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Facebook Mobile Ad Revs Now 41% of Total

Facebook announced its Q2 2013 revenues a few minutes ago. Overall the company beat analysts' expectations with $1.81 billion in total revenue. Advertising supplied $1.6 billion of that total with payments and fees providing $214 million.

The big suprise was mobile, which was responsible for 41% of total ad revenue (or $656 million) -- up from 30% last quarter. Here are the mobile numbers: 

  • Mobile monthly active users grew to 819 million
  • Daily mobile users in Q2 were 469 million
  • There were 219 million mobile only users

Facebook monthly mobile users

The company said on its earnings call that it's investing in "mobile, measurement and product innovation." The company said it has the most effective mobile ad products and is in a position to lead the mobile ad market. Indeed the company is second only to Google now in mobile advertising revenue. 

Apple's $35.3 billion Quarter Visualized

Apple just reported a $35.3 billion quarter, which was somewhat better than a year ago and beat financial analyst expectations -- largely on the strength of iPhone sales. The company also announced profit was $6.9 billion (vs. $8.8 billion a year ago). Sales outside North America accounted for 57% of revenue.

The company sold 31.2 million iPhones (vs. 26 million a year ago). But it sold fewer iPads than expected:14.6 million. Mac sales were down but Macs outperformed the PC industry as a whole, which is slumping badly. 

Below are two charts that show the distribution of revenues by segment/geography and by product line (figures in $billions): 

Unit sales of iPads were a concern for many financial analysts. The company sold 14.6 million tablet devices compared with 17 million last year and more than 19 million last quarter. While this implies market share erosion or shift away from the iPad, today Chitika released data showing that in North America at least, the iPad's web traffic share had grown since April and now stands at just over 84%. 

June iPad traffic

Source: Chitika

While Apple continues to generate huge quarterly revenues growth has slowed or declined in some cases. Accordingly there's enormous pressure from investors to bring out new products or create new product categories: TV, wearables, etc. On the earnings call Apple CFO Peter Oppenheimer said, “We are on track to have a very busy fall" though he wouldn't elaborate.

New iPads and iPhones are expected to be introduced. There may even be "surprise" products such as the rumored iWatch. 

Report: Apple Considering Building a 'Phablet'

The term "phablet," used to describe devices that operate like a phone but approach the size of small tablets, is horrible. But what may be more horrible is that Apple is reportedly considering creating one, potentially mimicking Samsung's strategy of a range of devices of differing screen sizes. 

Samsung is throwing a lot of mobile device spaghetti at the refrigerator, metaphorically speaking, to see what sticks with consumers. One might even describe its strategy as "incoherent." Nonetheless Apple may be moving toward introducing more devices with various screen sizes. That's according to an article in the Wall Street Journal:

The tests with suppliers seem to suggest that Apple is exploring ways to capture diversifying customer needs when many mobile device makers offer smartphones and tablets in various sizes.

In addition to potentially developing a device in-between the iPhone and current iPad mini, Apple is also apparently experimenting with larger screens for iPads. Most of these prototype experiments probably won't come to market.  

The huge-screened Samsung Galaxy Note has proven popular; however it's unclear how many units have sold. Indeed, Samsung has been the primary creator of market demand for larger-screen smartphones. And now Apple is feeling pressure to respond with a larger-screen iPhone. However that's not likely to be the 5S, due out later this year.

It might make sense for Apple to offer two iPhones: one with the current screen (small) and one with a 5-inch screen (large). However beyond that it makes little sense for Apple to go.

When Steve Jobs rejoined Apple as CEO 1997 one of the first things he did was to simplify Apple's product lineup, which had become cluttered and confusing to consumers. This is the danger if Apple tries to follow Samsung and create multiple device screen sizes.

Consumers do want a larger-screen iPhone but they haven't been asking for multiple devices of incrementally larger screens. It's also not clear that anyone wants or cares about a larger iPad. Maybe one with a slightly larger screen would be interesting but that would need to entirely replace the current iPad.

It makes sense for Apple to have four devices at most: iPhone (two screen sizes perhaps), iPad Mini and iPad. Beyond this the product lineup becomes muddled and confusing. And to the extent that Apple seeks to imitate Samsung's approach it may indicate the company has lost confidence in its vision. 

Nokia Sells More Lumia Handsets but Not in North America

Nokia's results this morning are something of a Rorschach test. You either see them as evidence that Nokia has stalled and Windows isn't going to save the company or you can see some momentum and success -- as a promise of more future success. 

Nokia's Q2 revenue was €5.7 billion ($7.5 billion), which was down vs. last quarter (3%) and last year (24%). Lumia sales were up 32% vs. last quarter to 7.4 million units. Overall the company sold 61 million phones, almost 90% of which are not smartphones however.

Nokia said the 7.4 million Lumia unit sales reflected strong demand for the Windows Phone based handsets. However in North America the company sold roughly 500,000 devices vs. 600,000 last quarter. Accordingly demand in North America is flat, while Windows remains under 5% in terms of market share. Nokia has had more success in Europe and other markets where its brand is stronger.  

Yet Nokia has now pulled into the number three smartphone slot after Android and iOS. BlackBerry reported selling 6.8 million phones last quarter. Becoming number three was an expressed goal when Nokia selected Windows as its exclusive OS. However the question now becomes can it do better?  

My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral. 

Update: The Verge reports that Nokia CEO Stephen Elop was concerned that if the company chose Android that it would lose to Samsung. Thus it chose Windows Phone as its exclusive OS. That has been a very mixed experience for Nokia, obviously. I believe that Nokia with its brand and marketing resources would have been in a position to challenge Samsung for Android dominance. 

But the early window of opportunity, so to speak, has now closed for Nokia. 

Study: 97% of Mobile Search in Gas & Convenience Category Happens in Apps

In honor of the blazing US summer and road trips, xAd and Telmetrics have released more data from their "Mobile Path-to-Purchase Study," this time on consumer behavior in the "Gas & Convenience" category. The study, which combined a mobile user survey (n=2,000) and consumer behavior data (n=6,000), was conducted by Nielsen earlier this year.

As might be expected the study reflects the very mobile-centric nature of the category, which includes convenience store visits, gas purchases and minor automotive service (i.e., oil changes). 

Below are the study's key findings:

  • 85% of time in the category "is spent on a smartphone with most conducting gas price comparisons/searches"  
  • 97% of mobile search happens within an app vs. mobile web (e.g., GasBuddy)
  • 80% of smartphone search and 40% of tablet search happens on the go (out of home) 
  • 88% plan to buy within the same day (2/3 within the hour) but only 10% have a specific place/business in mind
  • Location and price were the two factors that most influenced conversions (75% sought a location within five miles)

Interestingly, the study reported that "Gas & Convenience searchers spend an average of 6 minutes per mobile search session," which is 50% more than "the average Retail mobile search session." 

The study also found that Gas & Convenience users were very open to influence and receptive to mobile advertising, especially if the ad pertains to a nearby location and/or offers a deal or coupon. 

Chinese Smartphone Maker TCL Selects Nuance's Swype as Default Keyboard for U.S. Market

As the global market for smartphones matures, it is clear that the default keyboard platform is going to be key for product differentiation. That's why it is so interesting that up-and-coming Chinese OEM, TCL Communications Technology Holdings Ltd, has expanded its licensing agreement with Nuance, making Swype the default keyboard for its line of Android-based smartphones sold in the U.S. In its latest report of device shipments, TCL claims sales volume of smartphones grew 126% in June, when compared to the same month last year, exceeding 1.3 million units. Of the nearly 21 million phones sold globally in the first six months of 2013, over 18 million were sold outside the Chinese domestic market. 4.3 million were smartphones, selling under the he Alcatel OneTouch brand as well as TCL's own Idol X branding.

Like Samsung, TCL is a well-diversified consumer electronics manufacturer with a major presence in the flat-screen TV market. Its management expects the geographic expansion of its smartphone sales to fuel growth and profits in the coming years. If it does so, it will be at the expense of Samsung, HTC and Google's own Motorola brand. Matt Revis, Vice President of Dragon Devices at Nuance, points out that the company had its choice of a number of less expensive alternatives to Swype to support touch-based input, including the "free" default keyboard that ships with the Android operating system.

"This is representative of a situation where you have a company that is positioned to grow globally and looking for an innovation partner to make it a category leader," Revis explained. "They are working with Nuance."

Indeed, it is a signal event for Nuance and Swype, which is already available for free download from Google Play. While Nuance would not provide revenue estimates for the licensing agreement, the impact can be expected to be significant, given TCL's ambitious growth expectations in the coming year. A virtuous circle has been established whereby an aggressive manufacturer recognizes that innovation will be key to growth and has recognized the need to cement a relationship with a firm that has been steadily investing in improving the technologies that support touch-based and multimodal input - both through internal development and acquisition.

PCs in Q2: 'Worst Performance in 11 Years'

Against the backdrop of a sweeping reorganization at Microsoft, intended to promote greater collaboration and faster time-to-market, hardware tracker IHS reported that PCs "delivered the worst second-quarter performance in 11 years."

The firm said that global PC shipments were down 7% vs. a year ago. IDC reported in Q1 that PC shipments were down 14% year over year. I suspect that when the IDC and Gartner hardware figures are released we'll see greater declines for Q2 than what IHS is reporting. 

IHS said that during the first half PC sales, globally, suffered "a harsh 11.2% contraction compared to the same six-month period a year ago." 

Tablets and smartphones have clearly eaten into the PC market and put downward price pressure on PCs. PC replacement cycles are getting longer. A more intangible thing has also happened: PCs have ceased to be shiny new objects coveted by consumers.

They've become instead pure utilitarian items without the ability to evoke the device-desire they once had. 

Retailers Fail to Connect with Customers Via In-Store Technologies

While countless retailer apps and mobile websites are designed specifically to deliver an "omnichannel" experience -- tracking a customer through the lifecycle of a purchase -- retailers are missing out on opportunities to engage customers through in-store technologies, says a new report by EKN Research.

A survey of more than 60 large retailers found just 13% of retailers are offering in-store features for mobile apps indicating a significant gap in leveraging the use of smartphones or mobile devices for customer engagement.

In terms of providing the infrastructure for ubiquitous connectivity, only 1 in 5 retailers currently offer free in-store wi-fi, with 42% of retailers having no intention of ever offering free wi-fi in stores.

InStore_Technologies_Jul8

Mobile technologies may offer new opportunities for customers but many retailers are not willing to make the investment. The report finds that IT spending on store technologies will remain relatively flat in the next three years, representing 31% of the total IT budget in 2013. Though the share is expected to increase to 35% by 2016.

"In 2013, increasing store operations efficiency remains retailers’ top goal from investments in store technologies. Running an efficient store should be table stakes for mature retailers, and their top goal should focus more directly on improving customer engagement. EKN views this as evidence that the focus hasn’t yet shifted for a majority of the retailers."

This news comes on the heels of a recent comScore report that found 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.

And previous data suggest a majority of mobile users are accessing retailers' websites for in-store sales or customer service functions.

We'll be exploring the current pulse of retailers and in-store marketing technologies at our upcoming Place Conference this October in San Francisco.

IAB: Mobile Advertising Worth $8.9 Billion Globally in 2012

The IAB released a global mobile advertising report for 2012 this morning. It reflects ad share by region and ad format. The IAB sizes the global mobile advertising market at $8.9 billion (€6.9 billion) in 2012.

The North American mobile advertising market was worth $3.5 billion in 2012. It lagged just behind APAC and should overtake that region this year. 

The following are the values of the other global-regional markets: 

  • Asia-Pacific: 40.2% ($3,558 million/€2,769 million)
  • Western Europe: 16.9% ($1,499 million/€1,167 million)
  • Central Europe: 1.3% ($112 million/€87 million)
  • Middle East & Africa: 1.2% ($109 million/€85 million)
  • Latin America: 0.6% ($50 million/€39 million)

Mobile paid search (read: Google) is the dominant form of mobile advertising on a global basis and in most individual regional markets according to the IAB:

With the possible exception of Latin America, with its more limited smartphone penetration, SMS-based advertising is shrinking around the globe. 

Despite mobile paid-search's global dominance, search and mobile display are seeing comparable growth rates:

Google is clearly one of the beneficiaries of these trends but so will be Facebook, Twitter and a few ad networks. Fewer than 10 companies are in a position to control three-fourths of the global-mobile ad marketing in 2013. 

Report: iPhone Closing Share Gap with Android in US

Yesterday Kantar Worldpanel ComTech reported that the iPhone has gained on Android in the US market. The firm said the relative market shares of Android, iPhone and Windows Phones are now as follows:

  • Android: 52%
  • iPhone: 41.9%
  • Windows Phone: 4.6% (up 0.9% YoY)

The iPhone is the bestselling individual smartphone in the US, though not across the globe.

Kantar asserts that its survey data are more accurate than other sources because it operates "the largest continuous consumer research mobile phone panel of its kind in the world, conducting more than 240,000 interviews per year in the U.S. alone."

For comparison purposes comScore reports the following (May, 2013) smartphone market share in the US: 

  • Android: 52.4%
  • iPhone: 39.2%
  • BlackBerry: 4.8%
  • Windows Phone: 3.0

Comscore shows Android and the iPhone gaining in the US and all other operating systems losing share vs. last quarter.

While the iPhone may have gained in the US that trend does not appear to be global. Kantar reports that Android's share is now nearly 70% in Europe and even higher in China.  

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.