Mobile Advertising

Place 2014 - Agenda and Presentations

Place 2014, the leading industry event produced by Opus Research and held July 22 in New York City, brought together a range of developments and ideas: indoor location, online-to-offline tracking, and proximity-based mobile marketing. The agenda and presentations below reflect the what’s next for indoor location with perspectives and expertise from brands, retailers, agencies, technology providers, regulators, and investors.

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Agenda & Presentations

9:00 AM - 9:15 AM
The Place-Based Moment - Opus Research senior analyst Greg Sterling will present new data and original research on in-store consumer behavior, the “privacy paradox” as well as merchant demand for offline analytics and in-store marketing.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation

9:15 AM - 9:45 AM
The Agency Perspective - Michael Lieberman is Co-President of Joule US, where he oversees the expansion of Joule’s East Coast business. Based in New York, Michael heads up teams responsible for delivering mobile strategy, media and creative services that produce effective mobile campaigns for world-famous brands including AT&T, Dell, Colgate, and Ikea.
Michael Lieberman, Co-President, Joule US

9:45 AM - 10:25 AM
The Indoor Technology All-Stars - Google’s Don Dodge will lead a discussion with companies representing the full range of indoor location technologies, from WiFi to BLE beacons and LED lighting. From cost, accuracy and analytics perspectives, which technologies are “must haves” and which ones are “nice to haves”?
Speakers:
Nathan Pettyjohn, Founder & CEO, aisle411
Chris Goodall, Founder & CEO, Trusted Positioning
Dan Ryan, Co-Founder & CEO, ByteLight
Steve Cheney, SVP of Business and Operations, Estimote
Don Dodge, Developer Advocate, Google (Moderator)

10:45 AM - 11:15 AM
Ahead of the Curve: Alex and Ani - Alex and Ani’s Digital Strategy VP Ryan Bonifacino discusses the insights and opportunity that led the jewelry retailer to test and then rapidly deploy indoor location to all its stores across the U.S. – well ahead of its retail peers.

11:15 AM - 11:30 AM
Indoor Atlas and Magnetic Positioning
Wibe Wagemans, President, IndoorAtlas
View slides from this presentation

11:30 AM - 12:10 PM
Connecting the Dots: How Location and Offline Analytics Will Transform Digital Marketing - Offline location data and analytics will deliver huge dividends to retailers, ad networks and marketers in general. They will enable better visibility into campaign effectiveness and permit new levels of personalization and targeting. What will this new world of integrated data look like and how will it change digital and traditional marketing?
Speakers:
Juha Mattsson, VP, Marketing & Sales, Walkbase
Anne Marie Stephen, VP of Sales, iInside
Maria Fernandez Guajardo, VP of Products, RetailNext
Luke Edson, VP, Sales, YP
Greg Sterling, Senior Analyst, Opus Research (moderator)

12:10 PM - 12:25 PM
Case Study: SK Telecom - John Kim, Senior Business Development Manager with SK Telecom, will discuss multiple deployments of indoor location technology in the South Korean market.
View slides from this presentation

1:30 PM - 2:00 PM
Featured Speaker: Facebook - Doug Stotland is in charge of local solutions for both small and large businesses marketing on Facebook. Prior to his current role, Stotland worked on marketing science, pricing and building Facebook’s teams across Asia and the Pacific. Stotland will discuss Facebook's varied and creative efforts to track and measure the offline and in-store impact of Facebook advertising.

2:00 PM - 2:15 PM
Beacon Location Security & Encryption
Jimmy Buchheim, CEO, StickNFind
View slides from this presentation

2:15 PM - 2:55 PM
Indoor Location & Privacy: Steering Clear of the ‘Creepy Line’ - Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will guide a diverse panel of industry observers, marketers and experts through treacherous waters: how to drive engagement without crossing the “creepy line.” What are the issues and emerging best practices? And will the “surveillance” backlash derail merchant adoption of indoor location?
Speakers:
Maya Mikhailov, EVP and Co-Founder, GPShopper
Amanda Koulousias, Attorney, Federal Trade Commission
Kate Kaye, Writer, Advertising Age
Eloïse Gratton, National Co-chair, Privacy Practice Group, McMillan LLP
Jules Polonetsky, Executive Director, Future of Privacy Forum (Moderator)

2:55 PM - 3:10 PM
Hillshire Brands, inMarket and iBeacon - Agency BPN will present a new case study showcasing how beacons and geofencing are driving purchase intent, brand awareness and sales for Hillshire Brands.
Speakers:
Chris Hiland, Chief Strategy Officer, BPN
Todd Dipaola, CEO & Founder, inMarket
Presentation coming soon

3:25 PM - 3:40 PM
Best Practices for Consumer Push Notifications
Scott Townsend, Director of Agency Programs, Urban Airship
View slides from this presentation

3:40 PM - 4:20 PM
Street, Store or Shelf: Rightsizing the Consumer Experience - Indoor location and proximity marketing allow retailers, networks and brands to put marketing messages in front of consumers at strategic points in stores, malls and other venues. But just because it can happen doesn’t mean it should. What’s most effective in geo-fencing and proximity targeting? When is it best to engage consumers and how do we avoid creating more ad clutter and noise?
Speakers:
James Smith, Chief Revenue Officer, Verve
John Dempsey, Head of Mobile and Video, Datalogix
Catherine Lindner,Chief Merchant Officer, Shelfbucks
Asif Khan, Founder & President, LBMA (Moderator)

4:20 PM - 4:35 PM
Comparing Indoor Location Technologies - GISi Indoors will discuss the company’s real-world comparisons of multiple indoor location technologies, its findings, implementation experiences, when and when not to use it and conclusions.
Michael Healander, General Manager, GISi Indoors
View slides from this presentation

4:35 PM - 5:15 PM
Whither Geofencing: What Is the Future of Mobile Location? - Location is now often used for mobile audience discovery and profiling rather than for real-time location targeting. In some percentage of cases, location thus “disappears” into the background and becomes a proxy for behavioral and demographic information. How far will this trend go? What role will “geo” play in the future of mobile marketing and advertising? The panel will explore these and other provocative questions about the future of location and place-based marketing.
Speakers:
David Shim, CEO & Co-Founder, Placed
Eli Portnoy, President & General Manager, Thinknear
David Staas, President, NinthDecimal
Sarah Ohle, Director of Marketing Intelligence, xAd
Bill Michels, SVP of Product & Partnerships, Factual
Greg Sterling, Senior Analyst, Opus Research (Moderator)

Saks Fifth Avenue Parent the Latest Retailer to Roll Out iBeacons

The largest iBeacon retail rollout to date is the one announced earlier this year by American Eagle Outfitters. The company said it will put iBeacons in all 100 stores across the US. However it's not clear where that stands at the moment. Walgreens, Safeway, Alex and Ani and several other retailers have also deployed Bluetooth beacons to varying degrees in their stores. 

This morning Hudson's Bay Company said it joing the club. The retailer, which also owns the Lord & Taylor and Saks Fifth Avenue chains, said it will roll out beacons (with Swirl) in selected stores in Boston and Toronto:

HBC Department Store Group is deploying the Swirl in-store beacon marketing platform to deliver digital experiences to consumers’ smartphones while they shop in the company’s department stores in Canada and the US. Using beacons installed in merchandising areas throughout its stores, Hudson’s Bay and Lord & Taylor will automatically deliver branded content and personalized offers to in-store shoppers through an array of company-owned and third party mobile apps.

The stores will deliver messages via their own mobile apps through Swirl. Though Swirl still has limited visibility among most consumers, it's clear that retailers must pursue a multi-pronged strategy with smartphone shoppers. They need a combination of their own apps and some third party distribution or marketing to build in-store smartphone audiences. 

One related development that's very promising for retailers, which generally don't see high app-penetration rates, is the prospect of GPS-enabled mobile browser-based notifications. I wrote about this development earlier today. A company called Roost has developed push notifications for the web and will soon roll them out to mobile browsers.

This would enable retailers (and others) to get users on the PC to opt-in to notifications, which could potentially later be sent to nearby and in-store customers through the browser, even though those users don't have the retailers' apps on their phones. While this isn't yet available it's a potentially big deal for retailers.

My understanding is that BLE beacon signals wouldn't be receivable by these non-app browser users. Nonetheless, browser-based notifications could be used as a "fall back" or alternative way to message in-store consumers for those who don't have the retailers' apps. 

Preview of Place Conference 2014

When we launched the Place Conference late last year we felt that the time was ripe to hold an event that started to engage discussion around indoor location. But not simply indoor location; we wanted to "connect the dots" between indoor location, broader mobile marketing and online to offline tracking and attribution.

The first Place Conference in San Francisco was a unique event and a big hit. Roughly eight months have elapsed since that time and tomorrow's Place 2014 event reflects the rapid evolution of the market. We're at a moment when mobile marketing is really starting to take off -- expectations are that mobile advertising in the US will be north of $15B in 2014 -- and whe consumers are using their smartphones as shopping assistants in ever larger numbers.

Tomorrow's event at the W Hotel in Union Square will feature a range of speakers and and attendees who don't usually come to the same conferences: agencies, retailers, brands, technology companies, investors, lawyers and representatives of non-profits and government. 

Here's the very packed agenda (and my shorthand): 

  • The Place-Based Moment: Greg Sterling, Senior Analyst, Opus Research (consumer research and market sizing)
  • The Agency Perspective: Conversation with Michael Lieberman (agency perspective on the state of mobile and indoor location)
  • The Indoor Technology All-Stars with Don Dodge (array of providers discussing their capabilities)
  • Ahead of the Curve: Alex and Ani - Ryan Bonifacino, VP of Digital Strategy (why one retailer went all-in with indoor location early)
  • IndoorAtlas and Magnetic Positioning (an indoor technology that doesn't require hardware that you may not have heard of)
  • Connecting the Dots: How Location and Offline Analytics Will Transform Digital Marketing (indoor analytics and how it will impact digital broadly)
  • Case Study: SK Telecom (multiple use cases from South Korea)
  • Featured Speaker: Facebook’s Doug Stotland (how the company is connecting the dots from online to offline)
  • Beacon Location Security & Encryption (best practices for iBeacon and BLE)
  • Indoor Location & Privacy: Steering Clear of the ‘Creepy Line’ (experts discuss how to handle mobile location, indoor location and consumer privacy)
  • Hillshire Brands, inMarket and iBeacon (the first national brand case study using iBeacon)
  • Best Practices for Consumer Push Notifications (Urban Airship shares best practices from its many billions of campaigns)
  • Street, Store or Shelf: Rightsizing the Consumer Experience (what's going to work and how to avoid spamming consumers)
  • Comparing Indoor Location Technologies (an objective comparison of indoor location technologies for brands, retailers and agencies)
  • Whither Geofencing: What Is the Future of Mobile Location? (a forward looking discussion about location and mobile advertising)

If you're going to be in the room you'll be immersed in discussion about the future of mobile, location and offline attribution. These trends are coming together with profound implications for all digital marketers and brands. It's going to be an exhausting yet exhilarating day. 

 

Tiny Collection of Apps Dominating the Mobile Universe

Yesterday Nielsen released data (which has strangely now been pulled from the site) showing that smartphone users were spending about 30 hours per month in Q4 2013 on mobile apps. That was up from just over 23 hours in the previous . . . quarter? year?. The chart below isn't clear on the comparison time frame. 

What's most interesting is that while time went up the average number of installed apps did not. Users on average had just under 27 apps on their handsets. That number was basically flat.

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Interestingly, in May 2012, Nielsen reported that the average US smartphone owner had 41 apps on his/her phone vs. 32 apps in 2011. So either the calculation above is incorrect or the number of retained/active apps has declined. 

The following is comScore's top 15 US apps list for April 2014 (the most recent data available):

The internet -- as represented by apps, which now take up 51% of digital media time -- is shrinking. The list of top mobile ad revenue recipients is even shorter than the top apps list.

Forget the percentage specifics in the chart below; the point is the list itself. Google, Facebook, Twitter and Pandora are all "publishers," though in all but Pandora's case they're ad networks too. YP is a publisher but on the list as an ad network. Millennial Media is also a network. 

If we look at all these data together what we see is a mobile app universe dominated by a tiny collection of apps vs. the total universe of 1.2 million iPhone apps. An even smaller number of publishers/networks collect the majority of mobile ad revenue.

The Outlook for (Monetizing) Wearables

Before we can truly discuss the outlook for wearables we need to see Apple's iWatch and how much it costs. There are already a dozen or so smartwatches in the market, chief among them the Pebble and Samsung devices. Most of them have already failed.

The Pebble is a qualified success. However, there is really only one truly desirable smartwatch coming to market so far -- and we don't yet know the pricing. That's the Moto 360. 

The Samsung and LG watches ($199 and $229 respectively) shown off at the Google developer conference this week seem like decent but not great devices. As fashion items they leave much to be desired. I haven't yet used them so I can't comment on the experience. I have the Samsung Galaxy Gear Live (Android Wear). 

Nielsen reported yesterday that it tracked a "surge" in wearables adoption (fitness trackers and smartwatches) and usage between September 2013 and February 2014. The company added that "these wearable owners used their devices an average of 14 times during the month." The measurement firm also observed that smartwatch owners log a lot of time monthly accessing the internet and content on those wrist devices: 

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There's a question about whether the time is additive to existing mobile device usage or whether it cannibalizes some of that time. Regardless, the data above are very interesting, suggesting that with the right devices (mix of fashion + function + price) wearables could become a mainstream reality with fairly high engagement and diverse use cases.

The next obvious question about wearables surrounds marketing and monetization. Ad exchange TapSense announced earlier this week that it would be supporting delivery of ads to smartwatches. Those ads will likely follow the same pattern as early mobile display advertising: lackluster or perfunctory ad creative and weak or awkward overall experiences.

Most companies won't build anything like landing pages optimized for wearables. And most of these early ads will probably be for other app downloads. 

More likely to be effective are app-based notifications. For a long time SMS marketing held promise as a loyalty and location-based notifications tool. Today that promise has largely faded. However wearables may offer another go at that opportunity.

Consumers could, for example, opt-in to receive location-based notifications -- including indoor alerts -- that might contain marketing content (awareness or DR calls to action). This approach is probably going to be more effective and less awkward than ads within tiny apps on your wrist.

Paradoxically apps with ads that are too small to be noticed won't be effective and ads that are too large are likely to annoy. As "personal" as the smartphone is a watch is going to be even more personal in some respects -- and thus people may be less tolerant of conventional advertising on these devices.

Search content/ads may be an exception. Still you can't show many ads on a 2.5 inch screen. 

If Ad Spend Matched Time Spent Mobile Ads Would Be Worth $29B This Year

Earlier this week comScore reported that mobile devices (smartphones + PCs) were responsible for 60 percent of total digital media time in the US (chart at right). Traditional TV is still the king in the US in terms of overall consumer time spent. 

More specifically, comScore said that US users spend 51% of all their digital media time in mobile apps. The firm reports roughly 83% of mobile media time is app-based (vs. the mobile web). Nielsen puts the number at 89%. 

I spoke to comScore at some length about these numbers. We agreed that ad dollars would eventually follow the consumer traffic migration. The question is how long it might take. For the past few years mobile ad spending in the US has roughly doubled YoY (per the IAB):

  • 2011: $1.6 billion
  • 2012: $3.4 billion 
  • 2013: $7.1 billion 
  • 2014 (projection): $14 to $15 billion 

Total digital ad revenue in the US for 2014 will probably be around $49 billion. If time spent and ad spend were aligned mobile would capture more than half of that number (and in-app advertising the bulk of that). Accordingly mobile ad revenue would be $29.4 billion and PC ad revenue would be $19.6 billion. 

That would be radical.  

Forecast Shows Google Losing Mobile Search Share While Yelp Gains

A new report from eMarketer argues that Google is leaking mobile search revenue to apps. The forecast in the document says that US mobile advertising in total will reach $17.73 billion this year and search revenue will constitute just over $9 billion of that total. 

Last year the IAB reported $7.1 billion in US mobile ad revenue, roughly double the year before. If mobile ad spending were to double again it would reach between $14 and $15 billion. Getting to nearly $18 billion is a stretch. However eMarketer casts a very broad net around mobile advertising, including email and services like "site optimization" that don't involve any media spending. 

Mobile search share

Regardless of definitions, the consumer tendency to use apps rather than the mobile web is apparently taking a toll on Google’s mobile ad dominance. According to the forecast, Google's mobile search ad share was 83% in 2012, dropping to 68.5% last year. These numbers are somewhat deceptive because Google's mobile revenues are still growing and the company continues to have the largest individual share of global mobile ad spending. 

What's happened, however, is that more money is flowing into mobile generally (and mobile search advertising) and some of that money is being spread around to places other than Google. Among them, YP and Yelp are called out in the report.  

YP has been one of the (surprise) top five mobile ad companies in the US. However eMarketer projects that YP will lose share (though potentially grow overall revenue), going from 7.6% of total US mobile search revenues in 2013 to 4.1% in 2016. By comparison Yelp will grow from 1% in 2013 to 1.9% of search ad revenue in 2016. 

Google Now Update for Android Shows Indoor Maps, Geofenced Product Alerts

Google is updating its search app for Android devices. As part of that update Google Now, its predictive search/intelligent assistant feature, is offering new content and capabilities. These new features do not yet extend to Google Search/Now on iOS devices. 

The feature that got considerable coverage earlier today is a parking-locator card. Google records the location of your vehicle on the street or in a parking lot. It will show you a Google Now card with a map of the vehicle's location and point you in the right direction to get back to your car. 

I haven't used it so I don't know if it works at all. But it's potentially very useful.

Google Now will also now work when your wireless network or internet connection doesn't. In other words, the Now cards will remain on the phone and not disappear.

Google Now new features

Source: Google 

Of particular relevance to our discussion of Place-based marketing, Google Now will also show indoor maps of selected malls. I suspect later it will show indoor maps of stores that it has already captured. Google has maps of roughly 50 malls and a number of retail chains such as Home Dept, Macy's, Sports Authority, Ikea and others. Coverage is uneven however. 

Most intriguing of all, Google Now will remind users about products they've searched for previously when those users are near stores that carry the same items. If you've been looking for a particular type of running shoe, for example, and a nearby store typically carries that product Google Now will indicate you're near a store that offers it. 

This capability doesn't extend to real-time inventory however. That's up to the user to check or confirm.

In addition, it's not clear how large the geofence is. Will it be a mile, 3, miles, 5 miles? I suspect Google will see how users interact with this feature and adjust the geofence radius accordingly.

In a very obvious way this "product-alert" capability could quickly become a feature of Google's PLAs and a potentially powerful marketing vehicle for retailers and brands. Today users must themselves invoke Google Now (swipe up). To be really effective and helpful, however, Google Needs to turn some of these things into push notifications. 

It's very interesting that three out of four of these new features and capabilities pertain to location and two specifically to shopping and indoor location. 

Facebook Announces 'FAN' Mobile Ad Network at Developer Event

This morning at its developer conference in San Francisco Facebook is expected to make two significant mobile announcements. First it will announce what it's calling "Facebook Audience Network," a mobile ad network that will leverage Facebook data for ad targeting in third party developer apps. 

Facebook has been working on and refining this since 2012 and the formal announcement is expected today. This will instantly make Facebook a major mobile ad network and primary rival to Google in the mobile ad space. It may also foreshadow a broader introduction of an AdSense-like display network for the PC too. 

The other expected major announcement is a payments API. This will streamline the user payment experience (form filling) in third party commerce apps. It will also lead to more user/conversion data for Facebook. 

As the mobile payments battle heats up Facebook could quickly become tier-one player, along with PayPal, Apple, Amazon and Google. The open question is whether consumer-users will trust Facebook with their payments and credit card information. Many already do.

Both of these opportunities are natural, logical and very large for Facebook.

In its recent Q1 earnings report Facebook said that it had 609 million mobile daily active users and total mobile users of 1.01 billion. Mobile ad revenue represented approximately 59% of ad revenues for the first quarter of 2014, up from approximately 30% in the first quarter of 2013.

Update: The Facebook Audience Network mobile ad network was announced but not the payments API (so far). 

Report Benchmarks Mobile Video Ad Success

The Mobile Marketing Association (MMA) today released its first "Mobile Video Benchmark Study." The study looked at different categories of video ads through the lens of multiple variables: engagement, duration, OS and day part. CTRs were used as a proxy for engagement. 

A number networks and video technology platforms were involved: AdColony, BrightRoll, Brightcove, Hulu, Tremor Video and Videology. There were three types of video ads examined: linear, interstitial and "value exchange." 

Linear ads are essentially pre- and post- roll video advertising. Interstitial video ads are those that run during programming or content, and value exchange are ads that are user initiated for some reward or benefit. 

The study also evaluated the impact of engagement when ads were "skippable" vs. not-skippable. In total there were more than 500 million ad impressions tracked across mobile web and apps, on phones (by OS) and tablets. 

At the highest level the study found:

  • More than 75% of all advertising occurred in-app (vs. mobile web), the majority on phones (vs. tablets)
  • iOS activity accounted for more than 80% of ad volume
  • Skippable ads comprised a third of all ad impressions
  • Engagement for skippable video advertising is strong despite the skipping option
  • CTRs dropped for ads greater than 30 seconds
  • Mobile video ad performance, like other forms of advertising, declines with too much ad frequency

Value exchange ads generated the highest CTRs (2.7%), followed by non-skippable linear video (2.3%). Although skip rates are high, completion rates were also very high for those who did not skip ads. Ad completion rates were highest in the morning and late evening but flat throughout the day. 

Between 6 and 10 showings generated the highest CTRs (1.5%). After 10 showings of the ad CTRs declined. Finally ads between 15 and 30 seconds generated the highest CTRs. 

Video is going to be a major mobile ad format. The reason is that brand marketers don't need to generate separate creatives; and mobile users are already consuming huge amounts of video content on their devices. There's a natural fit. 

While rich media/video ads are just a small percentage of mobile advertising today I anticipate that will grow dramatically in the next two years. 

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.  

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.  

Amazon Top Mobile (and PC) Search Advertiser for January

AdGooroo, a division of Kantar Media, last week released data on the top mobile search advertisers in the US, UK and Australian markets. The data represent the month of January 2014 and are based on impressions triggered by the top 50,000 search keywords. 

These data are drawn exclusively from Google and Google AdWords. The chart below reflects the top 20 mobile AdWords advertisers. 

http://www.adgooroo.com/wp-content/uploads/2014/02/Top-Mobile-Search-Impressions-AdGooroo-Jan-2014.jpg

The list can be seen as a mix of telcos, financial institutions and retailers essentially. Compare the impression gap between Amazon and BestBuy and the rest of the group for that matter. 

As part of its analysis AdGooroo compared mobile search rankings on the PC and smartphones. Amazon turns out to be the top paid-search advertiser on both platforms. But there were a number of gaps between PC and mobile rankings/performance. For example, WellsFargo "ranked #9 in Mobile Search, with 11.5 million impressions, but 137 in Desktop/Tablet Search, with 12 million impressions."

There were a few advertisers that saw more mobile than PC search impressions. But equally there were advertisers, such as Wal-Mart and JCPenney, that ranked well on the PC but not as well in mobile search results. 

As of last year Google began compelling marketers to buy both PC and mobile search campaigns and set the PC bid as the floor, as a practical matter, for the campaign. Mobile bids can be adjusted up or down, depending on a number of variables including location. In other words marketers can specifiy a premium they're will to pay to get in front of smartphone users within a certain radius from a business location.  

Informally this week a Google employee at a conference dropped a bomb, saying that mobile search was projected to exceed PC search traffic by the end of the year. This was a casual remark as I understand it and not necessarily an official Google statement. In addition, I heard it second hand so I don't have more context to share. It's not clear what's included in "mobile search" query volume here (i.e., Maps, mobile web, apps)? It's also unclear whether this is US only or global projection.  

Webinar Today: Join Aisle411 and iInside for Indoor Case Studies

At 1pm Eastern/10 Pacific today we'll be hosting a new webinar: Indoor Location - Early Adopter Case Studies and Lessons Learned. It will feature Aisle411 co-founder Matthew Kulig and iInside EVP Jon Rosen. The emphasis is not on theoretical information but on what's actually occurring in the market -- today.  

Rosen will be talking about B2B case studies from current in-market deployments. He's going to cover:

  • Retailer KPIs
  • Measuring the impact of operations, merchandising and marketing on customer behavior in a specialty retail context 
  • Using indoor analytics to benchmark online marketing campaigns
  • Optimizing checkout selling in a grocery context
  • Using indoor analytics to measure and address showrooming 

Kulig will be discussing B2C cases, including the following:

  • Indoor app-based search and ad CTRs
  • Retailer monetization through branded in-app advertising
  • Location and intent based recommendations in store apps  

I'll be offering a general overview of the state of the market and offering attendees a free copy of our recent "Mapping the Indoor Marketing Opportunity" report (only available to real-time attendees). 

The webinar will be eye-opening and instructive to indoor neophytes and those with even considerable knowledge of this emerging market. Register now and show up later today.  

Bridging the WhatsApp-Facebook Advertising Chasm

WhatsApp may cross the threshold of a billion users later this year. The first year is free, thereafter it costs $0.99 per year per user.

If we assume that every one of those hypothetical billion users starts paying $1 per year. The company would bring in an additional billion dollars in revenue to Facebook, which just purchased (subject to regulatory approvals) the company for $19 billion in cash and stock. 

While many are arguing that WhatsApp was not expensive by some standards (cost per user), Facebook will over time be compelled to justify the acquisition by making money off of it. And that doesn't just mean fee-based revenue.  

Facebook CEO Mark Zuckerberg and WhatsApp CEO Jan Koum have very different views about privacy and advertising. The Wall Street Journal sums those up nicely in an article today:

The men are divided by more than differing approaches to making money. A legacy of his childhood in Ukraine is Mr. Koum's emphasis on privacy: WhatsApp doesn't collect any personal information other than a mobile-phone number and address book, and it wipes out messages shortly after they are sent . . . Mr. Zuckerberg, by contrast, has riled users by changing Facebook's privacy settings in ways that some thought exposed more of their personal information more widely.

Koum doesn't trust or like advertising; Facebook lives and dies now by the growth of its ad revenue. Something's got to give then. 

Either Koum and WhatsApp will bend on privacy, data mining and ads or there will need to be some accommodation to Koum's positions. That compromise could come in the form of opt-in SMS-style marketing.

Companies such as Placecast and other SMS-based mobile marketing firms use double and triple-opt-in systems to ensure that users consent to receive marketing messages from brands and retailers. This kind of permission-based (including loyalty) marketing could be a way around the conundrum for Facebook and WhatsApp.

The market will expect Facebook to monetize WhatsApp usage at some point in the future. Subscription revenue will probably not satisfy investors because of the perceived, larger marketing opportunity. Less intrusive, permission-based SMS-style opt-in marketing could be a way forward for the two companies.  

TruePosition Acquires Skyhook Wireless, Bolsters Indoor Location Services

Location technology provider TruePosition has acquired Skyhook Wireless for an undisclosed sum. Skyhook Wireless provides location positioning and gathers contextual data on consumer mobile behavior. The company has also been involved in multiple lawsuits accusing Google of patent infringement and unfair competitive practices.

Skyhook was founded in 2003 by Ted Morgan and Mike Shean to map wireless access points but has since expanded solution offerings focusing on mobile consumer behavior and associated analytics. Recently, Jeff Glass, formerly with mQube and Bain Capital Ventures, was named CEO.

Cellular location company TruePosition, a subsidiary of Liberty Media, is mainly focused on public safety applications for indoor location technologies including locating emergency callers and protecting borders and infrastructure. The acquisition bolsters the product portfolio of both companies by leveraging their complementary technologies, according to the press release about the acquisition.

“Skyhook's commercial focus balances TruePosition's safety and security strengths, and their location technology further strengthens TruePosition's ability to accurately locate mobile phones indoors,” said Steve Stuut, CEO of TruePosition, in the statement.

Skyhook's lawsuits against Google, the first of which was filed in 2010, claims Google interfered with its relationships with two hardware manufacturers, Motorola and “Company X” (Samsung). Google has consistently insisted it has done nothing improper; the legal battle is expected to go to trial sometime this year.

Media Still Fixated on 'Surveillance' Angle of Indoor Location

There are two themes running through most of the coverage of indoor location: gee-whiz technology and NSA-style "surveillance." While both approaches have generally been good for the sector, which has gained visibility accordingly, the "surveillance meme" is both unfair and largely inaccurate. 

In the general debate over consumer behavior tracking and data-centric targeting the "offline world" has largely been ignored. The practices and data-mining in use there are longer-established, more aggressive and much more shadowy than the online/digital media world. Yet the media devote almost zero attention to that arena because we have lived with it for so long. 

By the same token video cameras have been watching people in retail (and other) environments in the US something like 40 years. That fact is rarely if ever "remembered" or raised in the public discussion of indoor positioning and location. Why, because we're all "used to it"? 

A recent Bloomberg article about location-analytics provider Placed is a case-in-point. The headline emphasizes the more sensational aspects of what the company does (for impact) and the lede ties the project to the NSA scandal: "Tracking Every Move You Make—for a $5 Gift Card . . . Here’s something the National Security Agency might try to ease resistance to surveillance: gift cards." 

I certainly understand the journalistic "logic" behind these choices but they're misleading. Placed has what amounts to a triple opt-in process. Its users, who are offered incentives to share their location, are very clear on what they're doing. It's totally voluntary. But the article only mentions that in passing, "Placed asks users for permission and scrubs personally identifying information before companies see the data." It's more concerned with the data and inferences Placed can discern and deliver. 

That's all fine. But in neglecting to fully describe the opt-in enrollment process, the article fails to adequately represent what's going on with consumers. 

The implication still is that people don't fully understand what's happening or what information is being compiled about their behavior. The article suggests, with its lead, that Placed users, despite their voluntary participation, are still being somehow duped: they're giving up their sensitive behavioral and location information for "a five dollar gift card." 

Why it matters is because people will voluntarily participate in these systems and services when they understand the benefits and how their data are being used. It goes to questions of transparency and consent. Many articles operate under the deeply held assumption that if people understood truly what was happening with their information they would never share it with companies. (That's certainly true in many of the "offline" cases.) 

But when it comes to location and indoor location specifically people will trade their information for tangible benefits or a better experience. This has been shown repeatedly and Placed's panel is just one more example.  

Writing about the mechanics of disclosure and opting-in gets tedius and boring. So does the idea that people will willingly share location for improved in-store experiences or incentives. That's why we're likely to continue to see these "us vs. them" articles for the foresseable future. 

Make no mistake consumer privacy is a critical issue. Indoor location providers, retailers and others need to be highly respectful of that. And there are some who want to make the default consumer experience of indoor location opt-out. But most of the entrepreneurs and companies I've spoken to are very sensitive to and respectful of privacy.

The questions going forward should concern what sorts of experiences and disclosures must be presented to consumers to engage and educate them and gain their informed consent. Indeed, we'll be having this very discussion in much more nuanced and concrete detail at the next Place conference in New York in a panel lead by Jules Polonetsky

Alex and Ani Deploys iBeacon in All Its Retail Locations

Bluetooth iBeacons are definitely the indoor positioning technology with the buzz and momentum (though it's only part of the indoor location story). Today jewelry and accessories retailer Alex and Ani announced that it's deploying iBeacons in all its 40 US retail locations in partnership with Swirl.

Previously American Eagle announced it would also introduce iBeacons into its stores with ShopKick. However the Alex and Ani rollout is already complete. 

Swirl offers a consumer-facing app that adapts or changes depending on the store the customer visits. Swirl is also working with Timberland and Kenneth Cole. Alex and Ani doesn't yet have its own app but later plans to develop one using the Swirl SDK. Swirl installed the hardware in all the Alex and Ani stores. 

I was able to speak yesterday with Ryan Bonifacino, vice president of digital strategy for Alex and Ani. He comes from a venture capital background and is very focused on innovation and data usage. While most retailers and venue owners are still sniffing around the edges of indoor location Bonifacino said that Alex and Ani began testing iBeacons with Swirl in Q1 of last year in its New York and Boston stores. 

That's well before most people had heard of iBeacon.  

The data and insights the company gained during its two-store trial convinced Bonifacino that a full rollout was justified. Bonifacino said he was pleased with Swirl's ability to drive new customers into the company's stores, especially at times when regular foot traffic was generally lower. 

He explained that the new Swirl-driven customers actually spent more time in the store but purchased at levels that were comparable to Alex and Ani's regular customers. Indoor location was also able to provide greater visibility into who these new customers were. 

One of the things that Bonifacino is looking forward to most is the ability to collect data about in-store behavior and to test and optimize merchandising and displays. Beyond this, Bonifacino wants to provide a better in-store customer experience and believes that indoor location can help accomplish this.  

We spoke at some length about Alex and Ani's use of data in its marketing efforts and how data captured in stores would contribute to improving or refining those efforts. Bonifacino, however, was quick to say that the company is highly respectful of privacy and looking only at aggregate customer behavior. 

Alex and Ani also sells its jewelry and accessories through major retailers such as Bloomingdales and Nordstrom. Even though those retailers are separately examining indoor location Alex and Ani is helping educate them, says Bonifacino. The company hopes to use indoor location to promote its products and attract customers to its displays in those larger retail partner stores later this year. 

Twitter, Yelp and Pandora Are All Now Mobile Companies

Yesterday Twitter, Yelp, AOL and Pandora released quarterly earnings. AOL said that mobile was one of several drivers of 50% ad revenue growth. Yet it didn't break out any mobile numbers. The other three did, illustrating the degree to which each is or has become a mobile-centric company. 

Below are the mobile highlights . . .  

Twitter:

Twitter beat financial analysts’ expectations with $243 million in Q4 2013 revenue ($220 million in ad revenue). However that strong revenue growth was undermined by weak user growth. The company said it had 241 million monthly active users and nearly as many (184 million) mobile users.

Amazingly, 75% of the company's ad revenue for Q4 came from mobile. In real dollar terms that represented $165 million for the quarter. 

Yelp: 

Yelp reported just under $71 million in Q4 revenue. There were 53 million mobile users (120 million total users). Yelp also reported that 30% of new reviews were coming from mobile devices, since it started allowing reviews to be written via mobile. 

Yelp added during the earnings call that 59% of search queries were from mobile: 46% from its app vs. 13% from the mobile web. In addition, 47% of ad impressions were served on mobile devices in Q4. 

Pandora:  

Revenues for the full year were roughly $638 million. Pandora brought in just over $200 million in Q4. Of that, $162 million was ad revenue. Mobile was responsible for 72% of that ad revenue or just under $117 million. The company also said that 80% of Pandora listening happens via mobile devices

All three companies started on the PC and have evolved into mobile-centric entities in response to user behavior. Indeed, Pandora's iPhone app is largely responsible for the company surviving and going public. Overall for these companies most of the ad growth, revenue and usage is now in mobile.