drag2share: The Mobile Payments Rush Is On, And The Winners Will Shape The Future Of Transactions And Commerce
PayPal is close to a deal to acquire Braintree, a company that specializes in powering mobile transactions. Meanwhile, Facebook announced that it’s pairing up with payment companies to roll out “Autofill,” which makes it easier for its users to buy things straight from their phones.
Mobile devices are edging closer to fulfilling their long-delayed promise as digital wallets, and tech and financial services players do not want to be left out.
Consumers and merchants are beginning to see the advantage of channeling offline payments through mobile devices, rather than transacting in coins and cash, credit cards — or clunky register systems.
In a new report from BI Intelligence, we explain the main reasons why mobile payments are poised for takeoff, provide proprietary estimates for the growth and size of the mobile payments market in the years to come, and analyze the specific trends that will help shape the growth in mobile payments, including user concerns around security. We track the demographic and geographic nature of ! the cons umers who will drive the growth, merchant-side adoption, and the mobile payments solutions that will lead the charge.
Simon Khalaf, the CEO of mobile adtech company Flurry, tells Business Insider that an IPO is inevitable in the company’s future because his business has grown so big.
There has been gossip about a possible Flurry IPO for months now. Large adtech companies are often aimed specifically at IPO “exits,” so that their venture capital funders can get a payback on their investments. Millennial Media, Tremor Video, YuMe, Criteo and Marin Software have all gone public recently. Yet when CEOs are asked directly if they want the rich rewards of floating their companies on the public markets, they usually demur or hedge.
When we asked Khalaf about an IPO exit, however, he was refreshingly direct: “I consider an IPO an entrance,” he tells us. “We don’t have a choice, our volume is too high and our scale is too big for anyone to absorb us.”
Flurry has a net revenue run-rate of about $100 million. It has 150 employees and has taken $50.5 million in funding from investors. And although that doesn’t make Flurry the biggest player in mobile adtech — InMobi and Velti still have more employees, and Millennial has greater revenues — it is one of the biggest players in big data analytics and mobile app ad reach.
Here’s a slide on the number of mobile devices — 1.1 billion — Flurry reaches with ad impressions inside apps from Khalaf’s pitch deck:
It’s an alarming slide, because everyone knows that Google has the largest share of mobile ad revenue on the planet, which is in the billions of dollars. But the Flurry slide refers to reach on devices via ads in apps. Google’s mobile ad business is largely search. And the bulk of consumer time spent on mobile devices is in apps, not on the web, Khalaf says. Here’s the slide he uses to illustrate that point:
Flurry offers the full mobile ad stack, including a “supply side platform” for mobile app publishers who want to offers ad space for sale, a “demand side platform” for buyers who want to place ads, an analytics suite to measure the whole thing, and most recently a “real-time bidding” platform so that buyers can place ads on a live auction basis. That RTB marketplace, launched in April, already has 30 DSPs buying in it, Khalaf says. The Guardian and The BBC both use Flurry as publishers.
There is one more thing Khalaf is unusually direct about. Flurry is not yet profitable, he says. Usually when adtech CEOs are asked whether their businesses make money, they launch into an explanation of how they’re investing for growth or scale (or they say something impenetrably complicated about EBITDA). When asked whether the company is profitable, Khalaf says, “No. In 2014 we’re profitable maybe.”
The reason: Flurry is spending $28 million a year on data centers. “The cost of analytics is huge,” Khalaf says. Flurry wants to create the largest HBase cluster in the business, he says, referring to the gigantic — and gigantically expensive — database serving devices that can handle millions of lines of tabled information.
Diving a little further into specifics, the study finds that the share of airtime tweets sent during commercial time ranged from a low of 8% to a high of 43%, with those figures corresponding almost exactly with the share of airtime allocated to commercials (9% of airtime for the low end; 43% for the high end).
The same finding applied when sorting tweeting activity by genre. On the low end, 25% of tweets sent during sports programs were posted during commercials, and in turn, commercials accounted for 24% of airtime during those shows. On the high end, 35% of tweets sent during comedy shows were posted during commercials; commercials represented 35% of airtime.
Just because there’s no spike in tweeting during commercials doesn’t mean that viewers aren’t using their mobile devices, though: a recent study by Symphony Advanced Media found that participants spent one-third of TV ad viewing time looking at their mobile phone or tablet.
Games are popular on PCs, and videos gain steam on mobile devices
The term “digital native” gains more meaning as more and more digital content is targeted toward children learning to use computers and mobile devices at a young age. A study from KidBox, a Spanish- and Portuguese-language family-oriented web service, monitored usage of its child-safe internet platform among 60,000 families with children up to 8 years old in Argentina, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela in May 2013. The study found that 42% of children used internet-connected devices, spending an average of 40 minutes online per day.
Though the report refers to survey respondents as “child internet users” it may be more illustrative to describe the study’s results as “usage of child-focused content” in households with children up to the age of 8. In other words, the report tracked usage of content from KidBox targeted to children, but whether the user was parent, child or both is unclear. Nonetheless, for marketers looking for branding and direct-response opportunities that eventually would reach parents or children, the difference may be immaterial.
The KidBox study found considerable variation in usage between online and mobile, and among different countries as well. On computers, digital media usage was highly focused on game play across the board, with about three-quarters of all PC usage dedicated to gaming, as opposed to videos and general website content.
On mobile, g! eneral site visits were particularly uncommon in Latin America as a whole. There was also less disparity between video viewing and gaming on mobile, compared with the PC. With that said, there were distinct variances breaking out Argentina and Mexico individually. In Argentina, 56% of media usage was devoted to mobile videos and 38% went to games, and the percentages were nearly flipped for Latin America at large—about one-third of mobile web time in Latin America went to videos, while nearly two-thirds went to games. Mexico found itself in the middle, as time was split nearly equally between mobile digital video and games.
Mobile accounted for 12% of all hours spent consuming online video in June, according to Ooyala’s latest Global Video Index report.
Mobile continues to carve out an ever greater share of online video-viewing as video consumption migrates to mobile devices. A year before, mobile’s share of online video-viewing hours was just 7%.
Smartphone audiences are spending a surprising amount of their video-viewing time on longer video sessions. Smartphone users spent 53% of their time on sessions lasting 10 minutes or longer, up from 44% in the fourth quarter of 2012. Further, they spent 38% of their time on sessions lasting at least 30 minutes.
Smartphone and tablet video-viewing behavior is converging. The breakdown of video session length on smartphones and tablets now looks much the same.
The increase in longer video sessions on smartphones might be tied to exploding growth in the adoption of large-screen smartphones a! nd the g reater availability of ultra-fast 4G networks, which dramatically improve on-the-go video playback quality.
Similarly, while 36% regularly conduct in-store searches when looking at products priced at less than $50, 62% do so for products priced at $250 and up.
Besides price point, the study also finds that the frequency of in-store searches ranges significantly by product category. Respondents most commonly conduct in-store mobile searches for electronics and appliances (83% doing so almost always or frequently) and books and music (67%), with fewer do so for automotive (52%) and food and beverage (50%) products.
There are some intriguing results in the study’s section regarding the discount rates at which M-shoppers would consider buying online (these responses limited to US respondents). Almost 6 in 10 respondents would consider buying online if they could get a 10% discount on a $500 item. But a 10% discount on a $200 item would only persuade 50% to consider buying online, while swaying only 28% of those shopping for a $50 item. These results align with previous research from parago, which found that for an equal discount rate, consumers would be about 20% more likely to switch to an alternative online option (in this case Amazon) that provides larger dollar savings. The results from that study suggested that the focus on dollar savings over discounts could be attributable to a calculus regarding shipping costs.
The increasing obsolescence of the PC couldn’t be more evident.
Android, which runs almost exclusively on mobile devices, was installed on 60% of computing devices — including all PCs, tablets, and smartphones — shipped globally during the second quarter of 2013.
That’s up from only 39% a year before.
Android’s mobile-powered rise, and the decline of PC-linked platforms, becomes increasingly clear when we compare the recent fate of Android and Windows.
One year ago, Windows held 34% market share next to Android’s 39%. Four quarters later, that small 5% gap has exploded to a massive 35% rift between the two platforms.
The Windows market share has fallen to 24%.
In a mobile-centric landscape, Windows remains tied to the moribund PC market. About 87% of Windows’s total unit sales last quarter were PCs. Meanwhile, tablet and smartphone-oriented Windows software simply hasn’t taken hold.
Apple also lost global computing market share over the 12 months through the end of the second quarter. Its share dropped five percentage points to 14%.
Apple’s slippage is due to competitive dynamics within the mobile industry itself.
Android has been able to continue rising as a mobile platform, while Apple has clung to its strategy of selling high-end, premium devices and has lately succumbed to stasis. Over the last four quarters, Apple’s market share as a mobile platform has dropped from 26% to 16%.
That’s due to losses in the smartphone and tablet markets. With no new iPhones in the first eight months of 2013, Android climbed to take a record 80% share of the smartphone platform market in the second quarter.
On the tablet side, Apple has been unable to hold its own against the varied portfolio of fair quality, inexpensive Android tablets hitting the market. Android has a 64% share of that market.
Smartphones alone account for 50% of online time for the two above-mentioned groups. Interestingly, while smartphones only account for a relatively small 25% of online time for Americans aged 50 and older, tablets grab 16% share, the highest among the age groups.
The share of internet time represented by mobile devices differs greatly from one category to the next. For example, together they account for just 24% of time online with the automotive category and 32% of time spent with TV sites (an outsized 20% of which is on tablets). By contrast, two-thirds of social media time goes to smartphones and tablets, as does 82% of online gaming time and 92% of online radio time.
The US’ “digital universe,” referring to the number of adults going online, is 194 million strong per month, per the report. Of those, about 63% (122 million) use both a PC and a mobile device, while PC-only! users nu! mber 58 million (30% share) and mobile-only 14 million (7% share). Those figures are heavily influenced by older internet users. While 17-22% of internet users aged 18-49 are PC-only, that figure jumps to 48% of those aged 50 and older.
While only 17% of online women aged 25-49 are PC-only, a greater proportion of online males of that age are so-called “screen jumpers” (mobile and PC users), at 74% share. That’s because a significant 14% share of women aged 25-49 are mobile-only.
The study also looks at mobile views by day of the week and time of day, with some intriguing results (all data limited to the US):
- The highest share of weekly mobile video ad views in the US was reserved for Thursdays (17%), followed by Fridays (15.3%), Saturdays (16.7%), and Sundays (14.9%), such that about half of views took place between Thursday and Saturday;
- Saturday accounted for a leading 22.4% of weekly views on Apple devices;
- Completion rates averaged 52.2% on the weekend versus 44.4% on weekdays;
- About one-quarter of daily tablet video ad views occur between 8PM and midnight;
- Smartphone video ad views decline slightly during those hours, but that’s a function of the behavior of iPhone users, as Android phone users actually watch 33.9% of their daily video ads during that time period.
Mcommerce to increase its share of total ecommerce retail sales
Mobile devices account for a rapidly growing share of US retail ecommerce sales, and are expected to contribute to strong ecommerce sales growth this holiday season, according to eMarketer’s latest estimates.
eMarketer projects that retail ecommerce holiday sales in the US will rise about 15% again this year, matching last year’s gains. In total, US retail ecommerce sales for the holiday season—defined as November and December—are expected to reach $61.8 billion, up from $53.7 billion last year.
Mcommerce is expected to play an important part in overall digital holiday retail spending. This year, mobile devices will account for a larger-than-expected share of total US retail ecommerce sales, according to the newly revised forecast. eMarketer expects that mobile’s share will reach 16% in 2013, up from our previous prediction of a 15% mcommerce share this year.
The revision comes as data sets from multiple research sources showed mcommerce as a percent of retail ecommerce sales reached record highs earlier this year. In addition, large retailers, such as Best Buy and Home Depot, continue to invest heavily in smartphones and tablets, building out their mobile app and website offerings, and increasing spending on digital advertising in an effort to drive more conversions across devices and compete with companies with strong mobile infrastructure like Amazon and eBay.
In total, eMarketer predicts retail mcommerce sales will reach $41.68 billion this year and by 2017, retail sales made on mobile devices will climb to well over $100 b! illion.
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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