While it’s easy to assume that, by now, brick-and-mortar retailers are 100% on board shoppers’ multi-channel preferences, a new study shows they aren’t keeping up with consumers’ online expectations. In fact, the PwC survey finds, people aren’t waiting for stores, but inventing the multichannel experience for themselves as they go along. “Because most retailers haven't yet created efficient multichannel models, consumers are working it out for themselves, using different channels in ways that best suit them,” the report finds. “Consumers may choose to research a product in the store - a shoe perhaps - then use their mobile phone to find a better price online, and then call into the retailer's customer service line to order and have the shoe shipped to their home. In essence, consumers are creating their own multichannel experiences by leveraging multiple retailers across a single category or product.” In fact, in the U.S., 72% of online shoppers consider themselves “very accomplished.” Social media clearly has a large potential for retailers, with 32% of U.S. respondents saying they use some form of social media daily. (Both China and Hong Kong had higher social-media participation.) Yet overall, only 3% of the survey’s respondents have used it to actually make a purchase. The study, based on responses from more than 7,000 consumers around the world, found that while most people like online shopping because of its 24/7 convenience, it is the pricing, free and fast delivery, and a wide range of products that appeals to them most. Yet even though retailers would gain an additional margin opportunity of 8 to 12%, 59% of retailers still charge for shipping. In the U.S., two out of three shoppers say they’ll bail out of a transaction if it turns out they have to pay shipping charges. Online shopping’s appeal is also greater than many acknowledge. While 2010’s online sales penetration of total retail sales was 8%, once grocery sales are excluded, that rises to 11% of all sales. And in such categories as PCs and software, it’s 50%. Online shoppers buy in many more channels than some realize, the survey finds, with more than 90% of global online shoppers buying books, music and films, clothing and footwear online. And more than 60% of online shoppers have made purchases in categories with relatively little online shopping, such as jewelry, watches, sports equipment and outdoor goods. To make the most of these trends, PwC says, retailers need to focus more on what people expect from their physical stores, as well as the online experience. The store of the future, it says, will most likely be “a showroom where customers come for inspiration, to browse and to physically interact with, and to road test the products, as well as a convenient transaction point and customer service center, where customers come to complete a journey started on the web or to seek service for products bought regardless of the purchase channel.” Shoppers will likely enter these stores “knowing what they want and what price they expect to pay. They are using the store simply as a vehicle for completing the transaction and getting personal assistance that they can't find, or isn't available, on the web.” By 2015, PwC says, it expects U.S. e-commerce sales to reach $279 billion.
As smartphones and tablets have spread quickly in the last two years, some clear differences have emerged in usage. People turn to tablets mainly at home, while smartphones are used on the go, as well as at home. Tablets lend themselves to “lean-back” media consumption, while smartphones are geared to utility. The differences in how the devices are used, and who’s using them, impact how advertisers should approach them, according to a new Forrester report. It lays out separate marketing tactics for tablets and smartphones across a range of areas, including apps, display advertising, games and search. The main message is not to lump them together as mobile platforms, but tailor mobile initiatives according to the relative strengths of each device. That means marketers should not count on building one app for both screens. The report points out that Citi’s Private Banking app, for example, is geared to the tablet, since it offers deep market analysis better suited to reading at leisure on a bigger screen. Robitussin’s Relief Finder app, by contrast, is designed for smartphones because people use it to find relevant products while browsing store shelves. The same goes for mobile Web sites. Marketers should not try to send smartphone traffic to a site not optimized for mobile, or tablet traffic to a site geared to mobile phones. “For example, a tablet user viewing a site designed for smartphones can’t click to call and probably doesn’t need driving directions, but is interacting with a larger display that can therefore feature more content and controls,” noted the report authored by Forrester analyst Elizabeth Shaw. Without matching the experience to the device, marketing opportunities are missed. When it comes to search, mobile is expected to contribute 25% paid search this year, according to a Marin Software estimate. But Forrester advises a separate search strategy for smartphones and tablets. Because the form has smaller screens and are used more on-the-go, search ads should be kept simple, with features likes site links, local offers and click-to-call. Ads on tablets are better suited to features like click-to-download because of their larger screens and lean-back use at home. On the display side, click-through rates on both smartphones and tablets are both higher on a PC, making display ads a viable option for both. But on smartphones, in particular, companies should ensure ads don’t get in the way of what they user is trying to accomplish on the device. Gamers are also popular on both devices, with brands like 7-Eleven and Old Navy finding high engagement with in-game advertising, according to Forrester. Gaming giant Zynga publishes top social games like Words with Friends and FarmVille for the iPad, iPhone, and Android phones and tablets, offering opportunities for sponsorships and in-game ads. Because of their larger displays and often faster connections via WiFi, tablets are naturally better suited to watching video. About 52% of tablet owners watch video on their devices compared to 46% of smartphone owners. According to Nielsen data released last October, about 40% of both groups use their devices while watching TV. Smartphones do have one big advantage over tablets -- they’re simply more ubiquitous -- a key factor when considering reach. A new estimate from Nielsen today puts smartphone penetration at half of U.S. mobile users. A recent Pew survey found tablet adoption doubled over the holidays to almost 20% of adult Americans, while comScore estimates 15% of mobile users now have tablets.
All this talk about the connected home and digital ecosystems is not going away anytime soon. According to International Data Corporation, nearly 1 billion connected computing devices (including smartphones, PCs and tablets) shipped last year, and that number is expected to double by 2016. “We have for a long time counted the PC market and the tablet and smartphone market separately,” Bob O’Donnell, vice president of clients and displays at IDC, tells Marketing Daily. “Increasingly, we see those worlds melded together. Almost anyone you talk to has multiples of those devices.” In 2011, shipments of those devices (which doesn’t include connected non-computing devices such as televisions or Blu-Ray disc players) totaled 916 million units, with revenues of $489 billion, according to IDC. The company predicts unit shipments for those devices should top 1.1 billion by 2012 and will reach 1.84 billion units by 2016. “Those are enormous numbers,” O’Donnell says. “Yes, most of those will be smartphones, but PCs and tablets are still relevant devices. They’re all part of a large computing ecosystem.” The increasing dependence on several devices will have an impact on the operating systems running all of those devices. While IDC projects Windows-based devices to slip from a 36% share to a 25% share of all devices by 2016, Android and iOS will account for 31% and 17% of devices, meaning that none will really hold a dominant lead over any of the others, O’Donnell says. “It’s going to be a very diverse world,” O’Donnell says. “There’s not one solution. There’s no one winner here. If I’m an application developer or service, I have to be cognizant of the fact that I have to [work on] multiple platforms.”
Digital Magazine Circ Rises The total digital circulation of consumer magazines tracked by the Audit Bureau of Circulations has jumped from 1.4 million in the second half of 2010 to nearly 3.3 million in the second half of 2011, according to ABC figures cited by Ad Age. That’s a 125% jump in one year, reflecting the growing interest in online editions and the increasing penetration of tablet devices like the iPad and Amazon’s Kindle. Despite these impressive figures, Ad Age also reports that digital circulation remains just 1% of total paid and verified circulation, with sponsored circulation (generally sold in large packages to businesses) making up a much larger proportion of the digital than the print circulation. By contrast, individual paid circulation was just 24% of Maxim’s digital circulation, and 25% of Seventeen’s. Earlier this month, ABC announced it is introducing a new report format that will offer significantly more detail on consumer magazines’ digital publications. Principally, when a publication’s digital editions constitute over 2% of its total circulation (and average at least 3,000 copies), the publisher must report net digital circ by platform type -- including Web, apps and multiplatform offer. The new report format requires publishers to report several key metrics for digital magazine consumption via tablet apps and Web browsers, including the number of unique browsers or devices, total visits and average visit duration. Some big magazine publishers are already moving to offer advertisers and media buyers more insight into their growing digital circulation. For example, Conde Nast revealed that it will begin sharing information with advertisers, including the number of tablet subscriptions and single-copy sales, open rates for the tablet edition and the amount of time spent with the digital magazine by readers. Advertisers that pay extra for premium ads can get more information, including how many readers accessed the ad, the number of times it was displayed, and average time spent with the ad. Variety On Auction BlockVariety, the venerable purveyor of entertainment business trade news, has been put up for sale by owner Reed Business Information -- the latest in a series of magazine sales by RBI, which has divested a number of print properties in recent years. RBI CEO Mark Kelsey was quoted as saying: “With RBI's increasing focus on data services, and the sale of our other US print magazines, it now makes sense for us to sell the business. ... I have no doubt the business will continue to thrive under new ownership." The report noted that Variety has expanded into events and launched a number of new products, including the Variety Insight data wing (following the acquisition of TVtracker), Flixtracker and the Variety Archives. Ziff Davis Unveils PC Mag for iPadPC Magazine is now available for purchase at the iPad App Store and Apple Newsstand, according to publisher Ziff Davis, which said the monthly iPad edition will contain more than 40 articles, reviews and features, along with interactive elements like 360-degree views of products. It is also relatively small in terms of memory, at just 70 MB -- meaning it should be an easy download. The digital edition for the iPad contains “no advertising whatsoever,” Ziff Davis said. Editor in Chief Dan Costa stated: “Because we ceased the print publication a few years ago and shifted purely to the Web, we were able to design an iPad edition from scratch with the iPad consumer in mind.” The magazine’s other digital editions -- available on Zinio, Nook, Kindle and the Sony Reader -- have a total paid circ of over 50,000. The PC Magazine app for the iPad will be free to download and will include a free sample issue. The April issue is available for $3.99 and consumers can also choose two subscription options: monthly at $1.99 or annually at $19.99. Billboard Appoints Levy Editor Joe Levy has been named editor of Billboard. Levy previously served as chief content officer at Maxim, where he oversaw editorial strategy and brand direction. He also served as editor in chief of music mag Blender, and executive editor of Rolling Stone. His resume also includes a stint as senior editor at Details, editor at the Village Voice and Spin.
Half of U.S. mobile users now have a smartphone, according to new data from Nielsen. The 49.7% of mobile subscribers with a smartphone as of February is up from 36% in the year-earlier period, reflecting a 38% increase. Underscoring that growth rate, more than two-thirds who bought a new handset in the last three months chose a smartphone over a feature phone. Nielsen’s estimate of smartphone penetration tends to be more aggressive than others. comScore, for instance, put that figure at 42% among U.S. mobile users, and a recent Pew report found that 46% of American adults owned a smartphone as of February. The Nielsen estimate is based on a survey of more than 20,000 mobile users. When it comes to smartphone operating systems, Android maintains a commanding lead, with a 48% share of the market, followed by iOS at 32.1%. BlackBerry phones represented another 11.6%, down from 14.9% in December. Recent trends indicate that Apple is taking more share from BlackBerry and other competitors, including Microsoft’s Windows Phone platform. Among people who purchased smartphones in the last three months, 48% surveyed in February chose an Android, and 43% chose an iPhone. Only 5% bought a BlackBerry, and 4% got another type of smartphone. Apple has gotten a big lift from the iPhone 4S, which helped it sell a record 37 million iPhones overall in the fourth quarter. In December, 44.5% of new smartphone buyers got an iPhone, up from 25.1% in October. In February, the 48% who said they had bought an Android phone was up from 46.5% in December. Windows Phone could get a much-needed boost when AT&T launches Nokia’s Lumia 900 in April. The carrier is planning a major push behind the Windows Phone-powered smartphone, priced at $99.99.
While TV programmers and third parties are scrambling around to craft second-screen experiences that capture TV viewers on smartphones and tablets, the viewers themselves may already have found their favorite second screens on existing social networks. “Users are ahead of service providers in this respect,” says Informa Principal Analyst Nick Thomas in a recent report on the future of TV worldwide. “Many [are] already using Facebook and Twitter and other tools to communicate via the handheld devices about the content they are simultaneously viewing on the TV,” he writes. Facebook potentially has an enormous role in the evolution of social TV on a number of levels, Thomas argues. The social network can help broadcasters retain audiences with added value for live content experiences even as over-the-top video and time-shifting behaviors erode old viewing activities. At the same time, TV on-demand entities like Netflix could use Facebook to cultivate communities around on-demand content. But Facebook could itself become a social TV platform, with video and social interactions running in parallel. In an Informa survey of TV, telecom and Internet executives, social networks were considered by 21.8% of respondents to be the types of companies that can persuade users to pay for digital content. Only 16.8% cited network operators like telcos as likely platforms for paid content, while 27.7% pointed to over-the-top services like Netflix and the largest share cited device manufacturers like Apple, Sony and Samsung. The big content winners are likely to be entertainment, cited by almost 40% of executives as representing the greatest opportunity for increasing viewer engagement. Sports and news and weather were seen as the biggest opportunity by 27.5% and 14.8% of respondents, respectively. But movies (9%) generally were not regarded as a strong content type around which to generate social engagement. Tablets emerged as the most important second screen among the executives surveyed, with 41.4% saying that tablets would be the dominant tool viewers would employ to access social TV features. 35% cited smartphones as most important; 15.3% said PCs and laptops. Significantly, only 8.6% of the executives surveyed felt that social TV interaction would occur on the TV screen itself. The results suggest just how far the industry has been moved by mobile and portable devices away from pre-existing “Interactive TV” models. Informa recommends that all of the stakeholders in future TV not rely solely on their own social networks and apps to develop social TV strategies. “[They] need to create a portfolio of external partners, including Facebook, to ensure their social offering is relevant to viewers’ needs. “ Informa also recommends that programmers build viable social TV ad models that work off of the main TV display. The second screen is where advertisers can more precisely target and segment the TV audience. It is “vital to future TV revenues, as old advertising models based on a mass audience become increasingly devalued,” Thomas writes.
Google appears ready to take on the Kleenex of the tablet market after two years of watching Apple invent and dominate the market with iPads. According to a report in The Wall Street Journal, the company will open its own online store to sell tablet models that it co-brands with manufacturers such as AsusTek and Samsung. Once the proposed acquisition of Motorola Mobility is approved by U.S. regulators, Google also will be free to manufacture and sell is own tablets. WSJ reports that the plan is to introduce the online store with devices that will carry a Google co-brand, although a range of hardware OEMs will be represented. It appears that no timeline for the online store has been set, but Google is scheduled to release its next version of the Android operating system in the middle of this year. Google has attempted to sell its own branded Android hardware with little impact on the market. Its Nexus line of Android phones was offered direct to consumers online, but that plan was abandoned in short order. But Google is no doubt frustrated by the apparent inability of Android tablets to break through in a market that seems owned by iPads. The Amazon Kindle and Barnes & Noble Nook line, while powered by Android, use heavily customized versions of the OS that maintain their own walled-garden approach to Android apps. Despite Apple’s success in defining the tablet market with the iPad, recent research suggests that Android has an important role to play in the expansion of the device platform worldwide. ABI Research contends that lower-priced devices in the sub-$400 range, will surge in the market and grab 60% share by 2016. IDC also projects that Android tablets will overtake Apple in the market by 2015.
There are all kinds of good news-bad news scenarios that makes media a conundrum. The bad news: cable and broadcast audiences are declining. The good news: pay TV and video subscribers and revenues are growing. The good news: audience and engagement measurement is evolving into a more useful science. The bad news: it cannot happen fast enough. The undertow of disruptive innovation and rapid change in media is unprecedented. Netflix, which was given its last rites a year ago, is now being touted by some as the next cable network and content wholesaler. An outlier like Aereo has quickly emerged “the cord cutter’s dream,” sidestepping retrans laws by providing consumers with the antennas and tools needed to stream video on their own. If it survives legal challenges, it will “hasten the transition to long-debated, usage-based pricing for broadband,” notes Bernstein analyst Craig Moffett. More than ever, the end game appears to be ubiquitous video for universal screens. Its measured penetration and effectiveness will be the key that unlocks a windfall of digital value. Bernstein analyst Todd Juenger conservatively estimates $2 billion to $4 billion in advertising inventory is being held back or not counted as traditional TV video gingerly transitions to Internet and cloud distribution. With half of all cell phone-touting Americans using smartphones -- expected to morph to 70% by 2013, according to Nielsen -- media’s future hinges on measuring and mining pocket video and interactivity. Globally, there will be 10 billion mobile Internet devices by 2016, or 1.4 connected devices per every 7.3 billion persons on the planet by that time, according to Cisco. That’s pure opportunity. In more specific company terms, a pure TV player such as CBS can generate an additional $6 billion in enterprise value by continuing to reinvent itself in digital terms, creating new interactive advertising and fee-based revenues. Ironically, Internet display measurement is “horribly worse” than TV measurement with widely varying delivery estimates from competing sources, no duplication of impressions and no demographics, Juenger observes. It is a double whammy, considering how audience fragmentation has strained the currency of television that still supports $60 billion in annual advertising, some of which will increasingly find its way to interactive media venues. Bottom line: more than one in every four local ad dollars will be spent on digital by 2016, according to BIA/Kelsey. That makes hybrid approaches to quantifying those new connections -- and creating value and revenues -- inevitable, but not necessarily more effective. Nielsen proposes combining Internet video and traditional TV into blended impressions to create a single budget and planning process with its new Cross-Platform Campaign Ratings. The kicker is it will include new and emerging forms of video on YouTube, Hulu, iPads and other mobile devices excluded from its baseline C3 audience count – which doesn’t even include traditional TV or cable VOD within three days of the original air date or out-of-home! The mistake is considering these “TV audiences” in isolation rather than as more lucrative, all-encompassing video consumers. It is akin to cramming the Pandora’s box of interactive video into static television’s stable. As content and advertising quantification becomes more holistic with the fusion of data and video across all size screens and platforms, media will redefine itself in economic and creative terms. Then it won’t matter if cable network audiences are off 8% from a year ago or that overall pay TV subscribers are up by half a million or that Netflix’s domestic Web site visitors are up 13% from a year ago while it negotiates with cable operators to be included in movie cable packages. It will all be part of a global connected video experience that will thrive on ubiquitous value creation rather than be stymied by today’s false and failing defense of crumbling silos.
Culture is context. That is, culture is that loose and vague collection of values, symbols, rituals, habits, style and attitudes that characterize and distinguish a group of people. The amorphous and hard-to-finger qualities that differentiate the U.S. context from, say, the Japanese or Eastern Europe or Malaysian contexts all become key in how new platforms find a place within people’s lives. Despite the hubris of gadget geeks and the techno-industry, new technologies don’t in and of themselves change cultures. The interaction is much more complex than that. Every new and important media gadget, from the motion picture to radio to TV to Internet to mobile phones, ultimately is given a place within our culture in ways that the inventors may not have foreseen, because the technology has to negotiate its way into our lives and all our preexisting needs and values. This interplay between gadgetry and culture is especially apparent in the mobile world. As any global mobile marketer will tell you, the mobile phone has evolved as a gadget in significantly different ways around the globe. In some places, the mobile phone is the first and only contact many people have had with the Internet itself. While we in the U.S. now juggle PC, laptop, smartphone and even tablet, for much of the globe the feature phone is still both the first and the only screen in their interactive media cosmos. The mobile payment model has been very slow to gain traction in the U.S., but in some other contexts we are already seeing phones being used as payment systems. Even here in the U.S., while many in the industry would have liked to see near-field communications (NFC) and m-payments take hold, shoppers had their own ideas. Last year they started bringing their smartphones into store aisles -- an unexpected move that left many retailers scrambling for a solution. In a recent survey of multiple device usage in the U.S. and Japan, Dentsu found that cultures matter in the way that people perceive gadgets. For instance, in Japan 51.3% felt that a tablet was closer to a PC and only 39.7% felt that it was closer to a smartphone. In the U.S. the attitude is remarkably different, with only 33.3% saying a tablet is closer to a PC and 57.3% feeling it is closer to a smartphone. Usage patterns were also quite apart. For U.S. tablet owners, the device has become a persistent mainstay, with most of them using the tablet multiple times a day. In Japan, however, the primary daily uses appear to be social, with 26% using it for social media and 21% for video sharing. In short, the Japanese are not seeing the tablet (yet perhaps) as a media consumption device. Only 6% of Japanese tablet owners are even using tablets daily as ebook readers, compared to 35% in the U.S. For U.S. tablet owners who also own smartphones, 70% to 80% are ebook readers. Japanese tablet owners are themselves having trouble seeing these devices becoming mainstays. Only 18% of respondents felt that the platform would become a mainstream gadget. For tablet owners here, 38% are already convinced that tablets will be mainstream. Americans are seeing the device evolve as a piece of the media consumption continuum. The connection between tablet and TV is especially pronounced here, where 36% of owners say they use the device to comment on Tv shows over social networks, compared to the 24% who use smartphones to do so. Dentsu rightly points out that over time the availability of more media options on tablets in Japan could shift attitudes about the device closer to U.S. users'. But the place that the Japanese tablet user is already assigning to tablets, as more of a social than a media tool, suggests a different path for its future, with physical sharing of the tablet playing a bigger role. “While the tablet will no doubt become more of a personal device even in Japan, it may still evolve as a medium where people close to each other communicate, share the same space, and enjoy sharing abundant information.” In other words, the tablet will conform to the social patterns and priorities within that context. How we allocate the multiple screens now available in our lives will in many ways determine how media and marketers construct strategies for leveraging these screens. We need to think beyond the “always-on” paradigm. Spewing the same old ad crap across all of these displays at once will miss 90% of the opportunity and just make advertising seem even more irrelevant to our needs than it already does. This is not just the Web everywhere. Users will ascribe roles to each screen that aligns with different modes, mindsets, perhaps even moods. Tracking mere “behaviors” we once identified with someone accessing an auto article in the last six weeks (flag and follow as “auto intender”), will seem like small potatoes in this world. “Contextual targeting” used to mean aligning an ad with the content on a given page. In a multiscreen world, targeting “context” is actually close to targeting real world behaviors –- where someone is, what she is doing and even perhaps what mood she is in or level of receptivity the current screen implies about her. Good luck with this.