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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.  

Survey: 63% of Smartphone Shoppers Would Rather Buy in Physical Stores

Content management software company Kentico recently conducted a mobile-shopping survey (n=300 US adults). The sample size is small and so the results must be viewed cautiously. However there were a few interesting findings. 

Among them, the survey found that 85% of smartphone owners do comparison shopping (products, prices). However "only" 45% do so in stores. A recent report from Nielsen, xAd and Telmetrics argued that only 6% of mobile users "showroomed." Interestingly, most of the Kentico survey respondents (63%) said they would rather buy locally, in a physical store vs. online.

In terms of the mobile user/mobile commerce experience, as might be expected, the usability of websites was a major variable:

Whether or not an online shopper clicks ‘buy’ isn’t solely dependent on products or pricing: 78% of smartphone owners, 75% of tablet owners and 69% of laptop owners say it also comes down to the look and feel of a company’s mobile website . . . Word of mouth (28%), company websites (25%) and in-store experience (18%) weighed most heavily on strengthening or eroding brand affinity.

These respondents felt that PCs and laptops provided a better online shopping experience overall than tablets or smartphones.

Which device provide the best shopping experiences?:

  • 48% (desktop) computers
  • 40% laptops
  • 9% tablets
  • 3% smartphones

A significant minority (44%) of users said that they would never return to websites that featured bad user experiences (not optimized for mobile). This is not a surprise and echoed by other findings already in the market.

Despite Android Device Dominance iOS Devices Drive Much More Web Traffic

Online marketing firm Monetate puts out a quarterly report, like an increasing number of digital marketing firms today. Using customer data, its "EQ1" (2013) report offers a range of metrics, including e-commerce conversions by channel/platform and average order value. It also breaks out traffic by device category and browser. 

This report like others shows that iOS devices are generating a great deal more web traffic than their Android counterparts, which is mysterious given Android's market share dominance. In addition Monetate now shows roughly equal distribution between tablet and smartphone-generated traffic.

According to the chart below smartphone and tablet traffic has roughly doubled since Q1 2012. Tablets are now driving slightly more web traffic to Monetate customers than smartphones. Over all "mobile" traffic is 21%. 

Despite Android's market-share lead the iPhone is responsible for almost two-thirds of smartphone-based traffic to Monetate-client websites. In the tablet arena Monetate says that just under 90% of traffic is coming from the iPad, with Android tablets (including Kindle Fire) generating just under 11%.  

One of the more interesting charts shows browser market share. What we can observe from the data in the chart below are the following: 

  • The decline of IE; Firefox has also lost ground
  • The growth of mobile Safari and slight decline of desktop Safari (together equaling 27% combined market share) 
  • The Android browser has gained a little under 2 points and mobile Chrome has grown to just under 1% share since last year
  • Opera almost doesn't register 
  • Kindle's browser share is flat

If all the Android browsers are combined (assuming that mobile Chrome is mostly Android users) we see that Android's aggregate browser share is just over 5%. If PC browsers are excluded it would be larger however. 

According to StatCounter, among mobile browsers only, mobile Safari has about 53% market share to Android's roughly 36% (with 11% combined other). Notably Chrome has 3.2% according to StatCounter. 

Various theories have been advanced about why iOS devices are responsible for more web traffic than their Android counterparts, given Android's market share lead (in the smartphone arena). But none of them are entirely satisfactory. 

Study: Second Screening of TV Now Done by Majority

TV is arguably the lone traditional medium that been able to retain its premium ad rates and audience reach (mostly), while other media have suffered fragmenting audiences and declining ad revenues. But the fact that millions still watch TV doesn't necessarily mean TV advertising has the power and impact it once did.

A recent study from ad network InMobi, involving 15,000 users from 14 global markets including China, Europe, the US and several African countries, argues that consumers now spend more time with mobile media than TV (there are competing data that show TV is still on top). 

The survey found TV to still be the most influential single medium, followed by PC/online and then mobile. Other traditional media lagged behind in their influence over purchase decisions. The following reflects the percentage of survey respondents who reported that the medium "significantly influenced" their purchase behavior: 

  • TV -- 48%
  • Online/laptop -- 43%
  • Mobile -- 40% 
  • Magazines/newspapers -- 31%
  • In-store ads -- 18%
  • Outdoor/billboard -- 11%
  • Radio -- 10%  

The data above are not broken out by country. Undoubtedly there would be variation, potentially significant variation, accordingly.

With respect to TV, however, users are now widely "second screening" -- that is, diverting their attention from the programming and advertising to focus on some activity happening on their smartphones or tablets. Two-thirds of the TV audience is now doing this on a global basis, with younger users (<35) being the most likely to multiscreen (graphic above).

What are they doing on those second screens? The survey says they're on social networks or otherwise messaging friends (see graphic below). Note that a substantial number are "searching for information about products" they saw on TV. This represents both a new opportunity for brands and TV advertisers generally. 

Marketers now must be conscious that a significant portion, indeed the majority, of the TV audience is going to "look away" at their smartphones or tablets. Marketers must have a mobile optimized presence on search and social media. But beyond simple presence, TV advertisers need to make it easy for mobile users at home to find their products or services easily (the many hashtags used in Super Bowl TV ads is one example). 

TV advertisers can drive email sign-ups/opt-ins, app downloads as well direct purchases with the right offers and TV-ad messaging. In addition, with coordination and planning mobile can be used to measure TV ad effectiveness as well.

The larger point is that fewer and fewer TV viewers (especially those under 35) are watching TV or online video without a mobile device nearby. That allows them to either take action on ads they see -- or totally ignore them. 

Survey: 52% of Recent Travel Booked in Mobile vs. 48% on PC

Location-based and WiFi ad network JiWire is out with its Q1 insights report. The document contains a range of information drawn from surveys of mobile users who access the internet at mostly JiWire-powered WiFi hotspots. This quarter the company zeroes in on behavior in the travel vertical and examines multi-screen activity and cross-platform conversions accordingly.  

We know that travel is a very mobile-centric vertical with lots of apps for smartphones and tablets. And JiWire confirms extensive multi-device usage for travel research and purchases:  

  • Almost 50% of active mobile consumers are using smartphones & tablets for travel research
  • While laptops remain the preferred device for travel ... 27% [are] already saying they use their smartphone to make travel-related purchases. 
  • Nearly 50% of consumers will spend $500 or more in a mobile-travel booking context
  • 52% of travel booked within the past three months was on a smartphone or tablet vs. 48% on laptops

Next comes a fascinating chart showing the multi-screen purchase process in travel (a microcosm of consumer behavior more generally). Google documented this phenomenon previously in research showing that 90% of consumers move “sequentially” between different screens throughout the same day.

Below is the JiWire chart showing how consumers start on one device and often convert on another:

Below is the comparable Google chart:

Google found, generically, that more people started research on a smartphone than any other device category. This is generally consistent with the Nielsen-xAd-Telmetrics data released today. However, in travel laptops still command the majority of activity according to JiWire -- but not by much. As mentioned above, more travel booked in the past 90 days has come from mobile than the PC (52% to 48%). 

JiWire also investigated what variables influenced travel-purchase decisions and how those purchases were researched and completed on mobile devices. Leisure travelers were more impacted by discounts; business travelers were influenced by loyalty programs and company policies. (This finding has obvious mobile marketing implications.)

As reflected in the chart above, travel aggregator apps (e.g., Kayak) and branded airline apps (e.g., United) were more often used than mobile websites for travel bookings. This makes sense because the user experience is likely to be better and credit card and other personal information may be stored, expediting the checkout process. People who are required to fill out lots of fields, including credit card information are less likely to complete those transactions in mobile. 

Another factor impacting the findings regarding app vs. mobile usage is the probability that many of the people surveyed are frequent travelers and are more likely to have apps on their mobile devices than occasional leisure travelers who may be less aware of their app options. 

Study: As Many As 54 Million May Be Mainly Mobile Retail Shoppers

The latest installment of "Mobile Path to Purchase" research from Nielsen, xAd and Telmetrics drills down into retail-shopping attitudes and behaviors. As with the broader study, previously released, the findings show a significant percentage of users are doing shopping research exclusively on mobile devices. 

The Mobile Path to Purchase study is in its second year. The findings are based on an online survey of 2,000 US smartphone and tablet owners and “observed consumer behaviors from Nielsen’s Smartphone Analytics Panel of 6,000 Apple and Android users.”

According to the report, 42% of smartphone and tablet owners did not consult PCs at all as part of their retail shopping research. The broader study found the overall number to be 46%, who didn't use PCs. This is a staggering data point in my opinion.

Nielsen mobile retail shopping

Source: Nielsen, xAd, Telmetrics Mobile Path to Purchase study 2013

If we extrapolate these "mobile only" numbers, assuming they're representative, we're talking about a potential audience of perhaps 54 million in the US who may be relying primarily or exclusively on smartphones and tablets to shop.  

Other noteworthy findings from the study include: 

  • High conversions: More than 55% of mobile retail shoppers ultimately make a purchase
  • Immediacy:30% of smartphone owners and 25% of tablet users sought to make purchases within one hour. However a larger percentage of tablet owners (41%) "take a month or longer to make a purchase."
  • Where conversions happen: 77% of smartphone-based purchase activity happen locally, in stores. Tablet conversions are more evenly distributed: 39% in stores, 32% on PCs and 24% on tablets themselves.

The retail report also seeks to debunk a couple of "myths" about mobile usage. The first is that smartphones are used predominantly "on the go" and/or near the point-of-sale. The study found that smartphones were used throughout the pre-purchase research process and that the largest percentage of use was in fact "at the start" of shopping rather than near the end. 

Nielsen mobile shopping behavior

Source: Nielsen, xAd, Telmetrics Mobile Path to Purchase study 2013

The second "myth" debunked (though not quite as easily) is the notion that most smartphone owners are "showrooming" whenever they shop. The report says that showrooming (in-store price-comparison shopping) is relatively rare and practiced by a very small minority of users:

Only 6 percent of smartphone users conducted their most recent mobile retail search in-store . . . Mobile shoppers are in fact using their devices for comparison-shopping before and after an in-store visit. 

However previous survey findings from the Pew Internet Project and Google argue that significant numbers of smartphone owners do compare prices while in stores. For example, Pew's research found that 72% of smartphone owners used their devices while in retail stores. And the more recent Google-sponsored study reported the top in-store smartphone activities were the following:

  1. Price comparisons
  2. Finding offers and promotions
  3. Finding locations of other stores
  4. Finding hours

What the Nielsen-xAd-Telmetrics data argue is that most of this type of activity occurs before or after someone goes into a store. It may be that the wording of the questions influenced these results, though it may not be possible to entirely reconcile the conflicting findings. Regardless, the more important point is that smartphones and tablets are heavily used by consumers as part of their shopping research.

Accordingly, retailers that are not aggressively addressing the mobile audience are completely missing huge numbers of people and potential sales. 

Google Makes Downpayment on the 'Star Trek Computer'

At the Google developer conference in San Francisco a couple of weeks ago, Google demonstrated "conversational search" on the PC. It was one of the clear highlights of the nearly three-hour keynote. What the demo showed was Google's voice search (and audio read back) capability together with "context awareness" of previous query results.

For years Google has very self consciously been trying to replicate the "Star Trek computer." Now Google is making some meaningful strides toward that objective. 

In the demonstration at the Google event, we saw the capacity to search for a person, place or thing and then do follow-up searches using pronouns or otherwise building on the previous query. The Google representative spoke to the computer and planned a trip to the Northern California beach community of Santa Cruz. She spoke queries to her PC and got voice-response answers from the Google "assistant."

This kind of "context awareness" or "conversational" capability is present to varying degrees in Siri today (and other "assistants") as well as other "AI" driven call center and customer service solutions. 

Following the lead of Siri and then going beyond it, Google is transforming conventional search into a personal assistant experience. This is the clear future direction of the market. Google's voice search and Google Now information or answer "cards" illustrate this trajectory. As of late yesterday some of those same capabilities have been brought over to the Chrome browser on the PC.   

If users update their Chrome browsers to the latest version they'll find a prominent new voice-search experience on Google.com (it isn't yet available from the URL bar search). Many of the answers or results are "read back" to you (where there's an answer card or Knowledge Graph entry). However this doesn't happen all the time. And in my quick testing, the ability to follow up with secondary searches using pronouns and queries referencing previous results was very limited. 

Still, the spoken read-back (as in mobile search) is fun and as Google develops this contextual and conversational capability further you may be inclined to start having more verbal interactions with your computer. 

Apple Bests Others but Loses Satisfaction Points, Samsung Gains

The American Customer Satisfaction Index (ACSI) has released new data on mobile phone satisfaction. Apple (iPhone) comes out on top, as it does in the JD Power surveys. However the iPhone has lost two satisfaction points, while Samung jumped seven points, since last year.

The iPhone may be losing ground because Android devices are being released more frequently with a range of feature improvements and form factors. For example, the iPhone 5's screen, which was enlarged vs. the 4S, looks puny by comparison to some of the Samsung devices.  

Most other competitors on the ACSI list gained vs. last year except LG, HTC and BlackBerry. Immediately below are the ACSI rankings. 

 

For comparison purposes, here are the JD Power rankings. After Apple, Nokia came in second beating Samsung. Motorola, second in ACSI's list above, was fourth overall in the JD Power rankings. 

Screen Shot 2013-03-22 at 6.33.48 AM 

The ACSI people will tell you that satisfaction ratings matter because they're broadly predictive of future sales performance. I accept that as sound. However the data from year one have not always correctly predicted market share or sales performance in year two. One case in point is online search, where ratings declines for Google have not translated into market share loses and vice versa for other competitors.

It's also worth noting that the satisfaction rankings differences between JD Power and ACSI are probably the result of a focus on different criteria and different questions to consumers. Thus both lists may not be entirely complete measures of consumer satisfaction. However the iPhone did top both lists, which is significant. 

Google Checkout Is Dead, Long Live Google Wallet

The relationship between Google Wallet and Google Checkout has always been a bit confusing. Essentially Checkout was Google's PayPal competitor for merchant payment processing. It has been around for roughly seven years. It never really got traction, in part because Google didn't aggressively promote it.

Google Wallet is Google's mobile payments platform, the major component of which has been in-store NFC payments. It also hasn't seen much adoption, though that may change. It also can be used to store coupons and offers. 

Some time ago Google merged Checkout into Wallet. This was a bid to unify the two products. The pitch to consumers was "one wallet for online and in-store shopping." And that's still the pitch. It's the merchant side of things that has changed.  

Yesterday Google announced that it was shuttering Checkout (I thought the product name had gone away). The company said it will continue processing payments online until November of this year. Thereafter merchants will need a new payment processor. Google is sending people to Braintree, Shopify and Freshbooks. 

If merchants do have current payment processing Google is encouraging them to apply for what it calls "Google Wallet Instant Buy." The idea is to remove friction from mobile buying by eliminating the need to enter credit card data and other related information (e.g., billing/shipping address). The solution is directed at Android app developers. (I suspect Apple will eventually do something similar with iTunes.) 

Entering credit card data and related shipping/billing information on a smartphone is a major barrier to so-called "m-commerce." More than 90% of mobile users abandon shopping carts, partly for this reason. Security is another concern for many. However if Google Wallet Instant Buy is widely adopted by Android developers (there are no additional fees or changes from Google) it could have a major positive effect on mobile buying. Stored credit card data in one of the factors that has enabled Amazon to become the mobile commerce leader.

Google has also introduced a Google Wallet Objects API, which allows merchants to integrate their loyalty programs into Wallet and more broadly promote them to Google users. And, as we previously indicated, Google has also introduced the easiest possible P2P send money solution through Google Wallet (via email attachment).  

Google has thrown in the towel around merchant payment processing (Checkout). But it has introduced pretty compelling new features for consumers and merchants that should make Wallet a much stronger and more broadly useful product.  

Aruba Networks Acquires Indoor Location Firm Meridian

Wireless equipment maker Aruba Networks is acquiring privately held Meridian Apps, developers of indoor GPS technologies. Aruba will combine its network-based Wi-Fi technology with Meridian’s software platform for smartphones and tablets to create services for use in public venues. Terms of the deal were undisclosed.

“GPS-based wayfinding solutions are extraordinarily popular, but they don’t work well indoors,” said Keerti Melkote, founder and Chief Technology Officer at Aruba Networks said in a statement. “We intend to address that gap by creating ‘indoor GPS’ using Aruba’s Wi-Fi infrastructure and Meridian’s wayfinding platform … This is a clear opportunity for Wi-Fi to become not only an enabling platform for BYOD, but now across industries, a revenue-producing, customer engagement platform for the business.”

The Meridian enterprise software platform targets large, indoor facilities -- including the Art Institute of Chicago and Macy's store in New York City -- to build custom-made mobile applications that help people get around in public places.

Meridian opened up it platform last November, introducing a pair of SDKs, Nav Kit and Blue Dotto. The company, based in Portland, Oregon, had previously announced a partnership with Aruba Networks competitor Cisco.

For its part, Cisco unveiled Wi-Fi location services and analytics last November, thanks to its acquisition of ThinkSmart Technologies. The features are included in Cisco's Mobility Services Engine built in conjunction with mobile chip maker Qualcomm and AT&T. Cisco has also partnered with IBM for its "Mobile Concierge" service, which enables integrated web applications to be displayed on mobile devices and provides analytics to deliver a customized shopping experience with coupons and promotions.

Indoor Location Apps on the Rise for Retailers

In-store mapping provider aisle411 announced this week that its smartphone app is currently in use by more than 12,000 retail stores, including Walgreens, The Home Depot, Hy-Vee, Price Shoppoer, and Shop 'n Save, among others.

The mobile application provides directions to specific products and offers searchable store maps. Engaging consumers through in-store mobile apps holds considerable promise for retailers, says Nathan Pettyjohn, CEO of aisle411. "Offline Commerce, or purchases occurring at a physical store, make up approximately 90 percent of all retail purchases. aisle411's mobile platform digitizes the in-store shopping experience so that shoppers can find and buy everything that they came in the store to purchase."

Indeed a growing number of technology companies are offering in-store mapping and customer engagement platforms, collecting data about mobility patterns and giving customers information to make better point-of-purchase decisions. Don Dodge, Developer Advocate at Google helping developers build new applications on Google platforms and technologies, sees enormous opportunities in the future of indoor location technologies, saying it will be a huge market, "bigger than Maps or GPS".

Among the growing number of market entrants for indoor location technologies, beyond aisle411, include Wifarer, Meridian, Point Inside, VisibleBrands, Micello, and several others.

With Apple's recent acquisition of WiFiSlam for $20 million, the indoor positioning and indoor marketing industry is heating up. We'll be watching the market closely as retailers begin to embrace indoor marketing technologies and map the potential use cases going forward.

Can "Send Money" By Email Reinvigorate Google Wallet?

Yesterday at the Google developer conference, Google I/O, in San Francisco Google relatively quietly launched a new feature of Google Wallet -- send money by email. It represents, hands down, the simplest way to transfer money between people. And it could become wildly successful provided that Google promotes the service and explains how it works. 

It requires a Google Wallet account and an associated payment method (credit card, bank account). It doesn't require a Gmail account to send or receive. However it's easiest if there is a Gmail account. Gmail is the most popular webmail service now on a global basis. 

Google was reportedly going to announce a plastic payment card at I/O but that was scuttled at the last minute (apparently because of a poorly functioning demo for CEO Larry Page). Competitor PayPal offers a physical payment card for in-store usage, linked to PayPal payment methods (credit card, bank account). It's not clear how widely it's used. My suspicion is not at all.

Google's payment card was a renewed bid for relevance and adoption for Google Wallet. It may still launch after the "bugs are worked out." Its NFC-based mobile wallet has seen limited adoption and usage. And awareness of Google Wallet is well behind PayPal. 

Instead of the plastic card Google announced "send money." Essentially users just send money as they would an email attachment.  Users select the "attach money" icon in Gmail (not yet available but rolling out soon in the US to adults 18 and over), indicate the amount desired and the "from account" via a pull-down menu (credit card, bank account, Google Play balance). Then hit send. 

Sending money via email is currently only available on the PC. However users can send money from Google Wallet directly on their phones.

It's free for users to receive money. And it's free to send from your bank account. Sending a payment from a credit or debit card will trigger a 2.9% charge, just as if you had used your card in the "real world" at a point of sale. Google says it also offers "Purchase Protection ... against eligible unauthorized payments."

This is a pretty compelling way to send money, although there are a few adoption and potential trust issues that must be overcome. If Google can do that and educate people about the benefits it could become a huge success and make Google Wallet a hub for mobile payments vs. its current status as an "also-ran."

Millennial Media Q1: $49M, on Track for $230M+ in 2013

Millennial Media reported Q1 earnings yesterday afternoon. The company said that its revenue grew to $49.4 million from $32.9 million in Q1 2012. However the company saw a $3.8 million net income loss vs. a $4 million loss a year ago.

Non-US revenue was 18.4% vs. 12.1% in Q1 of 2012. Second quarter revenue guidance was $58 million to $60 million.

The company said that its network reached 420 million monthly unique users globally, including approximately 160 million monthly unique users in the United States. Millennial also said that its network was enabled on 42,000 mobile apps. 

CFO Michael Avon said on the earnings call that geotargeted, demographically and behaviorally targeted ads were "growing faster than the overall growth rate of the market." 

The company cited IDC's estimates that its mobile ad revenues in the US "were second only to Google." FY2012 revenues for Millennial Media were $177.7 million. However Facebook made $391 million in mobile ad revenue in 2012 and is on track to do nearly $1 billion this year. 

Directory publisher and local-mobile ad network provider YP said that it had $350 million in mobile ad revenue in 2012.

Mobile 'Economic Impact' Study Predicts $9.2B in US Mobile Ads by 2015

The Mobile Marketing Association, in connection with its latest conference, has released what it calls the "Mobile Marketing Economic Impact Study." Authored by Columbia University adjunct professors, it's a kind of soup-to-nuts document that includes mobile marketing forecasts as well as discussion of how many jobs are created by the mobile industry. The report makes a pitch for privacy self-regulation as well. 

The report asserts that mobile marketing "created 524,000 jobs in 2012." In calculating the economic impact of mobile and projecting mobile marketing spending it correctly sweeps much more broadly than mobile advertising alone. Accordingly the document predicts more than $30 billion in "mobile marketing expenditures" (defined broadly) will be spent by 2015 in the Us. 

Mobile Marketing Communications Spending in United States ($Millions)

 Screen Shot 2013-05-10 at 10.16.18 AM

Here's the MMA's explanation of its marketing categories in the chart above:

  1. Mobile Media Advertising (“bought” media)
  2. Mobile Direct Response (DR) Enhanced Non-Mobile Media, (also “bought” media)
  3. Mobile Content and Relationship Marketing (mCRM) (“owned” and “earned” media)

Thus a roughly equal amount of mobile marketing spending occurs outside of the framework of "mobile advertising":

Within the overall mix of mobile marketing communications, Mobile Media Advertising will remain the largest single component of spending over the forecast period, reaching $9.2 billion by 2015. But expenditure on mobile marketing communications is not limited merely to advertising in on-device media. Expenditure on mobile direct response (DR) advertising or mobile enhancements within non-mobile media is projected to grow the fastest, growing over four fold from 2012 to 2015, to almost $3 billion; and mobile CRM will continue to be the second largest source of expenditure -- indeed, almost as significant as mobile advertising -- through 2015, when it is expected to reach $7.6 billion.

The forecast for mobile advertising by 2015 is $9.2 billion. Last year the IAB found that marketers had spent just under $3.4 billion on mobile advertising (the MMA figure is just over $3 billion for 2012). The $9.2 billion in the MMA report forecast is probably aggressive but perhaps still within reach. 

By Saying 'No' to Android Has Nokia CEO Elop Sealed His Fate?

There are some signs of progress for Windows Phones and Nokia's Lumia line of handsets that exclusively use the operating system. Especially in Italy and the UK Nokia seems to be making some headway. There were also some data showing an uptick in Windows Phones' market share in the US.

The following are two sets of survey-based market share data from comScore and Kantar. Kantar shows much greater growth in Windows Phone adoption in the US than comScore. Regardless, over the past 18 months Windows Phones have largely failed to make a dent in the smartphone dominance of Android and Apple devices. 

comscore March mobile market share 1

Kantar Worldpanel ComTech smartphone data

It's almost 100% certain that Nokia, with its well-reviewed Lumia hardware, would be selling more phones if there were an Android option. However Nokia CEO Stephen Elop has essentially refused to consider that option and is sticking to the company's Windows-only strategy. This comes amid intensifying investor pressure to adopt Android.

According to a recent WSJ article:  

Shareholders approved the dividend-suspension proposal, but appear to be losing patience as questions about Samsung and Apple loomed over Tuesday's session. One shareholder asked Mr. Elop why Samsung is achieving what the investor characterized as 10 times better results than Nokia, and another concluded a round of tough questions by saying that right now Nokia isn't displaying "the spirit and charisma" that Apple has.

Over the next 2 - 3 quarters, Nokia may see slightly better results but they won't show the kinds of growth desired by institutional investors. Unless or until Nokia adopts Android sales won't accelerate to any significant degree, to the increasing frustration of investors. 

One way or another Nokia will likely be developing Android devices by this time next year -- absent a Windows sales miracle. Either Elop will give in to investor calls for Android or, if he does not, he will be ousted by their calls for his head. And the first act of any successor CEO will be to fast-track Android handset development. 

The Sexy-Shocking Number from Nielsen's Mobile Path to Purchase Study

Earlier today xAd put out its quarterly insights report. There were a number of interesting findings and datapoints. The "headline" was that the number of national-advertiser campaigns using more precise geotargeting (more specific than DMA, city or ZIP) had more than doubled over the course of the past 12 months. 

In a very general way this mirrors the movement of the market and the growing sophistication and use of location targeting by marketers. 

xAd Q1 data

There was also a nice case study involving Pinkberry's introduction of a new line of greek yogurt. Pinkberry's objective was to build awareness and drive visits to local stores. It used xAd enhanced geofencing to target users and show ads within 1 mile of store locations. The were a couple of discounts and incentives (coupons) associated with the product launch. 

The display ad clicked-through to a "dynamic landing page specific to the nearest location which features these offers as well as an option to save the coupon, obtain the address, phone number, map, directions and/or more information." According to the case study materials, in two weeks the campaign goals were exceeded by 2X. 

As you can see below, the ad creative was very polished. But the success of the campaign also illustrates how effective the combination of local relevance and offers can be. Indeed, xAd's reported average campaign metrics (for both search and display) outperform the industry averages. 

Screen Shot 2013-05-07 at 8.52.01 AM

More interesting than the findings in the insights report were the findings released last week in the 2013 US Mobile Path-to-Purchase study, undertaken in cooperation with Telmetrics and Nielsen, which conducted the research.

The Mobile Path to Purchase study is in its second year. The findings are based on an online survey of 2,000 US smartphone and tablet owners and “observed consumer behaviors from Nielsen’s Smartphone Analytics Panel of 6,000 Apple and Android users.”

There were a ton of data that came out of this report, and will continue to be released over time. However the single "blockbuster" finding is that across a range of purchase categories (i.e., Finance, Retail, Insurance, Convenience/Gas) 46% of survey respondents said they relied exclusively on their mobile devices (smartphones and/or tablets) in conducting pre-purchase research online. 

Accordingly, nearly half of the respondents did not use or consult PCs -- at all. I was initially shocked by this. I don't have detailed demographic information about who these people were beyond the fact that they skew younger (18 - 34). But this is a huge finding and one that should scare the stuffing out of any brand or advertiser that isn't actively pursuing a mobile marketing strategy. 

Tablets to Dominate 'PC' Sales, Low End of Market Increasingly Cluttered

According to a new forecast by NPD, tablets and touch-screen laptops (tablet-PC hybrids) will dominate the computing landscape in the coming years. More conventional PCs will be in the minority. 

Tablets are a new device category really. But let's put aside the longer debate about whether or not tablets should be considered "PCs" at all. There will be more "mobile devices" than traditional PCs (including laptops) sold in the next five years.

At best forecasts can show the direction of the market. But in this case the market's direction is clear. 

Global Mobile PC Shipments, 2012-2017

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Source: NPD

Last week Acer introduced a 7-inch tablet for $169, besting the aggressive pricing of Nexus 7 and comparable Kindle Fire devices. According to one rumor the next Nexus 7 will be priced at $149. But you can already buy a 7-inch Lenovo tablet for $129 on Amazon (quality is another question). The race is on for a "decent" Android tablet starting at $99. I suspect that will come in Q4 this year or very early next.

I was recently in Best Buy and Office Depot/Max and saw the displays of tablets; there are scores of them. It will be challenging for consumers to differentiate them -- especially at the lower end of the market. There will probably be three or four broad consumer criteria for tablets: OS/brand, price, size, specs like memory or battery life. 

With the exception of Kindle, Samsung and maybe one or two others the Android tablet universe is a sea of no-name devices. Here the battle will largely be about price. Apple iPads will stand apart because of strong brand identity. However a majority consumers will be price sensitive and likely to simply go after the cheapest "decent" (Android) tablet they find. Indeed, the devices are getting so cheap they're almost disposable. 

NPD says "Windows 8 are unlikely to be a major driver of touch adoption." I agree, as presently configured, Microsoft is unlikely to sell many stand-alone tablet devices. Surface Pro tablet-PC hybrids will sell to enterprise customers but Microsoft will struggle to sell basic tablets to consumers unless it reaches that $100 threshold first.

Tablets 'Shipment' Numbers Inconsistent with Traffic Reality

I'm a big opponent of using "shipments" as an indicator of market share. It may be a directional indicator of market share in some cases. But there are times when "shipments" is simply the wrong metric. IDC's latest tablet numbers offer a case-in-point.

The firm reported the following tablet shipment figures globally for Q1: 

  • Android -- 56.5%
  • iOS -- 39.6%
  • Windows -- 3.3%
  • Windows RT -- 0.4%
  • Others -- 0.2%

Basically the positions of Android and iOS tablets have reversed since last year. Shipments are put forward as a proxy for market share by IDC. However that's a dubious proposition at best. Shipments do not equal sales, let alone usage.

The following chart reflects North American tablet traffic share as of March, according to Chitika. After the iPad's 82%, Kindle Fire has a 7% share of traffic. Samsung Galaxy tablets come in at 4.3%. Needless to say these actual traffic data show a massive discrepancy vs. IDC's shipments estimates.

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Below is StatCounter data from 2012 (via Royal Pingdom) -- I was unable to find more recent global traffic data. These data reflect something very consistent with the Chitika data above.

In these various geographic markets the iPad is generating around 80% or more of tablet traffic. Even if we assume iPad share has fallen by 10 points since last year, these data are still a radical departure from the IDC figures. 

 tablet OS faceoff

Undoubtedly lower-priced tablets and the sheer proliferation of devices will necessarily diminish the iPad's "shipments share" over time. But it remains to be seen how actual usage is impacted. For the moment market share (as measured by consumer usage and traffic data) looks nothing at all like IDC's projections.

Facebook's Q1 Mobile Ad Revenues: $373.5M

Facebook announced Q1 revenues of $1.46 billion and net income of $219 million. Most usage and engagement metrics were up: daily, monthly and mobile active users. On the latter point Facebook announced 751 million mobile active users, up from 680 million in Q4 2012.

Mobile only users were 189 million vs. 157 million in Q4 2012.

Total ad revenue in Q1 for Facebook was $1.245 billion, which was 85% of total revenue. Of that $1.245 billion ad revenue, 30% was mobile. That's up from 23% in Q4. What that means, as a practical matter, is that Facebook made $373.5 million in mobile ad revenue in Q1.  

Facebook Q1 revenue 

Facebook mobile users

Facebook COO Sheryl Sandberg characterized Facebook is a “mobile-first” company and offered several examples of the company's mobile success during the earnings call. For example, she said that "3,800 mobile app developers used these ads to drive nearly 25 million downloads."

Facebook's FY 2013 global mobile ad revenues will probably land somewhere between $1.6 and $1.9 billion.  

PayPal Log-in Takes Aim at Social Log-ins, Could Be Huge for "M-Commerce"

Mobile commerce, at least on smartphones, is partly held back by the UX challenges of forms and inputting credit card digits. Amazon does well in so-called "m-commerce" in part because it has millions of user credit cards on file making the mobile check-out process nearly painless (it also has a trusted brand).

Mobile check-out is part of the larger problem of being compelled to repeatedly sign in to accounts on a mobile device. Though some sign-in credentials are remembered by mobile browsers users are constantly being asked to input usernames and passwords. It's incredibly frustrating. 

Nuance (and others) have tried to address this problem with voice authentication in lieu of manual password entry (one of the topics on the agenda at the upcoming Voice Biometrics conference in San Francisco next week). To date, however, voice authentication has seen limited adoption in mobile applications.

Q1-2013-Social-Login-Trend

Separately Facebook has sought to become the universal log-in, to address the challenges of pain of creating multiple accounts and passwords -- particularly in mobile. Google is now starting to challenge Facebook in that arena, according to a recent study from Janrain. 

Many people are disinclined to use Facebook to log-in to third party websites or accounts because of privacy concerns (uncertainty over what might be communicated to their networks). Enter PayPal log-in (and its mobile express checkout solution). 

This solves a couple problems for publishers/developers and consumers. First it offers an alternative, single set of log-in credentials offering consumers more privacy than Facebook. It also offers a commerce solution that, like Amazon, avoids the "16 digit problem" of manually entering information on mobile sites. 

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Amazon and Google both offer comparable and competing solutions for third party merchants. But PayPal is in a strong position to become both a single sign-on and mobile checkout leader. The eBay division needs to aggressively promote mobile express checkout to merchants and the security and privacy benefits and ease-of-use of PayPal log-in to consumers, which will be a significant marketing challenge. 

As part of that effort PayPal also needs to do something of a reintroduction of itself generally to consumers at large. Its brand needs to be "beefed up." However among "digital wallets" PayPal by far has the greatest consumer awareness, which the company can use in its argument to merchants.