The Problem with Mobile NFC

An NFC bus shelter in a deserted London street. Do they seriously think that anyone will tap on this?

Don’t get me wrong, I really like mobile NFC. Or at least, I like the idea of it. NFC can act as a fast, simple mobile wallet. It also has plenty of potential as a brand interaction channel. Touch in for ticketing, touch in to receive further brand information, touch in to join the in-store WiFi, touch in to leave your contact details. The possibilities are almost endless (there’s a good paper from the GSMA on the opportunities here). However, there’s a big problem with mobile NFC. Consumers, (and for that matter some retailers) just aren’t that bothered about it.

What Do We Know About the Success of NFC So Far?

- There are 200 million NFC enabled handsets*

- 300 million NFC enabled mobile and tablet devices predicted to be sold in 2013*

- 4 million NFC enabled retailers (100,000 in the UK) in 2013*

- The global value of mobile NFC predicted to be $50bn by 2016* (or $74bn by 2015**)

*http://www.gsmamobileeconomy.com/GSMA%20Mobile%20Economy%202013.pdf

** http://juniperresearch.com/viewpressrelease.php?pr=291

200 million handsets sounds good. But to put that in perspective, it’s less than 4% of all handsets (and the audio tagging app, Shazam has 300 million regular users). NFC has a long way to go before it is as ubiquitous as Bluetooth, which is in 80% of all handsets. And the stats don’t tell us how many people actually use NFC. Unfortunately no information seems to exists which states the number of people regularly using mobile NFC (I would guess at about 10% of those who have it on their phone, but if anyone has got better data, then please tell me). However, if the uptake of NFC was high,  I would expect that the providers would be shouting about it. Square, another mobile payment system did $4bn in 2012. How does that compare? My estimate is that mobile NFC payments are much less than that (feel free to correct me if you have accurate figures).

Will NFC Ever Happen?

Whilst there are plenty of predictions of exponential growth in NFC, there’s little evidence that it is actually happening. At best, we will see an incremental growth in users.

So why is NFC failing to take off? For starters there’s the retailers. Only a minority of them take contactless, and when they do, it’s not made obvious to the customer. The other day I was in a certain sandwich shop, and wanted to pay by contactless. First, I had to find the machine. It was buried under some packets of crisps. Then I had to ask the till assistant to turn it on. Except that they’d already got the chip and pin machine ready to hand to me. It is exactly this kind of experience that make’s consumer wonder, ‘what’s the point’? NFC ought to be a highly usable and frictionless experience, yet in practice, it rarely is. It now seems that some retail giants are far from convinced of the benefits of NFC (see below).

The other issue for consumers is one of trust. Banks will go to great lengths to tell you how secure contactless payments are. However, the problem is one of perception. Consumers feel it is not secure and they don’t trust the banks when they tell them otherwise. So it would seem that the payment providers are much keener on NFC than consumers. Or as someone once said: ‘NFC is a solution looking for a problem.’

Some people blame the lack of NFC in the iPhone as the reason it has yet to go anywhere in mobile. It’s certainly true that Apple users have driven a lot of mobile usage in the past. However, not only are there now considerably more Android phones than Apple’s offering, but usage of apps and web is similar to those of the iPhone. Arguably, Android is just as likely to drive usage as iOS. It now seems unlikely that Apple will ever implement NFC, with their focus on developing their own wallet rather than a retail payment mechanism.

What about mobile NFC outside of payments? In the UK a number of the outdoor ad companies are sticking NFC points all over the place, especially at bus stops. That’s quite a strange thing to do. Ask any OOH warrior and they’ll tell you that most bus stop advertising is aimed at the people going past in their cars, not the people waiting at the stop. The point is that brands are failing to show examples of useful, engaging NFC experiences that will demonstrate the benefits to consumers.

Failing to Solve Problems

NFC doesn’t really solve any pain for consumers. Arguably if it was going to be adopted widely, then it would have happened by now. A representative from the supermarket, Tescos recently stated that NFC is too complex and offers too few benefits for it to go anywhere. A key point was that consumers are now looking for a payment experience entirely within their mobile device. Think of the Starbucks loyalty app or Pizza Express’ mobile payment system. And from a brand perspective that also makes a lot of sense. Building payment into an app is a good bit of behavioural economics, which takes away the ‘pain of payment’. Think how Amazon One Click or iTunes do it. Some supermarkets, such as Sainsbury’s are already experimenting with apps which allow consumers to scan and purchase in-store all through their mobile.

My view is a UK/Euro-centric one. NFC has the opportunity to bring simple payment systems in emerging countries. A number of commentators have pointed to the success of contactless systems in Asia (still no data to demonstrate it, though). However, it’s dangerous to assume that what happens in some Asian countries can be applied elsewhere. In Europe, at least, there doesn’t seem to be much good news for mobile contactless. Much as I like NFC, it seems as if consumers really don’t care about it, and the opportunity for the channel may now have passed.

Audi Screenshot Ad

A simple, but clever ad from Audi. Take a screenshot of the car whizzing past on the advert:

WMC Barcelona in 10 Mintues

Everything you needed to know about Mobile World Congress in a handy summary:

MWC13 – What you need to know in 10 minutes from BrandEmotivity

How Kenneth Cole is Changing Fashion through Mobile and Social Media

‘During the @kennethcole runway show, out of respect for other members of the audience please make sure your phones and tablets are switched ON. This show will embrace the intrusive nature of social media.’

It wasn’t long ago that fashion shows were largely private affairs, where photography and video were tightly managed. Yet  the opening words above, greeted the audience to Kenneth Cole’s 2013 New York Fashion Week show.

The advent of smartphones, with high megapixel cameras and social media apps has challenged the highly controlled world of fashion shows. That challenge is similar to many retailers, where consumers are able to search, photograph and share products instantly. Whilst most runway shows barely tolerate smartphones, Kenneth Cole clearly embraces it. His front row was littered with fashion bloggers all using their smartphones to Tweet, Instagram and Vine (if that is now a verb) the event. He went a step further though, and at the end of the show the models came down the catwalk sending live Tweets from their phones. It was in the name of charity, as each Tweet sent resulted in a $1 donation from Kenneth Cole to an Aids charity.

By embracing smartphone driven social media in this way, Kenneth Cole has shown how brands can:

-       Use mobile social media to connect brands from the physical world to online channels

-       Bring amplification through sharing these events in social media

-       Create a long-tail of brand awareness through user generated content or co-creation

I previously blogged about how mobile social media were disrupting fashion and retail, but Kenneth Cole’s show takes it much further than that. Whilst it creates an opportunity to reach a global audience previously unavailable, Kenneth Cole is using mobile and social to challenge the traditional dynamic of fashion. With fashion bloggers using the new tools of the trade, it brings immediacy to a global audience. With models Tweeting down the catwalk, they are no longer simply ‘hangers’ for the clothes but now active participants in the event. And with celebrities populating the front rows, alongside the journalist and bloggers, are mobile and social creating a new form of reality fashion show?

The State of Tablet Devices: some facts and figures

A roundup of the tablet landscape 

In early 2011, Apple’s CEO, Tim Cook announced at Goldman Sachs that tablets will overtake PC sales by the end of 2012.

We know from Tim Cook’s statement that 55 million iPads had been sold in the 18 months since Apple’s was launched. That makes the iPad more successful in terms of sales rate than the iPhone (3 years to 55 million) and much more successful that the iPod. The iPad currently dominates the market, however, there has been strong growth in Android-type devices. Tablet sales rocketed in the third quarter of 2012 (according to end of 2012 figures from IDC), and Samsung and Amazon saw significant sales increases. According to analyst house IDC more than 27.8 million tablets were shipped in the third quarter of 2012 – up 6.7 percent on the previous quarter – but during that time Apple saw its market share cut to 50.4 percent, compared to 65.5 percent in the previous quarter.

Gender

According to Comscore data from the end of 2011, tablets skew more towards men, however as tablet devices have grown, the demographic has switched, and are now used by more women than men in the US:

Demographic Profile: Tablet* and Smartphone Audience 3 month avg. ending Apr. 2012  Total U.S. Tablet Owners and Smartphone Subscribers, Age 13+ Source: comScore TabLens and comScore MobiLens
	% Share of Tablet Audience	% Share of Smartphone Audience	Index of Tablet to Smartphone Audience**
Total Audience	100.0%	100.0%	100
Gender:
Male	49.2%	51.6%	95
Female	50.8%	48.4%	105
Age:
13-17	7.3%	6.5%	112
18-24	12.3%	16.9%	73
25-34	24.4%	25.3%	96
35-44	21.4%	21.2%	101
45-54	17.8%	15.7%	113
55-64	10.1%	9.2%	110
65+	6.8%	5.3%	128
Household Income:
<$25k	7.4%	11.7%	63
$25k to <$50k	17.7%	19.5%	91
$50k to <$75k	18.9%	19.5%	97
$75k to <$100k	18.3%	15.9%	115
$100k+	37.7%	33.4%	113

Income

As expected, the earlier adopters tend to be of higher income, but are more likely to choose a tablet over a smartphone. As with smartphones, cheaper devices and notebook replacements (see below) will create demand from lower income groups.

For many, a tablet is not a PC replacement, but an additional (yet another) device, that is hardly surprising. Comscore tell us that in Europe 34% of iPad users also own an iPhone.

Age

According to Flurry in Sept 2012, tablet users tend to be older than those with smartphones.

Where are they used?

The most preferred place to use a tablet is in the living room according to data from Adweek

It confirms the trend that they are largely a domestic device rather than a mobile one. The use in the living room also demonstrates the shared nature of tablets. Data from YouGov, stated that in the UK there is 8% tablet ownership, but significantly it represented 20% of UK households in June 2012 (http://econsultancy.com/uk/blog/10240-tablet-stats-ipad-still-rules-but-the-competition-is-catching-up).

Tablet Devices to overtake Notebook Sales

As expected, tablet devices are rapidly replacing notebook sales, with a prediction from NPD Display Search (Dec 2012) that they will overtake notebook sales this year:

Tablet Users do More

In the US, Comscore tell us that nearly 98% of tablet data usage was from the iPad at the start of 2011. As with the iPhone, it would seem that users do more of everything than other devices. They are also beginning to overtake desktop usage. Comscore’s November 2011 figures show that tablets represent 30% of non-desktop traffic. That is considerably higher than the percentage of ownership of ownership.

When it comes to purchasing, tablets also perform well. A study by Adobe Research over the 2011 US holiday period found that tablet users spend 54% longer on sites than mobile users, and purchase over 20% more than desktop visitors. The following chart shows a comparison using average retail order value.

The high sale value is partly down to the ease of use of the devices. In an IAB study in December 2011, nearly half of respondents said they used their tablet because it was ‘the easiest to pick up’ and 37% said that it offered the easiest user interface. But it is also worth considering that as tablets skew towards a higher income bracket, users are more likely to purchase.

Forecasts from eMarketer show that tablet devices show a greater growth when it comes to purchasing, with tablets representing nearly 10% of all US retail sales by the end of 2013:

Top Categories

Hardly surprisingly, the focus on tablet content is much more towards home/family than on smartphones (according to Comscore data):

Last Thing at Night (and First Thing In the Morning)

Data from Nielsen in 2011 found that 70% of tablet owners use it in front of the TV. Clearly, the iPad is the device for two screening. Interestingly though, the iPad is used in bed by nearly 60% of owners and appears to be replacing the book at bedtime. That figure is similar to smartphone use, but with tablets the spike at the end of the day is even more pronounced. Both the IAB study and data from Comscore in the US show that later in the evening, tablets are used more than mobile or television. On weekends there tends to be an earlier peak:

Advertising and Media

IgnitionOne, revealed that year-over-year (YoY) paid search spending growth for tablets doubled that of smart phones in the fourth quarter of 2012 as mobile devices as a whole grew to 18% of search budgets in the U.S

Useful read from Comscore: Connected Europe, How Tablets and Mobile are shifting media consumption (Jan 2012)

An App-based World

The Sept 2012 Flurry report found that tablet users were more likely to download apps than those with smartphones, and used the devices for playing games:

Video Views

Tablet Users Watch More!

According to Comscore in Sept 2012, tablet users are three times more likely to watch video on their device than smartphone users. Over half of US users (53%) ever watch a video during a month, with nearly 10% doing so every day:

Video/TV Viewing on Device for Tablet* and Smartphone Audience  3 month avg. ending Apr. 2012  Total U.S. Tablet Owners and Smartphone Subscribers, Age 13+ Source: comScore TabLens and comScore MobiLens
	Share of Audience that Watched Video/TV on Device
	% of Tablet Audience	% of Smartphone Audience
Ever in month	53.0%	20.0%
Once to three times throughout the month	24.6%	10.3%
At least once each week	18.9%	6.7%
Almost every day	9.5%	2.9%

Inevitably, video viewing is much higher on tablets than mobile. As a total percentage of online video views, tablet (3.21%) surpassed mobile (2.21%).

Ooyala’s “Global Video Index” report (Nov 2012) suggested that 71% of tablet users watch long-form content (30-60 mins), whereas on mobile it is much more focussed on short-form ‘snacking’ behaviour. The report also showed that tablet viewers were far more likely to complete a video view longer than 10 mins than any other device: for videos longer than 10 minutes was 39.2%, compared to 35.3% for CTV & GC, 26.8% for desktops, and 22.3% for mobile phones.

For shorter videos, tablets were still saw more completions than mobile, but were surpassed by connected TVs.

The Preferred Device for Reading

Whilst it is no surprise that tablets are preferred over mobile for reading, they are also more popular than dedicated e-readers (Online Publishers Association, June 2012). That naturally includes news and magazine content. Data from the MPA, November 2011, found that 45% of tablet owners spend 1-3 hours per week reading magazines. This makes the tablet the most-used digital device for reading:

Conversion Rates

Data which compared 2010 and 2011, reported by eConsultancy, showed that conversion rates for tablets were higher than mobile – 2.3% compared to 5.4% and 5% for desktops and tablets respectively.

Tablets and Consumers

The research from Nielsen (Dec 2012, US) shows that shoppers will tend to use their mobile for

-        finding stores, price comparison in-store, redeeming coupons

For tablets, though, consumers are more likely to:

-        Research items, read reviews, purchase

Two Screening

Although two screening use is largely similar between smartphone and tablet, the Nielsen data (US, Dec 2012) suggests that tablet devices are more popular for two-screening in older audiences:

Mobile Predictions for 2013

Whilst mobile technologies move quickly, its rise has been steady and incremental for well over a decade. There has not been, nor never will be a ‘year of mobile.’ So largely speaking, most trends in mobile have already started. If you’ve been reading the marketing and technology press then you will already have a good idea what will happen in 2013. But which trends are just fads and which will become a reality?

Non-movers
It feels like QR, Augmented Reality and NFC have been on mobile forever. Don’t expect to see any significant shifts. Consumers will still not see the point of scanning a QR code, with less than 20% of Europe’s smartphone owners doing so. AR will remain exciting and interesting, but with a few million users it will continue to be niche for brands. NFC is also struggling. The lack of a chip in the iPhone5 hasn’t helped adoption, and neither has the lack of terminals. The biggest hurdle is consumer perception of security. Sure, we are beginning to see NFC in credit cards, but it is all about perceptions, and payment providers have a lot of work to do to build trust.

Similarly mobile display advertising will only see an incremental rise. Although brands have been spending more in recent years, it still represents a very small portion of budgets (anyone remember iAd?), especially when compared to the time spent in mobile. Mary Meeker calls this ‘an opportunity’, but maybe brands don’t spend because it doesn’t deliver the numbers. Facebook and Google share prices have suffered as a result. But above all, mobile advertising doesn’t deliver a good experience on mobile. In the UK the operators announced a joint project called Weve, so expect to hear plenty more about it in 2013. Just don’t expect any significant shift in behavior.

The Upwardly Mobile

Mobile Payments have been on the rise for the last few years. It is clear that these payments will not come through any single channel, such as NFC. Instead it will be a matter of consumers using payment through a range of apps, brand apps and mobile sites. Apple’s Passbook shows potential, but the two big players in this space are likely to be PayPal and Square, both of whom are creating secure, frictionless experiences.

China, obviously has seen significant growth for the last two decades, and it has become the largest consumer market, the largest smartphone market and at the end of 2012, mobile internet access was greater than desktop. In 2013 China will be the place not just of ‘uptake’ but a place of real innovation and opportunities for brands. Witness Lei Jun, who is head of technology firm Xiaomi, described as the ‘Chinese Steve Jobs’

Virtual retail and the rise of the ‘unstore’. Last year I predicted that virtual stores such as Tesco Homeplus in Korea would become more widespread. In 2012 we saw various offerings from PayPal, Tesco F&F and many more. However these were largely PR stunts. However in 2013 we are likely to see more permanent offerings, spurred on by the announcement that Chinese retailer Yihaodian will open 1000 such stores.

Data and especially ‘Big Data’ were the catch phrases of 2012. As someone put it to me ‘it’s just data’. The now ubiquitous nature of smartphones means that data is being generated constantly. Combine this with Open Data and APIs and all kinds of things become possible. Twitter has become a major source of such data, predicting the US presidential result or spotting trends five hours ahead. In Kenya they are using it to track and manage malaria. Brands can also use this data to bring a better understanding of their customers and deliver a better service.

Data Privacy – the flip side of big and open data is that as consumers we will see more brand invasion of our privacy. Witness the numerous privacy issues around Facebook. A couple of slightly scary trends are based on facial recognition; Scene Tap and Facedeals. Technologically interesting, it remains to be seen if they are acceptable to consumers.

Connected Devices – the smartphone may have reached its obvious conclusion. Largely speaking it does everything we need. There will be improvements in screen and interface technology in 2013, such as better voice control, gesture control and variable texture or haptic screens. The big change, however, will be in connected devices. Google Glass project has been widely hailed as the future. Patents from Microsoft and Apple demonstrate that the space is hotting up. However, that kind of wearable technology is likely to be limited; both looks and practical issues from potential eyesight damage will not see AR glasses become universal. The interesting trend is in devices such as Nike Fuel. For brands, it will mean bringing more service into the product space. However, simple, cheap devices will also become more prevalent. Witness the Red Tomato Pizza fridge magnet. A simple, low-cost approach to brand engagement.

Want more trends? Try these: http://www.slideshare.net/fjordnet/fjord-trends-2013 and http://www.slideshare.net/NextGenerationMedia/12-trends-for-2012

How Mobile Can Deliver Better CRM

Mobile is the most personal, direct and emotional of all channels. Whilst many brands integrate mobile as another vertical channel, there is an opportunity to create a deeper, richer engagement by taking a more horizontal approach across all channels. What happens if consumers see an ad on TV, or use their device in-store?

Numbers show that brands in the UK are so far struggling to grasp this opportunity. For example, Experian’s ‘Global Data Quality Research Report’ in 2012 surveyed 300 UK organisations, and found that 40% of UK companies currently fail to collect any mobile data at all.

Consumers today are connected to the world 24/7, and this constant use of mobile devices provides brands with pervasive customer data, all of which can help them understand the changing consumer behaviour. Using the example of a consumer that performs a mobile search after seeing a TV advert, what if you could pick up where the TV advert left off and continue to tell the brand’s story on mobile ?

With insight and an understanding of consumers’ contextual behaviour, brands can actually adapt and tailor their approach so that they can be more relevant, timely and useful to consumers than ever before, thus building stronger customer relationships.

BrandEmotivity’s whitepaper on marketing to situations and contexts (below) explores the problem with mobile as a vertical channel, the advantages and challenges brands are faced with in integrating mobile horizontally, and how mobile and mobile data can work to improve brand’s CRM strategies. Or you can download it from here 0n SlideShare.

Mobile and CRM – Marketing to Situations and Contexts from BrandEmotivity