Every once in awhile, someone runs an idea by Marketing Daily that sounds simple, crazy and brilliant all at once, like this one: If brick-and-mortar stores are to survive, marketers should sell them products at a discount, while Internet retailers should have to pay more. It's the brainchild of Rafi Mohammed, a pricing expert and author of The 1% Windfall: How Successful Companies Use Price to Profit and Grow, and something he's written about recently for the Harvard Business Review. We asked him to explain the idea a little more. Q: Why should a retailer be able to ask for a lower price than those who sell strictly over the Internet? A: If I were a physical retailer, I would be demanding a lower price. Think of all the additional costs of running a physical store. They hire and train employees to show off the merchandise; they pay for and maintain the space to display it. Retailers add a lot of value to the process, and they should get some recognition for it. And that value goes up as the products become more complex. Take TVs. Or dishwashers. Q: Why is this more of an issue now? Customers have been shopping online for ages. A: It's driven by mobile. There are now so many apps that allow consumers to shop solely on price, and we've really seen the effect of that in recent months. They can go into a store -- again, let's take the dishwasher -- and physically see and compare all the models. The stores' sales associates spend valuable time, explaining and educating the consumer on the various models and features. But then, shoppers can scan a barcode and find the lowest price for that item, either online or at nearby store. And that is hurting stores. When Best Buy reported disappointing third-quarter results in early December, analysts attributed the poor numbers to increased competition from online retailers. Smartphones increase the threat, because shopping only on [a factor of] cost is now easier. Q: So how would it work?A: I call this discount the Physical Store Equalizer, or PSE. Retailers should point out what they provide to brands that online sellers don't, and how the opportunity to touch, feel and see goods -- not to mention ask questions to knowledgeable sales staff -- helps educate shoppers. Since retailers bear the cost, it's fair to ask for a price of 10% less than what Web retailers pay. I just think it's time for manufacturers to compensate physical retailers for the value they bring to the sales proposition.
In its fourth-quarter earnings release today, AT&T touted a record 2.8 million net wireless customers added during the period. But only 400,000 of those were new contract subscribers -- the most valuable type of customers coveted by wireless operators. What's more, that total was less than a third of the 1.3 million added a year ago, and did not meet Wall Street expectations. The slowdown comes as AT&T braces for the end of its exclusive hold on the iPhone when Verizon Wireless begins selling the Apple device next month. During a conference call with analysts Thursday, AT&T CEO Randall Stephenson admitted that 2011 could get off to a rocky start, but expressed confidence the nation's No. 2 wireless operator would stabilize and grow through the year. A key part of AT&T's strategy to become less reliant on the iPhone is embracing Android as Verizon Wireless did last year as a way to blunt AT&T's advantage with the iPhone. Already AT&T has begun selling Android devices last year, and at CES earlier this month announced more on the way, including the Samsung Infuse 4G and HTC Inspire 4G. Recent comScore data showed Android edging past Apple in the U.S. smartphone market for the first time at the end of 2010, with a 26% share compared to Apple's 25%. "You can expect us to be a heavy participant in the Android market this year," said Stephenson. AT&T has also added Windows Phone 7 and BlackBerry handsets to diversify its smartphone lineup. Despite the much-publicized launch of the Verizon iPhone in February, AT&T still activated 4.1 million of the devices in the fourth quarter. Stephenson took that as a positive sign that the company will be able to weather the transition when its main rival begins to offer the iPhone. But given the much smaller number of new contract customers in the quarter, the vast bulk of iPhone activations were from people upgrading phones rather than new subscribers. Only 20% were from customers who were new to AT&T compared to 40% a year ago. Even without the iPhone, Verizon managed to add 872,000 contract subscribers during the quarter. In addition to riding the Android wave, AT&T is also counting on the proliferation of connected devices to help drive mobile data revenue. To that end, the carrier added 442,000 iPad and Android tablets in the quarter and 1.5 million connected devices overall. That helped push data sales up 27% from a year ago to $4.9 billion. AT&T also said the proportion of integrated devices -- handsets with QWERTY or virtual keyboards in addition to voice functionality that include the iPhone -- increased to 60% of its 68 million contract subscribers from 46.8% a year ago. Overall, the carrier reported a fourth-quarter profit of $1.09 billion, or 18 cents a share -- down from $2.73 billion a year ago, or 46 cents a share. Revenue increased 2% to $31.3 billion.
Ever accidentally launch a mobile ad while navigating an app? You're not alone, according to a new survey from lead-gen agency Pontiflex and Harris Interactive. The study found that nearly half (47%) of mobile app users have clicked or tapped ads by mistake more often than on purpose. The upshot of the findings, based on a December survey of more than 4,000 app users, is that a large chunk of mobile ad dollars are wasted, since advertisers typically pay on a cost-per-click basis. "Clicks aren't an effective way of measuring mobile ad campaigns and these survey findings prove it," said Pontiflex co-founder and CEO Zephrin Lasker, in a statement. People 18 to 34 years old -- the most active age group when it comes to mobile apps -- were also the most likely to accidentally click on mobile ads, with 61% doing so. In a related December survey, 71% of app users said they prefer ads that keep them within the app they are using, instead of ads that take them out of the app to a mobile Web browser. That further suggests the need for mobile advertisers to move away from a click-based ad model, according to Pontiflex. The company estimates that 95% of mobile app users use free apps while 41% use paid apps. The new survey found almost two-thirds of mobile app users selected ads that contain coupons, deals or newsletters as their preferred in-app mobile ad type. There's little question that mobile apps are booming. A forecast released Wednesday by Gartner predicted worldwide mobile app revenue will nearly triple this year to $15.1 billion, while downloads will more than double to 17.7 billion. The revenue total reflects both paid downloads and free, ad-supported apps, which are expected to account for 81% of all downloads this year. With a growing in-app ad market, Pontiflex is not advocating that advertisers pull out of the emerging category altogether. Instead, the findings of the research it commissioned are intended to help convince marketers to adopt its own AppLeads format -- sign-up ads that allow people to opt-in without having to click out of an app or interrupting game play. Of course, Apple, Greystripe, Medialets and other companies make similar claims for their own in-app ad units. Perhaps a bigger problem for marketers is one indicated by a separate Harris Interactive survey on behalf of design agency EffectiveUI in November, which found that nearly 40% of adults online are dissatisfied with branded apps. The less time someone spends with an app, the less ad opportunity it affords.
Sports are a good way to reach affluent consumers, according to Nielsen's review of 2010 professional sports popularity and marketing activity. It is also a good way to reach mobile-media mavens. The firm found that visits to pro-sports sites by mobile Internet users was up 38% last year versus 2009 and that 84% of iPhone app downloaders have downloaded at least one free sports app. Events last year that garnered the most Internet messages were dominated by the NFL, and NBA, with the beginning of the NFL 2010 season getting the most online buzz, followed by the beginning of the NBA season, LeBron James defecting to the Miami Heat last summer and the Saints' Super Bowl XLIV win. Last year's Super Bowl, with 106.5 million viewers, according to Nielsen stats, became the most-watched telecast of all time, besting the series finale of "M*A*S*H." Nielsen says a big jump in ethnic viewers drove the increase with 8.3 million viewers having been among Hispanic households, a 9% jump, and 11.2 million among African American households, a 4% jump. Nielsen 2010 media stats show that the World Series, Super Bowl, NCAA Basketball Championships, U.S. Open Men's Final, The Masters, Stanley Cup, Kentucky Derby, World Cup Final and BCS National Championship over-index for people who belong to families with over $100,000 annual income. In the over 40,500 hours of live sporting events broadcast last year, the most-recalled, sports-themed advertisement was Subway's 15-second spot showing Olympics swimmer Michael Phelps swimming through pavement because of the power of his favorite sandwich. After that came Taco Bell, then a 30-second version of the winning Michael Phelps ad, then an ad for Jack Link's Beef Jerkey and, finally, an ad for Long John Silver. Nielsen also came up with the best athletes in each sport for brand spokesperson effectiveness. The firm partnered with E-Poll Market Research to produce what it calls an "N-Score" for each athlete, gauging their overall "endorsement potential." Nielsen says the score factors in awareness, appeal, and 46 personality attributes. Based on those parameters, Venus Williams was tapped by Nielsen as the "most effective endorser" among female athletes. Shaun White gets the top score among male athletes and Nielsen gave Terry Bradshaw the nod as most effective among sports commentators. Next among women were Lindsey Vonn, Serena Williams, Danica Patrick and Maria Sharapova. Among men White is followed by Shaquille O'Neal, Apolo Ohno, Peyton Manning and Michael Phelps. Nielsen says that within the NBA, the most effective endorsers are Shaquille O'Neal, Kobe Bryant, LeBron James, Yao Ming and Steve Nash. For the NFL, the top endorsers are Peyton Manning, Brett Favre, Drew Brees, Donovan McNabb and Tim Tebow. In NASCAR, the most effective endorsers are Dale Earnhardt, Jr., Jeff Gordon, Danica Patrick, Tony Stewart and Mark Martin. Nielsen found that NASCAR fans spent as much as 30% more on beer last year than fans of other sports and 25% more on non-alcoholic carbonate beverages.
If Groupon wasn't already widely recognized as one of the country's fastest-growing companies, the $950 million the deal-sharing site raised earlier this month put an exclamation point on it with its rapid rise. As part of its expansion, Groupon last spring acquired mobile startup Mob.ly, headed by Mihir Shah, former senior director of product management at Yahoo. As vice president and general manager of mobile at Groupon, he now leads the company's mobile efforts. We caught up with Shah recently to ask about what's happening at the company on the all-important mobile front. OMD: Can you briefly describe Groupon's mobile presence?Shah: What we have in U.S. is an iPhone app, an Android app, a BlackBerry app, an [iPod] touch site and WAP (wireless access protocol) site. Consumers use all the mobile products for two reasons: one is to purchase Groupons and the other is for paperless transactions, so they can carry Groupons with them, show them to a merchant and redeem via the mobile screen. OMD: How many downloads to date have there been of the Groupon app? Shah: What I can say is that on iPhone and Android, which have been around the longest, we've seen 5 million downloads combined. The iPhone app has only been in the market since about April of last year, I think, and Android came several months later. And we're seeing pretty high growth in number of active users. We've seen significant growth in the last six months in terms of percentage of users who redeem from mobile. OMD: Does customer behavior on mobile differ much from desktop Web?Shah:Our whole product is about making that quick purchase decision -- the Deal of the Day -- and then printing it out and redeeming it. It's not a time-spend product, it's really an ecommerce product about trying to buy the deal that's best for you and then you're done. It's probably even better suited to mobile -- you arrive in a new city, you just pop out your app, you can see what the deals are that day and maybe you can buy one and use it immediately. OMD: In that vein, what kind of location-based features work in connection with Groupon on mobile?Shah: In a city, we'll have a certain number of deals available. Now if you turn on the app and it senses your current location, then offers the deals in that city, we'll try to give you the most relevant. That's the personalization we have now based on location and a couple of other things we collect. What we don't have now is for you to just to say 'I want deals just in a .5-mile radius that are available now,' from a pull perspective. OMD: Is that a feature Groupon plans to add?Shah: We don't really talk about future projects, but what we're doing right now is taking a look at things we can do to help our merchants to get customers to walk through the door at the right time. First when we launched it was just Deal of the Day, then we added multiple deals for a particular city, and then we added personalization on top of that so we could use your demographic, male or female, or use your location to try to give you a better deal, so we're going to continue down that path. OMD: Can you talk a bit about the initiative to provide merchants apps to help process Groupon transactions?Shah: So we have mobile redemption apps we shipped a few months ago where the merchant can scan the barcode off the consumer's phone or off the paper Groupon for automated redemption. Merchants can just download the apps -- an iPhone app or an Android app -- or we have a program where we actually give the devices to them. They can also enter the bill total so they can track customer overspend [on a deal] and that sort of thing. We now have several hundred merchants, even though it's a pilot program, already using this. And we're adding over 100 every week. A lot of them already have employees that have smartphones, working the cash register -- and the way we we've built it, they can just download the app and log in. There's no secure information that would be revealed, and they can just start scanning. A lot of them have their own phones; you don't even have to provide them with the phone. They just use it and it automates the whole process. OMD: If Google launches a direct Groupon competitor, as reported, would it have an instant advantage in mobile if a Google Offers were integrated with Android?Shah: I haven't seen Google launch anything yet. Look, we have tons of clones and competitors out there. It's been a year and half since we've had clones [who compete with Groupon] all over the place. It hasn't really brought us down.
Google has created a "specialist team" to focus on the U.S. Hispanic market. John Farrell, general manager, Google Mexico, told MediaPost Thursday that the Mountain View, Calif. company developed a "methodical approach" to developing best practices that will help advertisers across all industries do a better job connecting with this market segment across search, display and mobile platforms. Farrell admits that Google determined 1.5 years ago that the U.S. Hispanic market had become too big to ignore. "There are 46 million U.S. Hispanics, 30 million of who are online," he says. "They have about a trillion dollars in purchasing power, making it a customer segment marketers can't ignore." Farrell points to the U.S. Hispanic market as one of Google's fastest-growing segments. During a gathering of marketers in New York today, Google will share findings from a recent study done with OTX that suggests advertising -- from search to video to display -- influences Hispanics. In fact, U.S. Hispanics are 58% more likely to click on search ads, compared with the general population. This market segment is significantly more likely to recall online ads, particularly video ads, when looking for retail-related information. And six out of 10 made a purchase in a store as a result of seeing online advertisements while researching products -- 22% more than the general population. U.S. Hispanics connect online. About 86% have high-speed Internet connections at home; and 78% use the Internet as their primary source of information, above TV and friends and family. While email, product reviews, and shopping are their main online activities, search is the primary online source of information. Seven out of 10 use search engines multiple times daily. Mobile also has become important to U.S. Hispanics. Many are more likely to use their devices for other purposes than voice services. For example, U.S. Hispanics text at greater rates than the general public, 64% vs. 56%; download music, 22% vs. 15%; play games, 19% vs. 15%; and access social networks, 12% vs. 10%, according to Scarborough Research. The U.S. Hispanic market segment is worth about $5 billion across TV, radio, print and online, Farrell says, pegging online at about 4%. "The U.S. Hispanic consumers are online, watching videos, sharing on Facebook and watching content on YouTube," he adds. "Online won't replace all other media, but budgets need to be adjusted." Farrell says Google plans to expand into other ethnic groups, too, including Asian- and African-Americans. Mark Lopez also joins Google to lead U.S. Hispanics efforts for search, mobile and display. He says Google will help marketers to understand the market and determine the best strategy to reach the U.S. Hispanic market segment. For example, when asked if ads should appear in Spanglish, Lopez says in some cases content remains more important than language. Marketers may tweak the message to make it culturally unique. The change comes on the heels of Google announcing its intention to add 6,125 employees in 2011. The additional head count will help sales and marketing increase their focuses on small and medium-sized businesses and marketing support for ad platforms. It also will support research and development for search, mobile, display, media and ecommerce.
Whatever missteps Sony has taken in its current generation of console and handheld gaming units (and there are many) the company still has the capacity to dazzle. Yesterday in Tokyo, Sony unveiled the long-awaited successor to its Playstation Portable (PSP), a totally tricked-out hunk of metal codenamed NGP. The impact of the smartphone revolution can be felt just from the specs of this next-gen handheld gaming unit. Its 5-inch OLED display has touch controls both on the front and back for a new style of touch gaming. The innards are direct ports of the latest smartphone standards: built-in 3G, GPS, gyroscope, accelerometer, compass, Bluetooth, front and rear cameras, microphone. This looks like a substantial hunk of hardware that is anything but pocketable. Sony, like Nintendo with its upcoming 3D version of the DS, is trying to carve out a niche in portable gaming that addresses the challenges of smartphones and still maintains a place for premium game play. My guess in both cases is that the counter-strategy will have limited success. Smartphone touch gaming has emerged to challenge Sony and Nintendo's markets in large part because of the superior portability and "always-there-ness" of smartphone games. Mobile gaming is one of those cases where once the content became "good enough" to entertain us on these platforms, it was possible to start shifting the market away from dedicated handhelds. The painful truth for hardware makers like Sony and Nintendo? People don't need a console in their pockets to have fun. For years, major game makers like EA threw all their big PS/Xbox/PC game franchises at feature phones thinking they would appeal to core gamers. It turns out that even the Call of Duty and Final Fantasy crowds really were after much simpler pick-up games when on the go. The complexity and depth of console gameplay just didn't map well to mobile users. The iPhone's touch screen gaming didn't fully reinvent mobile gaming so much as underscore and accelerate a trend that should have been apparent by the late 2000s. When highly simplified but elegant gameplay emerged on the iPhone in 2009, the big game makers finally caught on. Oh, consumers want "mobile gaming." Which is not to say that dedicated handhelds and their deeper gameplay don't have a place, but it has been diminished. I still play both my PSP and DS to engage a deeper RPG experience or enjoy just about any action gaming. I still think the touch and gyroscope interfaces work best with broad movements. I have never found shooters or even racers all that satisfying in the long term on smartphones. Others do, of course. But I think the handhelds maintain an edge for deeper play. Beyond technological differences between smartphones and handheld game consoles, the real challenge for the mobile model has been price and distribution. When smartphone games sell for a fifth and sometimes a tenth the price of DS and PSP titles, any sensible gamer has to do the cost/benefit calculation. Both Sony and Nintendo have fought back with online stores of lower-priced downloads, some developed by the startups that the app store markets helped create. But the big news from Sony yesterday was less about the hardware than about the platform being offered to app developers. The new Playstation Suite, a store and development platform to bring games to Android-based phones and tablets, puts Sony into the mobile game in the way we wished Nintendo had done years ago. Original Playstation content will be offered for Android devices, and a Playstation Store will allow Android users to download not only Sony games, but also content that can be written to the platform and played on Android and Sony NGP devices. Whether Sony succeeds in this two-pronged strategy is anyone's guess, but the company now seems to grasp the complexity of the mobile gaming situation. Understanding that dedicated handheld game consoles probably face a diminishing market, Sony went all-in to create a high-end experience for the hardcore game lover. But, to stay relevant and get a financial piece of the larger mobile gaming market, it needed a serious play in the smartphone/tablet world. Nintendo? You have something more impressive than 3D effects up Mario's sleeve?
The latest installment of the Motorola Solutions annual holiday study indicates that the majority of surveyed retail associates believe that shoppers were better connected to consumer information than in-store associates, driven by increasing availability of online shopping tools and mobile phone applications that allow price comparisons, access to coupons and social-networking. The survey found that retailers that aren't investing in technology to stay ahead of increasingly tech-savvy shoppers are hurting their own bottom line. 28% of store visits ended with an average of $132 unspent due to abandoned purchases driven by deal-habituated behavior, out-of-stocks, limited store associate assistance and long check-out processes. Product Awareness "The shopper today is better connected to product information than store associates... " (% of Retailers) Response% of Retailer Responses Completely agree 17% Somewhat agree 38 Neither agree nor disagree 26 Somewhat disagree 15 Completely disagree 4 Source: Motorola Solutions, January 2011 Nearly 25% of surveyed shoppers said they would be very likely to take advantage of a sales associate using a handheld payment terminal to complete their purchase, compared to only 9% who would be very likely to use their own mobile phone to scan their items and process payment without assistance. The survey found that when surveyed shoppers received guidance from a retail associate armed with a handheld mobile computer, 43% reported the device improved their shopping experience. The survey also notes that an overwhelming majority of retailers, 87%, believe that shoppers can easily find a better deal so customer service, aided by access to real-time information, is "more important than ever." Additional findings in the survey include the need to empower the mobile worker: