Category Archives: mobile advertising

The dismal rise of smart TVs

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Why are smart TVs not scaling?

Nielsen published some interesting stats recently on technology adoption in the United States. Broadband access to the Internet is now near 80%, meaning even Grandma has it. Smartphones have skyrocketed from about no use in 2007 (when they were first released by Apple as a category) to adoption by 3 of 4 adults. Tablets went from zero in 2010 to 46% last year, and today should be in the hands of 1 in 2 consumers. But smart TVs are trailing … in 2014 reaching only 13% of the U.S. population. At that lackluster growth rate, in five years only 1 in 4 U.S. households will have one.

Smart TVs are basically large video screens connected to the Internet, allowing you to “stream” content online, from Kevin Spacey taking over the world in Netflix’s House of Cards to YouTube videos. There are numerous reasons adoption may be slow: the average U.S. household already has three TV sets; consumers recently went through mass spending on flat panels, as they emerged as a sexy category about a decade ago, so may be reluctant to upgrade yet again; and the remote controls of the smartest TVs still don’t lend themselves to typing in commands for Internet video searches. Between the cost outlay and the lousy absent keyboards, it’s little wonder few have adopted to Internet-connected flat panels.

But there is a deeper psychological issue at play, too. When Robert Sommer first wrote of “personal space” in 1969, he suggested we actually have three fields of taking in information: an intimate space near our face or ears, similar to a lover’s whisper; a personal workspace about arm’s length away, the distance of tools in our hands; and a social space from about 4 to 10 feet away. Today’s technology fits perfectly in each of these fields: mobile is intimate, laptops are personal/work space, and TVs are social. We are more likely to speak up in our intimate space (“Honey, please move your elbow”) and more focused on listening in our social space (“shh, don’t interrupt the storyteller.”) This is why our thumbs crawl over mobile smartphone keyboards but with TV, we just want to chillax for the show.

Don’t get us wrong. TV is still king of all media. Despite all the hoopla over digital and mobile, consumers spend more than 4 hours a day letting the blue light of cable bathe over them, outpacing time spent on any other communication devices. But our utility of television is one of social receptivity. We don’t want to engage with big screens, but instead, wish for them to entertain us without nuanced input. Like stories from around a campfire, the streams that come from TV are meant for us to be received as passive entertainment. Our guess is “smart TVs” may never take off, even as screen resolutions grow sharper and the flat-panels increase in size until they are as large as your basement wall. Our modality is simply passive as we watch Kevin Spacey. When we want to truly engage, we turn to the mobile Twitter interface in our hands.

 

 

Mobile pushes young adults to shop at the mall. But why?

mobile samsung tabwatch

 

Well, this is interesting. A recent survey found that mobile devices make young adults 2x more likely to buy something at a physical retail store — but only young adults. Why?

In May Gallup asked 1,505 U.S. adults if mobile devices such as smartphones had boosted their in-person retail store shopping. Most adults over age 30 were ambivalent, with about 20% saying they shopped more as a result of iPhones and tablets, a similar 20% saying less, and the remainder saying no change at all.

But young adults were different. 29% of adults 18-29 years old said mobile had increased their in-store shopping, while only 15% said mobile had decreased it. That’s nearly a 2-to-1 edge for mobile pushing youth to the mall, a whopping finding. What gives? Why would mobile communications push young people to stores to buy, while most other adults ignore them?

Here are four possibilities:

1. Younger adults might have less access to credit cards, so mobile necessarily pushes them to physical stores. Gallup floated this idea in explaining its study, but it’s unlikely — since 60% of college seniors now have a credit card vs. the 70% U.S. adult average, the slight difference would not account for the 2x response in youth to mobile influence.

2. Younger adults spend more time at the mall, so mobile is more likely to increase their shopping while there. Hm. Possible. A recent tracking study of malls around the United States found that 34% of visitors were adults age 18-24, while that same demo makes up only 15% of the U.S. population. If young people are already there, mobile would be likely to get them to spend in stores.

3. The primary use of mobile is to enable social behavior, and young adults are more likely to think of shopping as a social experience. Teens, for instance, go shopping 75% of the time with friends, and 64% of adults age 18-24 go to the mall with someone else vs. being alone (vs. 55% among all adults), according to a 2009 Arbitron study. This confluence of mobile-social-shopping behavior among youth and young adults would make mobile communications more likely to drive retail purchases.

4. Youth are more open to mobile or social communications related to commerce. This conjecture is hard to prove, but another recent Gallup study did find that young adults were more open to social media influencing their purchase decisions. 43% of Millennials said social networks spurred their commerce, vs. only 34% of Gen Xers, 26% of Baby Boomers, and 16% of the oldest adult demo that Gallup kindly calls Traditionalists. Social media is not exactly mobile, but it’s close enough we can surmise youth are also more open to mobile messaging that drives shopping.

We suggest the correct answers are 2, 3 and 4 above. Youth go to the mall. Mobile is social. And social influences young adult shopping. This is important news for marketers who are struggling to reach the future generation of shoppers, since humans tend to take their media habits with them as they age.

If you’re wondering why Amazon went to the trouble of launching its own smartphone, or Facebook is so interested in pushing ads into the main mobile Newsfeed, Gallup tells you why.

Facebook solves the mobile sandbox problem

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At its annual F8 conference this coming week, Facebook will announce it’s solved a vexing problem for marketers trying to reach consumers on mobile: The sandbox.

Mobile advertising, you see, to date has stunk. The prime reason is that data about consumers — the core of any advertising is the information that allows you to target someone — has been largely missing in mobile advertising. When you use your cell phone, there is large entity called your phone carrier between you and most marketers, and the data about who you really are (gender, age, income, habits) doesn’t get through that intermediary very easily. Now, of course, many apps can monitor your behavior and gather information about you. A weather app likely knows what cities a business traveler goes to, and a news app may be able to build a profile of you based on your content consumption.

But apps don’t talk to each other well, and all the data within each app has been “sandboxed.” This means that the vast majority of mobile advertising to date has been ludicrously un-targeted. Some mobile ad networks claim they can IP target, but that is based on cell tower location, and only good to a few miles. So, like the very early days of web advertising, mobile targeting hasn’t worked well, and mobile ad dollars have not followed.

Except for Facebook.

In 2013 Facebook began rocking mobile advertising with its own system, because of course Facebook is more than a social network — it is a data giant, with enormous profiles of who you are, who you are dating or married to, your friends, your interests, and behavior. If you are logged into Facebook, suddenly marketers have a dreamload of data about you. In Q4 2013, Facebook made more than half its total revenue from mobile advertising.

Facebook is smart, and realizes that its nexus as the main social media platform may not last forever — so it needs to build out new revenue streams. How? By using all that data elsewhere, outside of the Facebook system.

Observers say Facebook will announce at F8 a new mobile advertising platform that allows marketers to use Facebook data outside of Facebook on other mobile apps. This is revolutionary, because for the first time marketers can really target mobile based on robust profile information. Marketers will love this, not only for the targeting ability, but for scale — because now it won’t matter if the consumer is reading her Facebook Newsfeed or checking a weather app, she can be reached across thousands of mobile touchpoints.

The data that used to be sandboxed inside each single mobile app is now accessible everywhere, with Facebook owning the treasure trove. And with 37% of all U.S. consumer digital “media time” now spent on mobile devices,  ad dollars will pour into Facebook’s new mobile ad network.

Data is the future of Facebook

Beyond this tactical network, this signals in the future Facebook will be much more than a social network. It has become both the keys to the Internet (you can log on to most major sites with Facebook) and the safety deposit box for your personal information. Facebook is the new Experian, a vast trove of data that marketers can use almost anywhere. If wearable technology takes off, Facebook will be there. If consumers gain enough trust to start buying products through Facebook, the social network could rival Amazon.com in personalization and e-commerce. If Facebook wanted a slice of the $144 billion U.S. television market ($70B in advertising plus $74B in cable subscription fees), it could launch broadcast capabilities with revolutionary data targeting ability.

This is not silly conjecture. Facebook is smart, and somewhere in its boardrooms lies a master, multiyear plan of how it will expand its services carefully using its data bank to protect itself from the inevitable decline of its social network while jacking up its stock price. Networks can only increase in value if the size of the network increases. With Facebook’s direct social users capping out (there are only so many people on the planet), it needs to expand its nodes elsewhere.

Like 1970s Ham radio, social media fads don’t last for long. But the data Facebook has on you is forever. Look for it next month via relevant ads on your smartphone.

Apple patent would let your pants talk to coffee shops


One of my favorite geek activities is to skim through Apple’s patents, which are updated nearly every day. Apple files for many cool ideas, such as holographic TV sets or haptic-sensory gloves, and the patents hint at real products to come.

Now, Apple wants to watch your body. In a recent filing, Apple described the need to move body-movement sensors beyond its current Nike+ sneaker systems, frankly admitting that the current Nike+ is limited in what it can do (basically log and share running miles, although Nike+ has started progressing into wristbands and watches):

The use of devices to obtain exercise performance information is known. For example, simple mechanical pedometers have been used to obtain information relating to walking or running… unfortunately, however, it is becoming more commonly practiced to place the sensor at locations on a garment (shoes, for example) that are not specifically designed to physically accommodate the sensor and/or calibrated to accurately reflect data…


The problem is twofold: athletes can move in many ways without shifting their feet, and there is a vast market beyond athletes if Apple found new ways to monetize other body-movement data. So Apple continues with this new concept — sensors in all clothing:

An embodiment of this invention pertains to linking an authenticated sensor with one or more authorized garments (such as running shoes, shirts, slacks, etc.) that can provide in addition to current physiologic data of the user, garment performance statistics (i.e., rate of wear of a running shoe), location of the garment and any related information (location of near-by eating establishments, for example) and any other garment related data.


The expansions of Nike+ would improve human tracking in a way that moves more Apple entertainment content. Clothing that tracks nuances in movement would allow Nike+ to work on bicycles, indoor trainers, or weight training; all of this data could expand the social functionality, and also tailor music playlists and content sales, a nice source of profit. The next way could be using physiologic data and LBS tracking to align Apple mobile devices with retail network partners (coffee shops, clothing outlets), telling you when and where you can find offers to refuel from workouts, another source of revenue for Apple. And Apple could even get into the payments game: if Apple integrated NFC into its mobile devices, it could capture a slice of each transaction as you use your iPod instead of a wallet.

Your physical condition, movement, content preferences, and buying mechanisms could all revolve around Apple. You’d get better feedback and personalized content (“Nice workout! And your favorite coffee shop is just ahead!”), and Apple would make a lot more money.

All you have to do is wear the right clothes.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Patrick Caire
Originally posted on Google+.

Facebook’s mobile advertising problem


Facebook’s registration with the Securities and Exchange Commission is a brilliant read for anyone who works in marketing or social media, because as Facebook prepares to go public it has to lay out everything that could go right or wrong in the future of social. The company is crushing its numbers now, with a cool $1 billion in profit, but read Facebook’s “risk factors” and what leaps out is the challenge of mobile.

Nobody has figured out how to make big money from mobile advertising; advertising rates for mobile ads are absurdly low, from $0.06 to $0.25 cost per click, a signal inside the ad industry that perhaps the back-end conversions from consumers clicking the ads are pitiful, and the macro mobile ad market has missed every rosy forecast of the past decade. Facebook hasn’t even launched mobile ads yet on its app (although that is coming soon) — and yet you know where consumers are headed. Handsets, tablets and other portable screens.

Here’s what Facebook warns in its S-1 filing:

Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.
We had more than 425 million MAUs [monthly active users] who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.


Digiday reported this week that Facebook will soon run mobile ads inside its smartphone app UI. For Facebook, it is absolutely critical that this new format succeed. Google also has been struggling with this issue, because the smaller screens in mobile mean any ads are more intrusive and less likely to be welcomed by consumers; this is one reason why Google bought Motorola Mobility and has pushed handset hardware designed with hot keys that boot search (and the corresponding search ads). As Facebook user growth slows (there are only so many people on the planet) and consumers shift away from PCs to portable Internet devices, the question is will we all want advertiser friends in our pocket?

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Originally posted on G+.

Consumers spend more time on mobile, spelling trouble for ads


Flurry, a mobile application analytics firm, has published a report that U.S. consumer usage of mobile apps now exceeds web use in minutes per day. Flurry compared data it tracks from 85,000 apps with comScore and Alexa data on Internet use (a perhaps fuzzy bit of methodology) and claims the average consumer spends 9% more time each day using smartphone or tablet apps than old-school Internet windows — 81 minutes on mobile device apps, altogether.

Beyond this consumption shift, which seems inevitable given smart phones and iPads everywhere, lies scarier data for marketers. When consumers are using mobile, they spend the majority of their time on games or social networks that typically do not carry advertising — and only 16% of their time reading news or entertainment, the traditional channels that push paid marketing messages. Tiny screens already have less visual inventory for ad space; now, the modality of consumers has moved away from content that holds ads at all.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.


Mobile eclipse of ad inventory


Brandflakes points us to this graphic showing how users of social-media tools are migrating to mobile. The graphic is slightly confusing — the overlap between the outer circle and inner one represents the share of mobile users in each category, with Facebook logging in at about 40% — but you get the drift. Mobile brings enormous challenges to the advertising industry since its small-screen formats limit ad inventory, users tend to be focused on a sharing/sending modality and not passive consumption, and achieving scale across the fragmented universe of handset formats and smartphone apps is a real pain. Think of the graphic above as a looming advertising crunch, with the inner circle eclipsing the old media consumption of yore. Solution? Get testing in the mobile space, marketers — it is not going away.

Has Apple snared 20% of total mobile ad spending?


Do the math and your jaw will drop.

While Steve Jobs was distracting you Monday with the glittering iPhone 4G’s front-facing camera, potentially heralding an era of video calls into the U.S., Apple was plotting its real move — staging a 40% margin slice of the nascent mobile advertising market. If you can believe Apple’s announcement, it has already booked one-fifth of the entire mobile advertising market — and the crazy thing is Apple’s mobile ad platform won’t go live for three more weeks.

Mobile advertising has been hampered for a decade by shoddy interfaces, shrunken visual inventory, changes in consumer modality (you use tiny handheld devices to talk and text things, not surf the web), and — most recently — Apple’s own groundbreaking app universe. More than 225,000 push-button apps have now been downloaded 5 billion times, and each of those buttons gives handset users a way to find information online — weather, sports scores, games — while avoiding the old-style Internet. Until now, that’s almost 225,000 unique tiny media formats that advertisers would have to push their way into if they want to try to intercept that audience. (Don’t think mobile advertising has stalled? Then please review the past decade’s comical missed mobile ad spending forecasts.)

But on Monday, Apple announced its iAd mobile advertising network had booked $60 million in ad commitments for the second half of the year — a run rate of $120 million annually, or 20.2% of the total $593 million that eMarketer says will be spent on mobile ads in 2010. Let us repeat. Apple’s iAd mobile ad platform, which will turn on July 1, has already gained one-fifth of the mobile ad market. At a 40% margin.

Apple’s platform gives hungry garage-based app developers the other 60% cut, something better than nothing, and marketers a way to outwit all of those nasty web-ad-inventory-avoiding applications by intercepting them all. And unlike Google’s app-ad systems, Apple’s doesn’t push you away from apps into the web when you click on one but lets you continue easily onward in your app-fueled journey.

What can we say, Steve? Forget that glittering glass iPhone; your margins are looking su-weet.

Image: Stephen Mitchell

Can online ads be 2/3 of media spend? No.


We had a friendly virtual debate with Shiv Singh tonight. You should read his blog, he’s a bright mind for Razorfish. Here’s the replay.

Shiv:

If you’ve wondered why the Internet is hot and continues to still be, this chart says it all. Advertising dollars are moving online in a big way… According to Union Square Ventures partner Fred Wilson, he can see this percentage becoming two-thirds of all advertising spend as TV and radio become audio on the Internet and video online. Do you agree?

Ben:

No. I appreciate the enthusiasm but I also suggest that following hockey-stick projections is a sure way to look silly in a few years. The facts are the average U.S. household has more than four TVs — more TVs than people — and the typical consumer watches 5 hours and 9 minutes of live television. The biggest trend is concurrent media usage, in which people, like myself, watch CNN while typing on a computer and using the phone. The Internet is additive but itself is facing the end of its bubble, a la the emergence of mobile as the new Internet, the diminished ad inventory inside smaller mobile screens, and the shifting modalities of consumers who are learning to create and share their own content. Apples’ “app” innovation has put a nail into the young coffin of mobile advertising since most apps have extremely limited visual inventory to insert any ads at all.

Now, if mobile is the future — and Wall Street guru Mary Meeker says it is, with more than 10 billion untethered devices soon to be in human hands — how has mobile advertising fared? Why, we’ve missed every mobile forecast for the past 10 years.

It’s cool to be visionary, but Internet advertising has a big problem — banner CPMs are falling to the floor, consumers are moving to smaller mobile screens with less inventory, and gadget manufacturers have an incentive to put up new walled gardens that make advertising insertion even more difficult.

Image: XiXiDu