Data And Forecasts

Announcing Place London, The Business Summit on Indoor Location

Opus Research is proud to announce that Place, the premier global venue for education, opinion and partnership development for the indoor location industry, will be hosted in London, England on November 17, 2014 at the Tower Hotel.

Place London offers a unique opportunity to learn, discuss and strategize how indoor traffic analytics, combined with mobile and online data, empowers business intelligence and consumer engagement.

Among the many topics for discussion at Place London 2014 include:

Beacon Case Study Shows Brand Content Equal to Offers for Driving Purchases

Agency BPN, together with inMarket, presented a Hillshire Brands in-store beacon marketing case study at the Place Conference in New York two weeks ago. This was the first time a national brand beacon case study had been presented publicly.

The company sought to build awareness, among 25 to 54 year olds, for its new "American Craft Sausage Links" -- with digital media exclusively. Hillshire worked with BPN and inMarket, leveraging the latter's shopping apps and its in-store iBeacon network.

Among other digital exposures, mobile users were shown geofenced display ads for the product near stores. These display ads invited users to add the product to an in-app shopping list. Once in grocery stores with beacons, smartphone users were sent a notification about where to find the product ("meat aisle").

In stores, smartphone owners were shown ads/content that featured offers or incentives to engage with and try the product. Others were shown pure awareness messages and branded content that didn't have an associated offer. 

BPN reported that the ads worked equally well. Indeed, pure content/awareness ads drove the same level of engagement and purchase intent as the offer-based ads. This is a major finding: brands don't need to offer coupons or deals to drive consumer purchase behavior. 

Overall the campaign was very successful. Roughly 1% of shoppers going in had any intention of buying the brand's link sausage. After exposure to the campaign purchase intent shot up to north of 21%. Brand awareness was boosted 36% according to BPN. 

This is an early proof-of-concept for in-store marketing and shows its significant potential to generate brand awareness, purchase intent and sales lift. Many billions of dollars are spent annually by CPG companies in grocery stores but rarely achieve these results. 

Accordingly this case study should cause brand marketers of all stripes and types to get going and start testing indoor and in-store marketing before their competitors beat them to the register. 

Place 2014 - Agenda and Presentations

Place 2014, the leading industry event produced by Opus Research and held July 22 in New York City, brought together a range of developments and ideas: indoor location, online-to-offline tracking, and proximity-based mobile marketing. The agenda and presentations below reflect the what’s next for indoor location with perspectives and expertise from brands, retailers, agencies, technology providers, regulators, and investors.

Place 2014 Sponsors
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Agenda & Presentations

9:00 AM - 9:15 AM
The Place-Based Moment - Opus Research senior analyst Greg Sterling will present new data and original research on in-store consumer behavior, the “privacy paradox” as well as merchant demand for offline analytics and in-store marketing.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation

9:15 AM - 9:45 AM
The Agency Perspective - Michael Lieberman is Co-President of Joule US, where he oversees the expansion of Joule’s East Coast business. Based in New York, Michael heads up teams responsible for delivering mobile strategy, media and creative services that produce effective mobile campaigns for world-famous brands including AT&T, Dell, Colgate, and Ikea.
Michael Lieberman, Co-President, Joule US

9:45 AM - 10:25 AM
The Indoor Technology All-Stars - Google’s Don Dodge will lead a discussion with companies representing the full range of indoor location technologies, from WiFi to BLE beacons and LED lighting. From cost, accuracy and analytics perspectives, which technologies are “must haves” and which ones are “nice to haves”?
Speakers:
Nathan Pettyjohn, Founder & CEO, aisle411
Chris Goodall, Founder & CEO, Trusted Positioning
Dan Ryan, Co-Founder & CEO, ByteLight
Steve Cheney, SVP of Business and Operations, Estimote
Don Dodge, Developer Advocate, Google (Moderator)

10:45 AM - 11:15 AM
Ahead of the Curve: Alex and Ani - Alex and Ani’s Digital Strategy VP Ryan Bonifacino discusses the insights and opportunity that led the jewelry retailer to test and then rapidly deploy indoor location to all its stores across the U.S. – well ahead of its retail peers.

11:15 AM - 11:30 AM
Indoor Atlas and Magnetic Positioning
Wibe Wagemans, President, IndoorAtlas
View slides from this presentation

11:30 AM - 12:10 PM
Connecting the Dots: How Location and Offline Analytics Will Transform Digital Marketing - Offline location data and analytics will deliver huge dividends to retailers, ad networks and marketers in general. They will enable better visibility into campaign effectiveness and permit new levels of personalization and targeting. What will this new world of integrated data look like and how will it change digital and traditional marketing?
Speakers:
Juha Mattsson, VP, Marketing & Sales, Walkbase
Anne Marie Stephen, VP of Sales, iInside
Maria Fernandez Guajardo, VP of Products, RetailNext
Luke Edson, VP, Sales, YP
Greg Sterling, Senior Analyst, Opus Research (moderator)

12:10 PM - 12:25 PM
Case Study: SK Telecom - John Kim, Senior Business Development Manager with SK Telecom, will discuss multiple deployments of indoor location technology in the South Korean market.
View slides from this presentation

1:30 PM - 2:00 PM
Featured Speaker: Facebook - Doug Stotland is in charge of local solutions for both small and large businesses marketing on Facebook. Prior to his current role, Stotland worked on marketing science, pricing and building Facebook’s teams across Asia and the Pacific. Stotland will discuss Facebook's varied and creative efforts to track and measure the offline and in-store impact of Facebook advertising.

2:00 PM - 2:15 PM
Beacon Location Security & Encryption
Jimmy Buchheim, CEO, StickNFind
View slides from this presentation

2:15 PM - 2:55 PM
Indoor Location & Privacy: Steering Clear of the ‘Creepy Line’ - Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will guide a diverse panel of industry observers, marketers and experts through treacherous waters: how to drive engagement without crossing the “creepy line.” What are the issues and emerging best practices? And will the “surveillance” backlash derail merchant adoption of indoor location?
Speakers:
Maya Mikhailov, EVP and Co-Founder, GPShopper
Amanda Koulousias, Attorney, Federal Trade Commission
Kate Kaye, Writer, Advertising Age
Eloïse Gratton, National Co-chair, Privacy Practice Group, McMillan LLP
Jules Polonetsky, Executive Director, Future of Privacy Forum (Moderator)

2:55 PM - 3:10 PM
Hillshire Brands, inMarket and iBeacon - Agency BPN will present a new case study showcasing how beacons and geofencing are driving purchase intent, brand awareness and sales for Hillshire Brands.
Speakers:
Chris Hiland, Chief Strategy Officer, BPN
Todd Dipaola, CEO & Founder, inMarket
Presentation coming soon

3:25 PM - 3:40 PM
Best Practices for Consumer Push Notifications
Scott Townsend, Director of Agency Programs, Urban Airship
View slides from this presentation

3:40 PM - 4:20 PM
Street, Store or Shelf: Rightsizing the Consumer Experience - Indoor location and proximity marketing allow retailers, networks and brands to put marketing messages in front of consumers at strategic points in stores, malls and other venues. But just because it can happen doesn’t mean it should. What’s most effective in geo-fencing and proximity targeting? When is it best to engage consumers and how do we avoid creating more ad clutter and noise?
Speakers:
James Smith, Chief Revenue Officer, Verve
John Dempsey, Head of Mobile and Video, Datalogix
Catherine Lindner,Chief Merchant Officer, Shelfbucks
Asif Khan, Founder & President, LBMA (Moderator)

4:20 PM - 4:35 PM
Comparing Indoor Location Technologies - GISi Indoors will discuss the company’s real-world comparisons of multiple indoor location technologies, its findings, implementation experiences, when and when not to use it and conclusions.
Michael Healander, General Manager, GISi Indoors
View slides from this presentation

4:35 PM - 5:15 PM
Whither Geofencing: What Is the Future of Mobile Location? - Location is now often used for mobile audience discovery and profiling rather than for real-time location targeting. In some percentage of cases, location thus “disappears” into the background and becomes a proxy for behavioral and demographic information. How far will this trend go? What role will “geo” play in the future of mobile marketing and advertising? The panel will explore these and other provocative questions about the future of location and place-based marketing.
Speakers:
David Shim, CEO & Co-Founder, Placed
Eli Portnoy, President & General Manager, Thinknear
David Staas, President, NinthDecimal
Sarah Ohle, Director of Marketing Intelligence, xAd
Bill Michels, SVP of Product & Partnerships, Factual
Greg Sterling, Senior Analyst, Opus Research (Moderator)

Survey Reveals Most Common Reasons Consumers Use Merchant Apps

A new survey about digital wallet usage from Thrive Analytics also contains findings about why consumers download and use merchant apps. While nearly 90% of time with mobile is spent "in apps," most consumers don't have many (or any) retailer apps on their phones.

This is something of a paradox and a major gating factor for indoor location and marketing. Unlike mobile wallet usage, foundational consumer behavior for indoor marketing is already well established: between 70% and nearly 90% of smartphone owners use their devices in stores already. 

However to leverage indoor location and improve the in-store experience, using mobile, apps are required. That's the challenge for retailers. 

The chart below reflects what the Thrive survey (n=2,038 US adults) found about the reasons that smartphone owners use merchant apps:

Source: Thrive Analytics, July 2014 (n=2,038)

To some degree this list reflects what's possible in retail apps today. I believe however that merchants must make their apps much more utilitarian in terms of the in-store experience than they currently are. Using indoor location retailer apps can recognize that consumers are in a store and transform from an e-commerce centric experience to one that focuses on common consumer needs in the store. 

This includes offering more in-store product information, maps and the ability to pay using an app. To the extent that retailers can further develop their apps as in-store assistants and incorporate payments they will give users much more reason to download and retain them.

Preview of Place Conference 2014

When we launched the Place Conference late last year we felt that the time was ripe to hold an event that started to engage discussion around indoor location. But not simply indoor location; we wanted to "connect the dots" between indoor location, broader mobile marketing and online to offline tracking and attribution.

The first Place Conference in San Francisco was a unique event and a big hit. Roughly eight months have elapsed since that time and tomorrow's Place 2014 event reflects the rapid evolution of the market. We're at a moment when mobile marketing is really starting to take off -- expectations are that mobile advertising in the US will be north of $15B in 2014 -- and whe consumers are using their smartphones as shopping assistants in ever larger numbers.

Tomorrow's event at the W Hotel in Union Square will feature a range of speakers and and attendees who don't usually come to the same conferences: agencies, retailers, brands, technology companies, investors, lawyers and representatives of non-profits and government. 

Here's the very packed agenda (and my shorthand): 

  • The Place-Based Moment: Greg Sterling, Senior Analyst, Opus Research (consumer research and market sizing)
  • The Agency Perspective: Conversation with Michael Lieberman (agency perspective on the state of mobile and indoor location)
  • The Indoor Technology All-Stars with Don Dodge (array of providers discussing their capabilities)
  • Ahead of the Curve: Alex and Ani - Ryan Bonifacino, VP of Digital Strategy (why one retailer went all-in with indoor location early)
  • IndoorAtlas and Magnetic Positioning (an indoor technology that doesn't require hardware that you may not have heard of)
  • Connecting the Dots: How Location and Offline Analytics Will Transform Digital Marketing (indoor analytics and how it will impact digital broadly)
  • Case Study: SK Telecom (multiple use cases from South Korea)
  • Featured Speaker: Facebook’s Doug Stotland (how the company is connecting the dots from online to offline)
  • Beacon Location Security & Encryption (best practices for iBeacon and BLE)
  • Indoor Location & Privacy: Steering Clear of the ‘Creepy Line’ (experts discuss how to handle mobile location, indoor location and consumer privacy)
  • Hillshire Brands, inMarket and iBeacon (the first national brand case study using iBeacon)
  • Best Practices for Consumer Push Notifications (Urban Airship shares best practices from its many billions of campaigns)
  • Street, Store or Shelf: Rightsizing the Consumer Experience (what's going to work and how to avoid spamming consumers)
  • Comparing Indoor Location Technologies (an objective comparison of indoor location technologies for brands, retailers and agencies)
  • Whither Geofencing: What Is the Future of Mobile Location? (a forward looking discussion about location and mobile advertising)

If you're going to be in the room you'll be immersed in discussion about the future of mobile, location and offline attribution. These trends are coming together with profound implications for all digital marketers and brands. It's going to be an exhausting yet exhilarating day. 

 

Tiny Collection of Apps Dominating the Mobile Universe

Yesterday Nielsen released data (which has strangely now been pulled from the site) showing that smartphone users were spending about 30 hours per month in Q4 2013 on mobile apps. That was up from just over 23 hours in the previous . . . quarter? year?. The chart below isn't clear on the comparison time frame. 

What's most interesting is that while time went up the average number of installed apps did not. Users on average had just under 27 apps on their handsets. That number was basically flat.

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Interestingly, in May 2012, Nielsen reported that the average US smartphone owner had 41 apps on his/her phone vs. 32 apps in 2011. So either the calculation above is incorrect or the number of retained/active apps has declined. 

The following is comScore's top 15 US apps list for April 2014 (the most recent data available):

The internet -- as represented by apps, which now take up 51% of digital media time -- is shrinking. The list of top mobile ad revenue recipients is even shorter than the top apps list.

Forget the percentage specifics in the chart below; the point is the list itself. Google, Facebook, Twitter and Pandora are all "publishers," though in all but Pandora's case they're ad networks too. YP is a publisher but on the list as an ad network. Millennial Media is also a network. 

If we look at all these data together what we see is a mobile app universe dominated by a tiny collection of apps vs. the total universe of 1.2 million iPhone apps. An even smaller number of publishers/networks collect the majority of mobile ad revenue.

The Outlook for (Monetizing) Wearables

Before we can truly discuss the outlook for wearables we need to see Apple's iWatch and how much it costs. There are already a dozen or so smartwatches in the market, chief among them the Pebble and Samsung devices. Most of them have already failed.

The Pebble is a qualified success. However, there is really only one truly desirable smartwatch coming to market so far -- and we don't yet know the pricing. That's the Moto 360. 

The Samsung and LG watches ($199 and $229 respectively) shown off at the Google developer conference this week seem like decent but not great devices. As fashion items they leave much to be desired. I haven't yet used them so I can't comment on the experience. I have the Samsung Galaxy Gear Live (Android Wear). 

Nielsen reported yesterday that it tracked a "surge" in wearables adoption (fitness trackers and smartwatches) and usage between September 2013 and February 2014. The company added that "these wearable owners used their devices an average of 14 times during the month." The measurement firm also observed that smartwatch owners log a lot of time monthly accessing the internet and content on those wrist devices: 

file

There's a question about whether the time is additive to existing mobile device usage or whether it cannibalizes some of that time. Regardless, the data above are very interesting, suggesting that with the right devices (mix of fashion + function + price) wearables could become a mainstream reality with fairly high engagement and diverse use cases.

The next obvious question about wearables surrounds marketing and monetization. Ad exchange TapSense announced earlier this week that it would be supporting delivery of ads to smartwatches. Those ads will likely follow the same pattern as early mobile display advertising: lackluster or perfunctory ad creative and weak or awkward overall experiences.

Most companies won't build anything like landing pages optimized for wearables. And most of these early ads will probably be for other app downloads. 

More likely to be effective are app-based notifications. For a long time SMS marketing held promise as a loyalty and location-based notifications tool. Today that promise has largely faded. However wearables may offer another go at that opportunity.

Consumers could, for example, opt-in to receive location-based notifications -- including indoor alerts -- that might contain marketing content (awareness or DR calls to action). This approach is probably going to be more effective and less awkward than ads within tiny apps on your wrist.

Paradoxically apps with ads that are too small to be noticed won't be effective and ads that are too large are likely to annoy. As "personal" as the smartphone is a watch is going to be even more personal in some respects -- and thus people may be less tolerant of conventional advertising on these devices.

Search content/ads may be an exception. Still you can't show many ads on a 2.5 inch screen. 

Mobile Ad Revs Over $2B in Q1, Could Hit 30% of Total for 2014

This morning the IAB put out a press release that reported $11.6 billion in digital ad revenue for the first quarter of 2014. However the trade association did not indicate how the numbers were broken down by channel and category. 

In 2012 mobile advertising represented 9% of total US digital ad spending. In real dollar terms that was roughly $3.3 billion. In 2013 mobile advertising grew to be 17% of total digital ad revenue or nearly $7.1 billion. 

Mobile advertising could double again in 2014 and reach between $14 billion and $15 billion. If so, by my calculation, it would represent nearly 30% of total US digital ad revenue -- assuming a full year 2014 projection of roughly $49 billion.

In Q1 mobile ad revenues were probably in excess of 20% of the total. In Q4 2013 they were 19% (though 17% for the full year). At 20% mobile ad revenue would represent $2.3 billion of the Q1 2014 $11.6 billion.  

Report: Weather Apps Have Highest Retention, Games the Lowest

App retention is getting better, according to Localytics. The company said that only "20% of apps are used only once, an improvement of 6% over four years." The data in the report were collected from 1.5 billion devices and 25,000 apps using the Localytics platform. 

Localytics attributes increased retention to better developer-publisher "understanding of and focus on user engagement that has enabled developers to create more useful and personalized apps." Here are the aggregated topline data: 

  • 20% of Apps are only opened once, improving from 26% four years ago
  • During the same period, the percentage of apps used 11 or more times increased 13% and now comprises nearly 40% of all apps.
  • Sports and Games apps have the highest app abandonment rate, whereas Weather and Social Networking apps have the lowest

overall chart

In a worrying development for iOS developers, Localytics says that iOS showed weaker app retention than Android:

In 2013, both Android and iOS had the same percentage of apps (34%) with 11 or more sessions. Now, Android has surpassed iOS in app engagement by increasing to 45%; nearly half of Android apps are opened 11 or more times, whereas only a third (34%) of iOS apps are.

The company speculates that "iOS users may be suffering from app overload. With the relatively larger number of apps installed on iOS devices, competition for an iOs user’s time increases and can weaken retention." 

platform chart

As indicated, weather and social apps showed the highest retention while sports and games had the highest percentage of one-time usage. Localytics observes that social networks are filled with personalized and highly dynamic content.

Yet sports apps have dynamic, changing content (e.g., scores) too. Perhaps personalization is a missing element or, alternatively, sports content may be highly "generic" and widely available, making any individual app less compelling. 

category chart

Forecast Shows Google Losing Mobile Search Share While Yelp Gains

A new report from eMarketer argues that Google is leaking mobile search revenue to apps. The forecast in the document says that US mobile advertising in total will reach $17.73 billion this year and search revenue will constitute just over $9 billion of that total. 

Last year the IAB reported $7.1 billion in US mobile ad revenue, roughly double the year before. If mobile ad spending were to double again it would reach between $14 and $15 billion. Getting to nearly $18 billion is a stretch. However eMarketer casts a very broad net around mobile advertising, including email and services like "site optimization" that don't involve any media spending. 

Mobile search share

Regardless of definitions, the consumer tendency to use apps rather than the mobile web is apparently taking a toll on Google’s mobile ad dominance. According to the forecast, Google's mobile search ad share was 83% in 2012, dropping to 68.5% last year. These numbers are somewhat deceptive because Google's mobile revenues are still growing and the company continues to have the largest individual share of global mobile ad spending. 

What's happened, however, is that more money is flowing into mobile generally (and mobile search advertising) and some of that money is being spread around to places other than Google. Among them, YP and Yelp are called out in the report.  

YP has been one of the (surprise) top five mobile ad companies in the US. However eMarketer projects that YP will lose share (though potentially grow overall revenue), going from 7.6% of total US mobile search revenues in 2013 to 4.1% in 2016. By comparison Yelp will grow from 1% in 2013 to 1.9% of search ad revenue in 2016. 

'Webrooming': the Opposite of Showrooming

Traditional retailers express anxiety and concern about so-called "showrooming," whereby smartphone owners shop for products in physical stores and then buy online for lower prices. We've shown multiple times that this is a real phenomenon; however it's generally a minority use case. 

In a sort of contrarian finding, Consumer Intelligence Research Partners said a few months ago that the large majority of Amazon shoppers are loyal to that site and not opportunistically buying online based on price. The financial research firm used consumer survey data to argue, "rather than looking for items at a physical store, then buying them online, most Amazon.com customers [80%] started shopping at the Amazon.com website." 

In our own survey data we have documented that roughly half (52%) of mobile users have (at some point) decided not to buy something based on information discovered on a smartphone while in the store. It's safe to say is that consumer in-store behavior is now more complex and smartphones are arming them with more information to help make purchase decisions -- online and off. 

Multiple surveys, including ours, have shown a range (66% to 90%) of in-store smartphone usage.

But what about the opposite of showrooming -- "webrooming" (a very awkward term I hope doesn't stick). According to an article in AdWeek, Merchant Warehouse found that "69% of people with smartphones in the 18-36 demo have webroomed, while only 50 percent have showroomed. Among 37-48 year olds, 71 percent have webroomed versus 53 percent who have showroomed." 

This is being presented as some new behavior or novel phenomenon. But it's just traditional retail buying. 

Well over 90% of all retail buying happens locally. But most internet users now do some form of online research before buying offline (depends on category/consideration). The bigger the ticket the more online "pre-shopping." 

I've previously estimated that when retail spending and local services are combined you've got a $9 to $10 trillion annual market in the US. Roughly $2 trillion or approximately 20% (or so) of that is being influenced by "online research." That figure will only grow as more people use smartphones as shopping assistants.

The bottom line, literally and figuratively, is that consumer shopping behavior is now multi-platform and more complex. But whether you call it "local shopping" or "webrooming," the overwhelming majority of buying (90%+) continues to happen offline. 

Survey: 50% Will Share Personal Info with Retailers for Deals

New survey data from PriceGrabber reaffirm that consumers will share private information -- this survey didn't specifically ask about location -- in exchange for rewards from retailers and e-commerce sellers. The survey was conducted in March among nearly 3,500 US consumers. 

The survey asked about consumers' willingness to share "personal information" online or in-stores: "personal information included age, gender, email, clothing/shoe size, and credit card number among others." Generally shoppers were more inclined to share information online (56%) than in-store though nearly half (48%) said they would do so in the latter context. 

The survey also tested various reward scenarios: price discounts vs. "percent off" choices. Most preferred percent-off to dollars-off or gift card reward options. 

Several other consumer surveys, including one conducted last year by Opus Research, indicate that consumers will share personal data and location information if they get a sufficient reward for doing so. There are numerous others that show consumers remain quite concerned about privacy and data collection. This seeming paradox might be described as consumer sharing ambivalence. 

In addition to discounts and coupons consumers have also indicated a willingness to share personal or location data in exchange for a better or more personalized shopping experience.

Smartphone Penetration in US Crosses 70%

In roughly March 2012 US smartphone ownership crossed the symbolic 50% threshold. In March of this year it reached 70%.

Media measurement firm comScore said that in March 166 million Americans (over age 13) owned smartphones. The firm says that amounts to 68.8% penetration. However historically comScore has made its penetration estimates using a base of 234 million mobile subscribers.

The number of mobile subscribers or smartphone owners hasn't declined in the past couple of years. Indeed, Pew survey data report that 90% of US adults now own mobile phones.

A denominator or base of 234 million smartphone owners divided into a numerator of 166 million translates into 70.9% penetration, not 68.8%. Since Q3 2013 Nielsen hasn't publicly released new smartphone penetration figures to my knowledge. However, in the past, Nielsen's smartphone penetration numbers have been more bullish and aggressive than comScore's figures.

All of this together suggests that US smartphone penetration has crossed the 70% line. It took two years to go from 50% to 70%. It's thus reasonable to assume that by 2016 the figure will be approaching 90%

Report Benchmarks Mobile Video Ad Success

The Mobile Marketing Association (MMA) today released its first "Mobile Video Benchmark Study." The study looked at different categories of video ads through the lens of multiple variables: engagement, duration, OS and day part. CTRs were used as a proxy for engagement. 

A number networks and video technology platforms were involved: AdColony, BrightRoll, Brightcove, Hulu, Tremor Video and Videology. There were three types of video ads examined: linear, interstitial and "value exchange." 

Linear ads are essentially pre- and post- roll video advertising. Interstitial video ads are those that run during programming or content, and value exchange are ads that are user initiated for some reward or benefit. 

The study also evaluated the impact of engagement when ads were "skippable" vs. not-skippable. In total there were more than 500 million ad impressions tracked across mobile web and apps, on phones (by OS) and tablets. 

At the highest level the study found:

  • More than 75% of all advertising occurred in-app (vs. mobile web), the majority on phones (vs. tablets)
  • iOS activity accounted for more than 80% of ad volume
  • Skippable ads comprised a third of all ad impressions
  • Engagement for skippable video advertising is strong despite the skipping option
  • CTRs dropped for ads greater than 30 seconds
  • Mobile video ad performance, like other forms of advertising, declines with too much ad frequency

Value exchange ads generated the highest CTRs (2.7%), followed by non-skippable linear video (2.3%). Although skip rates are high, completion rates were also very high for those who did not skip ads. Ad completion rates were highest in the morning and late evening but flat throughout the day. 

Between 6 and 10 showings generated the highest CTRs (1.5%). After 10 showings of the ad CTRs declined. Finally ads between 15 and 30 seconds generated the highest CTRs. 

Video is going to be a major mobile ad format. The reason is that brand marketers don't need to generate separate creatives; and mobile users are already consuming huge amounts of video content on their devices. There's a natural fit. 

While rich media/video ads are just a small percentage of mobile advertising today I anticipate that will grow dramatically in the next two years. 

Survey: Nearly 90% Use Smartphones in Retail Stores to Make Buying Decisions

New smartphone user survey data from Thrive Analytics and the Local Search Association (LSA) reinforce the now well-established idea that consumers will share location information in exchange for tangible rewards. We've seen this in our own survey work as well as that of other third parties (e.g., Swirl, OpinionLab). 

The LSA study involved just over 1,000 US smartphone users. It was conducted in January.   

Strinkingly the survey found that 97% of Gen Y, 91% of Gen X and 81% of "young Boomers" (under 53) used their smartphones at least sometimes while shopping in stores. Comparing prices and accessing coupons were the top two reasons.  

Large majorities of each demographic segement (85%+) said that using smartphones in stores makes them smarter shoppers and helps them make buying decisions accordingly. The top four apps used in stores were "mobile search," Amazon, Facebook (among younger users) and a barcode scanner such as RedLaser (eBay).  

The top three motivations (in order) given for being willing to share location with retailers were the following:

  1. To gain loyalty points or rewards
  2. To receive an offer or deal
  3. To receive exclusive or personalized content

 

Mobile-Centric Households Now Outnumber Those with Landlines in US

According to the latest data from the US Center for Disease Control (CDC), roughly 133 million US adults rely exclusively or primarily on their mobile phones at home. That means they either don't have a telephone landline at all or have one but rarely use it. 

The most recent data available are for the first six months of 2013. The CDC reported, "Approximately 38% of all adults (about 90 million adults) lived in households with only wireless telephones; 45.4% of all children (approximately 33 million children) lived in households with only wireless telephones." The CDC explained that younger people, adults with roomates and no kids and those in lower income groups were more likely than others to be wireless only.

The related “wireless-mostly” category is defined as "households with both landline and cellular telephones in which all families receive all or almost all calls on cell phones." According to the report, roughly 43 million US adults (17.7%) live in these wireless-mostly households.

Unlike the wireless-only group, however, wireless-mostly demographics feature better educated and more affulent individuals and families. They can afford to maintain a landline but choose generally not to use it. Most of the people reading this probably fall into that latter group.

Together these two groups represent about 55% of all US adults. This now means that landline users are in the minority.  

Study: Smartphone Users Ready to Buy -- Offline

This morning I received a message in my in-box with the subject line: "Mobile commerce has really arrived." In the associated article a range of data were cited to argue that consumers were doing more and more e-commerce on their smartphones.

While it's true that e-commerce over tablets and smartphones is growing we should be clear about what's really going on out in the real world. Smartphones are widely used by consumers as part of their shopping and purchase research -- between 60% and 80% (or more) use them in stores for product and price lookups.

Marketers routinely undervalue and misunderstand the now critical role of mobile in consumer purchase activity. Part of the reason is tracking/attribution: smartphone owners overwhelmingly convert offline (or on PCs) and much of that behavior is simply not captured. 

New research from comScore, Neustar and 15 Miles reinforces this basic point. The data are based on a December survey and behavioral observation of users. The sample size was just under 5,000 US adults. 

comScore Local Search Study

Source: comScore, Neustar Localeze, 15 Miles

The study found that 78% of local searches conducted on smartphones resulted in a purchase vs. 64% on tablets and 61% on PCs. 

The majority of those purchases (76%) happened the same day and most within "a few hours" of the lookup. This reflects the immediacy of the mobile search user's need. But here's the critical point: Almost 90 percent of those purchases happened offline, in a physical store (73 percent) or on the phone (16 percent). Eleven percent were e-commerce transactions. 

Actual transaction data (as opposed to self-reported survey data) from e-commerce software provider ShopVisible found that 85% of e-commerce transactions in 2013 were PC based, only 4% came from smartphones.

Marketers need to recognize that most smartphone users are going to consult their mobile devices throughout the purchase cycle but largely aren't going to complete a transaction on that device. If they don't understand this behavior and account for it they're going to fundamentally misunderstand the role of mobile and undervalue it significantly.

This is partly why online-to-offline analytics/tracking is such an important development -- and one that we'll be exploring in depth at Place 2014.  

Wearables: After High Interest, High Abandonment

There's a strong belief among tech insiders that "wearables" are an emerging hardware category that's here to stay and perhaps even a new marketing channel in the making. Nielsen consumer research asserts that 70% of US consumers are aware of “wearables" and roughly 15% currently own some form of the technology: 

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

Nielsen also found that roughly half of its survey respondents were interested in the category: "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." Our survey data similarly found a fairly high level of interest: roughly 40% of smartphone owners said they were interested in smartwatches (generally of the same brand as their smartphones). 

A report by Endeavor Partners, published in January (based on Q3 survey data), throws some cold water on all the excitement. The firm says that an online survey of "thousands of Americans" found that 10% of US adults owned or had used an "activity tracker" (e.g., Fitbit, Fuel Band). It didn't address smartwatches as a stand-alone category. 

 

The study also reported high abandonment rates of activity trackers/fitness wristbands. Roughly a third of owners stopped using them within six months of initial ownership and half were no longer using them: 

Endeavour Partners’ research reveals that more than half of U.S. consumers who have owned a modern activity tracker no longer use it. A third of U.S. consumers who have owned one stopped using the device within six months of receiving it. 

This first Samsung smartwatch reportedly experienced 30% return rates. But that's probably a function of the poor design and usability of that device rather than a broad statement about the prospects for the smartwatch category. The Pebble smartwatch is apparently selling well. 

It's still early in the development of wearables and there will be a range of new products of increasing quality and refinement. Hopefully we'll see some "next generation" watches coming out of the Android Wear effort. Apple is also expected to introduce its rumored "iWatch" at some point.  

Yet the Endeavor data offer a sobering counterpoint to all the hype about the category and widespread perception that wearables are an inevitable boom in waiting.

Surveys Show Growing Demand and Usage of Mobile Payments

Two surveys independently released in the past couple of weeks indicate growing demand for and consumer experience with mobile payments. One survey released by Verifone (n=1,000) found that 55% of respondents were interested in mobile payments, with higher percentages (70%) of "millennials" expressing interest.  

In that survey the motivations or perceived advantages of paying with a smartphone included: 

  1. Mobile deals: 45%
  2. Track spending: 45%
  3. Faster: 34%
  4. No wallet: 28%

A separate survey released by Local Corporation (fielded by the eTailing Group, n=1,294) asked a range of questions about mobile user behavior. Among them were several questions about mobile payments. 

The survey found that 27% of consumers had used their smartphones to pay for an in-store purchase at some point. However the materials and discussion released didn't indicate how "in-store" was defined (did it include Starbucks, for example?). Reasons for not using a "mobile wallet" were security (44%) and privacy (36%).

When asked what brands consumers trusted to manage mobile wallets and mobile payments, consumers said:

  1. Visa: 24%
  2. PayPal: 21%
  3. Apple: 15%
  4. Amazon: 13%
  5. Amex: 7%
  6. Google: 6%

It's not clear whether the findings immediately above are statements about the brand in general or indicate any direct experience of usability. The mobile/offline version of Google Wallet in its current form is essentially a dead product.

Apple and Amazon have not yet fully entered mobile payments but are going to do so. Apple has filed patent applications that indicate its intention to get into mobile payments, with its more than 600 million consumer credit cards on file.

We have argued that mobile payments are entering the mainstream through vertical or specialized apps that contain a commerce elment but with offline fulfillment -- Uber, AirBnB, OpenTable are examples. We should continue to see mobile payments "mainstream" and gain increasing momentum over the next five years.

Apps Killing Mobile Web, Facebook Biggest App, Google Biggest Revenues

According to new data released by Flurry apps have solidified their hold on mobile user behavior, claiming 86% of all time spent on the mobile internet. Early prognosticators believed that mobile apps were a temporary bridge to the mobile web and would eventually give way to the "open internet."

That obviously hasn't happened. Perhaps years from now things will be different. 

Earlier this year, consistent with Flurry's report, Nielsen found that about 89% of all time spent in mobile is with apps; 11% on the mobile web. Yet, despite this massive time-spent imbalance, the mobile web still has greater audience reach than mobile apps.  

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Among mobile apps, gaming is still the single largest category with 32% of time spent according to Flurry. However Facebook (including Instagram) is by far the dominant individual app, accounting for 17% of all time spent. By comparison YouTube captures 4% and Twitter 1.5%. Apple's Safari browser grabs 7% of time spent and Google's browsers 5%. 

Ad spending in mobile is growing quickly as brands and marketers race to catch up to consumers. According to the chart below Google claims a disproportionate share of ad spend, while Facebook is more or less in balance. By comparision the long tail of apps fail to capture their share of ad spend -- suggesting significant future growth for in-app advertising. 

An app developer and publisher survey conducted this year by App Annie found that only 42% monetized with display advertising.   

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