Opt-In a Must: Consumer Survey Indicates Retailer Risks with Indoor Location

There have already been several surveys that show consumers are interested in the benefits of indoor location and will share their personal data or opt-in when they're clear on what those benefits are. See, for example: 

A new survey (n=1,024 US adults) from OpinionLab shows that consumers are skeptical about indoor "tracking" and only want to participate in indoor location and marketing programs if they're opt-in. In an article about the survey Fortune sensationalizes the findings "Consumers hate in-store tracking (but retailers, startups and investors love it)."  

That headline overstates the degree to which consumers are hostile to being located in stores. It's very fair to say they're ambivalent and cautious about indoor location, though most haven't had any experience of indoor location at this point and are speaking only in the abstract.

The use of the word "track" is very charged and that's the framing here -- "In your opinion, is it acceptable for retailers to track shoppers’ in-store behavior via smartphone?": 

  • No -- 77%
  • Yes -- 23% 

An alternative question such as "would you be willing to share your location with retailers for benefits X, Y, Z" would have produced a different result. Indeed, how surveys present these issues to consumers really matters (see, e.g., Majority Of Shoppers Want Cross-Channel Personalization.) Accordingly survey results can be manipulated to serve agendas in favor of or against indoor location. 

Another question in the OpinionLab survey similarly predisposes the outcome -- "If one of your favorite retailers were to implement a tracking program in their stores, would you participate?":

  • No -- 63%
  • Yes -- 38% 

This survey found that consumers are open to indoor location if the programs are entirely opt-in (even with the "tracking" framing) -- "In your opinion, what is the best way for retailers to approach in-store tracking?"

  • Opt-in -- 64%
  • Opt-out -- 12%
  • No tracking at all -- 24%

Consistent with earlier surveys, consumers say they would opt-in for discounts and other incentives -- "What incentives would motivate you to participate in a retail tracking program?": 

  • Save money / price discounts 61%  
  • Free products 53% 
  • Chance to win a big prize (vacation, HDTV) 28%  
  • Better shopping experience overall 24% 
  • Unlock new experiences and awards as you shop the aisles 23% 
  • Personalized attention from store associates 12% 

What this survey, like others before it, shows is that consumers have real privacy concerns about indoor location and tracking. However, the word "tracking" is one that triggers an immediate, negative response and associations (i.e., "surveillance," "spying"). By contrast, discussing the benefits of indoor location produces a very different set of findings (see other surveys).

Yet the OpinionLab survey also shows that uncer the right circumstances consumers will share their location where retailers ask for permission (opt-in) and the benefits are sufficiently enticing and clear. 

Despite my criticisms of the framing of the OpinionLab survey I think it does illustrate that there are clear risks for retailers around indoor location if they don't respect consumer privacy and don't get the messaging to consumers right.

At the upcoming Place Conference Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will moderate a session on consumer privacy: "Indoor Location & Privacy: Steering Clear of the ‘Creepy Line.'"

Will Digital Advertising Work on Wearables?

Last week Google announced Android Wear, its smartwatch platform. Later in the week Nielsen released consumer research asserting that 70% of US consumers are aware of “wearables" and roughly 15% currently own some type of wearable technology today.

Among the 15%, Nielsen found the following breakdown: 

  • Fitness wristbands -- 61%
  • Smartwatches -- 45%
  • Health tracking devices -- 17%

The Nielsen survey probably overstates the number of Americans that actually own/use wearables currently; 15% of adults would translate into roughly 36 million people. Nielsen also found (I tend to believe this): "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." We found in our own research that roughly 40% of smartphone owners were interested in smartwatches. 

An article in Mashable speculates about the role that advertising might play on wearable devices. The article correctly notes that consumers will be far less accepting of "interruptive" ads on wearables. As much as smartphones are perceived to be "personal," this goes 2X for something like a smartwatch.

So-called "native" advertising may have a role to play in the context of a stream of news or other content, delivered on a smartwatch. But most if not all "advertising" on smartwatches will need to be opt-in marketing. These could take the form of location or time-based alerts or notifications (this could extend into indoor location and marketing as well). These types of marketing could prove to be very effective -- emphasis on the word "could." 

The bottom line is that all marketing on wearables (mostly smartwatches) will need to be highly sensitive to user privacy and almost entirely permission based.  

Burger King to Bring Mobile Payments to All 7K US Stores

According to Bloomberg, Burger King is readying an app upgrade that will allow users to pay with their smartphones. Little detail is provided beyond that. 

There are already app-based payments using the chain's "Crown Card," a stored value card that can be reloaded and can be presented physically or virtually via mobile phone (like Starbucks). It's not clear if the Bloomberg report is referring to this or a new options to upload and store a credit card in the Burger King mobile app.

Regardless, the move will motivate fast-food rivals to similarly adopt in-app, mobile payments. Mobile ordering for in-store pickup (a la Chipotle) is expected to later roll out. The rationale behind the move is obvious: more efficiency, more customer data and greater overall customer satisfaction. 

As I've argued elsewhere mobile transactions and self-service ordering will eventually eliminate many thousands of low-skilled cashier and service worker jobs in places like Burger King.  

Finally this is another example of mobile payments being introduced in a very specific context. Broad, horizontal payments tools and platforms such as Google Wallet and Clinkle are struggling while in-app or stored card payments are taking off in more narrow contexts (e.g., Uber, OpenTable). 

It's likely that Burger King's mobile payments will be widely adopted by loyal and regular customers. However it's not clear this will improve the company's competitive position vis-a-vis McDonald's. I suspect McDonald's will follow with its own mobile payments functionality in the relatively near future.  

Update: QSR chain Wendy's has now also announced that it's rolling out mobile payments. 

Google Announces Smartwatch Platform, 40% of Consumers Potentially Interested

Long anticipated, Google and several partners today announced Android Wear (smartwatches). Immediate partners are MotorolaLG and Fossil. HTC and Samsung are also on that list (although Samsung previously appeared to abandon Android for operating system Tizen in its Gear 2.0 smartwatches). 

Several designs were teased by Motorola and LG but no actual products were formally announced, nor were prices revealed. We also don't know if these watches will need the connectivity of an owner's smartphone. I suspect they will but it remains to be seen.  

It appears that the UI and functionality of all of these Android Wear smartwatches will be the same or very similar. Thus design and price really matter for differentiation among watch makers. Accordingly, there are lots of "smartwatch wars" headlines now going up. Apple is also supposed to release a smartwatch this year if rumors are correct.  

Google said in its promotional videos that it designed a new UI to accomodate the small form factor. The user experience will be based on voice search ("OK Google") and Google Now/notifications.

Not trying to do too in a smartwatch much is critical. Samsung's Gear 1.0 watch tried to do and be too many things. Furthermore, Google benefits from having developed a UI/UX for the very small and awkward form factor Glass. 

Unlike Google Glass, however, smartwatches have the potential to become a mainstream consumer success. In a survey we conducted last year (n=1,000 US adults) 40% of smartphone owners were interested in a smartwatch in the abstract. An actual product with a compelling design will boost that level of interest. 

Most smartphone owners in the survey, who expressed interest, indicated they wanted a watch using the same OS or brand as their current phones. 

Location Analytics without a Consumer Value Angle May Not Fly

An article in HBR today discusses what we've known and been writing about for some time now: location analytics is a major "must-do" opportunity for retailers and others (airports, hospitals, casinos, colleges, mall owners, entertainment venues). See also: Report: "Mapping the Indoor Marketing Opportunity."

The HBR piece discusses various provider-vendors (RetailNext, Placed, Euclid) and retail scenarios (operations, staffing, merchandising) that will benefit from indoor and offline analytics. However one of the major issues in the space is privacy and consumer acceptance. The article neglects to discuss privacy at all, although many of the comments raise the issue.  

Location analytics can be done in such a way to avoid any PII collection while giving customers the ability to opt out of any indoor tracking (save closed circuit TV). The Future of Privacy Forum has introduced an opt-out (a kind of do not track indoors) website SmartStorePrivacy.org. This is a voluntary thing at the moment, though with many analytics firms signing on. But it will likely become mandatory at some point in the near future.  

Despite ominous portrayals of indoor location by some journalists, it's not a very scary thing when you actually see it in action. Surveys conducted by Opus Research and others have found that most consumers will happily opt-in to location tracking when there's a value exchange that they understand.

Affirming this again, Swirl released some new consumer survey data (n=1,000 US adults) that found: 

  • 77% of consumer respondents would opt-in to location tracking/awareness as long as they received enough value in return 
  • Consumers are most interested in in-store push notifications (80%) around promotions, but also in price comparison tools, relevant content and loyalty program integration 
  • 72% are more likely to buy off an in-store promotion vs. an online offer or email promotion  
  • 62% said they would use apps in-store more often if their content that was relevant/personalized to the shopper’s interests and in-store location

Whether or not these specific findings are replicated at the same levels by other surveys, their general sentiment is: consumers are receptive to in store promotions and content and happy to share location information with a clear value exchange. 

Where indoor location and privacy become potential issues is when there is no consumer experience: if retailers or others are simply collecting data without offering value in return to consumers. Under such circumstances (where opt-out is offered or later required) we might see substantial numbers of consumers opting out of indoor location/tracking. 

My belief is that ultimately the FTC will compel explicit disclosures and signage where location analytics and tracking are present giving consumers the ability to opt out. Burying a notification such as "by using our WiFi you agree to let us track you" in terms and conditions isn't going to fly for much longer. 

New Full-Screen Apple Video Units Point to One Future for Mobile Ads

When former Apple CEO Steve Jobs discussed mobile advertising and iAd he often talked about combining "the emotion of TV ads with the interactivity of web ads." That call to arms benefitted the entire mobile industry and forced ad networks and platform providers to "up their game" -- temporarily. 

Sadly, that advance hasn't continued. Amid all the talk of exchanges, enhanced targeting and programmatic media, there has been little innovation with mobile ad creative. Most mobile ad campaigns are at best weak or perfunctory. There are some isolated exceptions.

The future of mobile search advertising seems to be relatively stable and relatively predictable: dominated by Google and mostly text based. On the display side, however, there are a number of trends taking shape. 

One strand involves "native" or "stream ads," which are represented by Yahoo, Twitter, Facebook and several others. (Both Twitter and Facebook gain more ad revenue from mobile than the PC). Programmatic is gaining significant momentum in mobile as well. Yet that has little or nothing to do with ad creative. 

Another major trend is video. Video is interesting because it permits sophisticated ad creative and enables marketers not to have to generate new units for mobile campaigns. Brand imagery and messaging can also be more effectively conveyed via video than static display or even rich media. A video ad simply needs to be right-sized to fit the screen or sometimes cut in length. 

Mobile distribution of video ads requires less thinking and less work for marketers and agencies. It now appears that Apple is planning to give mobile video ads a new boost with the introduction of new full-screen in-app video ad units. 

AdAge is reporting that Apple is about to "roll out new video iAds this year that will automatically play full-screen within iPhone and iPad apps, according to people with knowledge of Apple's plans." These new video ads are being described as "interstitials," which means they'll come between clicks and content or launch before content. They'll be larger and more effective provided they're not used too often or too disruptive of the user experience. 

AdAge reports that they're being sold through Apple's newly launched but low-profile ad exchange.k

Will Microsoft's Assistant Cortana Be a Breakthrough or a 'Me Too' Product?

Four years after Apple acquired Siri and two years after Google introduced its "predictive search" assistant Google Now (along with its voice interactions), Microsoft is finally bringing an intelligent assistant -- Cortana -- to market. 

Gadget site The Verge obtained some leaked screenshots of Cortana (see right), which is supposed to launch on Lumia devices with Windows 8.1. The question is whether Cortana will help Microsoft and Windows Phones differentiate and advance or whether they will simply be a kind of late entrant and "me too" product from Redmond. 

Cortana is supposed to operate across platforms and screens, including on the PC and Xbox. Derived from a character in the game Halo, Cortana was at one time going to offer an "embodied" female avatar. While that's still possible the screenshots leaked suggest that Cortana will not have a face or a body (which makes "her" more family friendly). It's also likely now, given the "baggage" associated with the Halo character that "she" won't even be named Cortana when she reaches the market in April. 

The Microsoft intelligent assistant will reportedly offer Google Now style anticipatory search and personalization features as well as Siri-like interaction. For Microsoft users (Outlook, Windows OS) Cortana may offer a rich experience but the company lacks some of the personal and search data that enables Google Now to function the way that it does. It has been speculated that for this reason, Microsoft invested $15 million in Foursquare last month in part to gain access to its location data and content to help feed Cortana. 

We'll have to wait for the ultimate product to assess whether it offers new depth or a better assistant experience. Siri helped create (or more appropriately name) the market but has since not kept pace with increasing user demands. Google voice search and Google Now are highly useful but not entirely "coherent" as an overall user experience. 

If Microsoft can in fact offer a "next generation" intelligent assistant it may have found a tool to drive Windows Phone sales as well re-stake a claim as a technology leader.  

Update: According to demo video above from UnleashThePhones Cortana will ask a series of questions to try and develop a personalized user profile to start. The more data that Cortana has over time the more personalized and "predictive" Microsoft can make the system. 

Reflections on RSA Conference: Vendors Stepping Up to Challenges of Strong Authentication for Mobile Users

In spite of pre-conference concern surrounding the roles information security (Infosec) technology providers like RSA play in the scheme(s) of government surveillance programs, the RSA Conference drew close to 30,000 people to (in the carefully chosen words of the conference organizers "Share. Learn. Secure." It certainly was a learning experience for me: one that started with a panel of CISOs (Chief Information Security Officers) discussing the challenges of balancing the appropriate level of security to mobile devices, apps or content without greatly inconveniencing mobile users or busting the budgets allocated for technology that must now protect enterprise information and facilities from physical entry, denial of service attacks, advanced persistent threats, malware and all forms of unwanted access.

As a strong proponent of biometrics-based authentication, especially the use of voiceprints for mobile access, I was gratified to observe that the infrastructure, protocols and business processes are coming together to make simple, secure and trusted mobile access more accessible to business enterprises. Two development and marketing initiatives drove home this point. The most dramatic was the high-profile progress that the FIDO Alliance was able to demonstrate when comparing this year's RSA to last year's. It's hard to believe that FIDO (Fast ID Online) was just making its debut to the world in February 2013. Its founding members included voiceprint specialist Agnitio, semiconductor manufacturer Infineon Technologies, computer maker Lenovo, security software infrastructure provider Nok Nok Labs, PayPal, and sensor maker Validity.

Barely a year later, at RSA Conference 2014, FIDO Alliance held an awareness raising event in which it could brag nearly 100 members, including a Board of Directors that includes representatives from Google, MasterCard, Discover Card, Bank of America, Microsoft, PayPal and RSA. It could showcase real world implementations of its "simpler, stronger, authentication." Even more importantly, when it hits the century mark, most of the new alliance participants will be regarding the two FIDO frameworks (UAF or "Universal Auth Framework" and U2F for "Universal Second Factor") as de facto, industry-initiated standards for either replacing or augmenting "username/password" as the predominant authentication method for mobile devices as well as computers. The magic words involve members' agreement to "share technology and collaborate to deliver open specifications for universal strong authentication." They have made great strides.

While walking the exhibit hall, it was pretty clear that Identity and Access Management (IAM) represents a small percentage of the floor space. Those linking biometrics to IAM are fewer still. Yet the need for a simple way to secure mobile devices, apps and content is causing both the security and IT community to look more closely at their alternatives. I was particularly impressed by the technology provided by Mocana, which positions itself as living at the "intersection of security, mobility and the Internet of Things." That's a bold statement, but its core new offering is the Mocana Atlas(TM) Extended Enterprise Engine. As the product managers described it to me, it sounds like a core, missing piece to the security dilemma that BYOD (Bring Your Own Device) has introduced to the enterprise IT ecosystem. 

Mocana's approach secures individual mobile applications in a way that is indifferent to the mobile platform in use or the nature of the app itself. Enterprises install a highly-scalable, purpose-built security appliance on their networks and it establishes a protected link between enterprise systems and databases and the apps running on mobile devices. To prevent the establishment of yet another security system, the protection is established on a "per app" basis. The apps themselves are developed separately from the security infrastructure. As the marketware explains: this approach to Mobile App Protection "injects new security into existing third-party, hybrid and in-house enterprise app binaries... no coding or security expertise required." This "decoupling" of apps for app security overcomes all sorts of fragmentation and shortens the time it takes to launch new mobile apps in the enterprise.

Perhaps most important from a mobile authentication point of view, it supports the existing auth mechanism which, ideally, could be set up with a "Single Sign On" approach for all the MAP protected apps. The enterprise can use the token of its choice, including voice biometrics.

Apple CarPlay vs. Google OAA: The Race for the Connected Car Starts Now

In some ways the automobile is the ultimate "mobile device." And pundits, analysts and prognosticators have been anticipating the rise of "telematics" for 20 years. Finally the "connected car" has finally arrived in earnest. 

While services like GM's OnStar and several others, including Microsoft Sync and proprietary in-dash navigation systems, have offered a promising glimpse into the future of in-car services, Apple and Google will drive, so to speak, the mainstreaming of these experiences. Apple today formally announced "CarPlay."

Previewed last year at the Apple developer WWDC event, the service is rolling out this week in vehicles from Ferrari, Mercedes and Volvo at the Geneva International Motor Show. A wide range of other automakers are also signed on: Chrysler, BMW, Ford, GM, Honda/Acura, Hyundai, Jaguar Land Rover, Kia, Mitsubishi, Nissan, Toyota and a few others.

The CarPlay experience is currently built around calls, messaging, music and maps. Siri is also at the center of CarPlay, offering eyes-free control over apps.

While most iOS apps won't be available through CarPlay it will become a new platform that will undoubtedly see modified versions of existing iOS apps and totally new apps specifically designed for the in-car experience.

Users will need an iOS 7 iPhone to participate. More importantly, they'll also need a new car. Thus it will take several years for CarPlay to take hold as a mainstream phenomenon and reach millions of drivers. 

Google has a competing "connected car" initiative modeled on its highly successful Android, "Open Handset Alliance." Called the “Open Automotive Alliance,” it's currently supported by Audi, GM, Honda and Hyundai. Others will probably join the list as Google offers incentives to automakers and pushes for greater reach. 

The in-car market now becomes like the living room -- another battleground in the war of mobile ecosystems.  

Microsoft, which was first of the big internet competitors to market with Sync, is at a disadvantage because of the relatively limited adoption of its mobile devices. The company will now be compelled to step up its investment in and development of Sync, as well as its lobbying of auto OEMs. 

These competing efforts are good news for consumers and app developers and bad news for terrestrial radio, which has so far escaped the kinds of major disruption that other traditional media, save TV, have experienced.  

Mobile Devices Generating 30% Of Global, US Internet Traffic

Data from e-commerce platform ShopVisible's 2013 year in review report argues that mobile devices (smartphones + tablets) were responsible for 30% of all traffic to its e-commerce clients' last year. Mobile devices, however, drove far fewer e-commerce sales (15%) compared with their traffic percentage. 

To determine how representative of the broader market these ShopVisible figures were I consulted StatCounter. That site confirmed that 30% of traffic in the US market is now coming from smartphones and tablets. The percentage is nearly identical globablly. For retailers and those in the "local" segment, the percentages are 10 or more points higher. 

Statcounter mobile traffic

Source: StatCounter US platform traffic comparison

Europe's mobile share of traffic is lower, probably because of slower Eastern European smartphone adoption. According to StatCounter below are the relative percentages of internet traffic by platform (rounded): 

US market

  • Desktop: 70%
  • Smartphones/mobile: 21%
  • Tablets: 9%

Europe 

  • Desktop: 80%
  • Smartphones/mobile: 13%
  • Tablets: 7%

Globally

  • Desktop: 72%
  • Smartphones/mobile: 22%
  • Tablets: 6%

Yesterday the Pew Research Center put out a survey based report (1,000 US adults) that reflected on the 25 years of the internet since Tim Berners-Lee wrote his seminal paper about a distributed network of computers and documents linked together by “hypertext.”

Here are the high-level US data from that report: 

  • Computer use: 81%
  • Mobile phones (all types): 90%
  • Internet use: 87%
  • Smartphone ownership: 64% (others say 65%) 

We can anticipate that smartphone ownership will eventually approach 100% of the mobile population. That may take three to five years however. In the near term we'll see 70% smartphone ownership (at least) by the end of 2014.

An increasing number of smartphone and tablet owners prefer or use those devices first vs. PCs. However the majority of e-commerce transactions (not counting things like restaurant reservations and Uber payments) are likely to continue to take place on desktop computers. 

The conversation about the role of mobile vs. PCs shouldn't be an "or conversation" it's an "and conversation."