As marketing clichés go, few are as firmly embedded as Gen Y’s technological savvy, or their parents’ doltish inability to master the text message. But new research from McKinsey & Co. reveals that this divide is growing faster than many marketers realize, and that important insights about behavior, such as Gen Y’s greater willingness than those over 35 to pay for online content, are getting lost in conversations about technology. Ewan Duncan, a principal in the Seattle office of McKinsey & Co. and co-leader of its Consumer research, tells Marketing Daily why the separation of generations is accelerating, and what marketers need to know. Q. So you’ve now looked at 100,000 consumers, across 15 countries. What’s surprising to you?A. The general patterns of our research support what people are seeing and saying about, for example, the rise of social media, the rise of mobile, and that people are using voice less. But certain groups are using it a lot less -- and that phrase, 'the future is already here, it’s just unevenly distributed,’ applies. If you look closely at the youth segment, they are already quite different than the rest of us. Q. How so? A. Well, they have laptops. But their primary computing device is their smartphone. When they communicate, they are likely to do it through text or video, not voice. They think email is slow and dumb. They don’t sit and watch TV -- they snack on video as they are doing other things. Q. What does that mean for marketers?A. Well, many of them don’t have landlines or watch normal TV, and that is quickly becoming the norm. Marketers need to be on the right side of that behavioral change. Q. Could you explain what you mean by device convergence? A. Your phone is becoming your digital Swiss Army knife. It is a still camera, a video camera, a screen for playback, a GPS. And companies will bake more and more technology into these phones. Some of these larger phones with bigger screens are better for video, but not so easy to hold up to your ear. Q. Isn’t that odd? That phones are becoming less like phones?A. I don’t think so. People use voice less and less, and I think it will continue to decline. Video calling is the big hidden trend, and younger users rely on their mobile devices when they can’t talk, like when they’re in class or at work. They are communicating more, but talking less. Americans talk much more than people in other countries. Q. What else are marketers missing? A. This group’s willingness to pay for online content. Our research found that those under 35 are 1.6 times more likely to pay for online content than those over 35. That could mean purchasing an app or a subscription, but I think we’ll see more companies moving toward a business model that addresses this.
Raising the bar for all online publishers, Hulu has committed to only bill brands and agencies for ads that viewers watch in their entirety. “This is an industry first,” according to Jean-Paul Colaco, Hulu's senior vice president, advertising -- explaining that the move is part of Hulu’s “all in” attitude. “Hulu advertisers will not be charged unless their advertisement has been streamed through completion.” The 100% completion rate commitment includes all ads sold by Hulu itself, and will apply to both Hulu and Hulu Plus, Colaco said Tuesday. In beta for several months, Zenith Media, General Mills, and Horizon Media all helped Hulu test its new model. The model has the ability to “minimize waste and maximize effectiveness of video advertising," Rick Hosfield, vice president of content planning and distribution at General Mills, stated. More than a mere marketing gimmick, Colaco sees the move as an extension of Hulu’s intrinsic brand-friendly nature. Bold as the offer may seem, however, it's important to note the difference between Hulu's play and YouTube's -- which is employing a pay-per-complete model, according to Michael Greene, an analyst at Forrester Research. “What Hulu is doing is reinforcing its status as a premium video publisher by calling attention to its strong user engagement and ad completion rates -- metrics that differentiate it from other publishers, especially those in the mid- to long tail,” Green explains. “YouTube, on the other hand, is trying to use consumer ad skipping to its competitive advantage. In a world where users can expect to skip video ads and advertisers pay for completes, only a publisher with the scale of YouTube can effectively compete on those terms," he adds. As Forrester senior analyst Joanna O'Connell notes: “YouTube is also focused heavily on using data to better match advertisers' ads to consumers, based on the likelihood that the consumer will complete the ad. Using data to enhance targeting is smart.” Conversely, in 2007, Hulu launched its ad selector, which encouraged viewers to choose among multiple ads to select the one most relevant to them. More recently, Hulu introduced its ad swap product, which lets viewers replace existing ads for those they feel are more relevant. Since the launch of ad swap, Hulu has seen over 9 million substitutions, according to Colaco. The original Hulu service continues to ramp up users and content, while Hulu Plus -- the company’s U.S. subscription service -- passed more than 2 million paid subscribers in the first quarter of the year. “Based on our research, Hulu Plus has achieved 2 million paying subscribers faster than any video subscription service -- online or offline -- in U.S. history,” per Colaco. There will be no extra cost to Hulu advertisers for this new guarantee.
Arbitron is launching a new syndicated mobile research service for the U.S. covering usage across the Web, apps, social media and e-commerce on mobile devices. The new offering will also report reach, frequency, and key activities on mobile phones and tablets, whether connected via a cellular or Wi-Fi network or used offline. Arbitron’s U.S.-based mobile panel includes an opt-in group of approximately 6,000 smartphone and tablet users 18+ initially recruited starting November 2011. Arbitron’s mobile division already operates research panels in the U.K., Finland, Denmark, France and Germany. Arbitron Mobile was created last year through the parent company’s acquisition of Finland-based mobile analytics outfit Zokem for $11.7 million. In the U.S., Arbitron will compete directly with media research firms including comScore and Nielsen, which also provide panel-based data on mobile usage. In addition to tracking usage via on-device software, the company says its measurement technology will be able to serve real-time questionnaires directly to a user’s mobile device for custom research studies. The new service is designed to help marketers, publishers, developers and carriers answer questions, such as how popular an app is, what key differences in usage are by operating system, where consumers come from to find content, and what a day in the life of a mobile consumer looks like. To that end, Arbitron revealed some initial findings based on its research, including naming the five most popular apps: Facebook, Google Search, YouTube, Pandora radio and Yahoo Mail. Facebook is the top smartphone app overall with a monthly reach of 65%, and accounting for 210 minutes of the average user’s monthly time spent on their device. Twitter, the No. 8 app, has 13.2% reach, amounting to 107 minutes a month in time spent. Social media apps collectively represent 11.1% of smartphone use. Arbitron found that app usage overall is growing faster than mobile Web browsing. When it comes to messaging, mobile users on average send about 11 SMS text messages a day and receive 13, and spend 212 minutes a month reading or sending them. More time is devoted to email than text messaging, at 332 minutes monthly. Of all communalizations via smartphones, voice accounts for only 45% of usage time, according to Arbitron.
Forget the “third screen.” Tablets are moving into the second-screen position (behind television) when it comes to watching full-length videos (i.e., television shows that are 30 minutes long or longer). “I’ll put it up there as a second screen,” Stuart Schneiderman, senior director of digital research, Viacom Media Networks, tells Marketing Daily. “The transition within these households that seems to be happening is not that it's pulling away of TV, it’s taking over what has been from the other smaller screens.” According to a survey of 2,500 consumers conducted by Viacom, 15% of full-length television viewing is done through a tablet device. About a quarter (25%) of Airplay users watch shows on their tablets, as do 19% of Netflix users and 22% of cable subscribers that have downloadable streaming apps, according to the survey. More than a third of the AirPlay (35%) and Whispersync (34%) users say they watch more programming on their tablets because of the apps. Elsewhere, the study found:
Mobile apps and Web sites are helping to change the way people book their travel. As some discount bookings sites discovered last year, untethering travel commerce from the desktop or laptop frees the consumer to book sometimes on a moment’s notice. And as mobile users gain confidence in m-commerce systems, they are willing to research and buy full travel itineraries. The latest estimates and projections from eMarketer suggest that mobility is a key growth driver in an online travel category that is otherwise approaching maturity. eMarketer says that in 2011, 12.1 people in the U.S. booked travel on their phones -- a number that will shoot up to 16 million this year, grow to 20.2 million next year and hit 36.7 million in 2016. Perhaps just as important is the even larger role mobile platforms will play in the longer research and purchase process. Already, 37.8 million are using mobile devices to research the category -- but not necessarily buy. That number will nearly double to 74.3 million in 2016. The growth of mobile is important to a travel category that is showing signs of leveling off online. While the $120 billion generated by Web-based travel bookings in 2012 shows 11% growth, that actually is less than overall retail sales. eMarketer is projecting that the overall 11% bump in 2012 will fall on an annual basis to 5% growth by 2016. Travel has been more sophisticated online and for a longer time than many other e-retail segments, and so it follows a shallower growth curve. Mobile, however, is giving the category a second wind as people’s buying habits shift to the devices.
Shoppers care most about network and cost when considering mobile device and service purchases. In fact, 58% said network reliability was most important; 56% said cost of data plan; 51% said cost of voice plan; and 50% said that device price was the most important consideration, according to a study released by Google. Upgrades -- and for the most part, the need to have the latest and greatest equipment -- drove new purchases during the Google Q4 2011 study. When asked why the survey participant purchased the upgrade, 48% said they were eligible, 31% wanted the latest technology, 17% wanted to buy their first phone, 14% switched to the provider plan offering the best deal, and 14% switched for a faster and more reliable network. Kyle Keogh, Google's tech industry director, said the most surprising insight came from a lack of consumers wanting 4G connections, for its rapid speeds and uninterrupted flow of streaming video content. For some, research has been a lengthy process. About 48% start more than three weeks before making a purchase. Others are more compulsive. Some 28% said they make the purchase on the same day they begin research, followed by 24% within two weeks. It's no surprise that digital content continues to become a more important part of the research process. Some 63% relied on search to research information about wireless devices before making a purchase. OEM sites followed with 48%; online customer reviews, 47%; carrier sites, 46%; and online retailers, 35%. Consumers also called on family and friends as the highest offline resource, and magazine ads for traditional. What type of ad makes a lasting impression? After television ads, online Web sites, email ads, search engine listings -- both organic and paid search -- make a lasting impression on consumers searching for wireless devices. TV ads took the No. 1 spot with 39%, followed by online Web sites, 22%; email, 21%; and search, 14%. Online video ads came in at 13%; cell phone ads, 4%; and tablet ads, 2%. Purchases still often occur in stores, but online activity continues to influence decisions. When asked how the consumer made the decision to purchase their most recent phone, 45% said in-store; followed by 25%, online; 24%, and 6%, other. Sometimes the decision isn't easy. About 72% consider two or more cell phone models, and 57% research content on more than five Web sites. Search ads leading to informational landing pages could help consumers make a choice. Keogh said about half of the U.S. population owns a smartphone, and consumers typically purchase a new one once every 1.5 years. One interesting stat released by ABI Research this morning suggests that smartphones will drive the semiconductor market to $170 billion in revenue within five years. That's huge, by the way. More mobile phones mean more purchases -- which mean more ads. Forrester Research Analyst Shar VanBoskirk also believes these ad-supported devices will enhance audience targeting. In the U.S. Interactive Marketing Forecast, 2011 To 2016, she writes: "More interactive marketing investment will spawn more ad-supported content. In time this will open the door for ad supported hardware too: big online user networks like Google and Facebook will option "freemium" devices to consumers in exchange for embedding ads into their displays." . . . Food for thought.
The advocacy group Electronic Privacy Information Center is asking the Department of Justice to investigate whether Google's Wi-Spy snafu violated any federal laws. "Over a three-year period, Google, Inc., deployed hundreds of cars on roadways across the United States, outfitted with digital cameras and Wi-Fi receivers, to capture both images available from public roadways and the private communications of Internet users," EPIC says in a letter to DOJ dated Tuesday. "Google's 'Street View' program has given rise to numerous investigations, and lawsuits, but none have adequately determined whether Google's conduct violated the federal Wiretap Act." If the DOJ takes up the matter, it will become the third federal agency to look into whether Google's Street View cars broke any laws by collecting payload data -- including URLs of sites visited, email and passwords -- from WiFi networks that lacked passwords. Google apologized and said the data collection was a mistake. Still, the revelations sparked a class-action lawsuit and probes in the U.S. and abroad. So far, however, none of the U.S. actions have amounted to much. The Federal Trade Commission closed an investigation in 2010 without commencing an enforcement proceeding. The Federal Communications Commission also closed its file on Friday. While that agency fined Google $25,000 for impeding the investigation, it didn't rule that any laws were violated. One reason why the FCC didn't condemn Google more forcefully is because no one seems to know how to apply the wiretap law to WiFi networks. The federal wiretap law, which dates to 1986, prohibits companies from intercepting electronic communications. But it doesn't apply to transmissions accessible to the general public. Google argues that communications sent through open WiFi networks are publicly accessible. Therefore, the company says, its inadvertent data collection was legal. U.S. District Court Judge James Ware -- who is presiding over the class-action lawsuit -- disagreed with Google. But Ware also granted Google's request to send that question to the 9th Circuit Court of Appeals, which is currently considering the matter. Meanwhile, the public relations fallout for Google might not end any time soon. Today, Ed Markey (D-Mass.) called for Congress to investigate the company. "The circumstances surrounding Google’s surreptitious siphoning of personal information leave many unanswered questions," he said in a statement. "I believe Congress should immediately hold a hearing to get to the bottom of this serious situation.”