Geolocation is Primarily Social

Contrary to what I have long believed, the primary benefit of geolocation services (the apps which can track your whereabouts for different purposes) is not coupons and discounts. Rather, the primary benefit is the social connections and networking which is provided through such services. This is according to a report titled "Lost in Geolocation: Why Consumers Haven't Bought It and How Marketers Can Fix It" published by White Horse. Over 60% of respondents indicated that the most importance benefit received from using these apps is social, be it through connections with others or finding a place liked by others they trust.

So, what does this mean? It emphasizes the importance of attracting many users to the geolocation service which is being provided. If the primary thing that users want is a social connection, there must be many people using the app for them to socialize with. Without that, the main benefit for the consumer is removed. This also demonstrates the value of having a geolocation app linked with social networking sites such as Facebook, Twitter, or LinkedIn. When a consumer has the capability to access all of their friends through the geolocation app, even if it is simply by syncing their Facebook account through the app, it adds tremendous value. We all know the value of Groupon, and we have seen the tremendous growth of the 2-year old company now valued at $25 billion (on a side note: I still am having trouble fathoming the fact that it is in talks for an IPO bigger than Google's, which was $23 billion), but the location-based coupons are not the most beneficial part of geolocation.

LivingSocial Tests Time Sensitive Advertising

This could be interesting. LivingSocial, the largest competitor to social discount juggernaut Groupon, will be testing time-sensitive advertising in Washington. The first thing that comes to my mind is, how will all of this work?

• Will there now be multiple deals offered per day, rather than the traditional 1 deal per day model?
• What will be shown the rest of the time?
• How will this be rolled out to other cities?

While I'm sure most of these issues have already been solved, it certainly presents an intriguing move for the company which may be valued as high as $3 billion. Since the company is often seen as Groupon's little brother, it has to keep innovating to find new ways to catch up. Will the time-sensitive advertising be the trigger that will catapult LivingSocial to the stratosphere of Groupon? My guess is no. I think there are too many obstacles to this offering, but it will be interesting to see what happens if this is a success.

Tablet Computing Market

One of the interesting trends in terms of technology has obviously been the rise (and dominance) of the iPad. Despite many experts doubting the iPad when it was launched, the device has introduced an entirely new market. I'm not talking about a new product which takes over the market. I'm talking about introducing an entirely new market. But, you already know this. The iPad 2 has been able to cement Apple as the leader in developing new and popular technologies for mass consumption. The iPad 2 was estimated to move between 400,000-600,000 units within the first three days on the market.

Now, despite the strength of the iPad product, and with products such as the Motorola Xoom (pictured above) having poor sales, Gartner has released forecasts for tablet OS market share through 2015. Although Gartner still predicts iOS to remain the top player in the tablet OS market, it feels that the Android OS will gain steady ground through 2015. Although the tablet market may not replicate the quick emergence of Android seen in the mobile phone OS market, it still indicates that Apple may not be invincible.

The Importance (Still) of SMS

It seems as though everyone now has their own cell phone. I was actually a little surprised to see a report from CTIA that only 90% of Americans own cell phones. As of December 2010, that means that there are 302.9 million wireless subscriber connections in the US alone. Of those cell phones, 98% come SMS-enabled upon opening the box. There are some interesting figures in the table below:

When looking at the teenage population of the US, 33% of teens (aged 12-17) send more than 100 text messages per day. Going even further, 11% of teens send over 200 texts per day. These numbers are according to Flowtown, who have created an interesting graphic which is displayed below.

These numbers show that despite the rising popularity of mobile apps and rich media, SMS is still an important function for companies to consider when trying to reach their audience. It is still an effective, if not vital, medium to reach a mass audience and often does not require the heavy capital investment of developing a full-scale mobile app.

Retailers: Start Using Location-Based Services!

It is officially the time (actually, it is a little late) to begin using location-based services (LBS).

Some statistics (according to JiWire):

• 50% of mobile users would like to receive location-specific advertising
• 39% of mobile users would like to receive location-specific coupons

Despite these numbers, the Pew Center and Forrester estimate that only 4%-5% of Americans have ever used these apps. As the number of people with smart phones begins to grow, so will the number of people using these apps. It seems as though most industries are beginning to embrace this phenomenon, but there still seems to be some areas which are slower at embracing the trend.

The Rapid Growth of Mobile Commerce

According to ATG, the number of consumers who use mobile devices to research or browse products and services has grown by 21% since November 2009 (chart to the left).

"There is a debate whether mobile is more of a transactional channel or a browsing channel, but the number of consumers who have purchased something on a mobile device based on the survey results shows it can be all of those things." - Kelly O'Neill, Director of Industry Marketing at Oracle-ATG

29% of the 1,000 individuals surveyed indicated they have made a purchase using their mobile device. This number is more than double the amount from 2009.

In my opinion, these numbers are destined to grow for the next few years as users become more comfortable making purchases on their mobile devices and as these devices become more sophisticated and user friendly.

Shopkick is Catching On

Earlier this month shopkick, the app that rewards you for walking into a store, surpassed 1 million users. Considering that the company had only 750,000 users at the end of January, that number is fairly significant. This also indicates the growing popularity of smartphone owners using the device while shopping.

Although services like foursquare are still more popular, shopkick appears to be catching on. The difference? Rather than relying on GPS, like foursquare does, retailers place a patent-pending device in the store. This device sends a signal to the users phone when they enter the store. This device, which costs retailers around $100, is more accurate than the traditional GPS model and ensures that a consumer is actually in the physical store.

Within the next two years, 24% of retailers surveyed by RIS News and IHL Group will sign up for shopkick or a similar service. This number is impressive until you compare that to the percentage who plan on signing up with foursquare or a similar service, which is 43%.

Although foursquare certainly seems to be the larger player (they added nearly 100,000 users at SXSW) shopkick may eventually overtake the market due to the accuracy issues of the GPS system. The fact of the matter is that the market is still rapidly growing and it is anyone's game at this point.

QR Codes Everywhere

I'm a bit slow in this, but if you haven't seen it yet, you should check this out:

Mobile Commerce Best Practices

In a recent posting on the Google Retail Blog, the company details four best practices which should be utilized when developing a mobile retail strategy. A summary of the article can be found below, or the full article can be read here.

1. Extend your online brand reputation to mobile with Seller Ratings - This extends an online reputation to mobile devices and can drive consumers to the website. Campaigns with mobile Seller Ratings saw a 7.5% increase in clickthrough rates compared to campaigns without the ratings.

2. Take your customers directly to your desired conversion path with Mobile Ad Sitelinks - This makes it easier for users to navigate a mobile site. Currently, only two sitelinks can appear on mobile devices. Campaigns that utilize mobile ad sitelinks see a 30% increase in clickthrough rates compared to campaigns without the sitelinks.

3. Drive customers to your store with Offer Ads - Special deals can be included in mobile search ads, which allows users to store coupons via SMS or email. This also displays the company's phone number or location on Google Maps, allowing the consumer to locate or contact the company immediately.

4. Make it easier for customers to contact you with Click-to-Call Ads - This includes the business phone number in the mobile search ads. Calls traditionally cost the same as a click for these ads, but calls can lead to higher quality leads and more conversions. There is also something named the Call-Only Creative enhancement which ensures that the phone number is the only clickable part of the mobile ad. This can be particular useful if the goal of the ad is to increase phone calls.

Although these are certainly not the only things which must be considered for an effective mobile retail strategy, they are certainly a good place to start.

The Home Depot Goes Mobile

The Home Depot, a company which was co-founded by Arthur Blank (the owner of the Atlanta Falcons) has decided to fully embrace mobile commerce by forming a partnership with Scanbuy. Home Depot shoppers will now be able to scan these codes, like the one pictured below, to see how-to videos, buying guides, product demos, and more.

If a consumer scans the code outside of a Home Depot, they can make purchases.

Scanbuy reports that nearly 25 million people throughout the US are in possession of barcode scanning technologies. It has also been reported that mobile barcode scanning displayed a 1,600% increase in traffic in 2010. If these numbers are correct, this could be an extremely advantageous move for Home Depot. The goal is to help connect customers with the store, and this may work, but it will be interesting to see if competitors embrace the strategy and if it turns into a profitable venture.

The Lincoln Lawyer and Groupon

Lionsgate, maker of movies such as Hotel Rwanda, Crash, Saw, and Kick-Ass, has teamed up with Groupon to promote its new movie, The Lincoln Lawyer. The two-day promotion, which began on March 16, offered Groupon users the chance to buy tickets to the movie for $6. As far as I know, this is the first type of deal between Groupon and a major film studio.

According to a post on the LA Times, this promotion sold roughly 190,000 tickets. If this number is accurate, at $6 a piece, that's $1,140,000 worth of movie tickets sold through Groupon in a two-day period. With Groupon taking a 50% cut of the sales, that means that the company grossed $570,000. Not bad for two days worth of work.

So, why does this matter? Fandango, which facilitated the promotion, reported that 31% of all tickets sold on that Thursday were to The Lincoln Lawyer. Rango, who was second on that list, accounted for only 12% of all tickets. You can count on the fact that a large percentage of these numbers were from mobile users. As with every first-mover, it is unknown whether or not this strategy will work for the movie and entertainment industry, but you can bet that others will try. It appears that more and more industries are beginning to embrace mobile and eCommerce, and it will be interesting to see who does it next..

Smartphones are Changing Commerce

The retail industry (and anyone selling anything) has to be prepared for the rapid evolution and adoption of smartphones by the average consumer. According to a February 7, 2011 report by Wells Fargo titled "The Sputnik Moment for Retail: A Whitepaper on eCommerce and the Disruption in Retail" smartphones are growing at a rapid pace. The chart to the right illustrates the Wells Fargo forecast of smartphone shipments (units in millions).

In addition to the growing number of smartphones throughout the general population, a majority (55%) are utilizing the phones while shopping. This is according to the March 2011 study "How Smartphones are Changing the Retail Shopping Experience" published by iModerate and CMB Consumer Pulse. However, despite over half of smartphone owners using the devices while shopping, only 23% have used them to actually make a purchase. While we can expect this number to climb as apps improve and users become more comfortable with the technology, this does signal the current state of mobile commerce.

Smartphones are growing in popularity, as is mobile commerce, but people still remain hesitant to make purchases in this fashion. My goal is to further research the state of mobile commerce and future expansion opportunities for those who are pioneering the industry. Will this simply remain as a niche market or will companies be forced to embrace this trend in new and innovative ways? Although I tend to believe in the latter, it is an exciting new field which I hope to analyze and to provide others with a strong base of knowledge in the future.

Smartphone Shopping Increases

A recent report from Chadwick Martin Bailey and iModerate Research Technologies shows that 50% of smartphone owners use their phones for assistance while shopping on-site. Why is this important? According to IBISWorld, smartphones accounted for 24% of the mobile phone market in 2010. That percentage is expected to climb to 70% of the market by 2015. As smartphones become more common throughout the general population, a majority of shoppers will be utilizing smartphones while shopping on-site. The most common use of smartphones are barcode scanner apps (44%) which enable comparison shopping. In other words, someone shopping in Target will be able to scan the barcode of a particular item and compare prices across all stores. I may purchase an item online from Wal-Mart or Amazon while standing in front of the same item in Target after I used my smartphone to instantly find a cheaper price. The explosion of the smartphone industry, and the apps that go along with it, are revolutionizing the way traditional commerce companies conduct themselves.