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With Its $12 Billion Marketing Budget, Samsung Now 'Owns' Android

I've written here and elsewhere about the fact that Samsung is increasingly the dominant global Android OEM. Samsung has ridden the Android wave to huge profits and near-global domination of the smartphone market. However the company is ambivalent about Android.

As Benedict Evans points out Samsung isn't promoting the Android brand and doesn't really mention Android in its multi-billion dollar "Next Big Thing" marketing campaign. Accordingly Evans contends that Samsung's Galaxy brand has greater recognition than Android itself. This conclusion is based on Google Trends search data, which may or may not be accurate as a reflection of actual brand recognition or demand.

There's plenty of other evidence in the market to support Evans' argument, however, including the above Android OEM comparison chart from ad network Millennial Media. Another data set from AppBrian also supports the same conclusion: 

With the possible exception of Huawei all the other Android OEMs are in decline (re market share) including and especially HTC, which is shifting its strategy to focus on emerging markets because it can no longer compete effectively in North America and Europe. 

What happens when Samsung so totally dominates the Android landscape that it can start using that leverage against Google or creating its own "forked" version of Android independent of Google (as Amazon has done with Kindle Fire)? That's presumably why Google is working on the "X-phone" through Motorola -- to try and create a viable rival to the Galaxy. But will Google be willing to go toe-to-toe with "partner" Samsung in terms of marketing dollars? 

No is the short answer. Samsung reportedly spends roughly $12 billion annually on marketing its mobile devices. That fact alone makes it hard for any other Android OEM, even Google-Motorola, to compete. Only Apple is really in a position to compete with Samsung. 

Study: Low Awareness of Digital Wallets Other than PayPal

Online measurement firm comScore released data from a new survey about digital wallet awareness and acceptance among US consumers. The survey was conducted in November 2012. It underscores familiar themes in the existing coversation about digital wallets: most consumers are largely unaware of the offerings, but those that are have security concerns.

In the context of this research "digital wallet" means online and mobile. To that end, the survey data showed that PayPal and Google Wallet were the only two payments products that enjoyed meaningful consumer awareness. In terms of usage, only PayPal has seen any real adoption -- largely because of its long established online history. 

Echoing many other surveys the comScore data found that security was a concern for many users. Like almost every one before it, the study concludes that consumers need to be educated about the overall benefits of digital wallets and the features that make them more secure than conventional credit card payments.

In a Q3 2012 survey we found very limited interest in mobile payments. 

How interested are you in using your mobile phone to pay for things, and replace cash or your credit cards?

Source: Opus Research (August, 2012; n=1,501 US adults)

From a demographic standpoint, people under 45 were considerably more interested in mobile payments than people who were older. Similarly, a recent survey (n=1,155 US adults) by the Raddon Financial Group found that that younger adults (Gen Y) are most likely to be interested and most likely to see value in mobile wallets.

Source: Raddon Financial Group (2012)

A recent survey from Harris Interactive is more bullish on the outlook for mobile payments than was ours:

“How interested are you in being able to use your smartphone to process in-person payments via tapping a special receiver, rather than using cash or payment cards?” 

• Very interested in using my smartphone instead of cash or cards: 8%
• Somewhat interested in using my smartphone instead of cash or cards: 19%
• Not very interested in using my smartphone instead of cash or cards: 12%
• Not at all interested in using my smartphone instead of cash or cards: 43% 

This was the full mobile-user population. The following were the smartphone-only responses: 

• Very interested in using my smartphone instead of cash or cards: 16%
• Somewhat interested in using my smartphone instead of cash or cards: 28%
• Not very interested in using my smartphone instead of cash or cards: 16%
• Not at all interested in using my smartphone instead of cash or cards: 30% 

While the benefits of "horizontal" wallets and mobile payments solutions (e.g., Google Wallet) are often unknown or ambiguous to consumers, what will drive (and is now driving) mobile payments adoption are "point solutions" that are highly specific. In these scenarios the benefits are concrete and self evident: 

• Coaster Another 'Point Solution' That Will Drive Mobile Payments Adoption 
• Siri-Fandango Tie-in Will Drive More Mobile Movie Ticket Sales 
• Starbucks-Square and How "Point Solutions" Will Drive Mobile Payments
• Point Solutions Like Parking Apps Will Drive Mobile Payments Adoption 

Apple the OEM Now Driving Most Mobile Internet Traffic Globally and in US

Amid all the hand wringing over Apple's "impending decline," it's interesting to note new traffic metrics from StatCounter that show Apple driving more mobile Internet traffic than any of its rivals. This is partly a product of the iPhone 5's success during the holiday quarter. 

The StatCounter data reflect mobile OEM market share based on actual Internet traffic. This stands in marked contrast to most smartphone and tablet market share estimates (from IDC, Gartner, comScore and others) that are based on shipments or consumer surveys. There are a few actual traffic measurements out there (e.g., Chitika) but not many.

That's why StatCounter's data (as a reflection of actual user behavior) are so interesting. Shipments is an inherently flawed metric that may or may not correspond to actual sales to end users. 

The "headline" being used along with this new StatCounter OEM data is that Apple has overtaken Nokia as the company driving the most Web traffic on a global basis. Samsung is third. In the US Apple is much farther ahead of rivals, including Samsung. Nokia by comparison drives just over 3% of mobile Web traffic in the US market.

Top 10 Mobile Vendors (Global)

Top 10 Mobile Vendors (US)

It's interesting to compare the above numbers to "mobile OS" and mobile browser figures from StatCounter. The vendor and OS numbers are essentially identical in Apple's case, as they should be. The browser numbers are not. They suggest that roughly 10% of iOS users in the US market are using browsers other than Safari. 

Top 10 Mobile Operating Systems (US)

Top 10 Mobile Browsers (US)

On a global basis the Android OS has a greater share of traffic in the aggregate than iOS: 37% to Apple's 26%. 

Top 10 Mobile Operating Systems (Global)

It's not clear to me whether StatCounter captures and includes apps in its traffic estimates -- I believe it's just conventional Web traffic. Regardless, traffic is a much better metric to discuss than handset or device shipments in terms of the influence and importance of the competing mobile platforms.

Super Bowl Advertisers' Missed Mobile Opportunity

While a few ads shown during yesterday's Super Bowl were noteworthy most were a bust -- and largely a waste of the nearly $4 million it reportedly cost to buy airtime during the game. Matt McGee at Marketing Land did a nice job of tracking and reporting on social media mentions or "calls to action" on most of the ads (Twitter and hashtags were most common).

Oreo is emerging as one of the big winners, with its fast reaction to the game's 30+ minute power outage.

Yet for all the energy put into associating ads with hashtags and social media, there was an almost total absence of explicit mentions or references to mobile. The only mobile app mention that I was aware of came on a quickly shown credits screen during an ad for the forthcoming Star Trek sequel (upper right image). Exact Target confirmed my own informal sense of that yesterday. 

A large percentage of people watching the game in the US were smartphone owners. As you already know, and as Nielsen and others have confirmed, there's a very high level of "second screen" behavior among smartphone owners. These Super Bowl ads were a huge opportunity to drive app downloads for brands. And other than the Star Trek mention, which raced by in less than a second, nobody talked about apps at all. 

One might have expected real estate company Century 21 to mention its mobile site or app in its several mediocre commercials given that so many people use mobile during their house hunting. But they did not. I could go on with numerous other examples. 

Perhaps the assumption among the agencies that produced these commercials was that people would be using Twitter or Facebook on their smartphones or tablets and the mobile call to action was thus implied. Yet it's more likely that marketers didn't really know what to do with mobile specifically and so were simply silent on the subject. 

How Damaging Would 'Do Not Track' Be to Mobile Advertising?

The digital advertising industry opposes "Do Not Track" (DNT). No surprise there. Indeed, the industry went "ape shit" (to use the vernacular) when Microsoft declared that IE 10 in Windows 8 would be set to DNT by default. Yahoo and the The Digital Advertising Alliance, a trade group comprised of the American Association of Advertising Agencies, the IAB, the DMA, the Association of National Advertisers and the American Advertising Federation, said they would simply "ignore" IE 10's DNT default settings. 

The rationale ostensibly was: "Microsoft is making a decision for the consumer; this isn't the consumer's decision." However another reason was that DNT fundamentally threatens behavioral targeting, profiling and retargeting.

A widely held view in the online advertising industry is that consumers, if they fully understood the benefits of targeting, would willingly accept it in exchange for more relevant ads. There's mixed evidence on this point.

In a Q1 2012 survey of roughly 2,000 US adults the Pew Internet & American Life Project found that 68% of respondents didn't want to be tracked and targeted while 28% were comfortable with it "because it means I see ads and get information about things I'm really interested in." Thus two-thirds of these people were explicitly rejecting the notion of trading privacy for more relevant ads. 

This morning the US Federal Trade Commission released a report on mobile privacy. It makes a boatload of recommendations to developers, OEMs/platform providers and ad networks. Without listing them out in detail, they mostly focus on education and disclosures. However the FTC also recommends that platforms (iOS, Android, Windows, etc.) adopt a global DNT capability that would block third parties from collecting information about them (including location).

Here's what the FTC says about DNT in the report:

Some consumers may not want companies to track their behavior across apps. Indeed, one survey found that 85% of consumers want to have choices about targeted mobile ads. A DNT mechanism for mobile devices could address this concern.

Accordingly, Commission staff continues to call on stakeholders to develop a DNT mechanism that would prevent an entity from developing profiles about mobile users. A DNT setting placed at the platform level could give consumers who are concerned about this practice a way to control the transmission of information to third parties as consumers are using apps on their mobile devices.

The platforms are in a position to better control the distribution of user data for users who have elected not to be tracked by third parties. Offering this setting or control through the platform will allow consumers to make a one-time selection rather than having to make decisions on an app-by-app basis. Apps that wish to offer services to consumers that are supported by behavioral advertising would remain free to engage potential customers in a dialogue to explain the value of behavioral tracking and obtain consent to engage in such tracking.

Apple has already begun to innovate with a DNT setting on its platform. Apple’s iOS6 allows consumers to exercise some control over advertisers’ tracking activities via the “Limit Ad Tracking” setting. Although the setting could be more prominent, this is a promising development, and we encourage Apple and other platforms to continue moving towards an effective DNT setting on mobile devices that meets the criteria we have previously articulated for an effective DNT system: that it be (1) universal, (2) easy to find and use, (3) persistent, (4) effective and enforceable, and (5) limit collection of data, not just its use to serve advertisements. We will continue to have discussions with stakeholders in the mobile marketplace on this important issue.

If such a platform-level DNT capability was available -- and obvious -- to smartphone and tablet users, I suspect that a majority of them would adopt it, as the Pew data above suggest. Perhaps a meaningful minority percentage of users would accept tracking/profiling as the price of more relevant advertising. But I still believe it would be less than 50%.

Of course one of the things that users don't understand is that they'll get ads regardless -- just lower-quality ads. 

Survey: Half of Mobile Showroomers Changed Their Minds about Buying

A new Pew survey (n=1,003 US adults) found that 58% of all mobile phone owners (feature + smartphones) used their handsets as part of in-store shopping during holiday 2012. More specifically, 72% of smartphone owners did so. Google research and InsightExpress have found even higher smartphone numbers: 82% to 90%+.

What kinds of things did these mobile phone owners do in stores? Mostly they called other people, but they also checked prices and product reviews.

Pew says 46% of all mobile users called others to get input on a purchase; 28% looked at product reviews and 27% compared prices on their phones (presumably there was some overlap among the categories). Of those who conducted price comparisons, roughly 48% didn't buy in the store, while 46% did make a purchase:

• 46 percent purchased the product at that particular store
• 30 percent decided to not purchase the product at all
• 12 percent purchased the product online
• 6 percent purchased the product at a different store

Interpreting these data is tricky. That's because we don't really know the mindset of these people when they entered the store. Accordingly we don't know the full impact of the pricing information they discovered. 

We can make the assumption that 64% of these respondents (of the 27%) had some level of existing purchase intent when they went to the store -- because they ultimately did make a purchase. As mentioned, 46% percent bought at the store and 18% bought elsewhere (another store, online).

Another way to interpret these data is to say that 48% of the the people who did in-store mobile price checks decided not to buy there (my headline). It's probably safe to infer that at least 18% of these people were negatively swayed by the price data they saw on their phones -- they bought online or at another store -- although the actual number may be quite a bit higher and include some or all of the 30% who decided not to buy at all. 

We don't have any sense of how this price-check group compares with the larger survey population. Did the larger group buy at higher or lower rates than the price checkers? We don't know.

One can see what one wants in these data. Without a sense of what people were thinking ahead of time we can really only guess at the full impact of in-store mobile phone usage. Yet it's clear from the totality of available information that "showrooming" is a real thing and that retailers need to aggressively address it. 

Related: Spaaza ‘MyPrice’: A New Response to Showrooming

Facebook Delivers Strong Quarter, Mobile Now 23% of Revenues

Facebook delivered the goods this afternoon. The company beat analysts' estimates and reported quarterly revenues of $1.56 billion and $5.09 billion for the year. Advertising revenue for the year was roughly $4.3 billion.

Despite the beat, Facebook shares were down after hours. 

Advertising revenue for Q4 was $1.33 billion, or 84 percent of total revenue. Impressively mobile advertising represented 23% of total ad revenue, which is up from 14% the previous quarter.Even more significantly Facebook said that mobile daily active users exceeded web daily users in Q4 for the first time. CEO Mark Zuckerberg characterized Facebook as "a mobile company" accordingly.

There were 680 million mobile monthly active users in Q4 (compared with just over 1 billion in total). Of those 157 million were mobile only users.

Siri-Fandango Tie-in Will Drive More Mobile Movie Ticket Sales

For users who updated their iOS devices to 6.1 yesterday Fandango is now the commerce partner for movie ticket sales via Siri. If you look up movies using Siri you get the Rotten Tomatoes powered list with an option to buy using Fandango. If you don't have the Fandango app on your device you'll be prompted to install it to complete the transaction. 

Fandango has reported that mobile now accounts for more than 30% of ticket sales. That will undoubtedly increase with Siri and iOS integration.

There are many Siri critics out there but the process of looking up a movie and (now) buying a ticket is pretty compelling. In fact this may well become the primary way that many iOS users buy movie tickets in the future. Once a credit card is on file with Fandango it's going to be faster and easier than conducting the same transaction even on the PC.

In addition, there's Apple Passbook integration post purchase. 

This is yet another "mobile payments" point solution (it's really e-commerce on a mobile device) that will get people comfortable with the idea of using their phones to conduct transactions and pay for things. The convenience and value here are obvious to consumers.