Data And Forecasts

BlackBerry Posts Fiscal Q1 Loss: Is It All Over?

BlackBerry posted a "suprise loss" (based on analyst forecasts) in fiscal Q1 of $84 million. The company announced that it had shipped 6.8 million smartphones. However of those only 2.7 million were BlackBerry 10 handsets (Z10 and Q10). 

The much-touted Z10 all-touchscreen phone seems to be a complete flop. The more "traditional" Q10, with its hardware keyboard, may wind up being more successful; it has only been on the market a few months.

These phones, it now seems clear, won't save the company. And BlackBerry is becoming increasingly marginalized in the smartphone and tablet world -- even in the enterprise it's traditional stronghold.

In terms of tablets BlackBerry said that it shipped 100,000 Playbooks in the quarter. BlackBerry CEO Thorsten Heins has dismissed tablets as mere fashion. He doesn't think the devices will exist in five years. While the iPad may not reign forever tablets will continue to exist certainly. Heins is mistaken.

The Playbook won't be getting an OS update and is effectively dead in the water. In North America it delivers less than 1% of overall tablet traffic, according to ad network Chitika. The chart above reflects the "tier 2" tablets that lag the iPad, Kindle and Galaxy in terms of web traffic. (The iPad delivers 82% of North American tablet traffic.) 

Gartner's global OS projection for 2014 shows BlackBerry having an almost non-existent market share.

Device share by OS 2014

Source: Gartner (6/13)

The hard question to answer now is "what next?" The transition-turnaround story clearly won't play to investors anymore. The stock is off 27% following the earnings releas.

Selling the company or taking it private are two options. But who would buy it? (Certainly BlackBerry would be acquired at the "right price.") Microsoft has flirted with the idea but it probably wouldn't serve Redmond because BlackBerry hardware isn't prized in the market and would be unlikely to advance Windows Phones.

Another "nuclear" option would be to start putting out BlackBerry Android-powered phones. However that would turn the company into a commodity provider of Android handsets without any meaningful differentiation. That was what Nokia was concerned about (although Nokia would have had more success with Android.) And it would be almost impossible to compete with Samsung globally. 

The company is almost out of options. 

Superman Can't Save Nokia, But Can Iron Man Help HTC?

Nokia paid for product placement in the wildly popular Dark Knight films and released a special Batman-themed Lumia 900 when The Dark Knight Rises was released. The short answer: no, it didn't really "work."

Nokia Windows Phones (Lumia 925) also appear several times in the also extremely popular Man of Steel. Apparently in the alternate reality of Metropolis Nokia-made Windows Phones are the only smartphones in existence. However even the Man of Steel with all his remarkable alien abilities and strength probably won't do much for Lumia handset sales. 

The Superman film is opening in China this week and Nokia is offering a Chinese "Superman Limited Edition" Lumia 925 with the "hope" (S) insignia on the back. Depending on how excited the Chinese are by Man of Steel there may be some sales lift. However the Chinese market is dominated by Android devices. 

Meanwhile over in the Marvel universe (Superman is a DC Comics character), Iron Man's Robert Downey Jr. is reportedly being paid $12 million in a two-year deal to promote HTC smartphones. It doesn't look like the Iron Man character is part of the deal or will appear in the ads. 

Downey is a recognizable and popular celebrity but he probably isn't powerful enough -- at least without the Iron Man suit -- to compete with Samsung's Galaxy juggernaut (The Avengers might collectively have a shot at defeating it). The Korean company spent over $400 million in 2012 to achieve and maintain its Android smartphone lead. That compares with HTC's $46 million and Nokia's almost non-existent $13 million. 

Report: Google 'Enhanced Campaigns' Raising the Cost of Mobile Ad Clicks

If you're not already aware, Google is compelling all AdWords advertisers to adopt Enhanced Cam­paigns by July 22. It's mandatory. And it signals big changes for Google and for search marketing in general. Google dominates paid-search, which is the biggest single chunk of online advertising.

The high-level shifts brough about by Enhanced Campaigns, if you don't already know, are the following:

  • Tablets and PC ads are grouped together and cannot be separated or segmented in campaigns
  • Neither smartphones nor PC ads can be excluded in any campaign
  • Mobile bids are adjusted as a percentage (higher or lower) of PC AdWords bids 

Google's rationale is simple: simplification. Google told us a few months ago that it wanted to make cross-platform campaigns easier to execute and easier to manage. But that means marketers give up some amount of control over bidding and can no longer implement mobile-only campaigns. 

There are many people who accept and agree with that justification. However there's a much more cynical view circulating in parallel, which is that Google is mostly trying to boost mobile CPCs and thus overall mobile revenues -- to compensate for declining desktop CPCs in some cases. 

Increase in CPCs for tablet and mobile campaigns on Google 

 Reversal of negative desktop CPC growth

 

Like all such competing explanations, the truth lies somewhere in-between.

Historically mobile and tablet CPCs were lower and thus a better value for marketers. Now Adobe's digital marketing arm is saying that will definitely change under the new Enhanced Campaigns regime. Adobe based these remarks on "the lat­est search mar­ket­ing and cost-per-­click (CPC) trends across nearly 100 major US adver­tis­ers rep­re­sent­ing more than $100 mil­lion in ad spend from March through May 2013."

The data come from the clients of the former Efficient Frontier, which Adobe acquired in late 2011 for roughly $400 million. 

As the graphs above reflect, mobile CPCs have already begun to rise for advertisers implementing Enhanced Campaigns, while desktop CPCs are stabilizing. According to Adobe:  

With the intro­duc­tion of Enhanced Cam­paigns, the his­tor­i­cally lower CPCs for tablet cam­paigns should increase to reflect desk­top CPCs. We’re only just begin­ning to see this trend mate­ri­al­ize . . . The over­all CPC trends across all devices includ­ing desk­tops also show strong growth. Google CPCs increased more than 6% over the last three months alone — a sig­nif­i­cant jump . . .

One other trend we noticed is that CPCs on Google have sta­bi­lized. For the past two years, Google CPCs fell on a year-­over-­year (YoY) basis due to the increase in mobile and tablet traf­fic where CPCs were lower. How­ever, for the first time in seven quar­ters, the CPCs on Google are flat YoY and we antic­i­pate that CPCs will rise on a YoY basis again start­ing next quar­ter . . . 

Seeking to rebut the perception that the company has successfully manipulated the system to boost its own revenues, Google disputes the assertion that rising prices are inevitable. The company told Search Engine Land earlier this week: 

There have been many speculative reports, but it's far too early for any of them to be reliable. Advertisers will choose their bids and adjust their spend based on the value they see in their campaigns.

Is Mobile the Answer to: 'Half of Online Ads Are Never Seen'?

By now you've no doubt read about the comScore data that showed (or argued) just over half (54%) of PC display ads are never seen by users. The finding turns the old Wanamaker "Half the money I spend on advertising is wasted . . ." quote on its head: digital advertising is just as "wasteful" (if not more) than traditional advertising.

Last year, using the same "viewability" methodology, comScore reported that "31% of ads were not in-view, meaning they never had an opportunity to be seen." So the problem is apparently getting worse.

The IAB said that display ads (not counting video) in 2012 represented 21% of the $36.6 billion in US online ad spending. They contributed $7.6 billion at least to the overall pie. If half of that is wasted because ads cannot be seen or are never served it means $3.3 billion is being flushed down the digital toilet, so to speak.

Comparing the impact of PC vs. mobile display advertising across key brand metrics

Source: Dynamic Logic

Enter mobile advertising. I've argued multiple times in the past that mobile is a superior "branding" medium to online for various reasons, not the least of which is improved performance metrics over PC-based digital ads (see graphic above). The chief problem is that most of mobile display features weak ad creative, compromising the potential efficacy of the ads.

To counter this the IAB is releasing a mobile creative "manifesto" of sorts that hopes to instruct brands and agencies about the importance and hallmarks of effective mobile ad creative: A Mobile Manifesto: Creative Leaders on the Art of Successful Mobile Brand Messaging. It features hypothetical examples of best and worst practices.

Here are the broad strokes of the report's recommendations:

  • Clear and persistent branding is important for building brand awareness
  • Short, focused messaging plays well in mobile’s small format
  • A striking color palette can drive ad recall, but legibility is paramount
  • Consumers respond to mobile ads that give them something back

Many of these recommendations are merely "common sense." However even now many mobile display ad campaigns are perfunctory at best with converted or automated ad creative from PC campaigns. Thus marketers and brands are missing out on the true potential of mobile advertising by not making a "sincere" effort to maximize the value of mobile campaigns.

Study: Mobile Users Want to Be Paid for Their Attention

A new study jointly conducted by Millward Brown and mobile loyalty platform SessionM finds that consumers want a clear "value exchange" or "tangible benefits" for their time and attention to mobile ads. The study was fielded earlier this year among two survey groups of 500 US adults and combined with qualitative follow-up interviews.

A primary finding of the study, which echoes Nielsen "consumer trust" data from previous research, is that only 9% of users have a favorable view of mobile ads. Despite their typically superior performance on brand and other KPIs, consumers generally report unfavorable views of mobile advertising in surveys such as the SessionM-Millward Brown study: 

The study argues that mobile ads need to deliver "tangible value" in order to gain consumer engagement. When they do they can outperform other types of digital and mobile advertising. SessionM says that tangible value has three components: "being useful, entertaining and worth the time it takes to engage." 

What this means as a practical matter, according to the study, is offering a literal reward for consumer attention (e.g., coupons, points), although people respond to other types of "incentives" as well as ads that are more "relevant" (e.g., local, personalized). 

The following were the preferred reward types according to the survey:

  1. Gift cards
  2. Coupon or discount of your choice
  3. Coupon or discount selected for you
  4. Tickets for Events
  5. Points towards contest entries
  6. Donations to Charity
  7. Virtual Currency
  8. Access to ad free environment
  9. Access to free videos or songs
  10. Access to free games
  11. Access to exclusive content

Essentially people are saying they want to be paid to look at and engage with mobile ads. It's important to note that the study argues in favor of the types of advertising and marketing that SessionM provides: incentive and reward-based mobile loyalty programs. However other data show that consumers do respond to coupons and discounts at higher rates than other categories of mobile advertising. 

Survey: Why People Shop Locally, Price-Matching Works to Stop Showrooming

In April Harris Interactive conducted an online consumer survey about "showrooming" and related consumer attitudes about online and offline buying. The survey had 2,114 respondents, 824 of whom said they had showroomed: "ever visited a brick and mortar store to examine a product before purchasing it elsewhere online."

Accordingly 39% of the April 2013 survey population had engaged in showrooming at some point. That's actually down from 43% in November 2012 according to Harris.

Best Buy, Wal-Mart and Target are the three major US retailers that are most often "victimized" by showrooming, though the order is different for men and women. This compares to a study (tracking actual store visits) with slightly different results, conducted in February by Placed:

gender showrooming index

According to the Harris study Amazon is by far the most-used online comparison point for in-store smartphone shoppers. A relatively small percentage also or alternatively consult eBay.

Harris also found that price-matching strategies being adopted by retailers are likely to succeed in combatting showrooming. A large majority of those who said they had "showroomed" also said this policy would make them more likely to buy in stores:

Price matching in stores

Source: Harris Interactive (4/13)

Survey respondents simultaneously indicated they like the option to "buy online and pick up in store." In terms of same-day delivery from an e-commerce provider, however, a majority (77%) said they would NOT be willing to pay more for the service. For those willing to pay the majority (56%) said between $1 and $5 was a tolerable range.

The survey also affirmed many of the familiar reasons that people prefer to shop locally vs. online:

  1. Being able to take the item home immediately (86%)
  2. Taking advantage of sales in store (84%)
  3. Not having to deal with the hassles of returning online such as paying for shipping and/or having to pack item (83%)
  4. Ability to touch and feel item (83%)

Being able to "talk with a salesperson" in stores was only valued by 57% of survey respondents. Indeed, a majority (60%) strongly agreed that they "would rather use [a] smartphone to search for information about a product than ask a salesperson for help."

I suspect the latter finding is a result of years of experiences with low-paid and generally poorly trained salespeople in retail stores.

Five US Companies Will Control 76% of Global Mobile Ad Revenue in 2013

Last year, according to the IAB, mobile ad revenues came in just under $3.4 billion in the US. On a global basis eMarketer (aggregating a range of third party data) estimates that mobile advertising was worth $8.8 billion. Of that Google was responsible for a staggering 52%. 

In 2013 eMarketer argues that Google's share of global mobile advertising will continue to grow to 56%. 

Screen Shot 2013-04-16 at 8.04.50 AM

Source: IAB 

Impressively or shockingly, nearly 66% of global mobile ad revenue in 2012 was concentrated in the top five companies according to eMarketer. In 2013 that figure is expected to exceed 75%.

The eMarketer forecast is that this year mobile advertising will be worth nearly $16 billion worldwide. In other words, roughly $12 billion of the world's mobile ad revenue will be concentrated in the top five US-based companies -- and most of that at Google. 

By comparison, the top 10 PC-based online advertising companies in the US control 72% of the revenue, while the top 50 control nearly 90%.

Source: IAB  

The eMarketer numbers may well be off. For example their YP figures are incorrect and underestimate the company's mobile revenues for 2012. However directionally the numbers are accurate and indicate the "concentration of mobile weath" in a small number of companies -- as well as the dominance of Google as the world's largest mobile ad company. (In terms of total digital advertising globally, Google controls 33%.) 

Facebook is really the only other player currently in a position to challenge Google for mobile ad revenue and reach. 

Pew: 81 Million US Adults Own Tablets

According to telephone survey data (n=2,252) released this morning by The Pew Internet & Life Project, 34% of US adults now own tablets. What that means as a practical matter is: 81 million adults. There may also be 20 million more people in the US under 18 who own tablets. (Our house has four.) 

I think it's relatively safe to say that if the number of tablets in the US isn't yet 100 million it's extremely close.  

A large majority of tablet owners are substituting tablets for PC usage in many instances and either buying fewer PCs overall or delaying PC replacement for a much longer period. This morning Apple will open its developer conference. A upgraded iPad/Mini is not expected to be among the announcements but it's possible. 

. Pew tablet ownership

As with other device categories, the story is largely the same with tablets. Penetration rates are higher among college educated (49%) and more affluent adults (56%). Affluent means at least $75,000 in income.   

The chart above reflects the growth of tablets since 2010 when only 3% reported tablet ownership. It's possible that by Q4 of 2014 half of the US adult population will have tablets (and 75% of affluents).

Global tablet shipments this year are expected to exceed those of laptop computers according to IDC. IDC also argues most of those sales will be at the lower end of the market (size, price).

Last week both Pew and Nielsen reported that 61% of mobile subscribers now own smartphones.  

It's Official: 61% of US Mobile Subscribers Have Smartphones

Earlier this week survey data from the Pew Internet Project argued that 61% of US adult mobile subscribers now own smartphones. Today Nielsen announced agreement with that number:

More than three out of five (61%) mobile subscribers in the U.S. owned a smartphone during the most recent three-month period (March-May 2013), up more than 10 percent since smartphones became the mobile majority in early 2012.

Comscore, for its part, says that the percentage of mobile users with smartphones is slightly less: 58%. Overall we're talking about 140 - 150 million people in the US now with smartphones.

In terms of OS market share, Nielsen reports that Android has 53% of the US smartphone market, while Apple controls 40%.

By comparison comScore says that it's 52% (Android) to 39% (Apple). Kantar (a market research division of WPP) shows a generally similar set of market share metrics for Android and iOS (iPhone).

comscore smartphones April 2013 US market

Source: comScore 

Kantar mobile market share data

Source: Kantar Worldpanel ComTech  

Where these market-share data disagree is with respect to Windows and BlackBerry. Nielsen says Windows Phone has 2% of the US smartphone market, while comScore says it's 3% and Kantar says it's closing in on 6%. 

If we look at actual web traffic in the US, the relationship between Android and iOS flips. (Here iOS may well include the iPad.) Internationally Android is ahead.

The following are StatCounter data showing traffic being driven by each of the major mobile operating systems:

US market:

  • iOS: 54%
  • Android: 40%
  • Windows Phone: 1.3%
  • Other: 4.7%

Globally:

  • Android: 38%
  • iOS: 26%
  • Symbian: 8%
  • BlackBerry: 3.5%
  • Windows Phone: 1.3%
  • Other: 23%

 

Growing Consumer Interest for In-Store Delivery of Mobile Coupons, Says Study

A new report by comScore shows how mobile and social channels are changing online buying habits and how retailers can benefit in delivering a blend of choices for consumers including mobile coupons.

The study, Pulse of the Online Shopper , notes a variety of flexible options for consumers – 46 percent said they are less likely to comparison shop when using a retailer's mobile app and 44% want the ability to buy online and pick up their purchases in a stores.

Of particular note, consumers are open to communications from retailers on their mobile devices with 47% of shoppers willing to have a retailer to send a coupon to their smartphone when they are in-store or nearby. This trend underscores the potential role of indoor marketing technologies.

comscore_infographic

Regarding mobile channels, the report states:

Mobile is quickly becoming the preferred e-commerce channel as 7 out of 10 online consumers access multi-channel retailers through a digital channel. Of those mobile shoppers, 30% prefer to use a smartphone or tablet. Also, 50% of online shoppers who own a smartphone and nearly 60% who own a tablet make purchases on these devices.

More than 3,000 U.S. consumers were surveyed on their online shopping habits and the report was commissioned by UPS. A copy of the executive summary and white paper can be downloaded here.

Is Windows Already Past "Point of No Return"?

No one should ever bet against Microsoft. But amid a flurry of new Android based "convertables" and tablets (some of which were announced today), Windows is facing a tougher fight than ever. Only the enterprise and Office stand between the company and a dire-looking market.

PC sales are off and it doesn't appear they'll turn around soon. Yet, Microsoft is hoping that its 8.1 Windows update fixes many of the problems and complaints with Windows 8, which have contributed to disappointing sales. Microsoft, with its many billions in quarterly revenues, is clearly the ironic underdog in the new world of mobile computing. 

Redmond got a bit of good news from WPP research subsidiary Kantar Worldpanel ComTech earlier today. The firm found that Windows Phones had gained nearly 2 points since a year ago (however comScore data show much smaller gains). It's not clear, however, whether the needle is really moving for Microsoft given that Windows Phones generate less than 2% of all mobile OS based web traffic in the US. 

Kantar mobile market share data

Source: Kantar Worldpanel

The company's Surface tablets have also been a disappointment thus far. RT starts at $499 and Pro starts at $899. Both are going to need to come down by at least $200 before most consumers will consider them.

ASUS today said it was releasing a 7-inch tablet for $149 (outside the US there will be a 8GB version for the equivalent of $129). ASUS is the maker of the popular Nexus 7. Over time a large percentage of tablet sales will be concentrated in the 7-inch to 8-inch range and those tablets will almost without exception -- the exception being the iPad -- be priced below $200. 

Regardless of how full featured Surface tablets are price is a major driver of purchase behavior.

Accordingly, in response to declining tablet prices and sluggish sales, Microsoft is going to lower its software licensing fees to enable hardware OEMs to bring down prices of their Windows devices. But it may not be enough to boost sales. In addition the absence of a native version Office on the iPad or Android hasn't boosted Surface either. 

One interesting question to ask is whether Microsoft's past success has mostly relied on its ubiquity and near-monopoly status as an operating system (together with Office). If there's even a shred of truth in that question it's a serious problem because once people are no longer "compelled" to buy Windows machines a substantial number of them won't.

The following slide, presented as part of venture capitalist Mary Meeker's semi-annual internet trends report, is very surprising and revealing:

When mobile operating systems are included in the universe of computing platforms, Microsoft now has a minority share (35%). If mobile devices are removed from the equation Microsoft still dominates on the PC. 

In order for Microsoft to gain share in mobile, as well as deliver Windows OS growth, there will need to be some significant quality improvements in the overall UX but equally some meaningful price reductions. Even so, it's probably already too late for Microsoft to regain its former position in the market.  

Mobile Campaigns That Use Location Outperform Standard Campaigns by 2X to 3X

Location-based mobile ad network Verve Mobile released a "State of the Market: Location Powered Mobile Advertising" report this morning. It focuses on the fast-food and casual dining restaurant category and offers several case studies that show the lift provided by location targeting. 

Here are a few datapoints from the report: 

  • QSR/casual dining campaigns that leveraged location data performed 2x those that didn’t
  • Nearly 70% of all QSR/casual dining campaigns leveraged location targeting
  • Verve's case studies, using location targeting (display ads), show 3% and 4% CTRs, which is quite high for display.

Below is the distribution of location/audience targeting methodologies employed by Verve's customer-advertisers:

In the pie chart above, geo-fence means relatively precise targeting around business locations. Geo-aware means broader location targeting such as city or DMA level. And audience targeting is demographic or psychographic segments or profiles (e.g., soccer moms, vacation travelers, sports enthusiasts) inferred from location. 

Verve also reported that "location targeted advertising [ ] revealed a greater than 3X lift in foot traffic to the advertiser’s locations. Not only did exposure to the ad increase the likelihood a user would visit an advertiser location, it also decreased the likelihood a user would go to a competitor’s location by more than 20%."

Accordingly the major takeaways are the following:

  • Adding location increases consumer engagement and response rates by at least 2X
  • Location related copy and mapping/geo-precise landing pages can drive 3X foot traffic vs. ads that don't employ this type of ad creative or techniques

Survey: 63% of Smartphone Shoppers Would Rather Buy in Physical Stores

Content management software company Kentico recently conducted a mobile-shopping survey (n=300 US adults). The sample size is small and so the results must be viewed cautiously. However there were a few interesting findings. 

Among them, the survey found that 85% of smartphone owners do comparison shopping (products, prices). However "only" 45% do so in stores. A recent report from Nielsen, xAd and Telmetrics argued that only 6% of mobile users "showroomed." Interestingly, most of the Kentico survey respondents (63%) said they would rather buy locally, in a physical store vs. online.

In terms of the mobile user/mobile commerce experience, as might be expected, the usability of websites was a major variable:

Whether or not an online shopper clicks ‘buy’ isn’t solely dependent on products or pricing: 78% of smartphone owners, 75% of tablet owners and 69% of laptop owners say it also comes down to the look and feel of a company’s mobile website . . . Word of mouth (28%), company websites (25%) and in-store experience (18%) weighed most heavily on strengthening or eroding brand affinity.

These respondents felt that PCs and laptops provided a better online shopping experience overall than tablets or smartphones.

Which device provide the best shopping experiences?:

  • 48% (desktop) computers
  • 40% laptops
  • 9% tablets
  • 3% smartphones

A significant minority (44%) of users said that they would never return to websites that featured bad user experiences (not optimized for mobile). This is not a surprise and echoed by other findings already in the market.

Despite Android Device Dominance iOS Devices Drive Much More Web Traffic

Online marketing firm Monetate puts out a quarterly report, like an increasing number of digital marketing firms today. Using customer data, its "EQ1" (2013) report offers a range of metrics, including e-commerce conversions by channel/platform and average order value. It also breaks out traffic by device category and browser. 

This report like others shows that iOS devices are generating a great deal more web traffic than their Android counterparts, which is mysterious given Android's market share dominance. In addition Monetate now shows roughly equal distribution between tablet and smartphone-generated traffic.

According to the chart below smartphone and tablet traffic has roughly doubled since Q1 2012. Tablets are now driving slightly more web traffic to Monetate customers than smartphones. Over all "mobile" traffic is 21%. 

Despite Android's market-share lead the iPhone is responsible for almost two-thirds of smartphone-based traffic to Monetate-client websites. In the tablet arena Monetate says that just under 90% of traffic is coming from the iPad, with Android tablets (including Kindle Fire) generating just under 11%.  

One of the more interesting charts shows browser market share. What we can observe from the data in the chart below are the following: 

  • The decline of IE; Firefox has also lost ground
  • The growth of mobile Safari and slight decline of desktop Safari (together equaling 27% combined market share) 
  • The Android browser has gained a little under 2 points and mobile Chrome has grown to just under 1% share since last year
  • Opera almost doesn't register 
  • Kindle's browser share is flat

If all the Android browsers are combined (assuming that mobile Chrome is mostly Android users) we see that Android's aggregate browser share is just over 5%. If PC browsers are excluded it would be larger however. 

According to StatCounter, among mobile browsers only, mobile Safari has about 53% market share to Android's roughly 36% (with 11% combined other). Notably Chrome has 3.2% according to StatCounter. 

Various theories have been advanced about why iOS devices are responsible for more web traffic than their Android counterparts, given Android's market share lead (in the smartphone arena). But none of them are entirely satisfactory. 

Survey: 52% of Recent Travel Booked in Mobile vs. 48% on PC

Location-based and WiFi ad network JiWire is out with its Q1 insights report. The document contains a range of information drawn from surveys of mobile users who access the internet at mostly JiWire-powered WiFi hotspots. This quarter the company zeroes in on behavior in the travel vertical and examines multi-screen activity and cross-platform conversions accordingly.  

We know that travel is a very mobile-centric vertical with lots of apps for smartphones and tablets. And JiWire confirms extensive multi-device usage for travel research and purchases:  

  • Almost 50% of active mobile consumers are using smartphones & tablets for travel research
  • While laptops remain the preferred device for travel ... 27% [are] already saying they use their smartphone to make travel-related purchases. 
  • Nearly 50% of consumers will spend $500 or more in a mobile-travel booking context
  • 52% of travel booked within the past three months was on a smartphone or tablet vs. 48% on laptops

Next comes a fascinating chart showing the multi-screen purchase process in travel (a microcosm of consumer behavior more generally). Google documented this phenomenon previously in research showing that 90% of consumers move “sequentially” between different screens throughout the same day.

Below is the JiWire chart showing how consumers start on one device and often convert on another:

Below is the comparable Google chart:

Google found, generically, that more people started research on a smartphone than any other device category. This is generally consistent with the Nielsen-xAd-Telmetrics data released today. However, in travel laptops still command the majority of activity according to JiWire -- but not by much. As mentioned above, more travel booked in the past 90 days has come from mobile than the PC (52% to 48%). 

JiWire also investigated what variables influenced travel-purchase decisions and how those purchases were researched and completed on mobile devices. Leisure travelers were more impacted by discounts; business travelers were influenced by loyalty programs and company policies. (This finding has obvious mobile marketing implications.)

As reflected in the chart above, travel aggregator apps (e.g., Kayak) and branded airline apps (e.g., United) were more often used than mobile websites for travel bookings. This makes sense because the user experience is likely to be better and credit card and other personal information may be stored, expediting the checkout process. People who are required to fill out lots of fields, including credit card information are less likely to complete those transactions in mobile. 

Another factor impacting the findings regarding app vs. mobile usage is the probability that many of the people surveyed are frequent travelers and are more likely to have apps on their mobile devices than occasional leisure travelers who may be less aware of their app options. 

Study: As Many As 54 Million May Be Mainly Mobile Retail Shoppers

The latest installment of "Mobile Path to Purchase" research from Nielsen, xAd and Telmetrics drills down into retail-shopping attitudes and behaviors. As with the broader study, previously released, the findings show a significant percentage of users are doing shopping research exclusively on mobile devices. 

The Mobile Path to Purchase study is in its second year. The findings are based on an online survey of 2,000 US smartphone and tablet owners and “observed consumer behaviors from Nielsen’s Smartphone Analytics Panel of 6,000 Apple and Android users.”

According to the report, 42% of smartphone and tablet owners did not consult PCs at all as part of their retail shopping research. The broader study found the overall number to be 46%, who didn't use PCs. This is a staggering data point in my opinion.

Nielsen mobile retail shopping

Source: Nielsen, xAd, Telmetrics Mobile Path to Purchase study 2013

If we extrapolate these "mobile only" numbers, assuming they're representative, we're talking about a potential audience of perhaps 54 million in the US who may be relying primarily or exclusively on smartphones and tablets to shop.  

Other noteworthy findings from the study include: 

  • High conversions: More than 55% of mobile retail shoppers ultimately make a purchase
  • Immediacy:30% of smartphone owners and 25% of tablet users sought to make purchases within one hour. However a larger percentage of tablet owners (41%) "take a month or longer to make a purchase."
  • Where conversions happen: 77% of smartphone-based purchase activity happen locally, in stores. Tablet conversions are more evenly distributed: 39% in stores, 32% on PCs and 24% on tablets themselves.

The retail report also seeks to debunk a couple of "myths" about mobile usage. The first is that smartphones are used predominantly "on the go" and/or near the point-of-sale. The study found that smartphones were used throughout the pre-purchase research process and that the largest percentage of use was in fact "at the start" of shopping rather than near the end. 

Nielsen mobile shopping behavior

Source: Nielsen, xAd, Telmetrics Mobile Path to Purchase study 2013

The second "myth" debunked (though not quite as easily) is the notion that most smartphone owners are "showrooming" whenever they shop. The report says that showrooming (in-store price-comparison shopping) is relatively rare and practiced by a very small minority of users:

Only 6 percent of smartphone users conducted their most recent mobile retail search in-store . . . Mobile shoppers are in fact using their devices for comparison-shopping before and after an in-store visit. 

However previous survey findings from the Pew Internet Project and Google argue that significant numbers of smartphone owners do compare prices while in stores. For example, Pew's research found that 72% of smartphone owners used their devices while in retail stores. And the more recent Google-sponsored study reported the top in-store smartphone activities were the following:

  1. Price comparisons
  2. Finding offers and promotions
  3. Finding locations of other stores
  4. Finding hours

What the Nielsen-xAd-Telmetrics data argue is that most of this type of activity occurs before or after someone goes into a store. It may be that the wording of the questions influenced these results, though it may not be possible to entirely reconcile the conflicting findings. Regardless, the more important point is that smartphones and tablets are heavily used by consumers as part of their shopping research.

Accordingly, retailers that are not aggressively addressing the mobile audience are completely missing huge numbers of people and potential sales. 

Apple Bests Others but Loses Satisfaction Points, Samsung Gains

The American Customer Satisfaction Index (ACSI) has released new data on mobile phone satisfaction. Apple (iPhone) comes out on top, as it does in the JD Power surveys. However the iPhone has lost two satisfaction points, while Samung jumped seven points, since last year.

The iPhone may be losing ground because Android devices are being released more frequently with a range of feature improvements and form factors. For example, the iPhone 5's screen, which was enlarged vs. the 4S, looks puny by comparison to some of the Samsung devices.  

Most other competitors on the ACSI list gained vs. last year except LG, HTC and BlackBerry. Immediately below are the ACSI rankings. 

 

For comparison purposes, here are the JD Power rankings. After Apple, Nokia came in second beating Samsung. Motorola, second in ACSI's list above, was fourth overall in the JD Power rankings. 

Screen Shot 2013-03-22 at 6.33.48 AM 

The ACSI people will tell you that satisfaction ratings matter because they're broadly predictive of future sales performance. I accept that as sound. However the data from year one have not always correctly predicted market share or sales performance in year two. One case in point is online search, where ratings declines for Google have not translated into market share loses and vice versa for other competitors.

It's also worth noting that the satisfaction rankings differences between JD Power and ACSI are probably the result of a focus on different criteria and different questions to consumers. Thus both lists may not be entirely complete measures of consumer satisfaction. However the iPhone did top both lists, which is significant. 

Millennial Media Q1: $49M, on Track for $230M+ in 2013

Millennial Media reported Q1 earnings yesterday afternoon. The company said that its revenue grew to $49.4 million from $32.9 million in Q1 2012. However the company saw a $3.8 million net income loss vs. a $4 million loss a year ago.

Non-US revenue was 18.4% vs. 12.1% in Q1 of 2012. Second quarter revenue guidance was $58 million to $60 million.

The company said that its network reached 420 million monthly unique users globally, including approximately 160 million monthly unique users in the United States. Millennial also said that its network was enabled on 42,000 mobile apps. 

CFO Michael Avon said on the earnings call that geotargeted, demographically and behaviorally targeted ads were "growing faster than the overall growth rate of the market." 

The company cited IDC's estimates that its mobile ad revenues in the US "were second only to Google." FY2012 revenues for Millennial Media were $177.7 million. However Facebook made $391 million in mobile ad revenue in 2012 and is on track to do nearly $1 billion this year. 

Directory publisher and local-mobile ad network provider YP said that it had $350 million in mobile ad revenue in 2012.

Mobile 'Economic Impact' Study Predicts $9.2B in US Mobile Ads by 2015

The Mobile Marketing Association, in connection with its latest conference, has released what it calls the "Mobile Marketing Economic Impact Study." Authored by Columbia University adjunct professors, it's a kind of soup-to-nuts document that includes mobile marketing forecasts as well as discussion of how many jobs are created by the mobile industry. The report makes a pitch for privacy self-regulation as well. 

The report asserts that mobile marketing "created 524,000 jobs in 2012." In calculating the economic impact of mobile and projecting mobile marketing spending it correctly sweeps much more broadly than mobile advertising alone. Accordingly the document predicts more than $30 billion in "mobile marketing expenditures" (defined broadly) will be spent by 2015 in the Us. 

Mobile Marketing Communications Spending in United States ($Millions)

 Screen Shot 2013-05-10 at 10.16.18 AM

Here's the MMA's explanation of its marketing categories in the chart above:

  1. Mobile Media Advertising (“bought” media)
  2. Mobile Direct Response (DR) Enhanced Non-Mobile Media, (also “bought” media)
  3. Mobile Content and Relationship Marketing (mCRM) (“owned” and “earned” media)

Thus a roughly equal amount of mobile marketing spending occurs outside of the framework of "mobile advertising":

Within the overall mix of mobile marketing communications, Mobile Media Advertising will remain the largest single component of spending over the forecast period, reaching $9.2 billion by 2015. But expenditure on mobile marketing communications is not limited merely to advertising in on-device media. Expenditure on mobile direct response (DR) advertising or mobile enhancements within non-mobile media is projected to grow the fastest, growing over four fold from 2012 to 2015, to almost $3 billion; and mobile CRM will continue to be the second largest source of expenditure -- indeed, almost as significant as mobile advertising -- through 2015, when it is expected to reach $7.6 billion.

The forecast for mobile advertising by 2015 is $9.2 billion. Last year the IAB found that marketers had spent just under $3.4 billion on mobile advertising (the MMA figure is just over $3 billion for 2012). The $9.2 billion in the MMA report forecast is probably aggressive but perhaps still within reach. 

Tablets to Dominate 'PC' Sales, Low End of Market Increasingly Cluttered

According to a new forecast by NPD, tablets and touch-screen laptops (tablet-PC hybrids) will dominate the computing landscape in the coming years. More conventional PCs will be in the minority. 

Tablets are a new device category really. But let's put aside the longer debate about whether or not tablets should be considered "PCs" at all. There will be more "mobile devices" than traditional PCs (including laptops) sold in the next five years.

At best forecasts can show the direction of the market. But in this case the market's direction is clear. 

Global Mobile PC Shipments, 2012-2017

Screen Shot 2013-05-06 at 9.02.39 AM

Source: NPD

Last week Acer introduced a 7-inch tablet for $169, besting the aggressive pricing of Nexus 7 and comparable Kindle Fire devices. According to one rumor the next Nexus 7 will be priced at $149. But you can already buy a 7-inch Lenovo tablet for $129 on Amazon (quality is another question). The race is on for a "decent" Android tablet starting at $99. I suspect that will come in Q4 this year or very early next.

I was recently in Best Buy and Office Depot/Max and saw the displays of tablets; there are scores of them. It will be challenging for consumers to differentiate them -- especially at the lower end of the market. There will probably be three or four broad consumer criteria for tablets: OS/brand, price, size, specs like memory or battery life. 

With the exception of Kindle, Samsung and maybe one or two others the Android tablet universe is a sea of no-name devices. Here the battle will largely be about price. Apple iPads will stand apart because of strong brand identity. However a majority consumers will be price sensitive and likely to simply go after the cheapest "decent" (Android) tablet they find. Indeed, the devices are getting so cheap they're almost disposable. 

NPD says "Windows 8 are unlikely to be a major driver of touch adoption." I agree, as presently configured, Microsoft is unlikely to sell many stand-alone tablet devices. Surface Pro tablet-PC hybrids will sell to enterprise customers but Microsoft will struggle to sell basic tablets to consumers unless it reaches that $100 threshold first.