How Apple plans to take on Google in mobile advertising
The iAd move could create many new apps for its new iPad
Apple chief executive Steve Jobs has placed himself head-to-head with rival Google in the budding mobile advertising market, by announcing a new iAd advertising platform to be rolled out this summer.
The announcement follows Apple's purchase in January of mobile advertising network Quattro Wireless for $300m (£196m), demonstrating that Mr Jobs is happy to put his money where his mouth is.
Yet the mobile advertising market remains tiny, and the acquisition price paid for Quattro is small change for a company currently valued at over $217bn.
However, analysts say that the potential for mobile advertising is huge and it could transform mobile commerce. Investment firm Piper Jaffrey is predicting a total in-application market for advertising of $700m by 2013, of which iAd could capture $380m.
Nascent industry
"Mobile advertising currently is at a very nascent stage, and the sector's revenues are totally eclipsed by other forms of advertising," says Ben Wood, analyst at technology consultants CCS Insight.
"However, there is no doubt that these companies view advertising as the business model of the 21st century."
Apple has placed itself head-to-head with Google
Mr Jobs's thinking is that mobile advertising can be tailored to the individual users needs and interests, in much the same way that Google has been able to use data from users of its search engine and gmail accounts to target advertising.
"The mobile is a very personal device," adds Mr Wood. "You can almost say that it gives you a market segment of one."
Apple could use the mobile phone user's physical location as a hook for advertisers - for example Mr Jobs cited a Nike advert incorporating a nearest store locator. But information about a user's interests can also be gleaned from the applications they choose to purchase.
The Apple head says that he wants to help developers make money with higher quality advertising so that they can keep their free applications free. "What some of them [developers] are starting to do is put mobile ads in their apps…" says Mr Jobs. "And most of this advertising sucks."
Opportunistic timing
Steve Jobs's announcement comes at a time when rival Google's own mobile advertising initiative has become hamstrung by the US anti-trust authorities.
In November, Google outbid Apple to purchase leading mobile advertising company AdMob for $750m.
"Google came in and snatched them because they didn't want us to have them," said the Apple head. Admob already operates on Apple's handsets.
Most of this advertising sucks
Steve Jobs, Apple CEO
However, Google's plans immediately ran into trouble as the Federal Trade Commission chose to review the deal. Months later, a decision is still pending.
"This gives Apple a first mover advantage," says Mr Wood. "Although Apple has a fraction of the experience in advertising that Google has today, Google knows they are a formidable competitor."
Flood of new apps
The iAd initiative also seems designed to provide a fillip to the growth of new applications for Apple's handsets.
The Apple chief executive said that 60% of the advertising revenues raised will be passed onto the application developers, creating a major new financial incentive for programmers to generate new functionality for the iPhone, iPad and iPod touch.
"The revenue sharing opens the floodgates for a lot more free applications," says Mr Wood. "This is an extremely astute move by Apple. I would expect both the number and the quality of applications to grow much more rapidly because of this."
The rivalry between Apple and Google will partly be decided by the direction that mobile phone technology takes in the future.
Apple stakes its future on the continuing development of applications as the main forum for mobile software, whereas Google expects applications to be supplanted by a web browser that gives users access to the entire internet.
Which technology wins out may depend on whether Apple's control of its content proves to be a plus, because it ensures the quality of its applications, or a minus, because new software is more easily available on the web.
Mobile advertising is poised to take off in Western Europe according to a new report by the research firm First Partner. The company says that annual growth could be as high as 50% over the coming years reaching around £810m by the end of 2013. It says that around £110m of this will be in the UK, making it the biggest market in Europe for mobile advertising.
The size of the market in Ireland is estimated to be worth around €7m a year.
Yankee Group found that in 2009 more than 90% of US consumers were at least somewhat interested in scanning images or bar codes with their mobile phone to get more information or coupons for a product.
Getting coupons via SMS or MMS was nearly as popular, although only 7% of respondents had received mobile coupons in the past three months.
Yankee Group expects involvement with mobile coupons to increase dramatically over the coming years, however. The number of mobile coupons redeemed in North America is set to increase more than tenfold in 2010. Triple-digit increases will follow in 2011 and 2012.
The value of mobile coupon transactions will climb commensurately. Yankee Group forecasts nearly $2.37 billion in North American mobile coupon transactions in 2013, up from just $5 million this year.
Hurdles remain for mobile coupons, which require infrastructure at the point of sale to deal with SMS codes or bar codes readable from mobile devices, but Yankee Group expects these challenges to be confronted successfully in the next few years. And since mobile coupons have been available for some time already, the research firm doesn’t predict consumer education will be a limiting factor.
UK Spam Study: Mobile Marketing Messages Widespread And Accepted
Mobile marketing company TXT4Ever has produced a very interesting study about mobile users’ attitudes towards mobile marketing messages.
The report, titled “UK Spam Study“, finds that mobile marketing is widespread and generally quite well accepted by the public. (download available).
The survey
The survey was conducted in mid-2009, and involved over 250 respondents ranging from 21 to 75 years old, with an average age of 35. A few statics about the phone usage show that it was an active group, but relatively close to UK averages.
About three quarters of respondents said they send at least one SMS per day, with one quarter sending more than 6 per day.
About three quarters of respondents said they make at least one phone call per day, although 10% said they never make voice calls, preferring to use SMS at all times.
Two thirds access the mobile internet on a regular basis.
The results
One of the key questions is the response that users have to mobile marketing messages. Perhaps surprisingly, less than one third said that they do not want to receive any marketing messages at all. Discount coupons and customer service messages were quite acceptable to most people.
Users also had concerns about the cost of paying for SMS spam, concerns about knowing the actual identity of the sender of a message, as well as concerns about giving third parties access to their phone numbers.
Only one third of the respondents felt that mobile spam was increasing. Presumably the cost of sending mobile spam will keep it at a level well below email spam.
Irish town to be an experiment in Near Field Communication
The fastest town in Ireland – Tuam! – is to be the first entire town in Europe to see the deployment of Near Field Communication, a technology that is set to transform the world of retail and mobile commerce.
Next week will see the citizens of the Galway town become leaders in next-generation consumer loyalty technology as the vast majority of Tuam retailers join together to implement Zapa Technology’s electronic loyalty card scheme.
Customers in Tuam will simply tap their phone at a terminal beside the cash register to avail of discounts, special offers and other loyalty schemes, ensuring that everyone in the town receives all the loyalty bonuses and rewards to which they are entitled from the town’s retailers.
How it works
The system operates using Near Field Communications over ordinary mobile phones. Ireland is the one of the first countries in Europe to use Near Field Communications technology, and the deployment of the technology in Tuam is one of the largest of its kind in Europe.
“It’s great to see an entire town taking up our Zapa Tag technology,” said John Nagle, CEO, Zapa Technology.
“This represents a very exciting move for our ZapaTag and for the future of loyalty and bonus schemes in this country. We believe the deployment of ZapaTags throughout the town of Tuam represents the largest commercial deployment of Near Field Communications in Europe.
“ZapaTags have already been deployed in Insomnia Coffee shops nationwide and we are in discussion with a number of other retailers, but this is the first time an entire town has been blanketed with Zapa technology and we’re very excited about it. We believe that as a loyalty scheme, the ZapaTag system is second to none for both the customer and the retailer.”
Zapa works by fixing a small tag (the Zapa Tag) to the customer’s mobile phone handset. The customer simply taps the ZAPA reader beside the cash register to receive their bonuses and rewards. The scheme is a "win-win" for both customers and retailers.
Reaping rewards
The Zapa Tag will be a "one size fits all" system for Tuam, replacing the numerous loyalty paper and plastic cards that customers can be bombarded with. Often customers don’t avail of their rewards in full, but this scheme will ensure that they never miss out again.
The Love Your Town initiative emerged earlier this year when Tuam Chamber of Commerce and Energise Tuam came together to introduce a paper-based town loyalty scheme. The use of the Zapa Tag has now automated this scheme.
The retailers of the town believe the scheme will encourage people to spend locally, especially in the run up to Christmas, as loyalty points will be awarded to shoppers based on their cumulative spend across all the retailers in the town.
Zapa Technology was formed by leading Irish entrepreneur John Nagle, who, as former CEO of card-payment services company Alphyra, has in-depth knowledge of the payments, mobile and electronic retail transaction businesses.
Greater potential
Ultimately, the technology has the potential for many more applications from the ability to redeem loyalty rewards from advertising posters to payment facilities.
The technology works like this: the customer waves or taps their mobile phone handset with the tag attached at the ZAPA reader beside the cash register to gain or redeem loyalty points. These points can be used to redeem loyalty bonuses set by the retailer in all the participating stores.
“The Zapa Tag system is very simple to use and we are confident that the people of Tuam will quickly see the benefits of being assured of getting all their loyalty bonuses all of the time,” said Sarah Roarty, chairperson of Love Your Town.
“With so many retailers in Tuam offering the Zapa Tag, we believe this scheme will be a huge success for both retailer and customer alike,” Roarty said.
The new scheme will be launched on Saturday, 14 November, with a festival in the town. Details of participating retailers will also be published on the website www.loveyourtown.ie.
Social networking is one of the fastest-growing activities among mobile users around the world. And as one of the primary ways mobile users communicate with one another, it is proving a significant driver of Internet usage on mobile devices.
eMarketer predicts the number of mobile users accessing social networks from their mobile devices will reach 607.5 million worldwide by 2013, representing 43% of global mobile Internet users. In the US, mobile social networkers will total 56.2 million by 2013, accounting for 45% of the mobile Internet user population.
“Combining two much-hyped, but still-emerging channels—mobile and social—results in a developing opportunity for marketers,” said Noah Elkin, eMarketer senior analyst and author of the new report, “Mobile Social Networks: Marketing by Location Shows Potential.”
The big three destinations of Facebook, MySpace and Twitter dominate the US mobile social networking space as they do the desktop world.
Location-based networks such as Loopt and foursquare have not yet reached critical mass, but are worth keeping an eye on as they work to link people, places and interests. In addition, location-based services can also be used in other contexts to help marketers target social network users with relevant information and offers.
“Location-aware branded applications and utilities that include a social component provide an avenue for marketers to engage their audience directly,” added Mr. Elkin
As smartphones become the norm, eBay buyers are embracing the devices to shop from anywhere at any time.
In fact, shoppers have spent an estimated $400 million on eBay using its free iPhone application since it became available in June, notes eBay CEO and President John Donahoe.
"The lines between mobile and fixed devices are beginning to blur," he says. "I do my research on my laptop, but actually make my purchase on my mobile phone."
While this number is significantly less than eBay's total sales last year ($59.7 billion), it is still important, reports TechCrunch, since iPhones only account for about 15 percent of all smartphones sold.
About 4.6 million iPhone users have downloaded eBay's free application, and eBay is expected to release a new version of the application by the end of the year.
The eBay application allows users to pay for their items through PayPal, get alerts when someone else places a bid on the items they're watching or when listings are coming to a close, view complete listings, leave feedback and more.
One eBay buyer used the mobile application to buy a Lamborghini for $350,000, TechCrunch reports.
"Companies are becoming more mindful of what they put in the mobile shopping experience, and the comfort levels consumers have with mobile is fueling this," notes Sucharita Mulpuru, an analyst for Forrester Research.
Amazon also has a mobile iPhone app that seems to be performing well, according to The Financial Times. However, the company would not say how many people have downloaded the app, or how much revenue it has generated.
The soccer world cup in South Africa in 2010 will see a massive explosion in the availability and adoption of mobile content and applications throughout Africa as consumers use every channel at their disposal to stay in touch with news about the tournament.
That’s the word from Ayodale Cole, founder and CEO of Cole Solutions LLC, an American mobile content and applications provider that has targeted SA for its services and products. He said that with a major handset manufacturer and a global mobile operator among the flagship sponsors for the tournament, 2010 is likely to be a showcase for mobile content and applications.
User-generated content, text and multimedia messaging-based news services, advergaming, mobile television, video clips and mobile web portals are just some of the content and application services expected to proliferate during the World Cup, Cole added.
The German world cup in 2006 gives just a taste of what we can expect for 2010. According to Fifa, it enjoyed more than 73 million page views on its mobile web portal after Fifaworldcup.com went mobile for the first time. And millions of European consumers accessed Fifa World Cup Soccer mobile content, according to research by Telephia.
Telephia’s research showed that 6% of Italian mobile subscribers, 4% and 3% of French, Swedish and British subscribers accessed World Cup content on their mobile devices. Global mobile operator, 3, alone had 740,000 users a week viewing World Cup clips. It offered video previews of every match, video clips of match highlights, SMS text alerts and a football talkshow.
Cole said, “At the time that the German World Cup took place, mobile content and applications was only a fledgling market. Since then, the industry has matured and consumers have higher expectations from mobile content providers. To compete, content providers will need to offer rich, high-quality content to subscribers.”
Cole pointed out that the African market, particularly South Africa, has massive cellular penetration and a large population of users already making use of mobile content and applications. For example, the South Africa Soccer-Laduma publication reportedly has three times as many unique users on its .mobi portal as on its traditional website.
With about 40 million mobile subscribers in South Africa and only about five million Internet users, there will be a massive demand for mobile world cup information and content, said Cole. There will also be a massive market among foreign tourists who arrive in South Africa with a mobile phone in hand. Fixture and match information by text messaging or on the mobile Web, multimedia clips, advergames, and social networking applications are all likely to be extremely popular.
One recent report from US-based research group, JBB, showed that the 2010 soccer world cup could give the mobile advertising industry in South Africa a huge boost. It said that the World Cup will spur on emergence of new advanced mobile user-generated services featuring advanced streaming video, mobile advertising, location aware, and social networking capabilities in particular.
Said Cole: “It’s important to remember that sports events are social events, and soccer fans will want to share information and opinions with their friends. Many South African football fans have no access to PCs, and most will be watching the big games at pubs, stadiums and other social venues with cellphones in their pockets.”
Cole said that technology has matured since World Cup 2006. Many more people in South Africa are now carrying smartphones with advanced Internet features, and the country has excellent EDGE, 3G and HSDPA coverage in its metropolitan areas. That means there are some strong opportunities for mobile content developers to add value.
However, it is important to remember that people’s expectations from mobile content are rising - they want rich up-to-the-minute content, commentary and rich media, Cole added
Americans take their mobile phones everywhere—many even sleep with their cellphone. That makes the mobile device an ideal way for marketers to reach interested consumers with well-timed alerts.
A survey conducted by Harris Interactive for 1020 Placecast found that 42% of 18-to-34-year-olds and 33% of 35-to-44-year-olds are at least somewhat interested in receiving opt-in mobile alerts from their favorite places.
Among respondents who would opt in to location-based alerts on their mobile phones, more than one-half were interested in messages from restaurants, followed by movie and event tickets, weather, and clearance sales.
Placecast also found that about 90% of consumers have made impulse purchases while out shopping because of a sale, and 22% of mobile users did so weekly. Marketers that let consumers know about local offers at the right place and time might take advantage of such behaviors.
“It’s that unique combination of place and time, combined with a consumer opting in to follow a brand that they care about, that we think delivers an opportunity for relevant marketing,” 1020 Placecast CEO Alistair Goodman told eMarketer. He stressed that such mobile alerts were “marketing as a service, not marketing as an intrusion.”
Connecting people with brick-and-mortar stores they already care about, while they are out shopping and ready to make a purchase, makes mobile marketing a natural way to drive consumers into local stores, 1020 Placecast suggests.
Borrell Associates estimates that local will make up only 20% of mobile ad spending in 2010, or just over $500 million.
“Still, mobile is a category worth watching as the audience grows and as couponing, mobile directory advertising and sponsored text messages find viable applications for local marketers,” according to the company’s “2010 Outlook: Local Interactive Advertising” report.
As mobile Internet usage increases, men are losing their advantage in numbers. They still account for the majority of users, but women are catching up quickly.
Mobile Internet visitors were up 34% year over year to 56.9 million in July 2009, according to The Nielsen Company. Growth among women outpaced the average rate by some 9 percentage points. Men still made up 53% of the mobile Web audience in July.
What keeps men so attached to their mobile phones for Web browsing? They make up the bulk of the audience for tech, sports and news content—and, unsurprisingly, for men’s magazine Maxim. Fully 95% of the Gizmodo mobile audience is male, and men accounted for about nine in 10 mobile visitors to NBA and NFL sites in July.
Women, by contrast, embraced the mobile Web for access to celebrity news, shopping sites and social networks. Females outnumbered males in their mobile visits to sites such as People.com, AT&T search and Horoscope.com.
Teens, adults ages 25 to 34 and those ages 55 and older also adopted the mobile Internet faster than the average rate, but, especially in the case of teens and seniors, from a very small base. Takeup was slowest among young adults ages 18 to 24.
In July 2009, users ages 65 and older still made up only 3% of the total. Just 12% of mobile Web browsers were under age 18.
eMarketer, which includes both Web browsing and the use of mobile apps in its figures, estimates there will be 73.7 million mobile Internet users in the US in 2009, an increase of 26.3% over 2008.
US mobile advertising revenues will see faster growth, according to Yankee Group, which predicts a 60% jump this year to $184 million. By 2013 the research firm expects $566 million to go toward mobile ads.
eMarketer’s US mobile ad spending forecast is significantly higher, predicting $760 million in spending this year, rising to more than $3.3 billion in 2013. However, different research firms have widely varying estimates of mobile ad spending, unsurprising in a nascent market that is still difficult to measure. Figures for 2009 spending range from Yankee Group’s low of $184 million to the more than $2.2 billion in spending predicted by JPMorgan in January 2009.
As smartphones such as the iPhone become more affordable to mainstream users after 2011, mobile marketing spend will grow further.
That is one of the findings published in a new Gartner report dubbed Mobile Advertising Grows Quietly.
Mobile marketing spending will also grow around 74 per cent worldwide this year to $913.5 million (£565 million), the research indicates, but it is after 2011 when things will accelerate.
"The growth in mobile advertising revenues is primarily driven by mobile web banner ads, but it also has a strong growth component from mobile search, downloadable applications and SMS advertising," the report states.
Backing up its predictions, Gartner suggests that smartphones will account for 45.5 per cent of all mobile phone sales in 2013.
Earlier this week, Adweek claimed that the iPhone represents just a "small opportunity" for marketers as there are still so many consumers throughout the world who do not own the Apple smartphone.
Years from now, when the mobile phone really is the remote control for life, historians will best be in position to gauge the 2007-09 contributions of Steve Jobs and Apple's iPhone.
The reality is that mobile marketing is not a one-hit wonder, but rather a robust pyramid comprised of several layers that individually and collectively can elevate a brand's awareness and drive positive consumer action. At the bottom is SMS. According to CTIA, more than 160 million people in the U.S. are on a text plan and the average age of a "texter" is 38. Taking these numbers into account it should surprise no one to discover that SMS gives brands the greatest reach and taps into the behaviors and interests of hundreds of millions, all through a simple 160-character message. SMS is a proven mobile-marketing weapon that is driving brand awareness right now.
As you move up the pyramid, the next layer introduces mobile Web/WAP sites. According to the Kelsey Group, there are 54.5 million mobile Internet users on a regular basis. Add to that the fact that more than 172 million phones are capable of browsing the Web and it's easy to the see the value these sites can bring to a brand.
Moving up the pyramid, you come to the social networking tier. Did you know that in January alone, comScore reports more than 27 million people accessed a social networking site from their mobile phone? Furthermore, experts from CCS Insight recently released the results of "Report on Mobile Internet Usage, 2009," which found that a third of young adults are regularly accessing Facebook and Twitter from their mobile phones. By creating a branded Facebook page, companies can connect with this audience, giving them a chance to engage with the brands they care about as well as other brand devotees, all from their mobile phone.
On the next tier of our pyramid resides the mobile banner ad. The banner has been a core component of online advertising campaigns for years and now is making its mark in the mobile world. One example is Wiley Publishing. As part of its mobile marketing campaign, the makers of the For Dummies series launched a series of banners ads that in about three months delivered more than 1.3 million impressions and produced a 1.4 percent click-through rate, which is four times that of the more traditional online component, according to Wiley. This superior click-through rate agrees with findings from Verizon Wireless, which at the 2009 Mobile Advertising Degree conference shared its experiences. Specifically, Verizon found its mobile banner ad click-though rates to be 2 percent, compared to the .3 percent achieved from the online counterparts.
Mobile data bandwidth use is up 30% worldwide during the second quarter, with increased video streaming on cell phones helping to drive growth, according to a new report.
People tuning into shows and clips on sites such as Hulu, YouTube and MySpace via mobile devices pushed up video streaming nearly 60% during the quarter, mainly as a result of expanded smartphone use and a growing selection of mobile programming. "It's outgrowing any other application," said Jonathon Gordon, director of marketing for Boston-based Allot Communications, a broadband-related service provider that conducted the study.
Overall, HTML, or full Web browsing, accounted for the largest share of traffic worldwide at 32%, P2P file-sharing, 22%; streaming, 21%; HTML downloads, 19%; and other applications, 6%. In the Americas, mobile browsing generated 37% of traffic because of broader use of smartphones, and especially the iPhone in the U.S.
Data from mobile ad network has shown the iPhone alone accounts for half of U.S. mobile traffic, and Apple itself recently estimated the proportion at 65%.
Globally, however, Asia led the way in mobile broadband use with a 36% increase in mobile broadband use, followed by Europe at 28% and the Americas at 25%.
The growing appetite for mobile data isn't all good news for network operators, though. The Allot study says mobile users are coming to expect the same level of Internet service on their phones as PCs.
"By extension, today's mobile operators face the same challenges as their wireline counterparts, but with more technological limitations," states the report. "All of these problems are exacerbated by the network infrastructure where the cells themselves can serve as natural bandwidth bottlenecks, often greatly contributing to network congestion and delay."
A separate study released Monday by researchers at Norman Nielsen Group underscored the problems of using the mobile Web, comparing it to primitive state of the wired Internet 15 years ago. It called "mobile usability" an oxymoron.
Allot's Gordon said network operators are having a hard time keeping up with the rapid rise in mobile broadband activity. "Twelve months ago when we said 'data' we were talking about SMS (text messaging), but now the mobile operators have a lot more traffic to deal with," he said.
Allot based its findings on traffic data collected from mobile operators worldwide with a combined base of more than 150 million subscribers.
News Digital Media Releases Research On Mobile Ads
Mobile users are most likely to respond to mobile promotions if they are in the form of a competition or mobile voucher, according to research released today by News Digital Media.
The research also found that consumers are becoming more comfortable and aware of display advertisements that appear on mobile sites. Text links within a mobile site and SMS advertising also proved popular.
The mobile survey commissioned by News Digital Media which attracted over 2000 responses found:
68 per cent of respondents found competitions an appealing form of promotions
56 per cent said they found mobile vouchers appealing
Display advertising on mobiles site had the highest recall rate of all other forms of advertising amongst respondents (80 per cent)
SMS advertising (44 per cent) as well as text links within a mobile site (40 per cent) also recorded high recall rates
News Digital Media’s director of corporate development, Sue Klose said the research provided advertisers with a good indication on how to get the greatest value from mobile campaigns.
“Mobile advertising, like any other form of advertising, can be successful if advertisers utilise the right advertising method for their brands to communicate with their target audience.
“For example, competitions would work particularly well for the entertainment or travel industries. Similarly, retailers can get a lot out of promotions utilising mobile vouchers.
“The great thing about mobile vouchers is that they are easily saved onto a user’s phone and drive in-store traffic for the advertiser.”
The survey showed distinct recall for certain forms of advertising.
“Banner advertising on mobile sites can be very strong, particularly if they have a call to action and provide clear consumer benefits. SMS advertising and text links are other advertising avenues that get noticed by mobile users that can be effective if utilised correctly.”
Ms. Klose also commented on the mobile advertising industry as a whole.
“The introduction of more sophisticated mobile handsets such as the Apple iPhone and Nokia N97 has encouraged users to browse the Internet from their phone. Carrier data plans that complement mobile Internet browsing have also aided in the increase of consumers using their phone to access the latest news and information.
“Combining this with our research, we anticipate mobile advertising to grow and become a key part of many advertising strategies and campaigns.”
News Digital Media recently announced that the news.com.au mobile site would be the launch news provider on Nokia’s Ovi Store.
An April 2009 survey by the Pew Research Center’s Internet & American Life Project shows that rising levels of Americans using the internet on a mobile handset. One-third of Americans (32%) have used a cell phone or Smartphone to access the internet for emailing, instant-messaging, or information-seeking. This level of mobile internet is up by one-third since December 2007, when 24% of Americans had ever used the internet on a mobile device. On the typical day, nearly one-fifth (19%) of Americans use the internet on a mobile device, up substantially from the 11% level recorded in December 2007. That’s a growth of 73% in the 16 month interval between surveys.
Most of this advertising sucks 
Mobile marketing company TXT4Ever has produced a very interesting study about mobile users’ attitudes towards mobile marketing messages.
