The era of mobile advertising is coming soon

by Jason Kincaid on Apr 8, 2010

Today during its iPhone 4.0 developer preview, Steve Jobs announced Apple’s much-anticipated mobile advertising platform, iAd. This has been expected since Apple acquired mobile ad platform Quattro Wireless, after having AdMob snatched away by Google (though the FTC may recommend blocking that deal).
Apple will sell and host the ads, giving 60% of ad revenue back to developers, and Jobs says that developers can add ads to their apps “in an afternoon”. Unlike most mobile ads, which kick users outside of the application they’re currently using, iAd keeps users in the same app. In a jab at Flash, while showing an ad, Jobs said “Oh, by the way, all of this is done in HTML 5.”
The first ad Jobs showcased during his demo was for Toy Story 3. It was rendered in HTML 5, was fully interactive, and looked similar to a native app — it actually had a game integrated in it. Jobs said, “”This is a new kind of mobile ad. Have you ever seen a mobile ad like this? Anything even close?”
Second, Jobs showed off an ad for Nike, which showed a history of Nike ads and allowed the user to actually flip through a history of the brand’s shoes. Ads will have access to many of the same APIs as ‘normal’ native applications — they’ll be able to use location services and the accelerometer. Location, in particular, will be important — this is going to be a boon to hyperlocal advertising (provided Apple offers a good way for local businesses to get their ads in the system).
It sounds like Apple won’t be too restrictive on who can build apps: Ad agencies will be able to develop these interactive ads, as will app developers. Though I imagine they’ll have to go through a review process similar to native apps on the App Store. Update: During a Q&A Apple said it would use a “light touch” and that there were obviously some ads they didn’t want to have shown, the same way a TV network doesn’t want some ads shown.
The obvious consequence of this new platform is that ads from other ad networks may well become second-class citizens, perhaps not just from Apple’s perspective but from a functional standpoint. Details are still scant, but if iAds are the only ads on the iPhone that can access the iPhone’s API, then ads from third party networks may be less interactive, and may not be able to as effectively determine the user’s location. Assuming developers embrace iAds and the iPhone continues its strong growth, this could have a significant impact on Google’s mobile ad efforts in the future.
Here’s what Jobs had to say about the launch (we’re updating from from our live notes, some of this may be paraphrased):

“Developers [of free apps] need to find a way to start making their money. A lot of developers turn to advertising – and we think these current advertisements really suck.”
“If you look at advertisements on a phone, it’s not like on a desktop. On a desktop, its about search. On mobile, search hasnt happened. People aren’t searching on their phones. People are spending their time in apps”
The average user spends 30 minutes a day in apps. If we put an add up every 3 minutes, that’s 10 ads per day.
Throughout the iPhone community, that’s 1 billion ad impressions per day
We’ve all seen interactive ads on the web. We want to deliver interaction – but also emotion.
“If you click on an add now, you’re yanked out of your app. As a result, people don’t click on ads.”
“We have figured out how to do interactive and video content without ever taking you out of the app”
Apple will sell and host the ads, and give 60% of ad revenue to developers

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Nielsen’s New App Playbook Debunks Mobile App Store Myth

March 24, 2010

Mobile carrier app stores are a long way from dead. Despite the fanfare around application stores tied to specific mobile devices such as iPhones and BlackBerries, a new Nielsen survey finds ongoing loyalty to carrier stores.  As of the end of 2009, half of all applications users were accessing carrier app stores according to Nielsen’s new App Playbook.

That said, the Apple App Store was the clear leader in preferred application stores in the United States and, combined with the dedicated AT&T Application Store, devices running on the AT&T network have the most popular stores.

The relatively new BlackBerry App World Store was the second most popular app store due to BlackBerry’s industry-leading installed base.

Carrier application stores come in next on the rankings due to the size of their subscriber base, suggesting users of more standard feature phones drove much of this ongoing popularity.

Nielsen’s App Playbook  surveys more than 4,000 application downloaders in the United States every six months about their mobile application usage. It allows companies in the mobile ecosphere to monitor the transition and growth of the application market as mobile users shift from feature phones to smartphones.

Not surprisingly smartphone users were generally using applications more than feature phone users – only 12% of feature phone owners have downloaded an app in the past 30 days while 46% of smartphone owners have —  with application usage driven mostly by the iPhone and Android devices. This was due to the size of the application universe offered on both platforms, which was significantly larger than that of the other platforms. BlackBerry’s relatively low number was due to the significant corporate user share, which often locks the device and only allows corporate IT to install applications on the device.

Among recent acquirers, BlackBerry continued to be the market share leader among smartphones in the U.S., while Apple’s iPhone continued to increase its market share, especially after the launch of the iPhone 3GS in June 2009. The launch of a significant number of Android devices in the latter part of 2009, drove its market share to 5% at the end of the year and set it on a promising trajectory for 2010. Both Microsoft and Palm were unable to capitalize on their new launches in 2009 of Microsoft Windows Mobile 6.5 and the Palm Pre and Pixi, losing 7% market share and 4% market share respectively. Symbian, one of the leading smart phone operating systems globally continues to struggle to make significant inroads in the United States.

With only eight Android devices launched in 2009 – and the Droid launching late in the year – the Android Market Store saw modest popularity.   Since then, a large number of Android devices launched, and the popularity of the Android Market Store is expected to increase as a result. This is further illustrated by the high satisfaction scores the Android Market received in the Nielsen study, second only to the Apple App Store. The Palm Application Store seems to be languishing due to the relatively modest success of the new Palm Pre and Palm Pixi, combined with a comparatively low number of applications available in its app store. The same is true for the Windows Marketplace, which is also suffering from a low number of applications and dwindling market share for Windows Mobile devices.

The Apple App Store and the Android Market Place have a sizable lead in terms of satisfaction compared to the other application stores. We see similar sized leads for both the Apple App Store and the Android Market Place when it comes to satisfaction with the pricing of the apps. While the often-overlooked carrier application stores are significantly behind the two leaders in terms of satisfaction, they are still marginally ahead of the BlackBerry App World and Windows Marketplace. It will be interesting to see how the just-announced revamp of the Windows Marketplace will impact satisfaction scores and what RIM will do in their next iteration of App World.

About Nielsen’s App Playbook
Insights from Nielsen’s App Playbook were gathered from 4,265 respondents who had downloaded an application in the past 30 days, 2,351 of which owned a smartphone and 1,914 of which owned a feature phone.  The respondents were identified through Nielsen’s Mobile Insights syndicated tracking study, which surveys 80,000 mobile subscribers per quarter.  The App Playbook sample is weighted back to the total qualified population from the Nielsen Mobile Insights survey.  The survey covers a wide range of topics related to applications, including audience profiling, market sizing, download and purchase behavior, app store channel, app usage and satisfaction.

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Smartphones to Overtake Feature Phones in U.S. by 2011

For more info: Contact The Nielsen Company

Roger Entner, Senior Vice President, Research and Insights, Telecom Practice

The iPhone, Blackberry, Droid and smartphones in general dominate the buzz in the mobile market, but only 21% of American wireless subscribers are using a smartphone as of the fourth quarter 2009 compared to 19% in Q3 2009 and 14% at the end of 2008. We are just at the beginning of a new wireless era where smartphones will become the standard device consumers will use to connect to  friends, the internet and the world at large. The share of smartphones as a proportion of overall device sales has increased to 29% for phone purchasers in the last six months and 45% of respondents to a Nielsen survey indicated that their next device will be a smartphone. If we combine these intentional data points with falling prices and increasing capabilities of these devices along with a explosion of applications for devices, we are seeing the beginning of a groundswell. This increase will be so rapid, that by the end of 2011, Nielsen expects more smartphones in the U.S. market than feature phones.

The Smartphone User
Slightly more males than females are getting smartphones (53% versus 47%) which is what we would expect for technical early adopter products. In terms of demographics, Hispanic Americans and Asians are slightly more likely to have a smartphone than what their share of population would indicate, which is a trend we see in the adoption of other mobile data services. While smartphones started out in the business segment, two-third of today’s buyers of smartphones are personal users.

Loyalty
In the last six months, roughly 77% of new smartphone buyers remained loyal to their wireless operator, while 18% switched to a new provider to get their new smartphone with the remaining percentage made up of first-time smartphone buyers. Interestingly enough, the percentage of people who switched carriers and got a new smartphone is not higher than that of the average wireless subscriber.

This indicates that the portfolio of the wireless carriers in general is robust enough to prevent any wide-spread smartphone flight from one carrier to the other, with very few exceptions. The added bonus for wireless carriers is that smartphone owners are significantly more satisfied (81%) with their device than feature phone owners (66%).

Features, features, features
Smartphones show higher application usage than feature phones even at the basic built-in application level. During Nielsen’s Mobile Insights survey we asked the respondents about features they’ve used in the last 30 days. The good news for the smartphone market is that people are actually taking advantage of the device capabilities.

The percentage of people who use their phone for only voice communications drops from 14% among new feature phone owners to 3% of smartphone owners. The use of the built-in camera and video capability jumps by almost 20% for both categories, due to the generally better quality and user friendliness of the features. Smartphones also often have a better speaker which translates into more frequent usage from about half of feature phone owners to about two-thirds of smartphone owners. Not surprisingly the use of Wi-Fi increases 10-fold from 5% for feature phone owners to 50% for smartphone users to satisfy the need for fast downloads.

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Android Equals iPhone in Smartphone Loyalty - Crowd Science

By Sandra Marshall, VP Research - Crowd Science

Earlier this year at Crowd Science, we conducted a study among cell phone and smartphone users, to investigate awareness and brand usage of Android phones. This study also cast a spotlight on the newly introduced Google Nexus One smartphone once it hit the marketplace as the study was ongoing.

In conducting the study, our intent was to see if there were any interesting differences between Android users (if we could capture enough of them to analyse) and iPhone users. In the end we found them to be more similar than different. We came across some interesting findings that pointed to favourable ratings on brand loyalty dimensions among Android and iPhone users, and in the process discovered some less-than-stellar results for the Blackberry brand in satisfaction measures.

Android awareness increases after introduction of Google Nexus One
First, a little bit about what we found out regarding general awareness of the Android operating system….before the Google Nexus One came on the scene, six-in-ten had ever heard of the Android OS, but awareness increased six points to reach 66% after the Google Nexus One was released on January 5th of this year.



Post-launch awareness of the Google Nexus One phone – among those not using Android phones – is 58%. Not unexpectedly, smartphone users demonstrate greater levels of awareness: 75% of Blackberry users, and an even larger proportion of iPhone users (91%), are aware of the Nexus One brand.

Developers more familiar with Android operating system

After being asked if they had ever heard of the Android operating system, respondents were asked how ‘familiar’ they were with it. About one-in-ten of non-Android users say they’re familiar with it, but among those who are developers, this skews higher, with 13% of developers (vs. 6% of non-developers) claiming familiarity with the Android OS. Perhaps this may not be surprising, given the fact that Android is an open source platform that would appeal to developers – as well as the fact that a significantly larger proportion of developers stray from the mainstream in their use of a broader array of smartphone brands, i.e., ‘other’ than Blackberry, iPhone or even Android (35%, vs. 19% of non-developers).

Android users skew younger, lower income
So what kind of people in our study tend to use Android phones? Generally, we found them to skew younger, and accordingly, lower income, than either iPhone or Blackberry users. Business users tend to be more prevalent among those using Blackberry phones, yielding the largest proportion of business-only users among the three brands.




Accordingly, iPhone and Android users are comprised of larger proportions of ‘personal-only’ users. In all cases, however, all three brands of smartphone yield a majority who use their cell phone for both business and personal purposes.

Android and iPhone demonstrate strong brand loyalty
When faced with the hypothetical situation of buying a cell phone tomorrow, Android and iPhone users alike demonstrated a high degree of brand loyalty. Each group was asked how likely they were to buy an iPhone, how likely to buy an Android phone, as well as how likely to buy some ‘other’ type of smartphone, using a 5-point scale of likelihood. The main intent, here, was to see if there might be any migration between Apple’s iPhone and the Android operating system. Instead, what we found was that each group was quite loyal to their own phone with about 9-in-10 saying they’d be likely to buy their own type of phone tomorrow. There was no statistical difference between Android users likely to buy an iPhone tomorrow or vice versa. Blackberry users yield higher proportions (34%) likely to buy an Android tomorrow compared with iPhone users (24%). Interestingly, almost 4-in-10 Blackberry users are likely to buy an iPhone tomorrow.

Satisfaction high among Android and iPhone users, lower among Blackberry usersAs it turns out, a good portion of Android users tend to be satisfied with their phones (61%), as are iPhone users (76%). iPhone users, however, yield a significantly greater proportion of those satisfied with their phone, when compared with Blackberry users (42%).



One might wonder about the ways the phones are used, with Blackberry used more for business purposes – perhaps provided by businesses to their employees, without offering a choice of phone type? Is satisfaction tied to the way the phone is selected, or how it is used? What about the applications that are available to use? Clearly more research might help us answer these and other questions to understand more about the lower level of satisfaction with Blackberry phones – perhaps the subject of one of our upcoming research endeavours.

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