involvement, approvals or the need to do much consumer education. These are the considerable benefits of a plastic card for Google. 

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Image Credit: Android Police

Below are some of the highlights of what was revealed in the screenshots (only a few of which are above): 

  • The Google Wallet Card is designed to be used when/where Google's NFC Wallet won't work or isn't available
  • It promises to work "where major credit cards are accepted"
  • It features the ability to link any card or set of payment cards to Google Wallet and choose on a per-transaction basis which one to pay with
  • Ability to send or withdraw money from a "Wallet Balance" (into a personal bank account or to a peer)

The benefits of the Wallet card being promoted in the third panel above are:

  • The Google Wallet card can act as a substitute for all other plastic cards in your wallet (remains to be seen)
  • Users will have access to unique offers and see them instantly redeemed at the POS
  • If the Wallet Card is lost you just cancel Google Wallet and not all your credit cards

PayPal also has a plastic card, introduced earlier this year. The Google Wallet card is probably modeled pretty directly on PayPal's card and copies many of its key features. It appears, however, there may be some additional features unique to Google Wallet. I'm not sure from the information I've seen and Google is not ready to speak about the product. 

The logic behind Google's new plastic card is clear. Google was caught off guard by carrier resistance or hostility to Google Wallet. Among the major US carriers only Sprint has truly embraced Wallet. While AT&T isn't officially blocking it (Verizon is) the carrier doesn't promote Wallet either.

Most US and European consumers are well versed in plastic payment card culture but they typically have no idea whether their phones carry an NFC chip.

PayPal announced a few months ago that the reach of its plastic card is being dramatically expanded through a deal with Discover and use of the latter's financial network. The Google Wallet information revealed above suggests that Google has or is negotiating a comparable (and perhaps broader) deal with credit card processors. 

As mentioned US consumers have not indicated a burning desire for NFC-powered mobile wallets or the ability to pay with their phones. A Google Wallet card could serve to introduce them to the Google Wallet service, while enabling them to pay in a familiar way: with a plastic card. Over time consumers' willingness to experiment and pay with mobile devices would presumably grow as their comfort with and trust in Google Wallet increased.

A plastic card would also enable Google to completely go around the gatekeeper-carriers and appeal directly to consumers, where its strength lies. 

From a merchant point of view there would be no new infrastructure investment required, as there is with NFC point-of-sale terminals. There are currently about 300,000 NFC enabled terminals in the US.

When I first heard about this Google Wallet card I thought that consumers would be confused and not see a reason to adopt it. But the promise of carrying fewer plastic cards, the security features, potential offers and the ability to manage multiple payment cards in the cloud will be intriguing or appealing to many people.

It's analogous to Google Voice. Google Wallet is essentially being used to "forward" a debit for payment to any account or credit card in the same way Google Voice forwards and routes calls to designated phone numbers. 

Thus for both PayPal and Google it would appear plastic cards are a "necessary evil" on the incremental path to "payments 2.0."

Report: People More Comfortable Doing Commerce Research on Smartphones in the Home

JiWire released its Q3 audience insights report earlier today. There are a number of interesting survey findings. However, it's important to note that JiWire's audience isn't necessarily representative of mobile users in the US and UK, or consumers more generally. The JiWire audience is large but generally more "mobile savvy" than average mobile subscribers. 

One of the headlines is that the number of people using smartphones in stores for product research has grown significantly since last year. 

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The things that people are doing or researching on their smartphones in stores has remained pretty consistent: price comparisons, product reviews, deals. 

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JiWire also found that 65% of its smartphone-owning respondents also own a tablet. This is higher than tablet penetration in the population at large. The company also asked about behaviors on both categories of devices.

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JiWire found that smartphone and tablet owners generally engaged in the same activities at the same relative levels. However a higher percentage of tablet owners was active in each category, chiefly because of the larger screen I would imagine. 

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Perhaps the most interesting data, however, has to do with so-called "m-commerce." For most people a semi-arbitrary $99 or $250 were the top amounts they were willing to spend in a mobile commerce transaction. There's nothing safer or more secure about a $99 transaction vs. a $500 transaction however. 

Perhaps there's an irrational belief that smaller transaction amounts bring less exposure. Overall, however, the numbers of people willing to engage in m-commerce have grown over last year. 

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Interestingly (and perhaps again irrationally) JiWire survey respondents appear to be more comfortable researching a $100 product (on their smartphones) in their own homes vs. other locations. This is really interesting and may indicate something about the psychology of many smartphone users.

However, once again, there's not necessarily anything more secure in being at home compared to being on cell or WiFi networks outside the home. 

An alternative explanation might be: more users simply have time to do research in the home and that's the most common location for smartphone usage. But I don't think that entirely explains the data in the chart below. 

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