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Catalina and 4Info Offer a Glimpse into the Future of Mobile Advertising

A once-impossible objective for digital marketers was 1:1 matching between online ad exposures and offline store visits and purchases. Hence the historical focus on e-commerce, which was much easier to track.

But tracking and matching users is getting a lot more sophisticated notwithstanding the decline of the cookie. For example, Facebook is matching "hashed" users (Facebook ID, email, phone) with offline actions and purchases through data partnerships such as Acxiom, Epsilon and Datalogix.

These data partnerships also allow for more flavors of demographic or audience targeting to occur online on Facebook. This is part of Facebook's Custom Audiences program.

In mobile specifically one of the things that has held back mobile ad spending has been the inability to show ROI on a per-campaign basis. However that's starting to change with efforts from PlaceIQ, Placed, xAd and others. Placed and PlaceIQ are starting to measure store visits in response to mobile ad exposures to show lift (this is something we'll be exploring in detail at Placed in October).

Indeed, online-to-store tracking will be mandatory for mobile ad networks within 12 months. Networks will need to be able to offer agencies and marketers a sense of the "Place Visit Rate" (a PlaceIQ metric) resulting from the campaign. Already today, however, there are examples of programs that represent the future of mobile marketing -- and one that achieves the formerly impossible goal of near 1:1 matching.  

 

Earlier this year Catalina introduced BuyerVision Mobile. It was created in partnership with 4Info and offers marketers the ability to target mobile shoppers based on purchase history (using store loyalty card data) and then "close the loop" through in-store purchase reporting. 

Over the course of the past 24 months 4Info -- formerly an SMS marketing platform -- has created a database of "110 million devices in 97 million households." The company claims that it has achieved a "90% direct match to NCS, DLX and Acxiom data sets." That's also true of the Catalina purchase history data.

Catalina and 4Info know exactly who their consumers are but have "hashed" IDs, yet matched these individuals in their respective databases. Thus when Huggies wants to target buyers of Pampers (smartphone moms), it can be done with almost 100% certainty. And when those individuals appear in stores and make purchases, those data are captured by Catalina and matched with the 4Info data to show whether the mobile ad exposure provided an actual in-store sales lift -- for each campaign. 

There are a number of privacy concerns that are immediately raised, though both 4Info and Catalina say there's no individual/PII targeting. Putting aside the privacy discussion for the moment, the Catalina-4Info model is pretty clearly the future of mobile targeting and ad measurement. 

And it's a future that is a great deal more nuanced, sophisticated and "closed loop" than 90% of current digial ad paradigms. 

Unlike Mobile Payments, Consumer Behavior for Indoor Marketing Well Established

The mobile payments space is a little like the local market: lots of promise, lots of money but very hard to crack. Yesterday a young entrepreneur and his payments startup Clinkle received a $25 million vote of confidence from a group of celebrity investors.

This was reported to be the "largest seed round ever." Whether it is or not $25 million is a lot of money for yet another mobile payments app. While it's true that nobody in mobile payments has "broken through," Clinkle will have a tough slog as it tries to build both merchant adoption and consumer usage.

Once again it's the "cold start" or "chicken and egg" problem. 

However, according to the NY Times, there's no merchant hardware requirement for Clinkle and the go to market strategy involves a Facebook-like focus on college campuses and surrounding businesses. That may be a key decision and help the startup gain some quasi-critical mass in selected markets among students. 

Beyond the hardware issues surrounding NFC adoption, the central issue with mobile payments has been a lack of perceived need among consumers. Mobile payments are being used in selected contexts and commerce situations (e.g., Starbucks) but the public at large hasn't seen the need to replace plastic payment with app-based payment that relies on stored credit cards or bank accounts. 

That brings me to indoor location and marketing. When discussing these topics, and the absence of technology standards, I often use mobile payments as an analogy. Yet there is a critical distinction. The difference between the two segments is that while mobile payments still largely requires a shift in consumer behavior, indoor marketing does not.

Large majorities of consumers are already using their smartphones in stores to look for price information, product reviews and coupons. The idea of brands and retailers communicating with them in stores will be built on this existing behavioral foundation. Accordingly indoor marketing won't require consumers to adopt new technology or approaches to shopping -- unlike mobile payments. 

The "heavy lifting" in indoor marketing is on the merchant side, where WiFi or other sensor infrastructure needs to be in place. Fortunately in most major retail environments the rudimentary infrastructure already exists.

But don't take my word for it. We'll be discussing the competing indoor location technologies and hardware requirements for indoor marketing (as well as their accuracy) at Place: The Indoor Marketing Summit this fall in San Francisco. It will be an event anyone in the mobile or location-based marketing space won't want to miss. 

BlackBerry Posts Fiscal Q1 Loss: Is It All Over?

BlackBerry posted a "suprise loss" (based on analyst forecasts) in fiscal Q1 of $84 million. The company announced that it had shipped 6.8 million smartphones. However of those only 2.7 million were BlackBerry 10 handsets (Z10 and Q10). 

The much-touted Z10 all-touchscreen phone seems to be a complete flop. The more "traditional" Q10, with its hardware keyboard, may wind up being more successful; it has only been on the market a few months.

These phones, it now seems clear, won't save the company. And BlackBerry is becoming increasingly marginalized in the smartphone and tablet world -- even in the enterprise it's traditional stronghold.

In terms of tablets BlackBerry said that it shipped 100,000 Playbooks in the quarter. BlackBerry CEO Thorsten Heins has dismissed tablets as mere fashion. He doesn't think the devices will exist in five years. While the iPad may not reign forever tablets will continue to exist certainly. Heins is mistaken.

The Playbook won't be getting an OS update and is effectively dead in the water. In North America it delivers less than 1% of overall tablet traffic, according to ad network Chitika. The chart above reflects the "tier 2" tablets that lag the iPad, Kindle and Galaxy in terms of web traffic. (The iPad delivers 82% of North American tablet traffic.) 

Gartner's global OS projection for 2014 shows BlackBerry having an almost non-existent market share.

Device share by OS 2014

Source: Gartner (6/13)

The hard question to answer now is "what next?" The transition-turnaround story clearly won't play to investors anymore. The stock is off 27% following the earnings releas.

Selling the company or taking it private are two options. But who would buy it? (Certainly BlackBerry would be acquired at the "right price.") Microsoft has flirted with the idea but it probably wouldn't serve Redmond because BlackBerry hardware isn't prized in the market and would be unlikely to advance Windows Phones.

Another "nuclear" option would be to start putting out BlackBerry Android-powered phones. However that would turn the company into a commodity provider of Android handsets without any meaningful differentiation. That was what Nokia was concerned about (although Nokia would have had more success with Android.) And it would be almost impossible to compete with Samsung globally. 

The company is almost out of options. 

Superman Can't Save Nokia, But Can Iron Man Help HTC?

Nokia paid for product placement in the wildly popular Dark Knight films and released a special Batman-themed Lumia 900 when The Dark Knight Rises was released. The short answer: no, it didn't really "work."

Nokia Windows Phones (Lumia 925) also appear several times in the also extremely popular Man of Steel. Apparently in the alternate reality of Metropolis Nokia-made Windows Phones are the only smartphones in existence. However even the Man of Steel with all his remarkable alien abilities and strength probably won't do much for Lumia handset sales. 

The Superman film is opening in China this week and Nokia is offering a Chinese "Superman Limited Edition" Lumia 925 with the "hope" (S) insignia on the back. Depending on how excited the Chinese are by Man of Steel there may be some sales lift. However the Chinese market is dominated by Android devices. 

Meanwhile over in the Marvel universe (Superman is a DC Comics character), Iron Man's Robert Downey Jr. is reportedly being paid $12 million in a two-year deal to promote HTC smartphones. It doesn't look like the Iron Man character is part of the deal or will appear in the ads. 

Downey is a recognizable and popular celebrity but he probably isn't powerful enough -- at least without the Iron Man suit -- to compete with Samsung's Galaxy juggernaut (The Avengers might collectively have a shot at defeating it). The Korean company spent over $400 million in 2012 to achieve and maintain its Android smartphone lead. That compares with HTC's $46 million and Nokia's almost non-existent $13 million. 

Report: Google 'Enhanced Campaigns' Raising the Cost of Mobile Ad Clicks

If you're not already aware, Google is compelling all AdWords advertisers to adopt Enhanced Cam­paigns by July 22. It's mandatory. And it signals big changes for Google and for search marketing in general. Google dominates paid-search, which is the biggest single chunk of online advertising.

The high-level shifts brough about by Enhanced Campaigns, if you don't already know, are the following:

  • Tablets and PC ads are grouped together and cannot be separated or segmented in campaigns
  • Neither smartphones nor PC ads can be excluded in any campaign
  • Mobile bids are adjusted as a percentage (higher or lower) of PC AdWords bids 

Google's rationale is simple: simplification. Google told us a few months ago that it wanted to make cross-platform campaigns easier to execute and easier to manage. But that means marketers give up some amount of control over bidding and can no longer implement mobile-only campaigns. 

There are many people who accept and agree with that justification. However there's a much more cynical view circulating in parallel, which is that Google is mostly trying to boost mobile CPCs and thus overall mobile revenues -- to compensate for declining desktop CPCs in some cases. 

Increase in CPCs for tablet and mobile campaigns on Google 

 Reversal of negative desktop CPC growth

 

Like all such competing explanations, the truth lies somewhere in-between.

Historically mobile and tablet CPCs were lower and thus a better value for marketers. Now Adobe's digital marketing arm is saying that will definitely change under the new Enhanced Campaigns regime. Adobe based these remarks on "the lat­est search mar­ket­ing and cost-per-­click (CPC) trends across nearly 100 major US adver­tis­ers rep­re­sent­ing more than $100 mil­lion in ad spend from March through May 2013."

The data come from the clients of the former Efficient Frontier, which Adobe acquired in late 2011 for roughly $400 million. 

As the graphs above reflect, mobile CPCs have already begun to rise for advertisers implementing Enhanced Campaigns, while desktop CPCs are stabilizing. According to Adobe:  

With the intro­duc­tion of Enhanced Cam­paigns, the his­tor­i­cally lower CPCs for tablet cam­paigns should increase to reflect desk­top CPCs. We’re only just begin­ning to see this trend mate­ri­al­ize . . . The over­all CPC trends across all devices includ­ing desk­tops also show strong growth. Google CPCs increased more than 6% over the last three months alone — a sig­nif­i­cant jump . . .

One other trend we noticed is that CPCs on Google have sta­bi­lized. For the past two years, Google CPCs fell on a year-­over-­year (YoY) basis due to the increase in mobile and tablet traf­fic where CPCs were lower. How­ever, for the first time in seven quar­ters, the CPCs on Google are flat YoY and we antic­i­pate that CPCs will rise on a YoY basis again start­ing next quar­ter . . . 

Seeking to rebut the perception that the company has successfully manipulated the system to boost its own revenues, Google disputes the assertion that rising prices are inevitable. The company told Search Engine Land earlier this week: 

There have been many speculative reports, but it's far too early for any of them to be reliable. Advertisers will choose their bids and adjust their spend based on the value they see in their campaigns.

Is Mobile the Answer to: 'Half of Online Ads Are Never Seen'?

By now you've no doubt read about the comScore data that showed (or argued) just over half (54%) of PC display ads are never seen by users. The finding turns the old Wanamaker "Half the money I spend on advertising is wasted . . ." quote on its head: digital advertising is just as "wasteful" (if not more) than traditional advertising.

Last year, using the same "viewability" methodology, comScore reported that "31% of ads were not in-view, meaning they never had an opportunity to be seen." So the problem is apparently getting worse.

The IAB said that display ads (not counting video) in 2012 represented 21% of the $36.6 billion in US online ad spending. They contributed $7.6 billion at least to the overall pie. If half of that is wasted because ads cannot be seen or are never served it means $3.3 billion is being flushed down the digital toilet, so to speak.

Comparing the impact of PC vs. mobile display advertising across key brand metrics

Source: Dynamic Logic

Enter mobile advertising. I've argued multiple times in the past that mobile is a superior "branding" medium to online for various reasons, not the least of which is improved performance metrics over PC-based digital ads (see graphic above). The chief problem is that most of mobile display features weak ad creative, compromising the potential efficacy of the ads.

To counter this the IAB is releasing a mobile creative "manifesto" of sorts that hopes to instruct brands and agencies about the importance and hallmarks of effective mobile ad creative: A Mobile Manifesto: Creative Leaders on the Art of Successful Mobile Brand Messaging. It features hypothetical examples of best and worst practices.

Here are the broad strokes of the report's recommendations:

  • Clear and persistent branding is important for building brand awareness
  • Short, focused messaging plays well in mobile’s small format
  • A striking color palette can drive ad recall, but legibility is paramount
  • Consumers respond to mobile ads that give them something back

Many of these recommendations are merely "common sense." However even now many mobile display ad campaigns are perfunctory at best with converted or automated ad creative from PC campaigns. Thus marketers and brands are missing out on the true potential of mobile advertising by not making a "sincere" effort to maximize the value of mobile campaigns.

Study: Mobile Users Want to Be Paid for Their Attention

A new study jointly conducted by Millward Brown and mobile loyalty platform SessionM finds that consumers want a clear "value exchange" or "tangible benefits" for their time and attention to mobile ads. The study was fielded earlier this year among two survey groups of 500 US adults and combined with qualitative follow-up interviews.

A primary finding of the study, which echoes Nielsen "consumer trust" data from previous research, is that only 9% of users have a favorable view of mobile ads. Despite their typically superior performance on brand and other KPIs, consumers generally report unfavorable views of mobile advertising in surveys such as the SessionM-Millward Brown study: 

The study argues that mobile ads need to deliver "tangible value" in order to gain consumer engagement. When they do they can outperform other types of digital and mobile advertising. SessionM says that tangible value has three components: "being useful, entertaining and worth the time it takes to engage." 

What this means as a practical matter, according to the study, is offering a literal reward for consumer attention (e.g., coupons, points), although people respond to other types of "incentives" as well as ads that are more "relevant" (e.g., local, personalized). 

The following were the preferred reward types according to the survey:

  1. Gift cards
  2. Coupon or discount of your choice
  3. Coupon or discount selected for you
  4. Tickets for Events
  5. Points towards contest entries
  6. Donations to Charity
  7. Virtual Currency
  8. Access to ad free environment
  9. Access to free videos or songs
  10. Access to free games
  11. Access to exclusive content

Essentially people are saying they want to be paid to look at and engage with mobile ads. It's important to note that the study argues in favor of the types of advertising and marketing that SessionM provides: incentive and reward-based mobile loyalty programs. However other data show that consumers do respond to coupons and discounts at higher rates than other categories of mobile advertising. 

Survey: Why People Shop Locally, Price-Matching Works to Stop Showrooming

In April Harris Interactive conducted an online consumer survey about "showrooming" and related consumer attitudes about online and offline buying. The survey had 2,114 respondents, 824 of whom said they had showroomed: "ever visited a brick and mortar store to examine a product before purchasing it elsewhere online."

Accordingly 39% of the April 2013 survey population had engaged in showrooming at some point. That's actually down from 43% in November 2012 according to Harris.

Best Buy, Wal-Mart and Target are the three major US retailers that are most often "victimized" by showrooming, though the order is different for men and women. This compares to a study (tracking actual store visits) with slightly different results, conducted in February by Placed:

gender showrooming index

According to the Harris study Amazon is by far the most-used online comparison point for in-store smartphone shoppers. A relatively small percentage also or alternatively consult eBay.

Harris also found that price-matching strategies being adopted by retailers are likely to succeed in combatting showrooming. A large majority of those who said they had "showroomed" also said this policy would make them more likely to buy in stores:

Price matching in stores

Source: Harris Interactive (4/13)

Survey respondents simultaneously indicated they like the option to "buy online and pick up in store." In terms of same-day delivery from an e-commerce provider, however, a majority (77%) said they would NOT be willing to pay more for the service. For those willing to pay the majority (56%) said between $1 and $5 was a tolerable range.

The survey also affirmed many of the familiar reasons that people prefer to shop locally vs. online:

  1. Being able to take the item home immediately (86%)
  2. Taking advantage of sales in store (84%)
  3. Not having to deal with the hassles of returning online such as paying for shipping and/or having to pack item (83%)
  4. Ability to touch and feel item (83%)

Being able to "talk with a salesperson" in stores was only valued by 57% of survey respondents. Indeed, a majority (60%) strongly agreed that they "would rather use [a] smartphone to search for information about a product than ask a salesperson for help."

I suspect the latter finding is a result of years of experiences with low-paid and generally poorly trained salespeople in retail stores.

Office Comes to the iPhone -- by Necessity

Microsoft has been in a kind of "double-bind." It has been trying to use Office integration with Windows Phone and Surface tablets to differentiate those products vs iOS and Android. However they haven't been selling particularly well (save in a few isolated countries). Yet the longer Microsoft held Office back from iOS (and Android) the more it faced the prospect of people getting used to alternative software or (Google) docs in the cloud.

Rumored for a very long time, today Office officially comes to the iPhone in app form (though not the iPad). In order to use the app iPhone owners must be subscribers to Office 365. It also requires iOS 6.1 as well and works on the iPhone 4 and above. 

The product appears to require a SkyDrive account in addition but that may be a built-in feature of Office 365. (I'm not a subscriber.) 

The new iPhone app allows users to view and edit Word, Excel and PowerPoint documents. However you can only create Word and Excel documents on the app. Users will also be able to edit docs "offline" and they will sync when the connection is resumed (think airplane flight). Microsoft promises that "formatting and content remain intact" on the iPhone and back to the 365 documents in the cloud.

As mentioned, there's no Office for iPad app but that will ultimately come in all probability. For the time being iPad users can access Office 365 through the browser. So effectively Office is available for the iPad. 

There are now hundreds of millions of iOS devices in the market globally. This year more tablets are expected to ship than laptops and by 2015 more tablets than PCs in general. In the aggregate there will be more "mobile device" users than PC users in the very near future. Thus Microsoft was all but compelled to bring Office to iOS (Android users can access via the browser). 

After Windows, Office is Microsoft's most important and lucrative product -- generating rougly $25 billion in revenue last year. The rise of mobile devices puts enormous pressure on both product lines. However the arrival of Office for iOS means there's less reason to buy a Surface tablet. 

Five US Companies Will Control 76% of Global Mobile Ad Revenue in 2013

Last year, according to the IAB, mobile ad revenues came in just under $3.4 billion in the US. On a global basis eMarketer (aggregating a range of third party data) estimates that mobile advertising was worth $8.8 billion. Of that Google was responsible for a staggering 52%. 

In 2013 eMarketer argues that Google's share of global mobile advertising will continue to grow to 56%. 

Screen Shot 2013-04-16 at 8.04.50 AM

Source: IAB 

Impressively or shockingly, nearly 66% of global mobile ad revenue in 2012 was concentrated in the top five companies according to eMarketer. In 2013 that figure is expected to exceed 75%.

The eMarketer forecast is that this year mobile advertising will be worth nearly $16 billion worldwide. In other words, roughly $12 billion of the world's mobile ad revenue will be concentrated in the top five US-based companies -- and most of that at Google. 

By comparison, the top 10 PC-based online advertising companies in the US control 72% of the revenue, while the top 50 control nearly 90%.

Source: IAB  

The eMarketer numbers may well be off. For example their YP figures are incorrect and underestimate the company's mobile revenues for 2012. However directionally the numbers are accurate and indicate the "concentration of mobile weath" in a small number of companies -- as well as the dominance of Google as the world's largest mobile ad company. (In terms of total digital advertising globally, Google controls 33%.) 

Facebook is really the only other player currently in a position to challenge Google for mobile ad revenue and reach. 

Will iPhone Buyers Wait for iPhone 6's Larger Screen?

The forthcoming iPhone 5S wil reportedly have the same screen size as the current iPhone 5. This will be a significant disappointment to some and potentially cause them to skip the update and wait for the iPhone 6, which is supposed to deliver a larger 4.8 inch screen. That could have a meaningful negative impact on iPhone 5S sales.

A recent survey from Retrevo shows that iPhone owners/buyers want a larger screen than the 5/5S has to offer:

The survey also showed that a significant percentage of would-be iPhone buyers have a "wait-and-see" attitude about buying their next iPhone. This is becoming a problem for Apple as media-fueled rumors of better hardware in the future cause people to delay purchases, unlike Android buyers apparently: 

Despite the wait-and-see approach and yearning for a larger screen iPhone buyers are paradoxically much more loyal, according to the survey, than Android owners. This has been confirmed by other, previous surveys (e.g., ChangeWave) as well.

Google Will Start to Punish Sites not Optimized for Mobile

There's a great deal of debate and discussion about the right approaches to mobile site development in the "SEO community." Should people build dedicated mobile sites; should they use responsive design; what about dynamic serving? The debates revolve around three considerations: complexity, optimal user experience and impact on mobile visibility (chiefly in Google search results).

Yesterday morning Google posted on its "Webmaster Central" blog that desktop sites using faulty or "irrelevant" redirects -- sending people on smartphones to the mobile site homepage, "page not found" pages or otherwise the wrong page in mobile -- would potentially suffer ranking consequences in mobile search results. 

Google expressed concern that "irrelevant redirects" are frustrating and disruptive to users -- and by implication reduce confidence in Google's mobile results. The company didn't address the precise ranking implications of not following its recommendations. However sites that don't correctly send people from PC pages to equivalent mobile pages will be demoted in the future.  

This is part of a larger push by Google to create good mobile user experiences and reinforce mobile search among consumers.

Last year, in a first, Google recommended responsive web design. Most marketers accepted that as gospel accordingly. However Google did not say that responsive was mandatory or recommended in every single case. It's certainly the lowest common denominator solution for publishers (though not always easiest to implement). 

Yet there are many reasons why "responsive" may not yield the best user experience overall (page load time, different mobile user intent, etc.). Regardless, Google is beginning to compel publishers to pay more attention to mobile user experiences (if they're not already) or suffer the ranking consequences. 

Google Becomes More Like Siri, As Siri Becomes More Like Google

It's fascinating to watch Google evolve from a "search engine" into something much more interesting and complex. The rise of mobile, the launch of Google Now, the improvements in voice search and the more recent, conceptual introduction of what Google is calling "conversational search" all point to where search at Google is headed.

The search metaphor is giving way to the personal assistant metaphor. The entry of Siri in the market roughly two years ago was the trigger of the transition.

Google search boss Amit Singhal was deeply enamored of Star Trek as a boy and, like others at Google, has openly fantasized about building the "Star Trek computer." In other words, a computer one could simply speak to naturally and get correct and complete information. 

Google Now, also sometimes called "predictive search," tries to go beyond that purely "conversational" scenario by anticipating user needs and interests based on big data and personal search history (and movements). Google Now is highly imperfect but when it works it's impressive. 

While Google has only recently sought to move in the direction of "personal assistant," Siri has always been an "assistant" but only recently aspired to be a search utility. Siri was explicitly conceived as a tool that would enable the accomplishment of specific tasks and not simply the retrieval and display of information.

As Apple has added more structured data feeds to what Siri can access it has improved -- much of Siri's value for users still comes from controlling the device and initiating calls, texts and emails rather than "searching" -- however the great "Achilles heel" for Siri has been its limited dataset and lack of flexibility. 

Although it wasn't true when Siri was first introduced, Google has now exceeded Siri by bringing its web-search capabilities and into the virtual assistant equation. Google has a much deeper (albeit mostly unstructured) knowledge base to call upon vs. Apple. Thus for numerous questions where Siri didn't have a structured response it would have to default to web search (i.e., Google): "I didn't understand XYZ [query], shall I search the web for XYZ."

Google would then ride to the rescue. In the Google universe it can bring increasingly structured answers to the same user queries but also its full index as a backup. 

With the coming integration of Twitter, Wikipedia and especially Bing into Siri's roster of data sources with iOS7, Apple adds a full web index and much more breadth to what Siri can do without having to hand off to a third party search engine (i.e., Google). And unlike current scenarios where users typically have to explicitly ask Siri to "search the web" to obtain XYZ information, soon they'll just ask for "XYZ" -- and Bing will supply the necessary or desired information.

The deal has potential to dramatically broaden Siri's utility and usage frequency. Equally it could, if successful, significantly increase search query volume coming to Bing from iPhone users. The integration will need to be very "elegant" to win over users, who are accustomed to either using apps or Google in the Safari toolbar to "search the web" on the iPhone. Users will need to be educated about Siri's new capabilities.

The integration of Bing's search capabilities is a "crossing the Rubicon" of sorts for Apple as it declares that comprehensive data and search capabilities are necessary to fully deliver on the promise of the personal-virtual assistant. 

Pew: 81 Million US Adults Own Tablets

According to telephone survey data (n=2,252) released this morning by The Pew Internet & Life Project, 34% of US adults now own tablets. What that means as a practical matter is: 81 million adults. There may also be 20 million more people in the US under 18 who own tablets. (Our house has four.) 

I think it's relatively safe to say that if the number of tablets in the US isn't yet 100 million it's extremely close.  

A large majority of tablet owners are substituting tablets for PC usage in many instances and either buying fewer PCs overall or delaying PC replacement for a much longer period. This morning Apple will open its developer conference. A upgraded iPad/Mini is not expected to be among the announcements but it's possible. 

. Pew tablet ownership

As with other device categories, the story is largely the same with tablets. Penetration rates are higher among college educated (49%) and more affluent adults (56%). Affluent means at least $75,000 in income.   

The chart above reflects the growth of tablets since 2010 when only 3% reported tablet ownership. It's possible that by Q4 of 2014 half of the US adult population will have tablets (and 75% of affluents).

Global tablet shipments this year are expected to exceed those of laptop computers according to IDC. IDC also argues most of those sales will be at the lower end of the market (size, price).

Last week both Pew and Nielsen reported that 61% of mobile subscribers now own smartphones.  

It's Official: 61% of US Mobile Subscribers Have Smartphones

Earlier this week survey data from the Pew Internet Project argued that 61% of US adult mobile subscribers now own smartphones. Today Nielsen announced agreement with that number:

More than three out of five (61%) mobile subscribers in the U.S. owned a smartphone during the most recent three-month period (March-May 2013), up more than 10 percent since smartphones became the mobile majority in early 2012.

Comscore, for its part, says that the percentage of mobile users with smartphones is slightly less: 58%. Overall we're talking about 140 - 150 million people in the US now with smartphones.

In terms of OS market share, Nielsen reports that Android has 53% of the US smartphone market, while Apple controls 40%.

By comparison comScore says that it's 52% (Android) to 39% (Apple). Kantar (a market research division of WPP) shows a generally similar set of market share metrics for Android and iOS (iPhone).

comscore smartphones April 2013 US market

Source: comScore 

Kantar mobile market share data

Source: Kantar Worldpanel ComTech  

Where these market-share data disagree is with respect to Windows and BlackBerry. Nielsen says Windows Phone has 2% of the US smartphone market, while comScore says it's 3% and Kantar says it's closing in on 6%. 

If we look at actual web traffic in the US, the relationship between Android and iOS flips. (Here iOS may well include the iPad.) Internationally Android is ahead.

The following are StatCounter data showing traffic being driven by each of the major mobile operating systems:

US market:

  • iOS: 54%
  • Android: 40%
  • Windows Phone: 1.3%
  • Other: 4.7%

Globally:

  • Android: 38%
  • iOS: 26%
  • Symbian: 8%
  • BlackBerry: 3.5%
  • Windows Phone: 1.3%
  • Other: 23%

 

Place Conference 2014

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July 22, 2014 | New York City, NY

Place 2014 offers the perfect venue to learn how indoor positioning, offline analytics and advanced mobile-location targeting will change the way that retailers, venue owners, manufacturers and brands think about operations, marketing and the customer experience

Place 2014 will bring together the entire spectrum of companies building the indoor marketing ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors will come together for the only event of its kind anywhere.

-------------------
I2Go: Mobile + Location is a news and advisory service provided by Opus Research.

For more information:
Pete Headrick
e | pheadrick@opusresearch.net
p | +1-415-904-7666


Growing Consumer Interest for In-Store Delivery of Mobile Coupons, Says Study

A new report by comScore shows how mobile and social channels are changing online buying habits and how retailers can benefit in delivering a blend of choices for consumers including mobile coupons.

The study, Pulse of the Online Shopper , notes a variety of flexible options for consumers – 46 percent said they are less likely to comparison shop when using a retailer's mobile app and 44% want the ability to buy online and pick up their purchases in a stores.

Of particular note, consumers are open to communications from retailers on their mobile devices with 47% of shoppers willing to have a retailer to send a coupon to their smartphone when they are in-store or nearby. This trend underscores the potential role of indoor marketing technologies.

comscore_infographic

Regarding mobile channels, the report states:

Mobile is quickly becoming the preferred e-commerce channel as 7 out of 10 online consumers access multi-channel retailers through a digital channel. Of those mobile shoppers, 30% prefer to use a smartphone or tablet. Also, 50% of online shoppers who own a smartphone and nearly 60% who own a tablet make purchases on these devices.

More than 3,000 U.S. consumers were surveyed on their online shopping habits and the report was commissioned by UPS. A copy of the executive summary and white paper can be downloaded here.

Is Windows Already Past "Point of No Return"?

No one should ever bet against Microsoft. But amid a flurry of new Android based "convertables" and tablets (some of which were announced today), Windows is facing a tougher fight than ever. Only the enterprise and Office stand between the company and a dire-looking market.

PC sales are off and it doesn't appear they'll turn around soon. Yet, Microsoft is hoping that its 8.1 Windows update fixes many of the problems and complaints with Windows 8, which have contributed to disappointing sales. Microsoft, with its many billions in quarterly revenues, is clearly the ironic underdog in the new world of mobile computing. 

Redmond got a bit of good news from WPP research subsidiary Kantar Worldpanel ComTech earlier today. The firm found that Windows Phones had gained nearly 2 points since a year ago (however comScore data show much smaller gains). It's not clear, however, whether the needle is really moving for Microsoft given that Windows Phones generate less than 2% of all mobile OS based web traffic in the US. 

Kantar mobile market share data

Source: Kantar Worldpanel

The company's Surface tablets have also been a disappointment thus far. RT starts at $499 and Pro starts at $899. Both are going to need to come down by at least $200 before most consumers will consider them.

ASUS today said it was releasing a 7-inch tablet for $149 (outside the US there will be a 8GB version for the equivalent of $129). ASUS is the maker of the popular Nexus 7. Over time a large percentage of tablet sales will be concentrated in the 7-inch to 8-inch range and those tablets will almost without exception -- the exception being the iPad -- be priced below $200. 

Regardless of how full featured Surface tablets are price is a major driver of purchase behavior.

Accordingly, in response to declining tablet prices and sluggish sales, Microsoft is going to lower its software licensing fees to enable hardware OEMs to bring down prices of their Windows devices. But it may not be enough to boost sales. In addition the absence of a native version Office on the iPad or Android hasn't boosted Surface either. 

One interesting question to ask is whether Microsoft's past success has mostly relied on its ubiquity and near-monopoly status as an operating system (together with Office). If there's even a shred of truth in that question it's a serious problem because once people are no longer "compelled" to buy Windows machines a substantial number of them won't.

The following slide, presented as part of venture capitalist Mary Meeker's semi-annual internet trends report, is very surprising and revealing:

When mobile operating systems are included in the universe of computing platforms, Microsoft now has a minority share (35%). If mobile devices are removed from the equation Microsoft still dominates on the PC. 

In order for Microsoft to gain share in mobile, as well as deliver Windows OS growth, there will need to be some significant quality improvements in the overall UX but equally some meaningful price reductions. Even so, it's probably already too late for Microsoft to regain its former position in the market.  

Mobile Campaigns That Use Location Outperform Standard Campaigns by 2X to 3X

Location-based mobile ad network Verve Mobile released a "State of the Market: Location Powered Mobile Advertising" report this morning. It focuses on the fast-food and casual dining restaurant category and offers several case studies that show the lift provided by location targeting. 

Here are a few datapoints from the report: 

  • QSR/casual dining campaigns that leveraged location data performed 2x those that didn’t
  • Nearly 70% of all QSR/casual dining campaigns leveraged location targeting
  • Verve's case studies, using location targeting (display ads), show 3% and 4% CTRs, which is quite high for display.

Below is the distribution of location/audience targeting methodologies employed by Verve's customer-advertisers:

In the pie chart above, geo-fence means relatively precise targeting around business locations. Geo-aware means broader location targeting such as city or DMA level. And audience targeting is demographic or psychographic segments or profiles (e.g., soccer moms, vacation travelers, sports enthusiasts) inferred from location. 

Verve also reported that "location targeted advertising [ ] revealed a greater than 3X lift in foot traffic to the advertiser’s locations. Not only did exposure to the ad increase the likelihood a user would visit an advertiser location, it also decreased the likelihood a user would go to a competitor’s location by more than 20%."

Accordingly the major takeaways are the following:

  • Adding location increases consumer engagement and response rates by at least 2X
  • Location related copy and mapping/geo-precise landing pages can drive 3X foot traffic vs. ads that don't employ this type of ad creative or techniques

Lack of Tablet Optimization a Greater Barrier to Retail T-Commerce than Security Fears

In March Harris Interactive conducted a survey on behalf of shopping site TheFind. There were slightly more than 2,000 US adult respondents. Among them 572 respondents owned tablets.

The survey revealed what one might expect: retail shopping and e-commerce are increasingly happening on tablets. However users are often frustrated by websites and checkout experiences that aren't tablet friendly. This trumps payment security as a reason for not conducting t-commerce according to the survey.

Here are the main findings (reflected in the "infographic" on the right): 

  • 87% of tablet shoppers use the devices to browse/search for products online and do price comparison shopping   
  • 71% purchase products on their tablets
  • 41% buy an item on their tablets at least once a month and 12% more often than once a week
  • 37% of tablet shoppers say "they are using them more to shop now than they were 12 months ago"
  • 49% of tablet shoppers report "their biggest pet peeve is that retailers’ websites and apps aren't optimized for tablets"
  • The main reason that people say the tablet isn't their preferred shopping device is because "retailers’ tablet apps/sites don’t offer the same experience as their standard websites" (40% cite this)
  • 35% are frustrated by the checkout process on tablet sites/apps
  • 28% cite security as a reason for not shopping on tablets
  • 68% of tablet owners "would be interested in using a shopping app on their tablets;" however, in a seemingly contradictory finding, consumers tend to visit retailer websites (48%) more than retailer shopping apps (12%)

There were no findings about responsive web design and whether users consider that to be "tablet friendly." In many cases responsive design is not as mobile friendly as a dedicated site.  

In the "retail vertical" more consumers use or turn to to mobile websites than apps. That may be because of a lack of awareness of retailer apps. However the behavior flies in the face of general consumer trends, where 80% of mobile media time is spent in apps vs 20% on the mobile web.