Archive for May, 2014
Targeting affluents? Don’t expect to reach them through texts. In Q1 2014, Luxury Institute found that just 17% of US affluent internet users, those with an income of $150,000 or more, had signed up or were somewhat/very likely to opt in to messages from a luxury brand.
Even tech-savvy affluent millennials weren’t interested in luxury brand messages popping up on their pho! nes: Jus t around one-quarter said they had or would be interested in receiving such communications, a percentage similar to Generation Xers.
Instead, emails may be the way into affluents’ digital inboxes, with 49% of respondents saying they had or were somewhat/very likely to opt in to receiving emails from a luxury brand.
While this wasn’t a majority activity among the entire group, the total percentage was skewed lower by boomers, as over half of millennials and Gen Xers were interested in receiving messages this way.
Either way, digital didn’t appear to play a major role in US affluent internet users’ research or purchase processes when buying luxury items.
Credit and debit cards have already gone a long way to getting people off of cash and checks.
But there is one type of payment that still requires a trip to the ATM or a desperate hunt for the checkbook. Called peer-to-peer (P2P) payments, these informal transactions are made between people — say to pay someone back for a concert ticket or to pay a babysitter for a few hours of work.
A new crop of apps, though, is changing the way these types of payments are made. In a new report from BI Intelligence we take a look at apps like Venmo, Square Cash, and M-Pesa, which are allowing people to transfer money back and forth using just a smartphone. Already, PayPal-owned Venmo, one of the leading mobile P2P apps, says it saw $314 million in transaction volume on its app last quarter.
In the report, we take a close look at what’s so compelling about these mobile P2P apps, and forecast mobile P2P payment volume through 2018. We explain what differentiates some of the most successful P2P apps and how we see adoption of smartphone-based P2P payments ultimately transitioning people onto mobile payments in general.
What’s really interesting about these apps is not just the services they provide for people, which solve a real pain point. It’s the fact that these services could ultimately get people to make mobile payments in general. There’s good reason to think that this is what these apps are really after. These companies often make little to no money off of facilitating peer-to-peer transactions, but if they can become the platform for in-store mobile payments, there could be real revenue at stake.
It’s hard to ignore the enthusiasm for programmatic display advertising—an automated, technology-driven method of buying and selling digital display ads—which seems to be on everyone’s roadmaps. Initially, the industry focused on real-time bidding and its impression-level, auction-based buying function. But as more brand dollars move to digital, both publishers and media buyers look to programmatic technology to lock in advertising agreements in advance, bypassing traditional direct sales channels, according to a new eMarketer report, “Programmatic Guaranteed: Meaningful Momentum, Despite Murky Industry Definitions.”
Known as “programmatic guaranteed” or “programmatic reserved” for the ability to secure upfront commitments to both price and amount of inventory, this branch of programmatic direct is gaining significant traction among publishers and media buyers looking to automate the often lengthy insertion order (IO) process and bring greater audience insight to their premium ad buys.
Apple CEO Tim Cook had an esoteric explanation for why Apple bought Beats, the headphones and music-streaming company. “These guys are really unique,” Cook told the New York Times. “It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”
But here’s the grim financial logic that shows why Cook felt he had to pay $3 billion for the company. Revenue from iTunes is in decline, according to this analysis from Morgan Stanley’s Katy Huberty.
Huberty notes that iTunes revenue is falling as users turn to streaming services such as Pandora and Spotify to meet their music needs. This decline “raises concerns about Apple’s ability to monetize the new base of emerging market customers,” writes Huberty. According to Huberty’s calculations, each iTunes account spent an average of $3.29 in the first quarter of this year, down 24% year-over-year.
This chart shows iTunes revenue falling as a percentage of Apple’s online services unit:
And this one shows iTunes’ revenue per user falling:
Given those headwinds, it appears that music was actually a battle Apple was losing to challengers like Pandora and Spotify. Beats, presumably, is intended to give Apple a new beachhead in subscription music services that run alongside iTunes Radio’s legacy free streaming service. And ! — another factor for Apple — the headphones themselves give Apple a device platform with its own existing distribution network that it can also improve and build out.
In recent weeks, a number of top U.S. retailers reported first quarter earnings, allowing BI Intelligence to compare the e-commerce segments of their business.
- Nordstrom‘s online sales grew the most among the top retailers we looked at. Its online retail sales in the first quarter totaled an estimated $400 million, according to Internet Retailer. That’s up 33% from the first quarter of 2013.
- Best Buy also had a strong quarter online. Its e-commerce sales in the U.S. grew 29% year-over-year to $639 million.
- Wal-Mart did not break out a dollar figure for e-commerce, but it did say that online sales grew 27% over the first quarter of 2013. Similarly, J.C. Penney‘s e-commerce sales grew 26% over the same quarter last year.
- Gap‘s online sales in the first quarter grew 13% year-over-year to $575 million. That’s down from Gap’s 2013 sales growth of 17%.
For full access to all BI Intelligence’s charts and analysis on the e-commerce industry, sign up for a free trial.
drag2share: Online Video Advertising Is Growing Many Times Faster Than TV, Search, And Most Other Digital Ad Markets
Online video is growing faster than most other advertising formats and mediums.
- Video ad revenue will increase at a three-year compound annual growth rate (CAGR) of 19.5% through 2016, according to our estimates.
- That’s faster than any other medium other than mobile. And much faster than traditional online display advertising, which will only grow at a 3% annual rate.
In a new report from BI Intelligence we explore the key drivers of the skyrocketing growth of video ads, examine the cost and performance of the emerging digital ad format, and look at the major players that are shaping the industry.
Here are some of the key trends we explore in the report:
- Online video ad revenue will reach nearly $5 billion in 2016, up from $2.8 billion in 2013, while TV ad revenue will decline by nearly 3% per year during the same time period.
- Video ad views exploded in 2013, topping over 35 billion views in December, averaging over 100% year-over-year monthly growth during the year.
- Online video ads are significantly more expensive than other formats, but prices are steadily declining as more publishers rush into video, and placements open up.
- Video ads have an average click-through rate (CTR) of 1.84%, the highest click-through rate of all digital ad formats.
- Viewability, the question of whether video ads are actually seen by multitasking online viewers, has emerged as an issue, but we believe that overall demand for online video is too high for viewability to put too much of a crimp in the video ad market.
- Streaming devices and connected TV accounted for just 2% of online video ad views in the fourth quarter of 2013, but companies like BrightLine are experimenting with formats to grow this new niche market.
- The growth of mobile and digital video advertising has been paralleled by fundamental changes in the online advertising industry — programmatic advertising, which we covered in a recent report, has begun to reshape the entire digital ad market, including video.
- Newly launched video ad platforms have been among the companies to adopt programmatic tools, including real-time bidding, ad exchanges, and advanced analytics.
In full, the report:
- Explores the key drivers of the growth of online video ads, and compares it to the growth in online ads generally
- Examines how video ads stack up against other digital advertising formats in terms of both cost and performance.
- Looks at the issue of viewability, and explains how the problem could impact future spending on video ads.
- Outlines the major players in the video ad space.
- Explains how startups like BrightLine and Alphonso are using innovative approaches to bridge the gap between digital and TV ad spend.
Publishers appear positive about their digital future. That’s what May 2014 research by Cxense in conjunction with Editor & Publisher found, with 88.45% of US publishing executives polled saying their companies’ digital revenues would increase in the next year.
Among those ! who plan ned to increase their digital revenues, ad sales were the top channel through which they intended to do so, cited by 62.8% of respondents. Less than one-quarter of respondents said the same for paid subscriptions, indicating that news sources may have caught on to the fact that mobile users aren’t interested in paying for digital news.
Mobile Grabs One-Third of US Computing Products and Consumer Electronics Digital Ad Spending – eMarketer
Digital advertising spending by the US computing products and consumer electronics industry will reach $3.80 billion this year, and that figure will increase to $6.01 billion by 2018, according to a new eMarketer report, “The US Computing Products and Consumer Electronics Industry 2014: Digital Ad Spending Forecast and Trends,” part of our new report series, “2014 Digital Ad Spending Benchmarks by Industry.”
Why is that important? If Google knows what the PUE should be at any time, its engineers can set up alerts to inform them if any data center falls outside of the prediction for whatever reason — ie., there’s probably something wrong going on. Google can also use the model to shave off low-hanging fruit of energy efficiency in the data center. The kind of finely grained analysis that can’t be determined by a human looking at a spreadsheet, but can be detected by software crunching the massive data set. For example, Google can use it to decide how often and the best time to clean data center heat exchangers that both save money and energy. Previously they’d been doing that with some guesswork.
Finally Google can use the machine learning to run simulated tests on the data centers to see how it would affect PUE. Such tests probably won’t be done in an actual environment, because they could have unintended consequences and involve some risks to the system.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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