iBeacon Surging but a Hybrid Approach to Indoor Location Will Prevail

In partnership with ShopKick, American Eagle (AE) Outfitters is outfitting 100 US stores with iBeacons to power deal notifications when shoppers enter stores. ShopKick also has a similar but much more limited partnership with Macys.

Right at-the-door notifications are the full extent of the ShopKick-AE indoor marketing functionality. But later it will become more precise by area or zone within the store. 

Outside of Apple's own chain-wide deployment of iBeacons this is the largerst and most visible iBeacon launch to date. Clearly Apple's credibility and support of BLE and iBeacons is propelling the technology. However it's important to point out that iBeacons don't work with older iPhones and it only work with a few Android phones currently.

Over time that will change. But iBeacon is not a stand-alone or complete solution. 

The rise of iBeacon argues that it will potentially be one of several "winning" indoor location technologies. But there won't be a single technology standard that emerges. Retailers and others will need to employ a layared or hybrid approach to provide store coverage and accuracy. 

WiFi and closed circuit TV are the foundational in-store analytics and location technologies -- but WiFi in particular. Acousitc, LED lighting and magnetic may also make gains as retailers and venue owners come to see they need multiple approaches for success. For example, Rouse Properties has adopted acoustic technology from Sonic Notify to power indoor location awareness and marketing within its network of 34 malls in the US. 

While indoor analytics are driving the market, companies are quickly stepping up with consumer-facing solutions -- such as ShopKick-AE. And while consumers widely use their smartphones in stores and are generally interested in things such as deals and personalization, retailers will need to be careful about annoying or spamming consumers with too many messages. 

For example, research from ISACA suggests that an education process and gradual roll out of indoor marketing are in order. Too much, too soon may have the opposite of the desired effect:

targeted marketing 1

Half of Americans Own Tablets or E-Readers

We've reached a potent new mobile milestone: half of Americans own tablets or e-readers. That's according to new data from the Pew Research Center. 

Specifically Pew says that 42% of American adults now own tablets and 32% own e-readers. Some own both. Pew says its survey was based on a representative sample of 1,005 adults (18 and over). It was conducted in early January -- so after the holiday.  

Pew tablet numbers

The iPad is still the dominant tablet, driving roughly 76% of all North American tablet traffic according to ad network Chitika. The following traffic-share figures were captured just after the holiday:  

  • iPad: 76.1%
  • Kindle: 9.4%
  • Samsung: 5.9% 
  • Microsoft Surface: 2.3%
  • Google Nexus:  2.0%
  • Other: 4.4% 

There are roughly 242 million US adults according to census data. If we can extrapolate the Pew survey data to the entire US population of adults it would mean that there are roughly 102 million tablets and 77 million e-readers in the market, owned by 121 million adults.

Notwithstanding some anomalous comScore data, the overwhelming body of evidence is that tablets are much more commonly used for e-commerce purchases than smartphones. Consumers shop on smartphones but much more commony buy on tablets. 

Tablets will out-ship PCs this year. Pew says its survey revealed that 75% of US adults own PCs (desktops or laptops). That number is flat.

We may reach a point in late 2015 when there are an eqivalent number of tablets and PCs in the US market. The web design and marketing implications of this are obvious. But when one combines the number of smartphones and tablets in the market, they exceed the total number of PCs already. 

Grocery Stores on Vanguard of Indoor Location Adoption

We anticipate that grocery stores will be on the forefront of indoor location and especially indoor or place-based marketing. They have enormous amounts of data about their customers (via loyalty programs), they've got mobile apps, increasingly sophisticated email marketing and brand client-advertisers that want to influence in-store shoppers. 

Shopping lists are the most common in-store smartphone use case in grocery stores. The second most common is seeking coupons (often from grocery store apps). Accordingly the indoor consumer smartphone usage in grocery stores is already well established. 

All of the above variables represent a potent combination and one that probably means we'll see much faster and more aggressive adoption of indoor location and marketing than even in other retail segments.

Accordingly we were struck by the announcement earlier this week that inMarket was rolling out iBeacon-powered indoor location in Giant Eagle and Safeway grocery stores in three markets: San Francisco, Seattle and Cleveland Ohio. The company says that its iBeacons will be in many hundreds of stores by the end of the year. 

Most media outlets covered the "iBeacon's continuing momentum" angle. Indeed, iBeacons are small, cheap to install and are backed by Apple. However we're at least as interested in the grocery store adoption angle. 

The video (below) introducing inMarket's "mobile to mortar program" showcases a range of use cases for its iBeacon offering: 

  • In-store use of shopping lists
  • Nearby coupon notification
  • Loyalty points based on in-store product visits/browsing (ShopKick like)  

Point Inside is also very active in the grocery space and has a number of advanced implementations in market. We'll be presenting some of these types of case studies at Place 2014 in New York in June. 

inMarket Mobile to Mortar iBeacon Platform Capabilities Spot from Sohrab Pirayesh on Vimeo.

Location Analytics Provider Euclid Throws Down Gauntlet, Makes Product Free

Euclid is one of the better known indoor-analytics providers in a new but increasingly competitive and crowded segment. There are well over 150 companies involved directly or indirectly in "indoor location," most of which have some sort of analytics component.

While some companies are closely identified with a particular technology (e.g., Estimote with BLE), most companies can use or do use multiple technologies to gain access to indoor smartphone positioning. It's not unusual to find companies using at least two or three technologies such as WiFi + BLE. Euclid still relies on WiFi exclusively but will likely be expanding in the future to include BLE (assuming it continues to gain momentum). 

This is comparable to how outdoor positioning and mapping relies on GPS, cell tower and WiFi triangulation as a hybrid approach to compensate for the limitations of each technology.  

Today Euclid took a bold step by introducing a free indoor analytics product aimed at the mid-market (e.g., specialty retailers). It's called Euclid Express and it's mostly a self-service offering. Euclid co-founder Will Smith told me that during the beta period his company has enrolled more than 400 new customers. Competitors will undoubtedly see it as a "land grab." 

The product assumes an existing WiFi "infrastructure" in the store locations. If not Euclid will provide a low-cost WiFi set up.

The objective of Euclid Express is to remove friction and barriers to adoption -- including price. It offers a range of indoor analytics data, including:  

  • Average duration of shopper visits
  • Number of unique visitors
  • Daypart concentration of visits
  • Shopper recency and frequency

All this data is provided in real-time. 

Euclid's advanced product has more features and costs $100 per month per store location. The Euclid Express dashboard offers users the option to upgrade to the advanced product. Euclid's Smith also touts his company's privacy practices (anonymous, aggregate data) and argues that privacy is now a product differentiator for the company. 

Below is video from the Place Conference in October: Digital Analytics for the Real World. 

Study: Push Notifications Significantly Boost App Engagement, Retention

Push notifications and mobile marketing platform Urban Airship released data last week that shows how push messaging can boost engagement and app-user retention. The company, which provides notifications functionality for publishers and app developers, compared how opted-in push messaging users behaved vs. those who had not elected to receive notifications in six verticals.

Those verticals were: retail, media, entertainment, gambling, sports and games. The study covered 2,400 apps and more than 500 million push messages during a six month period. At a high level Urban Airship found:

  • Users who receive push notifications open apps more frequently and are much better retained
  • Push messaging drives higher average monthly app opens per user

The company also reported that on average just under half of app users opted-in to receive push notifications. Though this is logical and may be intuitive, this is the first time the impact of push notifications has been documented empirically to my knowledge. 

The engagement and retention differences among those who received notifications vs. app users who did not varied by industry. But in all cases engagement and retention were boosted, sometimes dramatically. 

It may be that those opting-in were more favorably inclined toward the publisher or app and thus were predisposed to be more engaged with the content. However I think it's beyond dispute that push notifications, if used judiciously and correctly, can boost app engagement.  

The problem is that most requests to allow notifications come immediately upon download and often before someone has had an opportunity to see the value of an app or of notifications. I routinely opt out because I fear they'll be abused by publishers and I don't want to be constantly interrupted. 

Publishers, retailers and marketers should do a better job of explaining the benefits of turning on push messages for the end and perhaps not request an opt-in immediately upon download. It would also be interesting to know, for the 50%+ who did not opt-in, what were their thoughts and rationales.

Facebook's Remarkable Mobile Growth Curve

The Wall Street Journal published an interesting overview piece on Facebook founder Mark Zuckerberg's evolution and maturation as a CEO. One of the most amazing aspects of Facebook's post-IPO growth and "turn around" has been mobile. In a little over a year the company has gone from less than $100 million to more than $800 million in mobile ad revenues.

"Taking Facebook public and reshaping it around mobile phones forced him [Zuckerberg] to grow up," assert unnamed sources in the article. The WSJ credits Zuckerberg individually with driving the transformation of Facebook's mobile business though an increasing focus on the bottom line. 

In Q2 2012 Facebook reported mobile ad revenue of roughly $69 million against overall ad revenue of more than $990 million. In Q3 2013 (the most recent quarter available), Facebook advertising revenue was $1.8 billion. Mobile delivered 49% of that amount or approximately $882 million.

Facebook said in Q3 it had 728 million daily active users and 1.19 billion monthly active users, up 18 percent. Monthly active mobile users totaled 874 million on a global basis and mobile daily active users came in at 507 million.

When Facebook reports Q4 2013 revenue it's certain that mobile will account for more than 50% of total ad revenue. Overall, in 2013, it's likely that Facebook will have made about $2 billion in mobile ad revenue globally. 

The 'Battle for the Connected Car' Begins in Earnest

For at least a decade analysts and car makers have been discussing, debating and forecasting telematics. Until this point, however, telematics has mostly been about in-dash navigation. More recently, with Microsoft Sync and similar inititives, we've seen a move to integrate speech and smartphone-like app experiences into in-dash "infotainment" systems.

Apple, Microsoft and now Google are trying to expand their reach into the "connected car." This year's CES has featured a number of auto-related announcements. Among them -- and arguably the most significant -- is the Google-led "Open Automotive Alliance" (OAA). With the OAA Google seeks to bring Android into the car in a deep way: 

The OAA is aimed at accelerating auto innovation with an approach that offers openness, customization and scale, key tenets that have already made Android a familiar part of millions of people's lives. This open development model and common platform will allow automakers to more easily bring cutting-edge technology to their drivers, and create new opportunities for developers to deliver powerful experiences for drivers and passengers in a safe and scalable way.

One can imagine that if the initiative expands and succeeds it will boost Android generally and become a new channel for Google services (i.e., Gmail, Google Maps, Music, Google Play) and advertising.

Early members of the OAA, which mirrors the earlier Google-led Open Handset Alliance, include Audi, GM, Hyundai and NVIDIA. Microsoft currently works with Ford and Toyota via its Sync system. And in 2012 Apple announced partnerships to bring Siri into the car with a number of car makers, including BMW, GM, Mercedes, Audi, Toyota and Honda, among a few others.

It's not clear to me from a technical standpoint whether auto OEMs can built multiple operating system compatibility into their vehicles or whether they'll have to bet on one. However there's much at stake in this "battle for the dash." 

The operating systems that "win the car" will see a boost all around. For example, if Android beats Apple and Microsoft in the car it will help Android more broadly in the market, or vice-versa. As in-dash systems become richer and more complete, people will want their devices and apps to be compatible and accessible in the car.

The "battle for the car" also mirrors the so-called "battle for the living room" among these tech titans. It's really a battle of operating systems and ecosystems across multiple platforms. 

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

It's amazing to think that Pizza Hut has been doing online ordering for 20 years. That would mean Pizza Hut took its first online order in 1994 -- way ahead of the curve. And when it comes to mobile Pizza Hut again appears to be ahead of the market.

Today, according to Pizza-industry publication Pizza Marketplace, roughly 30% of all Pizza Hut orders come from the internet. But half of those are now coming from mobile devices, with momentum favoring mobile (smartphones + tablets) over the PC. 

The Pizza Marketplace interview is with Pizza Hut's Kevin Fish, senior e-commerce manager. He sums up the company's attitude toward mobile as follows: 

It's important that we're where our customers are and that our experience meets and exceeds their needs. The app offers us the opportunity for a highly engaging and personalized experience. Meeting our consumers at their point of need is become more and more important as technology continues to advance. Our opportunity now was to provide the best experience in the industry with enhancements that meet those consumer demands.

Pizza Hut is using its app to not only deliver services but to engage and cement the loyalty of its users. The company also uses location to deliver specific local promotions and offers that aren't necessarily available in all markets nationally.

I'm not a fan of Pizza Hut pizza but the company really has the right attitude toward multi-channel marketing and engagement -- with its mobile app (and all the personalization it allows) now at the center of its "online ordering" strategy. 

Amazon, eBay Dominate Retail App Usage

According to multiple sources roughly 80% of consumer smartphone time is spent in apps vs. the mobile web. However in the retail segment the story is almost the opposite. Most consumers engage with retailers through the mobile web vs. apps. That means loyalty and mobile engagement are more limited in the category. 

The exceptions are Amazon and eBay. According to early December data from comScore Amazon and eBay apps dominate the mobile retail category (Apple's #3 status almost doesn't count here because of its privileged position on the iPhone). 

The chart below shows leading retailers' audience reach and time spent by device categorty:

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

Early on Amazon and eBay invested very aggressively in mobile app development vs. traditional retailers and many other e-tail "pure plays." As a consequence consumers downloaded them "early" and have continued to be loyal to these apps.

What comScore doesn't discuss is that eBay and especially Amazon's apps are often used in retail stores to compare prices and for product reviews content. However, as the metrics firm points out, retailers without apps on consumer smartphones are at a competitive disadvantage.

While retail apps are used for buying sometimes, multi-channel retailers need to start thinking very differently about their apps and see them equally as in-store "assistants" rather than just extensions of PC websites. They will also need to expose and lobby consumers in multiple channels on the benefits of downloading their apps. Apps should be seen along with email as part of a broader, more holistic loyalty and engagement strategy. 

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

Many analyst firms that estimate mobile device market share rely on "shipments" data. Those include IDC, Gartner, NPD and Strategy Analytics, among others. Few of these firms rely on internet traffic and actual usage or sales data to fuel their estimates and forecasts.

The reason for this is simple: shipments data are easier to get than sales and usage data. While these estimates can be "directionally" correct they're often wildly inaccurate as a practical matter. Indeed, they often misrepresent what's really happening "on the ground." Even actual sales data often don't present an accurate picture of the marketplace. 

Consumer survey data, such as used by comScore, Nielsen and Kantar for market-share projections, are in most cases better and more reliable than shipments data (and in some cases sales data). Best of all is actual usage or traffic data. A very clear case-in-point is the tablet market.

IDC released an updated tablet-forecast earlier this month. It shows Android tablets with a global market share of 61% and the iPad with a 35% share. 

IDCtabletforecast

Looking only at these estimates, one gets the clear sense that the iPad has lost momentum and its preeminent place in the tablet market -- in the way that the iPhone ceded market share to Android handsets. The only problem with this shipments-centric forecast is that it bears almost no relationship to the reality "on the ground."

Checking actual tablet-generated traffic on a global basis we see that the iPad has a 74% share vs. 23% for Android. In Europe the story is much the same. In the US the iPad has a 79% share of tablet traffic. Other traffic-data sources show a comparable if slightly lower figure.

The aforementioned numbers are from StatCounter. Net Marketshare data similarly show the Safari browser as the dominant browser (56%) among mobile devices (smartphones + tablets) vs. 25% for Android (or 33% if Chrome is included; however Chrome is used on iOS devices too). Data from ad network Chitika also show that the iPad's share of tablet-based web traffic in North America is around 80%. 

What are we to make of the massive discrepancy between the IDC 2013 estimates and these three traffic sources? Perhaps it's not important to try and reconcile these figures. Rather we should be asking which data "matter"? The answer is: usage is what matters.

Usage matters to developers, publishers and marketers trying to allocate budget and resources. What if millions of Kindles were given as gifts but later sat on bedside tablets, used only occasionally or in very limited ways? The simple notion that they're "out there" is irrelevant if they're not being used. 

Collectively we should reject device "shipments" (and even sales) as a definitive market-share metric. Instead the industry should look at more concrete metrics such as traffic and other usage-based data that show what's actually happening in the world.

In the end this is what really matters to everyone, including investors. Even reliable consumer survey data about device possession and usage are better than shipments figures. Actual traffic data are less susceptible to misinterpretation (or manipulation). 

Usage doesn't work as a forecasting tool for obvious reasons. Here projections will need to be based on some mix of assumptions and sales trends and other data. But the degree that the media and tech industry simply pick up and run with these regular shipments numbers without comparing them to actual traffic or other usage data -- I've been guilty myself -- is sloppy and misleading.