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):
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.
PayPal recently released survey data on e-commerce and mobile payments. There were more than 15,000 respondents from a range of countries: Australia, Brazil, Canada, China, France, Germany, Israel, Italy, Japan, Russia, Singapore, Spain, Turkey, UK and the US.
The survey identifies arguably the two major offline payments "pain points" for consumers: 1) waiting for their payments to be processed (or waiting in line) and 2) having enough cash on hand (less true in Western markets).
PayPal found that the hierarchy of "can't leave home without" items was as follows:
The survey also asked about friction or frustrations with to e-commerce: "Which of the following, if anything, annoys you about online payments?"
The responses vary by country but this is the list:
The survey also inquired about time spent shopping -- this is self reported data but with a roughly 1K per country sample. The question asked how many hours per week were spent shopping offline vs. online.
In China more time was spent online and in Brazil the time spent was identical (very hard to believe). The UK is nearly 1:1 but the US favors offline by about 2.5X. I would take these numbers not as actual but as directional indications of time spent. For example, is grocery shopping included here? It's not clear.
In my view the most interesting findings are reflected in the top chart about the challenges and frustrations of traditional offline payments. There's great opportunity in minimizing payment wait times and enabling people to avoid lines. This is starting to happen as in-app/mobile payments are currently being deployed in fast-food and "fast-casual" restaurants and in a few fine dining establishments with the OpenTable app.
Retailers also have a major opportunity with mobile payments. Loyalty and payments are two features that would help them generate app downloads and repeat usage. It would also provide them with additional tracking tools, not to mention "closed-loop" ways to market to their customers.
Currently most retail apps are sort of mini e-commerce sites. By contrast, they need to create apps that either contemplate the majority of usage being nearby and in-store, and make changes to the user experience accordingly, or have context-sensitive apps that can change when a user comes into a store.
Custora released some new data on mobile e-commerce drawn from “over 100 online retailers, 70 million consumers and $10 billion in transaction revenue.” Based on transaction volume to date in 2014, the company predicts that mobile e-commerce will hit $50 billion by the end of the year.
Based on US Census Bureau data, total US e-commerce is likely to be in the range of $280 to $290 billion this year.
Custora says that roughly 37% of visits to e-commerce sites in the US are now coming from smartphones and tablets. Apple devices currently drive the highest transaction volume but Android is gaining, chiefly in the form of Samsung devices and “forked” Android Kindle Fires from Amazon.
The Kindle Fire phone is poised to be a mobile commerce powerhouse if it sells. However it lacks mainstream appeal in my view.
Apple’s over share of m-commerce declined from 75% in 2012 to 51% in Q1 2014 according to Custora data. Among tablets the iPad still dominates, driving roughly 80% of all e-commerce from tablets. Samsung tablets were responsible for 15% of tablet based e-commerce and Kindle tablets drove about 4.5% says Custora.
Perhaps the most interesting finding from Custora is that email generated 27% of m-commerce transaction volume in the quarter. These were users “responding to email marketing and shoppers going directly to e-commerce sites (including app traffic).” By comparison, email marketing drove 21% of PC based transactions and 23% of tablet-based e-commerce. This strongly argues for immediate optimization of email for smartphones.
Custora says that social media basically didn’t drive mobile transactions. The company said “social media accounted for only 0.6% of sales on phones and 0.2% on tablets.”
New data from the National Health Interview Survey (NHIS) from the National Center for Health Statistics, now reflect that 41% of US homes have no landlines -- only mobile phones. These data are from the period July 2013 through December 2013.
The report goes on to say that almost 34% of households with both landline and wireless phones "received all or almost all calls on wireless telephones." These mostly wireless homes represent 16.1% of all US households according to the NHIS.
Together the two categories of wireless only or mostly wireless homes constitute 57.1 percent of all US households. Either the landline doesn't exist or it's mostly a spam catcher for telemarketing and other unwanted calls.
There are regional and demographic differences in the data. The poor were much more likely to be mobile only and so were younger adults. The Midwest was the region that (barely) had the most mobile only households with 43.7%. The Northeast had the least at 24.9%.
According to NHIS, growth of mobile-only homes has slowed vs. previous years. Thus growth of mobile-only homes may be near a plateau.
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.
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.
Consumers are ambivalent about online privacy. Some surveys suggest outright hostility to mobile-location tracking; others argue users are happy to share personal information for clear rewards and benefits. Consumers also express a desire for greater personalization of online, mobile and shopping experiences. How can these contradictory positions be reconciled?
The privacy landscape is evolving rapidly with Apple making location privacy changes in iOS 8 and state governments getting involved in regulating privacy in the absence of federal action.
Rather than an “issue that will blow over,” privacy has become a central discussion for marketers and brands. It’s the flipside of “big data.” But timidity, passivity and denial won’t work. Stakeholders must proactively tackle the issue head on.>
Join Greg Sterling, Senior Analyst with Opus Research, and Future of Privacy Forum executive director Jules Polonetsky for an informative, interactive webinar about the latest developments in location and privacy on Wednesday, July 2, 10 am PDT /1 pm EDT.
Project Tango is Google's new 3D mapping technology. It uses the smartphone's camera, gyroscope and accelerometer to do indoor mapping (based on SLAM -- simultaneous localization and mapping).
This approach doesn't require additional hardware installation (even Beacons). It just requires smartphones to do the initial mapping. It's one of three or perhaps four such approaches now emerging. Others include Indoor Atlas and FlyBy Media (a Tango partner).
At Google's developer conference I/O last week the company was showcasing various uses of Tango, one of which was in a retail environment through a partnership with aisle411. The latter implemented Tango in Walgreens to generate in-store augmented reality (AR) shopping experiences (see video below).
Product locations are married to a store map, created using the Tango technology. Using a smartphone or, in the video, a tablet fixed to a shopping cart, the end user can see product locations, map shopping lists to a floor plan and see enhanced product information or coupons "pop up" on the screen.
Aisle411 says the technology allows for accuracy "within centimeters." This is a pretty interesting variation on some of the indoor location scenarios we've been discussing and exploring. However one question is whether stores will equip shopping carts with tablets, which could be expensive and risk theft. On the other hand this AR experience is potentially less satisfying and effective on a smaller screen smartphone -- users are unlikely to hold them out as they walk down store aisles.
Regardless it's a pretty interesting marriage of digital and real-world experiences in a shopping environment. Aisle411 will be speaking on the indoor location technology panel at next month's Place Conference on July 22 in New York.
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:
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.
Earlier this week comScore reported that mobile devices (smartphones + PCs) were responsible for 60 percent of total digital media time in the US (chart at right). Traditional TV is still the king in the US in terms of overall consumer time spent.
More specifically, comScore said that US users spend 51% of all their digital media time in mobile apps. The firm reports roughly 83% of mobile media time is app-based (vs. the mobile web). Nielsen puts the number at 89%.
I spoke to comScore at some length about these numbers. We agreed that ad dollars would eventually follow the consumer traffic migration. The question is how long it might take. For the past few years mobile ad spending in the US has roughly doubled YoY (per the IAB):
Total digital ad revenue in the US for 2014 will probably be around $49 billion. If time spent and ad spend were aligned mobile would capture more than half of that number (and in-app advertising the bulk of that). Accordingly mobile ad revenue would be $29.4 billion and PC ad revenue would be $19.6 billion.
That would be radical.
There were early, hopeful rumors that Amazon's smartphone would be free. What a radical move that would have been.
That free rumor was quickly quashed by Amazon. Indeed, when it showed up last week the Fire phone was priced like an iPhone: $199 with a two year contract or $650 unlocked. I was very surprised by this "premium" pricing.
Amazon CEO Jeff Bezos feels he's developed a premium phone and that consumers will also see it that way. True, Fire does have a number of stand-out or innovative features:
Yet one can't escape the feeling that this device has been designed almost entirely to promote Amazon, its content and e-commerce. The user is somehow secondary or merely a vechicle for the realization of Amazon's broader mobile ambitions.
The early reviews have been very mixed. Consequently few iPhone buyers will switch and the same is probably true for those loyal to Samsung Android devices. Amazon's loyal customers are the likely buyers of this handset. While that's millions of people it's not enough to make the phone a true hit.
Had the phone been more aggressively priced, as the Kindle Fire tablet was when it launched, the story would be very different. In all but a very few cases price matters. An unlocked $199 Fire or, ideally, unlocked $149 Fire would generate significant sales. Then, I believe, Amazon would have had a massive potential hit on its hands.
Consider that Motorola sells the 4G Moto G Android phone for $179 -- unlocked. Between the Amazon phone and the less flashy but still well-equipped (and much cheaper) Moto G, the choice is obvious: Moto G.
As with the Fire, now destined for disappointing sales absent a price cut, the price of Apple's forthcoming iWatch matters. The device (or devices) will be released, according to reports in October.
Financial firm Piper Jaffray surveyed 100 people (too small a sample) and asked about interest in a $350 iWatch. Apparently only 14% (or 14 people) said they were willing to buy a $350 iWatch. The survey extrapolates limited demand from those findings.
The conclusion of that there's only limited interest in smartwatches is wrong. There's considerable interest in the market. Surveys by Opus Research, Nielsen and others suggest a potential market in the US of more than 100 million people. There are two key variables however: design and price.
The Samsung Galaxy Gear watches failed not because of price ($299) but because they were ugly and poorly designed. We can expect Apple's iWatch(es) to be well designed but the price is an issue.
If Apple can price these devices below $300, and preferably below $250, they're likely to see considerable sales volume. But above $300 the market will be more limited, as the Piper Jaffray data suggests.
Apple needs another hit product so it would do well to take a lower margin on the iWatch in favor of boosting sales and making it more accessible and affordable for a larger population.