Apples iAd takes biggest slice of mobile ad market. Should Google be worried?

According to a report in Business Week, iAd are set to take 21% of the mobile advertising market in 2010. Given that Apple went from a standing start (the acquisition of Quattro aside), that’s pretty good going. The looser seems to be Google, who in spite of buying AdMob earlier this year, have lost share not only to Apple but other third party mobile advertisers. I have blogged previously that iAd is niche and will only take a small market share. Have I now been proved wrong?

Well not exactly, no. For starters the mobile advertising sector is currently very small, although it’s value is increasing rapidly. Apple’s iAd requires a minimum spend of $1m. With such a large revenue requirment then it’s hardly surprising that their slice of the market is so big. In fact, if you look at Steve Job’s claim that iAd would take 50% of the mobile advertising market, Apple still have a way to go. Ultimately iAd will remain niche in terms of audience size simply because of it’s reach to iphone, ipod touch (and eventually) ipad users. Just as the iphone makes the most profits of any handset, I expect that iAd will follow the same route. It’s audience will be relatively small, but advertisers will use it if it continues to deliver results. And Apple will reap the profits.

Still, if I was Google, I’d be thinking hard about the next move. Having acquired AdMob, they have not yet realised the vast revenues that Google’s search advertising has. To date, they’ve pretty much run AdMob as it was previously. If they want to challenge Apple then they will need to develop new approaches to mobile advertising.

MMS marketing works. Yes it does. Really.

MMSAnother interesting result that came from the recent mobile messaging study conducted by the DMA and IAB, was how well MMS performed. In the study, M&S sent MMS messages (try saying that quickly) for their ‘Dine in for a Tenner’ and shoe campaigns. They achieved the same recall levels as SMS, and generated much higher click-through rates to the mobile site – in fact 150% greater than SMS. The consumer interviews were particularly revealing. There was no question that the pictures were appealing – hardly surprising given that it was food and shoes – as they say, a picture is worth 1000 words. And in the world of mobile messaging, 1000 words is very hard to achieve. However the other significant comment was that the MMS appeared more trustyworthy because it had the M&S logo and branding. In the world of mobile messaging, trust is a key issue. With SMS, is hard to achieve – you can’t have a brand name AND a reply number in the SMS header. You can put the brand name at the start of the message, but that is taking up valuable space.

Whilst it isn’t difficult for someone to ‘spoof’ the branding of someone like M&S, the mobile user experience is of almost no spam MMS. It all adds up to MMS creating an effective mobile marketing medium.

It’s all in the messaging

The DMA and IAB have just released some joint research into mobile messaging, which shows that SMS and MMS have an important place in mobile marketing. One of the main findings was that consumers would not only like to receive vouhcers and offers by SMS, but that at the moment they do not feel that brands are giving them enough offers. That’s clearly an opportunity. However from a marketing perspective, it isn’t a case of just shoving the offers out there on SMS. What was also very apparent is that mobile users want to opt-in directly to a brand, and even within that, they want to choose what offers (and when and where) they will receive them.

When I speak to advertising agencies, they often consider mobile messaging to be ‘a bit rubbish’ (as one industry journalist described it). Rubbish and old school seems to be the current agency thinking on SMS and MMS. Their focus is on apps, and in particular, iPhone apps. But when people say those kinds of things about mobile messaging they’re missing the point:

Firstly, there are many highly creative and successful mobile messaging campaigns. In my article, The Business Case for Mobile, I give a number of examples – Orange and Walkers Crisps are two obvious ones. They have run imaginitive and successful campaigns using just SMS. They’re far from rubbish and the creative element comes from the idea itself.

Secondly, SMS and MMS are the drivers for many different types of marketing. SMS is a good response mechanism, not only in mobile but across other channels such as TV or outdoor advertising. At the other end of the customer journey, messaging is a great call to action. It can be a reminder to do something (or buy something) and the immediacy of messaging makes it happen.

Thirdly, SMS and MMS are a good delivery mechanism for other types of media. For example, NatWest used O2 More’s opt-in network to send an SMS to customers on the iPhone to download their app. What happened was that 36% of those people downloaded it. By identifying only those people who banked with them and had a compatible handset, there was zero wastage in the messaging and a very high level of engagement. Could you have got that level repsonse through email or TV? I very much doubt it.

Fourthly, people remember SMS and MMS. The study found that almost everyone (98%) remembered the mobile marketing message sent to them. How many other channels can do that? The reason people remember them is that mobile is a very personal device, and SMS is a very personal channel. When we receive an SMS we check it on our phones very quickly. Over 90% of text messages are read whether they are personal, or a marketing message. A number of brands are spending a lot of money developing and promoting iPhone apps to create greater brand awareness, maybe they’re focussing in the wrong place. If you want to create brand awareness, how about using SMS or MMS? It has nearly 100% recall!

In this age of smartphones and convergent devices, apps, web, location or AR etc have an increasingly important place in marketing. There is an argument to say that with such devices there will be a move away from SMS into messaging through IM (and BBM) or through social media, such as Facebook. Whilst there is some element of that going on, there is no evidence that SMS is on the wane. In fact the reverse is true. The universality and immediacy of the channel has seen SMS continue to grow. It has an important place in mobile marketing, and at the end of the day, it simply works!

The full research is only available to DMA and IAB members, but contact me through this blog if you woulde like a copy.

NMA Article on the research is here

Mobile Marketing Magazine article on the research is here

McDonald’s Foursquare campaign: check-ins and foot traffic are not the same

It has been widely reported that McDonald’s Foursquare campaign in April saw a 33% increase in footfall at their restaurants. However, as is often the case with digital media, and mobile marketing especially, the metrics are a little bit loose. It turns out from Wion, the company that ran the campaign for McDonalds, that they measured check-ins. It would be pretty hard to measure actual visitors to the stores, especially as the staff at many of them didn’t know much (or even anything) about the campaign. They could have measured voucher redemptions for sure, but maybe that casued problems again for the staff. What they did instead was to measure the increase in check-ins on the day of the offer against previous ones.

A spokesperson for Wion explained:

“During the pilot program we saw a 33% increase in check-ins from people visiting our restaurants. We measured this by indexing the amount of check-ins across all McDonald’s restaurants in the days leading up to the pilot and then on the pilot day itself. While a check-in isn’t the same thing as foot traffic or sales, it does show an increased level of engagement with our brand and that social media can be used to drive folks into our restaurants.”

There’s nothing wrong with brand engagement, especially for someone as high profile as Mickey Ds, but it is important that this data is correctly reported. If it isn’t, agencies and brands will be naturally suspicious of mobile as a marketing channel.

Apple dominate other mobile handset manufacturers on profit

An interesting article here, looks at how Apple’s iphone has blown away the competition in terms of profitability. Though only 3% of the handset market, the iphone has generated more profit for Apple than the other manufacturers combined. In a way, it’s not surprising. Apple do not sell cheap handsets, and they have also dictated the price plans to the mobile operators. In fact, when you throw in the app store, everything that Apple do is geared towards high profit.

The key point, however is that Apple are neither after the biggest slice of the market nor the biggest selling handset. I suspect they are quite happy with their 3%, but highly profitable share. I have argued many times on this blog, that the iphone is a niche product when looking at the overall handset market. I say that, because many marketers and ad agencies seem to think that it is the ONLY handset out there. Or at least the only one worth thinking about. As Android takes a hold with some great handsets from Samsung and Motorola, then the iphone’s share of the smartphone market may indeed fall. But with the kind of profits that Apple are showing, why should they worry?

Ad Agencies like iAd (some do, at least)

Whilst I have been a bit sceptical about both the cost and reach of iAd, it seems that some ad agencies and clients think its pretty good. In an article in emarketer, the overall conclusion was that iAd was good for business. This is not in terms of response rates, but more in terms of branding, mobile media and mobile advertising as a whole. One interesting point was that iAd offers a ‘return on innovation’. Apple is currently the coolest brand out there, certainly in the techie sector, so if you want to be seen as a cool, cutting edge brand, then iAd offers an opportunity to associate with that.
iAdThe other key point is that Apple has brought mobile advertising and in-app ads especially, up the agenda and shown the possibilities of mobile as a branding channel. Even iAd’s (indirect) competitor, AdMob, have said that the awareness of the channel is good for business by raising mobile marketing’s profile.
I previously blogged about comments from a Publicis director who felt that iAd had a tiny reach, was too expensive and will ultimately fail. I agree there are issues, but if you want to appeal to a particular, option forming tech savvy audience then iAd offers some real possibilities. As long as you have the budget.

How fast is mobile broadband in reality?

Anyone who’se used mobile broadband, either through a USB or mobile phone connection will know that it can be extremely slow and unreliable. Yet the mobile operators would have us think that mobile broadband just whizzes along. Fortunately consumers are not that stupid (mobile operators take note), and have been complaining about the speeds to Ofcom in droves. That has now prompted tests into the real speeds of mobile broadband, to be carried out by Welsh firm, Epitiro. Consumers have also been voting with their feet, or at least their wallets. I blogged in June that mobile broadband sales had plumetted because users found it simply didn’t work very well.
Ofcom tested the fixed line ADSL operators last year and found, surprise, surprise, that the claimed speeds were considerably higher then the reality faced by users. It’s not that hard to predict what the findings will be for mobile broadband speeds.
All of this goes back to the problem of data on mobile networks. Something that I have been writing about for a while. It is the poor and unreliable data connections that are holding back mobile as a truely convergent connected device. O2 has seen the bulk of data problems recently – their 2 million plus iphone users are contstantly updating Their Facebook status, and slowing the data network down to a crawl. As a result the operator has put limits on monthly data usage. However the data problem is unlikely to go away for the other operators. Ofcom’s annual report highlighted some of the problems. Whilst data usage has surged, the opeartor revenues from it have declined.

Facebook places launches in the UK

There seems to be much excitment about the launch of Facebook’s location service in the UK. Twitter is full of it, and most of the social media/digital news sites are mentioning it. And it all seems to be quite positive. There are the continued privacy issues, but it looks like location is catching user’s imagination. The addition of location into Twitter hasn’t caught people’s imagination in the same way. Comments like ‘what’s the point’ shows that it looks like a bit of an after thought on Twitter’s part.

iPad subscriptions- are Apple getting too greedy?

Apple is looking to take as much as 30% from newspaper subscriptions sold through it’s app store, along with 40% of advertising sold through those subscriptions. The model is consistent with their app store and iAd revenues, but are Apple going too far? With when the iphone app store first appeared it was a new market, largely speaking. Apple offered developers (especially small developers) revenue opportunities through a new channel. The fact that Apple took a large chunck of that money was less of an issue as they were offering a platform which was not previously available.
There have since been a few moans about the iAd revenue split, but the latest idea of taking 30% from publishers could be a problem for Apple. Newspapers and magazine subscriptions is a long-standing market. Longer standing than the iPad and the internet. Many of the brands are well known and already have a customer base. So why would they want to allow Apple to take 30% from each subscription. The publishers would like to see a simple fee rather than a hefty revenue percentage. Whilst at the moment Apple dominate the tablet market, there is plenty of competition on the horizon with the likes of The Kindle and Android devices. Are Apple about to get too greedy?

Guardian report here

iAd’s ‘tiny reach’

In spite of all the noise from Apple about iAd changing mobile advertising, six months down the line, it still doesn’t look like ad agencies are convinced. At a panel conference in New York, execs from ad agency Publicis claimed that iAd couldn’t deliver the numbers that brands were looking for. Jami Lawrence, associate director of mobile marketing at Publicis Modem said ‘it’s a really small audience—from a scale perspective not really there’. Whilst the iphone is popular it only represents a few percent of handsets at best. What’s more, for many brands those users are not their target audience. Look at retail, and the supermarkets in particular. For most of them their customers are mainly women, and for some, mainly older women. Yes, men shop in supermarkets these days, but typcially the main buying decisions are made by women.

Lack of reach is one problem for brands, but the other is the $1 million entry fee limits the network to major brands. And major brands who are willing to risk that amount in the mobile space. Publicis pointed out that typical spend on mobile campaigns is $20-$50k, which is consistent with the UK experience.

There is also a barrier to developers including iAd in their apps: the 60% payout rate from Apple may not be enough of an incentive. Added to that are the limited metrics provided by Apple. Click through rates are not enough of a measurement for today’s digital advertisers, they want to see a full run down of customer behaivour. Something that iAd cannot give. I previously blogged about Apple ditching Quattro Wireless and putting all of their eggs into the iAd basket.
Whilst iAd offers a great, interactive experience (that doesn’t take the user away from the app), that simply isn’t enough for brands. Apple have pitched their network at too high a level to make it a success. In all likelyhood Apple will make money from iAd, but it will remain a niche product. Unlike the claims from Steve Jobs, it will not do for mobile advertising, what the app store did for the iphone.