Mobile

Mobile

Contents

• Trends & User Behaviour
  • Size of the market
  • What our mobiles mean to us
  • Mobile internet
  • Social networking
  • Search
  • Operator revenue and pricing
  • Unlimited data plans
  • VoIP
  • 3G
• Mobile Advertising
  • Size of the market
  • Mobile advertising formats
  • Advertising networks
• Mobile Messaging
  • SMS & MMS
  • Using messaging for CRM
  • Messaging using operator databases
• Applications
  • The Apps market
  • Top categories
  • Key players
  • Apps vs sites
  • New technologies
• M-Commerce
  • Size of the market
  • Usage of m-commerce
  • Mobile coupons and vouchering
  • Retailers
  • Mobile banking
• Mobile and Other Media
  • Mobile and Press
  • Mobile TV
  • Mobile and Radio
  • Mobile and Outdoor
  • Using mobile as the response mechanism in other media campaigns

  Featured Tables & Charts

  • Market share of smartphones
  • Morgan Stanley New Computing Cycles
  • Mobile internet and PC internet projections
  • Top 10 mobile internet sites by unique visitors
  • Top mobile internet sites by minutes spent
  • Top 10 PC internet sites (parent sites)
  • Facebook usage on mobile vs PC
  • Mobile adspend by advertising format
  • Industry sector display market shares
  • SMS usage by age
  • Channel interest
  • Top categories for apps
  • App user engagement
  • Application downloads by handset
  • Average spend per user
  • Consumer attitudes to mobile transaction
  • The rise of 3 screeners

Featured Tables & Charts

33 pages, featuring 17 tables and charts

Executive Report: Mobile, September 2010
Introduction
Why are people suddenly so interested in mobile? Significant improvements over the
last few years have led to big changes in the way people use their mobiles, and the
mobile media consumed (amount and content). Consumers now have better
handsets, cheaper access, clearer pricing and better content, giving advertisers
greater opportunities on what is claimed to be the most targeted and personal
medium.
One of the major potentials of mobile for advertisers is its scale. With more handsets
than people in the UK, the mobile is the most prolific consumer device. There are
more than five billion mobile phone connections worldwide, and this is predicted to
rise to six billion by the middle of 2012 (Source: Wireless Intelligence). When
mobiles were first launched an industry insider predicted 10,000 phones, now there
are three times as many mobile phones as PCs globally.
Despite the mass reach of mobile, mobile internet usage has historically been low.
This is starting to change and in the UK there are already 17.8 million handsets
spending 4 billion minutes online in a month (comScore/GSMA MMM, March 2010).
This looks set to grow substantially, with Morgan Stanley predicting that more users
will connect to the internet via mobile devices than desktop PCs within five years.
The growth of mobile and the potential for advertisers means that media owners are
starting to put mobile on their agenda. Over 50% of members of the AOP
(Association of Online Publishers) see mobile as their greatest challenge in 2010.
Advertisers are still just testing the water, with only 1% of digital advertising spend
going to mobile. However, spend has increasing rapidly growing by 32% in 2009,
despite this being the worst year on record for advertising.
This report looks at the key growth areas of mobile, the drivers for this change and
the impact on advertising revenue.
Mobile, September 2010
Trends and user behaviour
Five key facts
1. 80% growth of smartphones in UK (one in four phones in the UK)
2. 17.8 million handsets in the UK access the internet
4. 4.1 billion minutes were spent browsing the mobile internet in March 2010
5. Facebook accounts for 48% of minutes spent on mobile internet
5. Mobile internet looks set to overtake PC internet within five years
Size of market
One of the most quoted facts about mobile is that there are now more handsets than
people in the UK. The real story however is the significant growth of smartphones
(high-end devices that act like computers) and mobile internet usage. A forecast from
Futuresource Consulting predicts that more than one billion people worldwide will
own a smartphone by 2013.
In the UK, the number of smartphones has grown 80% in the last year (see Table 1),
with smartphones now accounting for one in four mobiles. Symbian (Nokia) holds the
largest share of the smartphone market, but the iPhone from Apple has experienced
the biggest growth year on year (271%).
The growth trend looks set to continue as the majority of handsets sold are now
smartphones. According to GfK, in Q2 2010, exactly two-thirds of all handset sales
for contract customers where smartphones.
Mobile, September 2010
www.mediatel.co.uk
The iPhone currently represents just 7% of the UK mobile market, and 28% of the
smartphone market. However, it is the iPhone that has accelerated the fundamental
change in consumer mobile behaviour. Across Europe, more iPhone users consume
mobile media1 (94%) than the average smartphone user (65%), and 85% browse the
mobile internet compared to 53% (comScore MobiLens, 3 month average to April
2010).
Google’s Adroid is fast becoming a key player in the smartphone market. In the US,
Android-powered smartphones accounted for 28% of consumer sales compared with
21% for the iPhone in the first quarter of the year (source: NPD). Google have
predicted big things for Android and their chief executive has said that “it looks like
Android is going to be either the number one or number two player”.
What our mobiles mean to us
Deloitte’s annual survey, State of the Media Democracy, highlights just how
important the smartphone is to consumers, and found that amongst owners, they
ranked fourth in terms of the product that they value the most.
Reasearch by Aeneas Strategy supports the “always and everywhere” claim so often
made about mobiles, with 74% of respondents never turning their phones off and
92% never leaving the house without their phone.
Nowadays, mobiles can be so much more to us than just our “phones”, they are our
camera, mailbox, organiser, source of instant information and news, entertainment,
movie screen, music device, games console, book and our wallet and they are
unique and personal to us (75% of users agreeing that mobile is the most personal
device they own).
The on the go nature of the mobile phone means that they are able to provide us
with all these channels of information, entertainment and communication, regardless
of where we are. Research by Orange found that 73% of mobile media users
consume mobile media when they are out and about. However, the research also
found that 87% of mobile media users consume mobile media at home (Source:
Orange Exposure 2).
Mobile internet
Morgan Stanley have looked back at each computing cycle over the last 60 years,
finding that each cycle was almost ten times bigger than the last. They expect this
trend to continue into the next cycle of mobile internet, predicting that it will be ten
times larger than desktop internet.
Mobile, September 2010
www.mediatel.co.uk
1 comScore defines mobile media as accessing the Internet on a mobile phone via
browser, app or SMS
In the UK 17.8 million handsets accessed the mobile internet, spending an average
of 32 minutes a day (comScore/GSMA MMM, March 2010). Whilst mobile internet
was always seen as a “snacking” medium, research by Yahoo! has found that 77%
of all mobile internet occasions are over five minutes. The research also found that
40% of mobile internet consumers are heavy users, accessing the mobile internet
daily. (Source Yahoo! Appetite, March 2010).
The explosion of mobile internet usage is a result of a culmination of key drivers –
smartphones, 3G, unlimited data plans and content.
Morgan Stanley believes that more consumers will connect to the internet via mobile
devices than desktop PCs within 5 years (Morgan Stanley Mobile Internet report),
see chart x below. There are industry expectations that mobile internet should be
even better than standard internet with the multi-sensory properties of mobile (touch,
sight and sound).
Mobile, September 2010
The top 10 sites for mobile internet and PC internet, show a crossover in internet
usage. Both show similar patterns of social media, search and shopping, with
Google, Facebook, Yahoo!, BBC, Microsoft, Wikimedia and eBay all appearing in the
top 10 sites (ranked by unique visitors). The remaining three sites in the mobile top
10 are operator portals.
Whilst the composition of the top 10 mobile sites by time spent is the same as the
top ten sites by UVs (with the exception of Handmade Mobile Entertainment/
Flirtomatic), Facebook is the top site. In fact, Facebook accounts for a massive 48%
of all time spent on the mobile internet, showing much higher user engagement than
the other top ranking sites.
Table 3: Top mobile internet sites by minutes spent

Social networking
Although there are many popular content genres, social networking has been a
major area of growth for content on mobile. In the UK, there has been an 80%
growth in the number of mobile social networkers in the last year alone. The
demographics of social network users is evenly split between male and female,
suggesting that social media is bringing mobile internet out of early adopter mode
and is introducing many consumers to the mobile internet. There is evidence that
Facebook is the first mobile internet experience for many people.
When comparing social networking via mobile and PC some interesting differences
stand out. Despite there being fewer people accessing social networks on mobiles
than on PCs, they are far more engaged, visiting sites more frequently and for longer
periods of time. For example, many more people access Facebook via a PC than a
mobile (75% of PC internet users vs 33% mobile internet users), however, mobile
users visit more often and browse the site for longer.
Chart 3: Facebook usage on mobile vs PC
(Source: comScore, Jan 2010)
Search
As smartphones have become more popular there have been dramatic increases in
mobile search volume. Over the past two years, Google’s mobile search volumes
have grown more than fivefold. Every week, tens of millions of people search on
Google from their mobile phones, generating hundreds of millions of searches.
Mobile, September 2010
www.mediatel.co.uk
The mobile offers new ways of searching. As well as typing search queries,
consumers can use voice search (speaking the query into phone) and visual search
(using camera to take pictures and then searching for the items). Google’s new
“Click-to-call” search ads enable advertisers to include a local business or national
phone number directly in their ad text, allowing consumers to click to call businesses
directly
Operator revenue and pricing
Operators’ revenues have traditionally consisted of voice (income from standard
phone calls), messaging and data. With voice becoming cheaper and more
competitive, operators are placing greater importance on data as a revenue stream.
The average revenue across the major operators from non-voice services has
increased to circa 30% from circa 20% over the last four years. (Source: CCS
Insight).
This increase in data usage is a reflection of the growth of smartphone uptake, (and
to some extent dongles), mobile internet access getting faster and cheaper and an
ever developing apps market.
With a more competitive market and consumers constantly looking for value,
operators are responding by focusing on contracts and encouraging migration from
prepaid to contract by offering a wider availability of attractive high-end devices, and
by increasing the value of subscriptions with more offers of bundles, “unlimited data
plans” and flat-rates.
According to comScore, monthly subscription fees in the high tier (> £35 in the UK)
are not growing at the same rate as in the mid to low tier. High tier adoption was up
60%, whereas the mid to low tiers grew 76% year on year (comScore Mobilens, 3
month average to Jan 2010).
Unlimited data plans
With their rising popularity, it seems that unlimited data plans may have become a
victim of their own success. They have quadrupled in the last two years and now the
major UK mobile operators fear that the rapid increase in data usage will clog up
their networks, resulting in poor service and slower download speeds.
Operators have responded to this by imposing monthly caps on their new contracts,
a move which coincides with the launch of the Apple i-Phone 4. Some networks vary
their data bundle between 500MB and 1GB per month, depending on the contract.
Orange have always had a 750MB monthly “fair usage” policy since it started to offer
the iPhone in late 2009. To put these “caps” into perspective, 1GB amounts to
approximately two to three hundred MP3 song downloads a month. However, data
consumption increases rapidly when users stream videos on their mobiles.
Mobile, September 2010
www.mediatel.co.uk
Industry analysts have said that caps were “inevitable” as more consumers switch to
smartphones which can surf the web and show video. Operators claim that the data
usage of the vast majority of their customer base is well below the caps imposed,
and that a huge amount of data is being consumed by a minority – it is this minority
who will have to pay the additional charges. O2 recently revealed that just 3% of
consumers on smartphone tariffs accounted for 36% of its smartphone data traffic.
However, the future demand for data consumption is only going to increase, and
operators are going to have to ensure that their networks can keep up with their
customers’ demands for data.
VoIP
While voice still accounts for the majority of mobile operators’ revenue, its
importance is starting to decline and the role of voice is entering a period of change.
Mobile Voice over IP (VoIP) is on the rise due to growth in faster handsets, 3G and
WiFi phones. Juniper forecasts the number of Mobile VoIP users will exceed 100
million by 2010, of which over half will be in North America and Europe due to 3G
penetration in these regions.
Juniper also forecasts the number of mobile VoIP minutes carried annually on 3G
and 4G networks will rise from 15 billion minutes in 2010 to 470.6 billion by 2015 (the
US alone will account for 135 billion mVoIP minutes). Operators will be most
affected by WiFi mobile VoIP as it bypasses the mobile networks. Juniper forecasts
suggest that mobile VoIP over WiFi will cost operators $5 billion globally by 2015.
3G
‘3G’ is the third generation of telecommunication hardware standards that allows
voice and media services to mobile customers by providing high data rates and
functionality.
In the UK, 44% of mobile users have a 3G connection, up from 35% a year ago
(comScore Mobilens 3 month average to May 2010)
The next generation ‘4G’ is not forecast to roll out in the UK until at least 2013. This
will allow even faster download speeds of up to 100Mbps, much faster than the
average broadband connection in the UK.
Mobile, September 2010
www.mediatel.co.uk
Mobile advertising
Five key facts
1. Mobile adspend worth £37.6 million in 2009
2. Year on year growth of mobile adspend was 32%
3. Search accounted for 54% of mobile adspend in 2009
4. Mobile adspend forecast to reach £285 million by 2014
5. Entertainment is the biggest sector
Mobile advertising is growing at an astonishing rate, much like online did in its early
days. Advertisers are starting to see mobile as an essential part of their overall
campaigns, not just an experiment. Such was the growth in 2009, that it bucked the
declining trend of the total advertising market. However, mobile spend still only
accounts for 1% of digital spend (Source: IAB).
With mobile being such a personal device/medium, it is easy to see why the direct
nature of the mobile advertising is so appealing to advertisers.
Size of the market
The IAB/PricewaterhouseCoopers adspend study reports that in 2009 the mobile
adspend market was worth £37.6 million, experiencing growth of 32.2% year on
year. Growth was consistent throughout the year, with the last quarter seeing the
biggest increase, up 36% quarter on quarter.
Search took the largest share of mobile adspend, accounting for 54%, up from 50%
in 2008. Of the display advertising formats, which accounted for the remaining 46%,
banners and text links took the largest share of revenue (84%).
Mobile, September 2010
www.mediatel.co.uk
Chart 4: Mobile adspend by advertising format
(Source: IAB/PWC Adspend Study)
Entertainment was by far the largest sector for mobile advertising, accounting for
61.5% of mobile adspend. The second largest, telecoms, only achieved 14.7%.
Chart 5: Industry sector display market shares
(Source: IAB/PWC Adspend Study)
Mobile, September 2010
www.mediatel.co.uk
FirstPartner forecasts that mobile advertising in the UK will maintain a steady growth
rate of 33%, reaching £49.8 million in 2010 before growth accelerates in 2011
delivering revenues of £285 million by 2014.
Mobile advertising formats
Mobile internet advertising can be categorised into three distinct areas:-
1. On portal – operator sites (O2, Orange, T-mobile, 3 and Vodafone) which are
usually set as default landing pages
2. Off portal – sites that fall outside the operator portal or walled garden
3. Search – can be accessed directly or via search partners on portal sites
There are many mobile advertising formats available:-
• Text links – popular due to the low cost and low risk
• Mobile banner ads – still the most popular form of mobile advertising. Similar in
format and style to those on PC internet, they are uncomplicated and easy to
execute
• Expandable mobile banner ads – sit at the top of the mobile web page or
application and expand when clicked or touched. Offer brands high quality and
interactive content
• In-app advertising – provide advertisers with a platform for rich, interactive content,
and include in-app banner ads, in-app sponsorship or in-app expandable ads
• Pre/post roll and in-video – video is increasingly popular on mobile with the ad
formats similar to online. Pre roll (ad shown before content) is the most popular
• Tenancy deals – an advertiser owns an entire section of a site and provides the
content
• In SMS/MMS advertising – both Orange and O2 have customers opted- in to
receive adverts and offers via SMS and MMS. Other companies like 118 118 place
ads in the text messages that they send to customers
• Search – similar to online, but with the added benefits of a less cluttered
environment and lower CPC due to less advertisers bidding on keywords
Mobile, September 2010
www.mediatel.co.uk
Advertising networks
Currently most industry talk is around AdMob and iAd driven by the profile of their
owners Google and Apple. Speculation is rife on how Apple will implement its ad
network iAd, across iPhone apps and what this could mean for other ad networks.
Apple has taken the approach of working with big advertisers, with big budgets, with
a rumoured minimum spend of $1 million in the US. They are already claiming big
successes, with $60 million in bookings secured before they launched, representing
almost half of the total forecasted mobile adspend in the US for the second half of
2010.
Google’s $750 million acquisition of AdMob took several months to secure
government approval in the US, resulting in a much bigger offering from Google,
including search and display advertising.
Other global ad networks include Millennial Media, InMobi, Smaato and BuzzCity,
and in Europe and the UK, YOC, 4th Screen Advertising and Unanimis.
Mobile, September 2010
www.mediatel.co.uk
Mobile messaging
Five key facts
1. 96.8 billion texts were sent in the UK in 2009
2. 11 million text messages are sent every hour in the UK
3. 1.6 million MMS sent a day
4. 17.3 million consumers receive SMS ads a month
5. Most popular form of mobile marketing
Amongst all the excitement around mobile advertising and apps, one marketing tool
that doesn’t always achieve the same profile is messaging, despite the fact that it
can be highly effective and is used by nearly the whole population.
A survey of medium-to-large UK organisations by Bigmouthmedia, revealed that 76%
of respondents cited increased brand awareness as the main benefit of mobile
marketing, while 60% said that increased traffic and sales leads were a major
benefit.
SMS & MMS
Since the early 2000s SMS usage has been rising. In the UK alone, 11 million text
messages are sent every hour, (96.8 billion in 2009), and texting has become
second nature, so is the most successful app. Another benefit of texting is its
popularity across all age groups as the chart below demonstrates.
Chart 6: SMS usage by age
(Source: comScore 2009)
Mobile, September 2010
www.mediatel.co.uk
Multimedia messaging (MMS) launched in 2003, and whilst gaining momentum, has
seen slower uptake than SMS. Last year, 601 million MMS were sent, equating to
1.6 million a day (Source: IAB). MMS includes pictures and videos.
Not only does messaging offer mass reach, it is also hugely popular with consumers.
Research by Aeneas Strategy revealed that consumers were the most interested in
SMS and MMS as an advertising channel. See chart below.
Chart 7: Channel interest
(Source: Aeneas Strategy)
Today, mobile messaging is still the most popular channel of mobile marketing, with
several 100 million advertising messages sent out every month in Europe. In the UK,
17.3 million consumers receive at least one SMS advert a month. The most common
content of SMS advertising is information about a product, brand or service, followed
by coupons or discounts (comScore Mobilens, 3 month average to May 2010).
Although simpler and less glamorous than an app or mobile site, messaging is easily
understood by the majority of the population, and can be just as effective. Messaging
response from outdoor, point-of-sale and print can deliver offers that are redeemable
online or instore, collect data, and drive traffic to a transactional mobile site. It can be
a lot more than simply requiring consumers to text “yes” for a brochure, and can offer
advertisers and agencies a range of creative options, such as texting to receive a
discount, texting to hear the sound of a car engine and texting to watch a video clip.
For companies that want to target a specific group, SMS and MMS provide an
opportunity to deploy targeted collateral, notifications and information updates to
their own customer database or to a targeted opted-in list.
Mobile, September 2010
www.mediatel.co.uk
Using messaging for CRM
Messaging can be used as a CRM tool for brands, enabling them to send
promotional messages and offers to customers, while building brand loyalty.
Messaging offers advertisers a number of benefits as a CRM tool:-
• Immediacy – texts can be sent out almost at the touch of a button, at any time of
day or night
• Penetration of handsets – messaging can reach almost the entire population
• The immediacy of reading the message – people read texts almost as soon as they
receive them
• Cost – much cheaper to send a text message than a letter for example
Messaging using operator databases
For the last year O2 and Orange have been developing their own opt-in database of
consumers to receive advertising messages and offers from third parties. This
follows the purely adfunded operator Blyk which gave consumers (aged 16-24) free
calls and text messages in return for receiving adverts. Whilst Blyk struggled to make
this model a success, Orange saw the opportunity and bought the technology to
deploy their own offering, Orange Shots, to their own customer base.
Similarly, O2 have developed O2 More. They collect a range of data about
preferences and personal information from customers who opt in for the service, in
exchange for customers receiving up to one text a day with tailored offerings. Whilst
Orange’s offering is similar, they build dialogue with their customers, gradually
creating audience profiles over time. Both platforms are relatively small in
comparison to the overall operator customer base, but are growing rapidly and have
achieved some highly impressive results.
Mobile, September 2010
www.mediatel.co.uk
Applications
Five key stats
1. 2.6 billion apps downloaded in 2009
2. App downloads expected to increase tenfold by 2015
3. Top category for apps is games
4. 75% of downloaded Apple apps are paid for
5. Sites still drive more traffic than apps
The Apps market
With consumer appetite for mobile apps escalating and revenue and growth
increasing, the opportunities for developers and publishers are huge. Juniper has
forecast the number of global mobile app downloads to increase tenfold from 2.6
billion in 2009, to more than 25 billion in 2015.
Juniper forecast that the combined revenue (global) from apps (funded by pay-perdownload,
value-added services including freemium and subscription, and
advertising is expected to rise from just under $10 billion in 2009 to $32 billion in
2015.
In 2009, the number of apps stores more than quadrupled from 8 to 38 and this is
expected to increase further. Platforms such as Android, Blackberry, Samsung and
Ovi continue to develop their own app stores in response to the huge success of
Apple and their fears that Apple will gain further share of the smartphone market.
Top categories
The apps market is driven by games, with 70% of smartphone owners downloading
them. In second place are maps, reflecting the rising trend of location based apps,
giving consumers access to local and relevant information such as entertainment
listings, travel and accommodation information, as well as navigation assistance.
Despite social networking driving mobile internet usage, it ranks third with just 25%
of smartphone owners downloading social networking apps. This could be due to the
popularity of the Facebook mobile website, thus reducing the need to download the
app.
Mobile, September 2010

The Morgan Stanley Internet Trends (April 2010) report found that 75% of Apple
apps are paid for, with books and travel having the highest percentage (92% and
87% respectively). Despite games being the top category for downloads, only 68%
are paid for.
Statistics from Pinch Media (a mobile applications analytics company) show that
usage of apps declines by almost a third in the first month of use and consumers
spend more time with paid apps than free apps. This trend suggests that continual
engagement with consumers through apps is a challenge for brands.

Key players
Apple
In just three days in the summer of 2008, Apple achieved 10 million downloads from
500 apps transforming the world of apps and downloads.
The number of apps available on the Apple App Store is now thought to be around
200,000 and the number of downloads 4 billion by April 2010. Apple apps have
gained huge popularity, taking 35% of all downloads, despite only accounting for 1%
of handsets in 2009. (Source Juniper Research, March 2010).
Android
Google’s Android is installed on a rapidly increasing range of handsets which has led
to sales of Android handsets overtaking the iPhone in the US (Source: The NPD
Group). One of the key differences for developers in particular is that Android has a
much more open approach to apps and doesn’t require approval for the publication
of apps, unlike Apple.
Android has some catching up to do if it is to become as big as Apple in the paid for
market. Admob’s Mobile Metrics found that while 50% of iPhone users buy at least
one paid app a month, only 21% of Android users do.
However, the report also highlighted some key similarities between the two. The
average Android and iPhone user downloads approximately nine new apps a month.
They also spend similar amounts of time using apps, 80 minutes per day for Android
and 79 minutes for iPhone users.

GetJar is the world’s number two apps store (second to Apple), with over 1 billion
downloads to date. The company differentiates itself from Apple by delivering apps
for both feature and smartphones across all the major platforms (Android,
Blackberry, Windows Mobile, iPhone and Symbian).
GetJar provides over 75,000 apps to consumers around the world, and their most
downloaded app is Facebook’s mobile site shortcut, downloaded more than 61
million times since its launch last year.
Apps vs sites
Within the mobile industry, there is much debate about mobile apps and the size and
importance of each. Apps are very much the story of today amongst advertisers, but
both apps and sites carry their own advantages, and there is some blurring as to
what is an app and what is a mobile site.
Apps
Apps currently offer the opportunity to fully integrate with the handset in a way a site
can’t. With an iPhone app for example, you can access the GPS, the camera and the
accelerometer (detects the user tilting the phone). This is of particular importance for
games which can have far richer content with an app rather than a site, vastly
improving the gaming experience.
Apps also enable users to interact both on and offline, giving users the potential for
the same experience wherever they are. Mobile sites cannot offer this to consumers.
Sites
With Apple offering the biggest app store, and iPhones only reaching about 7% of
the population, mobile sites are still the most accessed by consumers (17.8m
handsets look at sites each month). As well as having mass scale, sites give brands
the advantage of reaching consumers across different handsets with the same site,
rather than having to develop a separate app for each handset.
As browsers and the language that sites are written in improve, site user experience
will catch up with that on apps. HTML5 in particular offers a user experience for
mobile sites much closer to that of an app.
The Yahoo! Appetite research shows that consumers are less fussy about how
content is delivered, as long as they get what they want. When asked whether they
would prefer to download an app if it offered the same as a mobile site that they
have accessed, only 12% agreed, with 33% preferring a site and 55% not minding as
long as it did the job.
Mobile, September 2010
www.mediatel.co.uk
New technologies
Mobile is constantly evolving and there are a range of new technologies that have
the potential to further increase the importance of the mobile phone.
HTML5
Almost all pages visited on the internet are based around the code HTML. HTML5 is
the fifth iteration of this code that allows for more dynamic, animated and interactive
web pages. On mobile it enables a much richer web experience, closer to that of an
app. This is particularly relevant for devices like iPhones where Flash isn’t allowed.
Augmented reality
Augmented reality is where live imagery taken on the camera of a phone (and being
shown on the screen) has computer imagery overlaid (or augmented). It is used in
particular for location based apps that allows the consumer to search visually for
points of interest near by (pubs, ATMs, petrol stations etc). Google Goggles is one of
the highest profile apps to use augmented reality.
NFC (near field communications)
NFC is similar to the technology used in London’s Oyster cards, or in the
Barclaycard Contactless cards. The technology is already integrated into some
handsets and looks set to be rolled out to more in the future. Operators have already
trialled using NFC for transport and ticketing, and it opens up possibilities for the
mobile having the functionality of a credit/debit card.
Location based services
Forecasts from Gartner suggest that by the end of 2011, over 75% of devices
shipped in mature markets will include a GPS. GPS will be the primary, but not the
only, means of establishing handset location. WiFi and cell ID systems (identifying
the nearest operator mast) will remain important in situations where GPS is
unavailable or unreliable.
Visual & voice search
New technologies offer new ways of searching on mobile. As well as typing search
queries, consumers can speak their queries into their phones, use photos to initiate a
search and translate queries from different languages.
4G
The next generation “4G” is not forecast to roll out in the UK until at least 2013. This
will allow even faster download speeds of up to 100Mbps, much faster than the
average broadband connection in the UK.
Mobile, September 2010
www.mediatel.co.uk
Touchscreens
Mobile touch screen devices are the next mass media platform. According to Taptu,
the Mobile Touch Web is growing rapidly and they expect the number of mobile
touch websites to reach 1.1 million by the end of 2010.
According to Gartner, the global market for touchscreen mobile devices will surpass
362 million units in 2010, a 97% increase from 2009. By 2013, touchscreen mobile
devices will account for 58% of all mobile device sales worldwide and more than
80% in developed markets such as North America and Western Europe.
Touchscreen mobiles are going mass market, with virtually every handset maker
introducing touch enabled devices.
Mobile touchscreen websites are derived from the internet, but are developed
specifically for mobile touchscreen devices, with finger-friendly layouts, and
lightweight pages that are fast to load.
Mobile, September 2010
www.mediatel.co.uk
m-commerce
Five key facts
1. m-commerce was worth £122.9 million in 2009 and forecast to be £275 million in
2013
2. 19% of UK mobile owners have participated in m-commerce
3. 18-34 year olds are the main drivers of m-commerce
4. 5% of UK retailers have mobile sites or apps
5. 200 million global consumers forecast to have used mobile banking by end of
2010
There have been many false starts for m-commerce, and the move to mobile is still
work in progress. However, there are many options available to retailers, ranging
from fully functioning transactional sites and apps down to text alerts.
Size of market
In 2009, m-commerce was worth just 0.6% of total UK online retail expenditure
(£21.2 billion). According to a report by Ovum and Verdict Research, UK mobile
internet shopping sales (m-commerce) will more than double by 2013, reaching £275
million, up from £122.9 million in 2009.
Juniper predict that the value of the global mobile payments market2 will quadruple
by 2014 to reach $630 billion, although still only accounting for around 5% of the
total e-commerce retail sales. Juniper also say that nearly half of all global mobile
phone users will pay for digital and physical goods by 2014.
Usage of m-commerce
Research by the MMA (Mobile Marketing Association) and Lightspeed Research
reveals that the UK has the highest number of consumers, at 19%, participating in
mobile commerce. It also finds that 18-34 year olds are the primary drivers of mobile
commerce with 29% making transactions.
At present, although just under one in five consumers are “shopping” via their
mobiles, the mobile is also taking on the role of enhancing the overall shopping
experience, enabling consumers to compare price, and interact with retailers and
brands.
2 Mobile payments for digital and physical goods, money transfers and NFC
transactions
One of the main hindrances to the uptake of m-commerce is consumer fears over
security. However, Juniper forecast that these fears will subside as the availability of
secure, easy-to-use payment applications and industry regulation continues to
evolve. According to the MMA, only 50% of UK respondents feel their mobile content
purchase is secure and trustworthy. The figures show however, that they have more
trust in the purchase of tickets (64%) and physical goods and services (60%).
Currently, mobile purchases tend to be lower value, with Bango, a mobile payments
company, claiming that 80% of purchases they see are below £5.
Chart 10: Average spend per user
(Source: Bango)
Research by Brandbank looked at consumer attitudes to mobile transactions. Of the
2,000 UK respondents, 10% said that they didn’t know how to purchase items
through their mobile (just 7% of smartphone owners). Of those who had made
purchases on their mobile, only 4% found that the process was “hassle free” (15%
for smartphone users).
Mobile, September 2010
www.mediatel.co.uk
Chart 11: Consumer attitudes to mobile transactions
(Source: Brandbank 2010 m-commerce report)
M-commerce offers consumers a convenient method of shopping and as they
become more confident with the concept of paying for goods and services through
their mobile, it is quite possible that in the future, we will see m-commerce becoming
one of the mainstream ways that we transact.
Mobile coupons and vouchering
Mobile transactions are not limited to commerce and include using discounts or
coupons, collecting and redeeming loyalty points.
Where coupons have been used, they have been proven to be effective. Research
by Compete indicates the importance of mobile coupons to retailers (in the US).
When asked about their most recent purchase using mobile coupons, 57% would not
have bought the item if they didn’t have the coupon and the average amount spent
was more with a coupon than without.
Mobile coupons can be delivered in a range of formats including standard barcodes,
2D barcodes and unique number codes. The biggest mobile couponing campaign in
the UK is Orange Wednesdays, where customers receive a unique code that is then
simply shown to cinema staff to redeem the two for one offer on a Wednesday.
Mobile coupons look set to dramatically increase in the future, with global forecasts
by Juniper predicting 300 million mobile coupon users, worth $6 billion in redemption
value by 2014.
Mobile, September 2010
www.mediatel.co.uk
Retailers
Statistics from a BT Expedite multichannel retailing survey reveal that just 5% of UK
retailers have m-commerce sites or apps, with 24% planning m-commerce activity.
These figures are low when compared to the 23% of North American retailers with a
mobile commerce presence and a further 47% planning to.
Some of the UK success stories of m-commerce are detailed below.
Ocado
When Ocado launched their On The Go iPhone app last July, they were the first UK
supermarket on the iPhone. By February 2010, 4.4% of all Ocado orders were being
placed or updated on it, equating to over £15 million per annum. In response to the
huge success of the iPhone app, Ocado has also just launched an Android app
which incorporates voice search technology.
Ocado’s m-commerce experience is such that it claims that m-commerce will
revolutionise retail.
eBay
Ebay is launching three new apps to join its m-commerce site, eBay Mobile app and
text messaging program, as the internet giant predicts that its mobile sales will hit
$1.5 billion this year. In 2009, its mobile channel accounted for $600 million in sales
(75% from iPhones).
Amazon
Amazon is operating a fully transactional service via its iPhone app, launched in
October last year. The app offers the full Amazon inventory and also features
Amazon Remembers which allows users to take photographs of items in shops and
submit them to see if they can find a match. In the last 12 months, customers from
around the world have ordered more than $1 billion of products from Amazon using a
mobile device.
Juniper expect mobile shopping via platforms such as Amazon Mobile to grow
significantly over the next five years.
Tesco
In 2008 Tesco planned to become the first supermarket to launch grocery shopping
on mobile. Since then, it has launched a mobile portal and apps, including a storefinder
app and a Clubcard app, but is yet to roll out a fully-fledged transactional
service.
Argos
Argos has recently launched its first iPhone app, prompted by a 600% increase in
traffic to its website from Apple devices last year. The app will enable customers to
Mobile, September 2010
www.mediatel.co.uk
update their Argos accounts, order items for collection in-store and check availability
of stock.
Marks & Spencer
Marks & Spencer launched its first transactional m-commerce site in May 2010,
claiming to be the first major high street retailer to do so. Prior to the launch, 800,000
people had accessed their website from their phones, with many consumers using
mobiles such as Nokia. With this knowledge, M&S developed a mobile site rather
than an app to enable all customers to complete a purchase.
Mobile banking
Whilst not a mainstream activity, mobile banking is gaining traction, and showing a
similar trend to online banking at the beginning of the last decade. Although it is
primarily driven by current and savings accounts, the range of services offered is
increasing.
Juniper have forecast that just over 200 million mobile phone users (globally) will
have used their mobiles for banking information by the end of 2010. They forecast
this figure will exceed 400 million by 2013. (Juniper Mobile Banking Strategies, June
2010).
Mobile banking is delivered in three main ways:-
• Messaging (SMS) – by far the most popular technology. Used to alert customers of
account balances, overdraft limits, and notification for transactions such as
transfers. Most messaging services are free to the user. Customers still need
convincing about its security. The main advantage of SMS is that it can be used
across almost all mobile phones.
• Mobile browser – gives users access to basic services such as mini statements
and balance enquiries, as well as more advanced services such as payments.
Advantages include security (no data is left on the individual mobile phone), rollout
across all smartphones, and customer familiarity if the site is similar to the online
site.
• Apps – offers customers a range of banking services through one downloadable
app, including balance statements, bill payments, money transfer, and ATM
locators. One huge advantage of the app is that it offers a secure environment.
However, one disadvantage is that different apps need to be developed for specific
phones.
Mobile, September 2010
www.mediatel.co.uk
Mobile and other media
Five key facts
1. Most national press titles have an app
2. Only 4% claim that catching up on news on iPad would result in them reading
printed newspapers less often
3. Sky claim 250,000 registered mobile TV subscribers
4. ITV’s World Cup iPhone app downloaded 800,000 times
5. 4.2 million mobile media users are “3 screeners”
There is no doubt that mobile usage is affecting media consumption, and for
advertisers and media owners it opens up new opportunities. While some media
owners might see mobile as a threat, others are seeing it as complementary to
traditional media. Mobile is often quoted as being the “glue” that can hold media
campaigns together.
Mobile and press
Whilst press titles have struggled to form business models on the internet, mobile is
offering new opportunities, particularly on devices like the iPhone and iPad. Most
national press titles have a mobile site and/or app. Pricing strategies differ from title
to title. Some offer free apps (e.g. The Telegraph), others charge a one off fee to
download the app (e.g. The Guardian at £2.39) and others offer a freemium model
where the app is free to download and users then pay to subscribe to content (e.g.
Financial Times).
There is evidence that printed and mobile news can co-exist with apps “whetting the
appetite” for more detailed news in the printed format. According to research from
Ipsos MediaCT, only 4% of all GB adults claim their ability to catch up on news on an
iPad would result in reading printed newspapers less often than they currently do.
The research also highlighted the potential for newspaper brands to extend their
appeal to new audiences, with 20% of those interested in owning an iPad and using
it to catch up on news not currently reading printed press.
Mobile TV
Mobile TV has changed dramatically in the last couple of years, with numbers finally
starting to pick up. Historically, operators were selling mobile TV packages to
consumers, but in recent months, there has been a move by broadcasters to
distribute content directly to consumers, particularly through their own apps.
Mobile, September 2010
www.mediatel.co.uk
Broadcasters are already starting to see significant numbers. Sky offers a
subscription service, charging £5 per month, allowing consumers to watch Sky
channels live on their mobiles. Sky claim 250,000 registered mobile TV subscribers
(Source: Sky). Amongst other Sky apps is the Sky News app which streams the Sky
News channel live and free.
Another success story is ITV’s World Cup iPhone app that was downloaded 800,000
times (Source: ITV).
Yahoo! Appetite research points to an interesting media consumption pattern. It
shows the growing trend towards consumers using more than one medium at the
same time. It reveals that already 29% of UK consumers use their mobiles at the
same time as they watch TV, and 22% (4.2 million) use their mobiles alongside the
TV and PC.
Chart 12: The rise of 3 screeners
(Source: Yahoo! Appetite)
This data raises questions about how devices could work together and which
medium is getting the most attention.
A report by Juniper found that the increasing availability of WiFi services is expected
to transform the mobile TV industry with anticipated revenues of nearly $7 billion by
2015. According to the report, mobile TV traffic over WiFi is expected to increase 25
times between 2010 and 2015, when streamed service usage is forecast to increase
dramatically.
Mobile and radio
There is a history of people using their mobile phones to listen to the radio as
handsets have had radio installed for years.
Nowadays smartphones have created new opportunities with radio stations able to
stream their broadcast over 3G or WiFi. Apps make it even easier for listeners to
tune into to their favourite stations, and almost all commercial radio stations have
their own app. There are now hundreds of radio apps in the Apple App Store.
The emergence of devices like the iPhone which also has iTunes and iPod
functionality built in, makes downloading and listening to podcasts more prevalent –
again creating new opportunities for radio stations.
Mobile and Outdoor
Given that 92% of people never leave the house without their mobile phone (Aeneas
Strategy), mobile is a great medium to integrate with outdoor, particularly as a
response mechanism. Response can include a shortcode to text for more
information, but increasingly consumers are using their mobiles to access a brand’s
websites directly.
Technologies like Bluetooth offer different opportunities. One example is the network
set up by Blismobile which uses Bluetooth technology across highly populated dwell
points in the UK such as train stations and shopping malls. Passers by get sent a
message enabling them to download video news clips and other branded content.
There are newer technologies that can also be used in outdoor, such as 2D
barcodes, image recognition where people take photos of outdoor ads and interact
with them, and the use of NFC in outdoor ads where people can simply touch their
phone against the ad to get more information.
Using mobile as the response mechanism in other media campaigns
Mobile offers a great response mechanism when used in conjunction with other
media. As well as the opportunities outlined above with outdoor, mobile can be used
with TV, radio and print.
With the increasing number of shows that include text voting and competitions,
consumers are becoming more used to using the two media together. TV advertisers
are also running campaigns and sponsorships that integrate shortcodes as a DR
mechanism.
Print creates even more opportunities to integrate mobile. Beyond just using
shortcodes, there are technologies such as visual recognition and augmented reality,
creating many innovative opportunities. Augmented reality has been used in a
Mobile, September 2010
www.mediatel.co.uk
number of press ads and new technology on mobiles is making its use more
widespread.
This report has been compiled for you by MediaTel
If you have any questions about this report please contact us at [email protected]
MediaTel Group
MediaTel Group provides the most comprehensive, intuitive and integrated media buying, selling and
research products developed exclusively for media professionals.