It seems obvious, but as an ‘always there, always on’ channel, mobile gives brands the opportunity to give their customers a better, more frictionless service. Mary Meeker has highlighted the media shift from traditional channels to mobile and tablet devices. Google has shown that mobile is used at every stage of the consumer journey, and 80% of users are doing that in conjunction with other media. For example, their recent in-store study found that customers often use their smartphones as an assistant to check information whilst they are in-store.
Mobile service may seem obvious, yet many brands fail to do it. An IAB study found that only 63% of the top 100 brands have a mobile optimised website. Even where there are mobile sites, there is a limited mobile experience. A recent DMA study highlighted an often over-looked area for brand service. Making a phone call! Simple services such as click-to-call buttons or scheduled call-backs were top of the consumer priority list.
In spite of this, some brands have understood the need to create a mobile-optimised experience across their whole service – from Marks and Spencer to Nike to Starbucks. The following Slideshare shows the issue and how brands can gain some quick wins from a simple, yet optimised mobile service:
According to reports in the digital media press, iAd is contacting UK agencies about changes in their pricing policy and structure. In the US, the minimum spend has already been reduced from $1m to $100k, but it seems there will be even further developments. Currently iAd uses a ‘hybrid’ (or double) pricing model of both CPM and CPC for its advertising, which is a major barrier for advertisers. Apple are also expected to increase payouts to developers in order to create further distribution of ad content.
The expected changes come at a time when the mobile advertising market is hotting up. Google’s Admob has moved closer to the Adwords model and Facebook are likely to launch a major mobile ad initiative before the spring. Back in June 2011, I wrote that Apple seemed to be losing interest in iAd and a report by The Digital Times suggested that the recent moves are a last-ditch attempt save the project. Apple have driven the consumer market in mobile, but have failed to ignite the world of advertising. With the amount of profit they’re making, I suspect they’re not too worried about it.
If there wasn’t enough evidence already to show the growth of mobile search, Google announced last week that it was worth over $1 billion. Nice going. Google are at pains to point out that they are more than just a search company, using the success of Android as evidence. However, whilst there is no doubting the success of their mobile OS (now over 30% of the US smartphone market), the revenue comes from … well, it’s search advertising!
More on the report here, in Techcrunch: http://techcrunch.com/2011/04/14/google-q1-earnings/
With all the talk of mCommerce and contactless (NFC in particular), a war between the operators and handset manufacturers was always on the cards. It looks like it’s beginning to kick off. The Wall Street Journal reported on Friday that RIM (BlackBerry) was ‘locking horns’ with operators over who controlled the NFC customer data. The issue is about where ‘credentials’ (the encrypted personal payment information) will be stored. Will it be on the SIM card (operator) or the phone memory (handset manufacturer). This is much more than a row over a technical function, as the customer will be tied either to their network or handset depending on how this data is stored. Whilst RIM talked about their close relationship with operators at the Mobile World Congress, one senior figure at Bell Canada recently stated “we expect some closed operating-system vendors will probably try to build into the handset. RIM and Apple fall into that category”.
The problem from an operator perspective is that whilst revenues are being squeezed, customers are demanding much more for their money, in particular they want more data. How do the operators make more money in already saturated markets? The answer is through providing mCommerce. In order to do that they will need to invest in expensive security infrastructures, making it even more critical to keep their customers with SIM-based credentials. On the other hand, we have increasingly seen handset manufacturers and handset operating systems define the mobile market and mobile content. The two that have done most to drivfe this change are Apple’s iPhone (and appstore) and Google’s Android.
My money is on the handset/operating systems winning out. Apart from their obvious success in defining the mobile content channel, they seem to have the revenue model right. Operators tend to charge consumers or merchants/content producers high transaction charges – look at app stores before Apple (£1000 + to get your game listed) and the low payouts on premium SMS. On the other hand, Apple and Google are past masters at the freemium model – get something for free and pay if you like it. And there’s no question about which model consumers prefer.
The Google Mobile mobile ads blog has given some insight into the countries that generate the most traffic to their mobile Ad network, AdMob. The 80:20 rule still seems to apply, with just 17 countries out of 190 served, providing 80% of the traffic. Whilst North America is the biggest region, Asia takes second place, with Europe in third. Surprisingly India saw the most ads served in Asia. Although the country has a large mobile population, it is generally represented by lower end handsets and small data usage. However this shows the trend towards more smartphones and a growing middle class population. In Europe, the UK represented 1/3rd of advertising traffic, with France and then Germany some way behind.
With 1000% rises in traffic in some territories, Google predicted that 2011 would be a ‘break-out year for mobile’. It looks like mobile advertising has really come of age.
Since Google took over admob a year ago, the company’s ad serving has gone up three times over the previous year – they are now serving a massive 2bn ads every month. The highest performing region was Asia (564%), followed by Western Europe (471%) and Oceania (363%). It looks like mobile advertising really has come of age.
How accurate were the 2011 predictions? As a review of the year in mobile, I have added comments in italics. 2012′s mobile predictions are here.
1. The rise of Contactless (or NFC).
In the UK Orange and Barclaycard launched a (not very good) NFC phone. More significantly both the Google Nexus, higher end BlackBerry and a number of other devices included contactless. The real potential for growth will be in 2012. In the UK it will be spurred on by the need for fast payment etc at the Olympics and growth will be also be significant elsewhere, especially if the iPhone 5 includes an NFC chip.
2. mCommerce – where the retailers lead, others will follow
Whilst 2010 saw retailers establish themselves in the mobile web space, 2011 was where they consolidated it. From eBay to Amazon, from M&S to Halfords, mobile represented 10% or more of their digital sales. Whilst there hasn’t been exactly a charge towards mobile web from other brands outside retail, during the year most of them created some kind of offering. Interestingly retailers are seeing the potential of mobile and moving beyond just a mobile site with initiatives such as augmented reality pop-up shops.
3. Mobile Search – the next big thing in mobile marketing?
From the user perspective, 2011 saw mobile search continue to grow. More smartphones means more search from mobile, especially in stores. Research from Google showed that over 70% of smartphone owners were searching and comparing product information whilst in store. Not only that, but most mobile search is about immediate intent – people are looking for something because they want (or need) it now. Sadly brands have not really caught on to mobile search marketing in any significant way as yet.
4. Mobile Advertising gets Exciting
2011 saw HTML5 take off in mobile, and particularly mobile advertising. Besides iAd, Google also started to offer HTML5 banners through their ad channel. There were some creative campaigns – Nissan Duke for iAd, Tuborg and Magnum Ice Cream and Auto Trader in the UK – there is still a lot of untapped potential. Mobile is now 8% of our ‘media time’, more than in print, yet the spend on advertising is less than 1%. Print? More than 20% of the total spend.
5. Location, Location, Location
Whilst location is the backbone of most mobile media, social location didn’t quite live up to expectations in 2011. Although Facebook incorporated location into status updates, they ended their Places and Deals, failing to become a leader in social location. However, Foursquare continued to see their numbers rise to 15m + users. Along with the likes of SCVNGR and Instagram, they engaged both users and brands. In the meantime, Facebook hired the Gowalla crew to rethink their offering. Social location remains important.
6. The End of Unlimited Data Plans
It happened in the UK, US and elsewhere thanks to too many iPhone users. The biggest problem has been video. More and more mobile users are accessing it but it uses tremendous amounts of bandwidth. The only long term solution is 4G, which is beginning to roll out in some countries. In the UK, the government put the licence bids back into 2012, which means 2013 will be the earliest. Developing countries may well get into 4G sooner and leap-fog the UK. The mid-term solution is in rolling out more WiFi. O2 are working on that right now … hopefully there’ll be enough data bandwidth by the time every0ne arrives for the Olympics.
7. New Interfaces
There were announcements of 3D screens, gesture control, and electrovibration to create the feeling of textures in mobile and tablet screens. The biggest impact on the consumer came in the form of voice interfaces, notably iOS5′s Siri. After Apple upped the ante, Google are looking to implement something better than Siri into Android in 2012.
8. Fad Gadget?
Not everyone is convinced by the iPad. It made the top 10 list of worst gadgets of 2010 in one magazine, whilst also making the top 10 best gadgets in the same publication.
This prediction was entirely wrong. The tablet device, or the iPad (others sold very few), sold at a faster rate than the iPod or iPhone. In many territories they were outselling PCs.
This hasn’t taken off as such, but other forms of social media activity on smartphones increased. When Twitter was incorporated into iOS5, their sign up rate went up three-fold. Now nearly half of all Tweets come from mobile devices. It’s not just writing though. Mobile users say it through photos, as demonstrated by Instagram and Flickr (the iPhone 4 was the most used camera on the site).
I predicted that from a very fast start, Bada would become an important OS in 2011. It didn’t happen. Samsung have not released any figures about the operating system, but they would appear to be low, and the company is likely to drop the OS. In a way, it’s not surprising when you consider that Bada was for lower end handsets but consumers have moved towards smartphones. Not only that, but Android is open source and can be put on most handsets.
It seems that Google wants us to talk to computers more and the computers talk back to us. Or at least that’s the indication with their recent acquisition of UK company Phonetic Arts. Google seem to like the whole talking at machines thing: their Google Voice Search has been around for a while, and comes as standard on Android phones. Similarly the iphone has a voice control element.
But do we really want talking computers? Apple and Microsoft tried it way back. When I got my first talking Mac, I used it for a day and then turned the thing off because it was annoying. With the Microsoft speach recognition, the problem seemed to be that it worked quite well. However, working quite well isn’t good enough for an input device. It needs to work very well, all the time. I’ve found the same problem with the Google Voice Search. On the one hand, it’s useful if you are walking along the road – using a touch screen on the move is nearly impossible. On the other hand, it doesn’t work well enough.
There’s also the whole talking machine thing. Some people like the idea, but I think that many people (including me) are put off by it. When cinemas started having voice recognition, I felt stupid talking to the machine. I’m sure I’m not the only one. I don’t see much evidence of people using voice control or search on their smartphones. So whilst Google may be striving for the Star Trek ideal, when it comes to computers there are more than just technological barriers to overcome.