User Experience

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.

Google Project Tango and aisle411 Team Up for Augmented Reality Shopping

Project Tango is Google's new 3D mapping technology. It uses the smartphone's camera, gyroscope and accelerometer to do indoor mapping (based on SLAM -- simultaneous localization and mapping).

This approach doesn't require additional hardware installation (even Beacons). It just requires smartphones to do the initial mapping. It's one of three or perhaps four such approaches now emerging. Others include Indoor Atlas and FlyBy Media (a Tango partner). 

At Google's developer conference I/O last week the company was showcasing various uses of Tango, one of which was in a retail environment through a partnership with aisle411. The latter implemented Tango in Walgreens to generate in-store augmented reality (AR) shopping experiences (see video below). 

Product locations are married to a store map, created using the Tango technology. Using a smartphone or, in the video, a tablet fixed to a shopping cart, the end user can see product locations, map shopping lists to a floor plan and see enhanced product information or coupons "pop up" on the screen. 

Aisle411 says the technology allows for accuracy "within centimeters." This is a pretty interesting variation on some of the indoor location scenarios we've been discussing and exploring. However one question is whether stores will equip shopping carts with tablets, which could be expensive and risk theft. On the other hand this AR experience is potentially less satisfying and effective on a smaller screen smartphone -- users are unlikely to hold them out as they walk down store aisles. 

Regardless it's a pretty interesting marriage of digital and real-world experiences in a shopping environment. Aisle411 will be speaking on the indoor location technology panel at next month's Place Conference on July 22 in New York. 

Report: Weather Apps Have Highest Retention, Games the Lowest

App retention is getting better, according to Localytics. The company said that only "20% of apps are used only once, an improvement of 6% over four years." The data in the report were collected from 1.5 billion devices and 25,000 apps using the Localytics platform. 

Localytics attributes increased retention to better developer-publisher "understanding of and focus on user engagement that has enabled developers to create more useful and personalized apps." Here are the aggregated topline data: 

  • 20% of Apps are only opened once, improving from 26% four years ago
  • During the same period, the percentage of apps used 11 or more times increased 13% and now comprises nearly 40% of all apps.
  • Sports and Games apps have the highest app abandonment rate, whereas Weather and Social Networking apps have the lowest

overall chart

In a worrying development for iOS developers, Localytics says that iOS showed weaker app retention than Android:

In 2013, both Android and iOS had the same percentage of apps (34%) with 11 or more sessions. Now, Android has surpassed iOS in app engagement by increasing to 45%; nearly half of Android apps are opened 11 or more times, whereas only a third (34%) of iOS apps are.

The company speculates that "iOS users may be suffering from app overload. With the relatively larger number of apps installed on iOS devices, competition for an iOs user’s time increases and can weaken retention." 

platform chart

As indicated, weather and social apps showed the highest retention while sports and games had the highest percentage of one-time usage. Localytics observes that social networks are filled with personalized and highly dynamic content.

Yet sports apps have dynamic, changing content (e.g., scores) too. Perhaps personalization is a missing element or, alternatively, sports content may be highly "generic" and widely available, making any individual app less compelling. 

category chart

'Webrooming': the Opposite of Showrooming

Traditional retailers express anxiety and concern about so-called "showrooming," whereby smartphone owners shop for products in physical stores and then buy online for lower prices. We've shown multiple times that this is a real phenomenon; however it's generally a minority use case. 

In a sort of contrarian finding, Consumer Intelligence Research Partners said a few months ago that the large majority of Amazon shoppers are loyal to that site and not opportunistically buying online based on price. The financial research firm used consumer survey data to argue, "rather than looking for items at a physical store, then buying them online, most Amazon.com customers [80%] started shopping at the Amazon.com website." 

In our own survey data we have documented that roughly half (52%) of mobile users have (at some point) decided not to buy something based on information discovered on a smartphone while in the store. It's safe to say is that consumer in-store behavior is now more complex and smartphones are arming them with more information to help make purchase decisions -- online and off. 

Multiple surveys, including ours, have shown a range (66% to 90%) of in-store smartphone usage.

But what about the opposite of showrooming -- "webrooming" (a very awkward term I hope doesn't stick). According to an article in AdWeek, Merchant Warehouse found that "69% of people with smartphones in the 18-36 demo have webroomed, while only 50 percent have showroomed. Among 37-48 year olds, 71 percent have webroomed versus 53 percent who have showroomed." 

This is being presented as some new behavior or novel phenomenon. But it's just traditional retail buying. 

Well over 90% of all retail buying happens locally. But most internet users now do some form of online research before buying offline (depends on category/consideration). The bigger the ticket the more online "pre-shopping." 

I've previously estimated that when retail spending and local services are combined you've got a $9 to $10 trillion annual market in the US. Roughly $2 trillion or approximately 20% (or so) of that is being influenced by "online research." That figure will only grow as more people use smartphones as shopping assistants.

The bottom line, literally and figuratively, is that consumer shopping behavior is now multi-platform and more complex. But whether you call it "local shopping" or "webrooming," the overwhelming majority of buying (90%+) continues to happen offline. 

Survey: 50% Will Share Personal Info with Retailers for Deals

New survey data from PriceGrabber reaffirm that consumers will share private information -- this survey didn't specifically ask about location -- in exchange for rewards from retailers and e-commerce sellers. The survey was conducted in March among nearly 3,500 US consumers. 

The survey asked about consumers' willingness to share "personal information" online or in-stores: "personal information included age, gender, email, clothing/shoe size, and credit card number among others." Generally shoppers were more inclined to share information online (56%) than in-store though nearly half (48%) said they would do so in the latter context. 

The survey also tested various reward scenarios: price discounts vs. "percent off" choices. Most preferred percent-off to dollars-off or gift card reward options. 

Several other consumer surveys, including one conducted last year by Opus Research, indicate that consumers will share personal data and location information if they get a sufficient reward for doing so. There are numerous others that show consumers remain quite concerned about privacy and data collection. This seeming paradox might be described as consumer sharing ambivalence. 

In addition to discounts and coupons consumers have also indicated a willingness to share personal or location data in exchange for a better or more personalized shopping experience.

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. 

PayPal Tries to Solidify Market Position As Competitors Ready

Yesterday's Facebook developer conference didn't yield a payments announcement.) It's still a logical move for the company to make.) However it did see the introduction of a new logo/identity and the launch of a new branding campaign for payments incumbent PayPal.

PayPal is probably still the growth engine among a range of decent-performing but somewhat lackluster businesses at eBay. Here's the data from the Q1 earnings release:

PayPal net total payment volume grew 27% with Merchant Services volume up 32% and on-eBay volume up 15%. Revenue grew to $1.8 billion. PayPal gained 5.8 million new active registered accounts to end the quarter at 148 million, up 16%. Global on-eBay penetration increased to 78.9%. PayPal continued to invest in its credit offerings, providing flexibility for consumers and merchants while improving its ability to manage transaction expense and reinvest in the business to accelerate growth.

PayPal may soon face a range of mobile payments competitors in Facebook, Amazon and Apple. Google failed to vanquish the online payments incumbent with Google Wallet but it bet on the wrong strategy (NFC). The PayPal brand is not as strong as some think (perhaps even the company itself). It has name recognition but relatively weak brand affinity among consumers. 

There are some surveys that suggest PayPal is a highly trusted consumer brand and in a stronger position vis-a-vis its rivals and potential rivals. I belive that's mostly about name recognition and not actually about trust. I also think that PayPal (on the consumer side) is extremely vulnerable to "disruption" should a well-designed Apple or Amazon (or potentially Facebook) payments product come along. 

Below are the installed user-base numbers for the three companies: 

  • PayPal: 150 million approx
  • Apple: 600 million
  • Amazon: 240 million approx 

Against that backdrop PayPal introduced a new brand identity and is launching a global branding campaign featuring TV and online-video. The theme of the ad below is simplicity and convenience. 

The campaign and global push may well shore up PayPal's position by making it the most familiar non-bank/credit card associated with payments. Indeed, there's an opportunity for PayPal to more firmly establish itself as the online and mobile payments product of choice.

It will still need to improve the user experience (e.g., stop defaulting to user bank accounts as the primary payment method), crack down on PayPal related fraud and phishing (if it can) and be generally more consumer-centric and service oriented rather than simply an alternative way to pay to avoid filling out a form. 

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). 

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. 

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.

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.'"

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. 

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.