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Survey: Nearly 90% Use Smartphones in Retail Stores to Make Buying Decisions

New smartphone user survey data from Thrive Analytics and the Local Search Association (LSA) reinforce the now well-established idea that consumers will share location information in exchange for tangible rewards. We've seen this in our own survey work as well as that of other third parties (e.g., Swirl, OpinionLab). 

The LSA study involved just over 1,000 US smartphone users. It was conducted in January.   

Strinkingly the survey found that 97% of Gen Y, 91% of Gen X and 81% of "young Boomers" (under 53) used their smartphones at least sometimes while shopping in stores. Comparing prices and accessing coupons were the top two reasons.  

Large majorities of each demographic segement (85%+) said that using smartphones in stores makes them smarter shoppers and helps them make buying decisions accordingly. The top four apps used in stores were "mobile search," Amazon, Facebook (among younger users) and a barcode scanner such as RedLaser (eBay).  

The top three motivations (in order) given for being willing to share location with retailers were the following:

  1. To gain loyalty points or rewards
  2. To receive an offer or deal
  3. To receive exclusive or personalized content

 

Cortana Reportedly Closes 'Assistant Gap' with Siri, Google

Windows Phone OS 8.1 has received some early favorable reviews. One of the standout features is Microsoft's virtual assistant Cortana

Two early side-by-side comparisons of Cortana with Siri and Google's Voice Search/Now contend (and demonstrate) that the Microsoft assistant achieved comparable performance: 

It thus appears that Microsoft has taken away Siri or Google's assistant capabilities as competitive differentiators vs. Windows Phone. Indeed in the Gizmodo test Siri lagged in a few cases.

Neither review says that Cortana has exceeded the other assistants at this point. But the fact that Microsoft is out of the gate with a comparable capability is impressive. The only major thing that now stands in Windows Phone's way is its more limited app selection. 

Let's hope that Cortana now puts pressure on Apple to further upgrade Siri. Since its dramatic introduction nearly four years ago Siri has not lived up to its potential, though it has continued to improve incrementally. 

Google Voice Search performs adequately. It's speech recognition for dictation is consistently not as good as Apple's (Nuance's). Google Now's "anticipatory search" and related features are much more interesting. However Google Now also hasn't evolved significantly in the past 12 to 18 months. 

Mobile-Centric Households Now Outnumber Those with Landlines in US

According to the latest data from the US Center for Disease Control (CDC), roughly 133 million US adults rely exclusively or primarily on their mobile phones at home. That means they either don't have a telephone landline at all or have one but rarely use it. 

The most recent data available are for the first six months of 2013. The CDC reported, "Approximately 38% of all adults (about 90 million adults) lived in households with only wireless telephones; 45.4% of all children (approximately 33 million children) lived in households with only wireless telephones." The CDC explained that younger people, adults with roomates and no kids and those in lower income groups were more likely than others to be wireless only.

The related “wireless-mostly” category is defined as "households with both landline and cellular telephones in which all families receive all or almost all calls on cell phones." According to the report, roughly 43 million US adults (17.7%) live in these wireless-mostly households.

Unlike the wireless-only group, however, wireless-mostly demographics feature better educated and more affulent individuals and families. They can afford to maintain a landline but choose generally not to use it. Most of the people reading this probably fall into that latter group.

Together these two groups represent about 55% of all US adults. This now means that landline users are in the minority.  

Following Facebook and Twitter, Google Starts Tracking Offline Purchases

Internet-influenced offline consumer spending is roughly 10X the value of e-commerce but no one has been able to clearly see or track this phenomenon until recently. Most marketers have focused on online clicks and conversions because they have been much easier to track and measure.

There are now a range of methodologies to track online-to-offline conversions. Some involve tracking smartphones. However some involve CRM or sales data and the matching of that data to online or mobile ad exposures. This methodology is utilized by Facebook, Twitter -- and now apparently Google. 

The Wall Street Journal reports that Google is involved in a "pilot program" with six advertisers that matches online cookies to store sales data and other information provided by Acxiom Corp. and DataLogix. Facebook and Twitter both work with DataLogix as well. 

Apparently the Google pilot involves search ads for the time being (but I'm sure it contemplates display as well). According to the WSJ, the in-store tracking pilot "adds a new column that shows in-store sales spurred by the ads."

Google is also in beta with a program called "estimated total conversions," which measures cross-device visits and extrapolates conversion rates from a subset of signed-in Google Chrome browser users. The company is planning on extending the program to offline store visits (tracking Android users exposed to ads into physical retail stores). 

IAB biggest ad categories  

Retail is the largest spending category of online advertisers according to the IAB. In 2013 total digital retail advertising was worth roughly $9 billion out of a total of nearly $43 billion. Retailers are also major mobile advertisers.  

As indicated, there are a variety of methodologies that can now be used to track online-to-offline conversions:

  • Media-mix modeling 
  • Conversion "proxy" metrics: call tracking, map look-ups
  • Coupons
  • Check-ins, scanning QR codes in-store
  • Mobile payments and matching of CRM + online databases
  • Geofencing and indoor location
  • User surveys 

DataLogix and similar vendors have data on trillions of dollars of consumer purchase behavior. The internet-influenced product and services market is worth more than $2 trillion, while e-commerce in the US is worth between $210 and $260 billion. 

Online to offline ad tracking and its impact on the larger digital media world will also be one of the themes of Place 2014.  

Mobile Revs in US Double to $7 Billion, Now 17% of All Digital Revs

No more "year of mobile jokes." Thank God.

The IAB just reported that in the US mobile advertising revenues (all formats) essentially doubled from 2012 when they were just under $3.4 billion to $7.08 billion in 2013. The IAB breaks out "online" ad revenue by format, but no longer for mobile.

However search is the largest mobile ad format or category. It's probably safe to assume that mobile search revenues were between 45% and 50% of total mobile revenue for 2013. If that's accurate, it would mean roughly $3.5 billion in 2013 mobile search revenue. 

2013 IAB digital revenues

Based on last year's numbers and first half growth we had expected that that US mobile ad revenues would come in just under $7 billion. But a big Q4 bumped them over the $7 billion threshold.

According to the IAB, in Q4 2013, mobile ad revenue was 19% of total digital revenue or $2.3 billion, essentially double Q4 2012's $1.2 billion. Remarkably "mobile" captured the same percentage of total US digital advertising as online display in Q4: 19%.

IAB biggest ad categories

For the full year 2013 mobile grabbed a still-impressive 17%. In addition mobile was the fastest growing digital ad segment, which makes sense. 

Retail was the largest-spending advertiser category, followed by financial services and automotive. The IAB didn't break out advertiser spending by format. However retail is one of the top mobile-ad spending sectors , seeking to drive foot traffic to physical stores.

IAB industry ad revenue

Study: Smartphone Users Ready to Buy -- Offline

This morning I received a message in my in-box with the subject line: "Mobile commerce has really arrived." In the associated article a range of data were cited to argue that consumers were doing more and more e-commerce on their smartphones.

While it's true that e-commerce over tablets and smartphones is growing we should be clear about what's really going on out in the real world. Smartphones are widely used by consumers as part of their shopping and purchase research -- between 60% and 80% (or more) use them in stores for product and price lookups.

Marketers routinely undervalue and misunderstand the now critical role of mobile in consumer purchase activity. Part of the reason is tracking/attribution: smartphone owners overwhelmingly convert offline (or on PCs) and much of that behavior is simply not captured. 

New research from comScore, Neustar and 15 Miles reinforces this basic point. The data are based on a December survey and behavioral observation of users. The sample size was just under 5,000 US adults. 

comScore Local Search Study

Source: comScore, Neustar Localeze, 15 Miles

The study found that 78% of local searches conducted on smartphones resulted in a purchase vs. 64% on tablets and 61% on PCs. 

The majority of those purchases (76%) happened the same day and most within "a few hours" of the lookup. This reflects the immediacy of the mobile search user's need. But here's the critical point: Almost 90 percent of those purchases happened offline, in a physical store (73 percent) or on the phone (16 percent). Eleven percent were e-commerce transactions. 

Actual transaction data (as opposed to self-reported survey data) from e-commerce software provider ShopVisible found that 85% of e-commerce transactions in 2013 were PC based, only 4% came from smartphones.

Marketers need to recognize that most smartphone users are going to consult their mobile devices throughout the purchase cycle but largely aren't going to complete a transaction on that device. If they don't understand this behavior and account for it they're going to fundamentally misunderstand the role of mobile and undervalue it significantly.

This is partly why online-to-offline analytics/tracking is such an important development -- and one that we'll be exploring in depth at Place 2014.  

Wearables: After High Interest, High Abandonment

There's a strong belief among tech insiders that "wearables" are an emerging hardware category that's here to stay and perhaps even a new marketing channel in the making. Nielsen consumer research asserts that 70% of US consumers are aware of “wearables" and roughly 15% currently own some form of the technology: 

  • Fitness wristbands -- 61%
  • Smartwatches -- 45%
  • Health tracking devices -- 17%

Nielsen also found that roughly half of its survey respondents were interested in the category: "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." Our survey data similarly found a fairly high level of interest: roughly 40% of smartphone owners said they were interested in smartwatches (generally of the same brand as their smartphones). 

A report by Endeavor Partners, published in January (based on Q3 survey data), throws some cold water on all the excitement. The firm says that an online survey of "thousands of Americans" found that 10% of US adults owned or had used an "activity tracker" (e.g., Fitbit, Fuel Band). It didn't address smartwatches as a stand-alone category. 

 

The study also reported high abandonment rates of activity trackers/fitness wristbands. Roughly a third of owners stopped using them within six months of initial ownership and half were no longer using them: 

Endeavour Partners’ research reveals that more than half of U.S. consumers who have owned a modern activity tracker no longer use it. A third of U.S. consumers who have owned one stopped using the device within six months of receiving it. 

This first Samsung smartwatch reportedly experienced 30% return rates. But that's probably a function of the poor design and usability of that device rather than a broad statement about the prospects for the smartwatch category. The Pebble smartwatch is apparently selling well. 

It's still early in the development of wearables and there will be a range of new products of increasing quality and refinement. Hopefully we'll see some "next generation" watches coming out of the Android Wear effort. Apple is also expected to introduce its rumored "iWatch" at some point.  

Yet the Endeavor data offer a sobering counterpoint to all the hype about the category and widespread perception that wearables are an inevitable boom in waiting.

Microsoft Formally Launches Its Personal Assistant -- Cortana

At its Build developer conference in San Francisco today Microsoft finally and formally announced Cortana, its personal assistant. The name is derived from a character in the game Halo.

For a time it was thought that there might be a female Cortana avatar (inspired by the game). However Microsoft (probably wisely) chose not to do that.

Cortana aims to go beyond both Siri and Google Now by being a more comprehensive way to interact with Microsoft devices. It entirely replaces the Bing search button on Windows phones and is powered by Bing and all its back-end capabilities. Users can input queries or questions by voice or through the keyboard (which Siri does not). 

Cortana_Collection_Travel03_16x9

I'm not at the developer event and so am only reacting to the announcement and some of the details trickling out. From what I can tell however Cortana combines most of the capabilities of Apple's Siri, Google Voice Search and Google Now.

Previously I asked, will Cortana be a breakthrough or a "me too" product? There doesn't appear (from a distance) to be a "wow" breakthough capability that would immediately differentiate Cortana/Windows Phones and tips the scales in favor of Microsoft. However Cortana might impress with subtle or refined capabilities and functionality. There's a lot going on here.

After I've had a chance to use Cortana I'll be able to render a better judgment about its competitiveness and utility. Basically Microsoft had to offer an assistant on Windows Phones if it hoped to remain competitive with Apple and Google. 

Cortana will launch on Windows Phones with 8.1 software in the US. It will expand to other non-US markets later. 

Surveys Show Growing Demand and Usage of Mobile Payments

Two surveys independently released in the past couple of weeks indicate growing demand for and consumer experience with mobile payments. One survey released by Verifone (n=1,000) found that 55% of respondents were interested in mobile payments, with higher percentages (70%) of "millennials" expressing interest.  

In that survey the motivations or perceived advantages of paying with a smartphone included: 

  1. Mobile deals: 45%
  2. Track spending: 45%
  3. Faster: 34%
  4. No wallet: 28%

A separate survey released by Local Corporation (fielded by the eTailing Group, n=1,294) asked a range of questions about mobile user behavior. Among them were several questions about mobile payments. 

The survey found that 27% of consumers had used their smartphones to pay for an in-store purchase at some point. However the materials and discussion released didn't indicate how "in-store" was defined (did it include Starbucks, for example?). Reasons for not using a "mobile wallet" were security (44%) and privacy (36%).

When asked what brands consumers trusted to manage mobile wallets and mobile payments, consumers said:

  1. Visa: 24%
  2. PayPal: 21%
  3. Apple: 15%
  4. Amazon: 13%
  5. Amex: 7%
  6. Google: 6%

It's not clear whether the findings immediately above are statements about the brand in general or indicate any direct experience of usability. The mobile/offline version of Google Wallet in its current form is essentially a dead product.

Apple and Amazon have not yet fully entered mobile payments but are going to do so. Apple has filed patent applications that indicate its intention to get into mobile payments, with its more than 600 million consumer credit cards on file.

We have argued that mobile payments are entering the mainstream through vertical or specialized apps that contain a commerce elment but with offline fulfillment -- Uber, AirBnB, OpenTable are examples. We should continue to see mobile payments "mainstream" and gain increasing momentum over the next five years.

Apps Killing Mobile Web, Facebook Biggest App, Google Biggest Revenues

According to new data released by Flurry apps have solidified their hold on mobile user behavior, claiming 86% of all time spent on the mobile internet. Early prognosticators believed that mobile apps were a temporary bridge to the mobile web and would eventually give way to the "open internet."

That obviously hasn't happened. Perhaps years from now things will be different. 

Earlier this year, consistent with Flurry's report, Nielsen found that about 89% of all time spent in mobile is with apps; 11% on the mobile web. Yet, despite this massive time-spent imbalance, the mobile web still has greater audience reach than mobile apps.  

apps dominate hires resized 600

Among mobile apps, gaming is still the single largest category with 32% of time spent according to Flurry. However Facebook (including Instagram) is by far the dominant individual app, accounting for 17% of all time spent. By comparison YouTube captures 4% and Twitter 1.5%. Apple's Safari browser grabs 7% of time spent and Google's browsers 5%. 

Ad spending in mobile is growing quickly as brands and marketers race to catch up to consumers. According to the chart below Google claims a disproportionate share of ad spend, while Facebook is more or less in balance. By comparision the long tail of apps fail to capture their share of ad spend -- suggesting significant future growth for in-app advertising. 

An app developer and publisher survey conducted this year by App Annie found that only 42% monetized with display advertising.   

ad spend hires v1 resized 600 

Early Nokia X (Android) China Success Hints at What Might Have Been

From the beginning, after Nokia announced that it was embracing a third party mobile operating system (Windows), I argued that Nokia should have also released Android devices. And in something of a surprise, we learned late last year, after the $7+ billion acquisition of the company's hardware division by Microsoft was announced, that Nokia had been secretly working on an Android handset.

Chinese and other Asian regulators have delayed the closure of the Microsoft-Nokia transaction, which has now been pushed to the end of April. But it still should be approved and close. 

Earlier this year we got to see the Nokia-Android handset, the Nokia X (and its kin). The company created a Windows Phone-like UI and overlaid it on top of a semi-forked version of Android. The idea is to bring low-end buyers into the Nokia fold with a Windows-like Android UX and Microsoft services and then upsell them into a true Windows-Phone experience.

Intended to be highly affordable the Nokia X has now rung up 10 million pre-orders in China. These are not actual sales (yet) but reservations to buy the phone when it becomes available in the near future. This impressive level of demand indicates that had Nokia been building Android phones all along it might now be in a very different position and potentially wouldn't have had to sell to Redmond. 

Of course Microsoft, heavily dependent on Nokia, recognized its own vulnerability and essentially bought the Finnish company's devices division for defensive reasons. Had Stephen Elop made different OS choices, Nokia might today be vying neck-and-neck with Samsung for position as the top global Android OEM. 

Facebook Announces 1 Billion Mobile Users As It Readies the 'Platform of the Future'

Yesterday on the conference call discussing the $2 billion acquisition of Oculus VR, Facebook CEO Mark Zuckerberg also told the audience that it now had one billion mobile users -- quite a milestone. The company previously reported in its Q4 2013 earnings that it had 945 million "monthly active" mobile users, as of December 31, 2013. 

Daily mobile users are now probably around 600 million on a global basis.

Ad revenue from mobile devices in Q4 was "approximately 53% of advertising revenue ... up from approximately 23% of advertising revenue in the fourth quarter of 2012." That means the mobile ad-revenue number will likely be 65% or greater by the end of the year. Twitter gets roughly 70% of its ad revenue from mobile, based on its most recent earnings report.  

Even though mobile experiences, advertising and marketing are still relatively young (since 2007), Facebook is looking beyond mobile to the "next computing platform." For Zuckerberg that's virtual reality. 

He's potentially right.

However much depends on whether and how virtual reality can be translated into a mainstream experience. It's not unlike taking original IMAX and turning it into a smaller but more "accessible" cinematic IMAX for popular film releases.

Beyond gaming, which is Oculus' current pursuit, Zuckerberg articulated the idea of bringing people (virtually) into places, events and experiences in a more immersive and direct way. There are both commercial and non-commercial scenarios. Many of them, however, are straight out of science fiction or dystopian novels and movies (see, e.g., Matrix, Demolition Man, Strange Days).

Paradoxically, the Oculus acquisition brings Facebook more into the "real world" (away from 2D internet) but also offers new potential opportunities to create internet-like experiences for users, into which they can enter.  One such example might be strolling down a virtual shopping street, like a character in a 3D game, where people can "touch" and examine products in a holistic 3D experience. 

It's fascinating to contemplate an internet of the future that might be radically different than what we know today.  

Retailer Apps Must Focus on the Offline Shopper, Not Just Ecommerce

The notion that retail apps or mobile sites should primarily be a shrunken ecommerce experience is misguided. That idea, however, is promoted in February survey results from RSR Research. The survey data reflect how retailers regard the role and value of mobile.

The results divide retailers into "winners" (market leaders) and "all others" (presumably laggards). Among the winners, the top use case for mobile is "an ecommerce site that can extend into mobile." That's followed by "downloadable shopping app, "public WiFi in stores," and "employee assisted selling mobile capability."

It's a bit unclear what these secondary responses mean. However I assume they all pertain to an offline or in-store role for retail apps or sites.

 

Source: RSR Research

RSR celebrates the notion that the primary role for mobile is to extend ecommerce into mobile: "an eCommerce site that can extend to mobile is the best technology approach for their customer-facing mobile strategies." I disagree with this philosophy. 

Although most smartphone users have conducted transactions on their handsets, this is not the primary shopping-related use of smartphones. The overwhelming majority of ecommerce transactions that involve mobile, start on a smartphone and end in stores or on a tablet/laptop later. 

A recent ShopVisible survey illustrated that while mobile devices drive 30% of ecommerce/retail traffic, they're only responsible for 15% of purchases. But beyond this the data show that smartphones only generate 4% of "mobile orders."

ShopVisible data  

There are range of surveys with different percentage findings about mobile transactions. But directionally they're virtually all the same: consumers use smartphones as a critical part of the shopping research process but when it comes to buying they do so on PCs, tablets and, overwhelmingly, offline in local stores. (Internet influenced offline spending is probably worth more than $2 trillion annually, many times larger than ecommerce.)

We don't argue with the idea that mobile apps and sites have an important role to play in ecommerce (tablets especially). Despite this, smartphone retail apps should be thought of primarily as a tool to aid the offline shopper. Most of the current deficiencies of the offline retail experience (lack of competent in-store personnel, inability to find products, additional product information) can be mitigated or addressed with a strong in-store app experience.

It's also possible to "have it both ways": to emphasize ecommerce when the user is far from the store but use location detection (and opt-in) to offer a in-store experience that features shopping lists, product information, buying incentives and in-store maps/navigation (where appropriate).  

Juxtaposing ecommerce and offline commerce is something of a false dichotomy. Offline shopping support should not be neglected, however, because retailers are focused on trying to drive mobile-commerce transactions (because they misunderstand consumer behavior). Retailers should provide an ecommerce catalog in mobile while still recognizing that there's far more value and opportunity in supporting the real-world shopper.

Opt-In a Must: Consumer Survey Indicates Retailer Risks with Indoor Location

There have already been several surveys that show consumers are interested in the benefits of indoor location and will share their personal data or opt-in when they're clear on what those benefits are. See, for example: 

A new survey (n=1,024 US adults) from OpinionLab shows that consumers are skeptical about indoor "tracking" and only want to participate in indoor location and marketing programs if they're opt-in. In an article about the survey Fortune sensationalizes the findings "Consumers hate in-store tracking (but retailers, startups and investors love it)."  

That headline overstates the degree to which consumers are hostile to being located in stores. It's very fair to say they're ambivalent and cautious about indoor location, though most haven't had any experience of indoor location at this point and are speaking only in the abstract.

The use of the word "track" is very charged and that's the framing here -- "In your opinion, is it acceptable for retailers to track shoppers’ in-store behavior via smartphone?": 

  • No -- 77%
  • Yes -- 23% 

An alternative question such as "would you be willing to share your location with retailers for benefits X, Y, Z" would have produced a different result. Indeed, how surveys present these issues to consumers really matters (see, e.g., Majority Of Shoppers Want Cross-Channel Personalization.) Accordingly survey results can be manipulated to serve agendas in favor of or against indoor location. 

Another question in the OpinionLab survey similarly predisposes the outcome -- "If one of your favorite retailers were to implement a tracking program in their stores, would you participate?":

  • No -- 63%
  • Yes -- 38% 

This survey found that consumers are open to indoor location if the programs are entirely opt-in (even with the "tracking" framing) -- "In your opinion, what is the best way for retailers to approach in-store tracking?"

  • Opt-in -- 64%
  • Opt-out -- 12%
  • No tracking at all -- 24%

Consistent with earlier surveys, consumers say they would opt-in for discounts and other incentives -- "What incentives would motivate you to participate in a retail tracking program?": 

  • Save money / price discounts 61%  
  • Free products 53% 
  • Chance to win a big prize (vacation, HDTV) 28%  
  • Better shopping experience overall 24% 
  • Unlock new experiences and awards as you shop the aisles 23% 
  • Personalized attention from store associates 12% 

What this survey, like others before it, shows is that consumers have real privacy concerns about indoor location and tracking. However, the word "tracking" is one that triggers an immediate, negative response and associations (i.e., "surveillance," "spying"). By contrast, discussing the benefits of indoor location produces a very different set of findings (see other surveys).

Yet the OpinionLab survey also shows that uncer the right circumstances consumers will share their location where retailers ask for permission (opt-in) and the benefits are sufficiently enticing and clear. 

Despite my criticisms of the framing of the OpinionLab survey I think it does illustrate that there are clear risks for retailers around indoor location if they don't respect consumer privacy and don't get the messaging to consumers right.

At the upcoming Place Conference Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will moderate a session on consumer privacy: "Indoor Location & Privacy: Steering Clear of the ‘Creepy Line.'"

Will Digital Advertising Work on Wearables?

Last week Google announced Android Wear, its smartwatch platform. Later in the week Nielsen released consumer research asserting that 70% of US consumers are aware of “wearables" and roughly 15% currently own some type of wearable technology today.

Among the 15%, Nielsen found the following breakdown: 

  • Fitness wristbands -- 61%
  • Smartwatches -- 45%
  • Health tracking devices -- 17%

The Nielsen survey probably overstates the number of Americans that actually own/use wearables currently; 15% of adults would translate into roughly 36 million people. Nielsen also found (I tend to believe this): "Nearly half of Americans surveyed expressed their interest in purchasing wearable tech in the near future." We found in our own research that roughly 40% of smartphone owners were interested in smartwatches. 

An article in Mashable speculates about the role that advertising might play on wearable devices. The article correctly notes that consumers will be far less accepting of "interruptive" ads on wearables. As much as smartphones are perceived to be "personal," this goes 2X for something like a smartwatch.

So-called "native" advertising may have a role to play in the context of a stream of news or other content, delivered on a smartwatch. But most if not all "advertising" on smartwatches will need to be opt-in marketing. These could take the form of location or time-based alerts or notifications (this could extend into indoor location and marketing as well). These types of marketing could prove to be very effective -- emphasis on the word "could." 

The bottom line is that all marketing on wearables (mostly smartwatches) will need to be highly sensitive to user privacy and almost entirely permission based.  

Burger King to Bring Mobile Payments to All 7K US Stores

According to Bloomberg, Burger King is readying an app upgrade that will allow users to pay with their smartphones. Little detail is provided beyond that. 

There are already app-based payments using the chain's "Crown Card," a stored value card that can be reloaded and can be presented physically or virtually via mobile phone (like Starbucks). It's not clear if the Bloomberg report is referring to this or a new options to upload and store a credit card in the Burger King mobile app.

Regardless, the move will motivate fast-food rivals to similarly adopt in-app, mobile payments. Mobile ordering for in-store pickup (a la Chipotle) is expected to later roll out. The rationale behind the move is obvious: more efficiency, more customer data and greater overall customer satisfaction. 

As I've argued elsewhere mobile transactions and self-service ordering will eventually eliminate many thousands of low-skilled cashier and service worker jobs in places like Burger King.  

Finally this is another example of mobile payments being introduced in a very specific context. Broad, horizontal payments tools and platforms such as Google Wallet and Clinkle are struggling while in-app or stored card payments are taking off in more narrow contexts (e.g., Uber, OpenTable). 

It's likely that Burger King's mobile payments will be widely adopted by loyal and regular customers. However it's not clear this will improve the company's competitive position vis-a-vis McDonald's. I suspect McDonald's will follow with its own mobile payments functionality in the relatively near future.  

Update: QSR chain Wendy's has now also announced that it's rolling out mobile payments. 

Google Announces Smartwatch Platform, 40% of Consumers Potentially Interested

Long anticipated, Google and several partners today announced Android Wear (smartwatches). Immediate partners are MotorolaLG and Fossil. HTC and Samsung are also on that list (although Samsung previously appeared to abandon Android for operating system Tizen in its Gear 2.0 smartwatches). 

Several designs were teased by Motorola and LG but no actual products were formally announced, nor were prices revealed. We also don't know if these watches will need the connectivity of an owner's smartphone. I suspect they will but it remains to be seen.  

It appears that the UI and functionality of all of these Android Wear smartwatches will be the same or very similar. Thus design and price really matter for differentiation among watch makers. Accordingly, there are lots of "smartwatch wars" headlines now going up. Apple is also supposed to release a smartwatch this year if rumors are correct.  

Google said in its promotional videos that it designed a new UI to accomodate the small form factor. The user experience will be based on voice search ("OK Google") and Google Now/notifications.

Not trying to do too in a smartwatch much is critical. Samsung's Gear 1.0 watch tried to do and be too many things. Furthermore, Google benefits from having developed a UI/UX for the very small and awkward form factor Glass. 

Unlike Google Glass, however, smartwatches have the potential to become a mainstream consumer success. In a survey we conducted last year (n=1,000 US adults) 40% of smartphone owners were interested in a smartwatch in the abstract. An actual product with a compelling design will boost that level of interest. 

Most smartphone owners in the survey, who expressed interest, indicated they wanted a watch using the same OS or brand as their current phones. 

Location Analytics without a Consumer Value Angle May Not Fly

An article in HBR today discusses what we've known and been writing about for some time now: location analytics is a major "must-do" opportunity for retailers and others (airports, hospitals, casinos, colleges, mall owners, entertainment venues). See also: Report: "Mapping the Indoor Marketing Opportunity."

The HBR piece discusses various provider-vendors (RetailNext, Placed, Euclid) and retail scenarios (operations, staffing, merchandising) that will benefit from indoor and offline analytics. However one of the major issues in the space is privacy and consumer acceptance. The article neglects to discuss privacy at all, although many of the comments raise the issue.  

Location analytics can be done in such a way to avoid any PII collection while giving customers the ability to opt out of any indoor tracking (save closed circuit TV). The Future of Privacy Forum has introduced an opt-out (a kind of do not track indoors) website SmartStorePrivacy.org. This is a voluntary thing at the moment, though with many analytics firms signing on. But it will likely become mandatory at some point in the near future.  

Despite ominous portrayals of indoor location by some journalists, it's not a very scary thing when you actually see it in action. Surveys conducted by Opus Research and others have found that most consumers will happily opt-in to location tracking when there's a value exchange that they understand.

Affirming this again, Swirl released some new consumer survey data (n=1,000 US adults) that found: 

  • 77% of consumer respondents would opt-in to location tracking/awareness as long as they received enough value in return 
  • Consumers are most interested in in-store push notifications (80%) around promotions, but also in price comparison tools, relevant content and loyalty program integration 
  • 72% are more likely to buy off an in-store promotion vs. an online offer or email promotion  
  • 62% said they would use apps in-store more often if their content that was relevant/personalized to the shopper’s interests and in-store location

Whether or not these specific findings are replicated at the same levels by other surveys, their general sentiment is: consumers are receptive to in store promotions and content and happy to share location information with a clear value exchange. 

Where indoor location and privacy become potential issues is when there is no consumer experience: if retailers or others are simply collecting data without offering value in return to consumers. Under such circumstances (where opt-out is offered or later required) we might see substantial numbers of consumers opting out of indoor location/tracking. 

My belief is that ultimately the FTC will compel explicit disclosures and signage where location analytics and tracking are present giving consumers the ability to opt out. Burying a notification such as "by using our WiFi you agree to let us track you" in terms and conditions isn't going to fly for much longer. 

New Full-Screen Apple Video Units Point to One Future for Mobile Ads

When former Apple CEO Steve Jobs discussed mobile advertising and iAd he often talked about combining "the emotion of TV ads with the interactivity of web ads." That call to arms benefitted the entire mobile industry and forced ad networks and platform providers to "up their game" -- temporarily. 

Sadly, that advance hasn't continued. Amid all the talk of exchanges, enhanced targeting and programmatic media, there has been little innovation with mobile ad creative. Most mobile ad campaigns are at best weak or perfunctory. There are some isolated exceptions.

The future of mobile search advertising seems to be relatively stable and relatively predictable: dominated by Google and mostly text based. On the display side, however, there are a number of trends taking shape. 

One strand involves "native" or "stream ads," which are represented by Yahoo, Twitter, Facebook and several others. (Both Twitter and Facebook gain more ad revenue from mobile than the PC). Programmatic is gaining significant momentum in mobile as well. Yet that has little or nothing to do with ad creative. 

Another major trend is video. Video is interesting because it permits sophisticated ad creative and enables marketers not to have to generate new units for mobile campaigns. Brand imagery and messaging can also be more effectively conveyed via video than static display or even rich media. A video ad simply needs to be right-sized to fit the screen or sometimes cut in length. 

Mobile distribution of video ads requires less thinking and less work for marketers and agencies. It now appears that Apple is planning to give mobile video ads a new boost with the introduction of new full-screen in-app video ad units. 

AdAge is reporting that Apple is about to "roll out new video iAds this year that will automatically play full-screen within iPhone and iPad apps, according to people with knowledge of Apple's plans." These new video ads are being described as "interstitials," which means they'll come between clicks and content or launch before content. They'll be larger and more effective provided they're not used too often or too disruptive of the user experience. 

AdAge reports that they're being sold through Apple's newly launched but low-profile ad exchange.k

Will Microsoft's Assistant Cortana Be a Breakthrough or a 'Me Too' Product?

Four years after Apple acquired Siri and two years after Google introduced its "predictive search" assistant Google Now (along with its voice interactions), Microsoft is finally bringing an intelligent assistant -- Cortana -- to market. 

Gadget site The Verge obtained some leaked screenshots of Cortana (see right), which is supposed to launch on Lumia devices with Windows 8.1. The question is whether Cortana will help Microsoft and Windows Phones differentiate and advance or whether they will simply be a kind of late entrant and "me too" product from Redmond. 

Cortana is supposed to operate across platforms and screens, including on the PC and Xbox. Derived from a character in the game Halo, Cortana was at one time going to offer an "embodied" female avatar. While that's still possible the screenshots leaked suggest that Cortana will not have a face or a body (which makes "her" more family friendly). It's also likely now, given the "baggage" associated with the Halo character that "she" won't even be named Cortana when she reaches the market in April. 

The Microsoft intelligent assistant will reportedly offer Google Now style anticipatory search and personalization features as well as Siri-like interaction. For Microsoft users (Outlook, Windows OS) Cortana may offer a rich experience but the company lacks some of the personal and search data that enables Google Now to function the way that it does. It has been speculated that for this reason, Microsoft invested $15 million in Foursquare last month in part to gain access to its location data and content to help feed Cortana. 

We'll have to wait for the ultimate product to assess whether it offers new depth or a better assistant experience. Siri helped create (or more appropriately name) the market but has since not kept pace with increasing user demands. Google voice search and Google Now are highly useful but not entirely "coherent" as an overall user experience. 

If Microsoft can in fact offer a "next generation" intelligent assistant it may have found a tool to drive Windows Phone sales as well re-stake a claim as a technology leader.  

Update: According to demo video above from UnleashThePhones Cortana will ask a series of questions to try and develop a personalized user profile to start. The more data that Cortana has over time the more personalized and "predictive" Microsoft can make the system.