Greg Sterling19 November, 2013

LSS ‘Big Trends’ 2013 EditionLSS ‘Big Trends’ 2013 Edition

• Continued momentum of mobile and “decline” of the PC• Growth of tablets (and emergence of smaller tablets)• Rise of multi-screen consumer• Mobile shopping and ‘showrooming’• Mobile payments – not quite there yet• Bursting of the deals “bubble” • Decline of Facebook? • Fragmentation of search, growth of apps and “assistants”• Slow merchant response (brands, SMBs) to consumer changes• SMB confusion amid market complexity• Novel uses for location data (proxy for audiences)• Indoor location, “turn by turn” directions

A Q u ic k L o o k a t L a s t Ye a r

• Rise of mobile-only and mainly mobile users• Mobile colonizing local• Vertical marketplaces and “e-commercification of local

services” (incl. mobile payments)• Market bifurcation: “winner take all” yet perennial

insurgents • Search-free local search: virtual assistants and data-driven

local recommendations• Real-world analytics• Indoor location• Wearables• Last but not least . . . privacy

To p 1 0 T h is Ye a r

SMB confusion/market complexity

S t il l t h e D o m in a n t S to ry

Mobile and its impact on the local and social sectors continues to be the big story of 2013 (and 2014)

C a tc h in g U p to W o r ld P o p u la t io n7.1 billion people in the world*, 6.6 billion “mobile subscriptions” today**

37% of global population in China and India

*US Census Bureau estimate (2013) ** Ericsson Mobility Report, (November, 2013)

N e a r ly 6 B S m a r tp h o n e s b y 2 0 1 9

** Ericsson Mobility Report, (November, 2013)

Source: Nielsen (Q3 2013) comScore (Q1 2013), Pew Research Center, Opus Research (2013)

53% to 66% penetration across ‘EU5’

Nearly 140 million people

62%+ smartphone penetration

Nearly 150 million people

Sm a r tp h o n e s : 7 0% b y 2 0 1 4

Figures higher for those under 35

A g g re s s iv e P r ic in g = P e n e t ra t io nMoto G: a premium smartphone for £135, $179, €132

Amazon will release an inexpensive/subsidized smartphone

Mobile Only/Mobile First

‘G e n e ra t io n M ’• 50% of teen smartphone owners

(12-17) use the internet mostly on their mobiles

• 45% of young adults (18-29) reported in 2012 that they mostly go online with mobile

Source: 2012, 2013 Pew Research Center reports on “Teens and Technology”; Nielsen-xAd-Telmetrics (2013)

• 46% of survey respondents said they relied exclusively on smartphones or tablets in conducting online research across a range of local purchase categories

M u lt is c re e n U s a g e P a t te rn

Source: Google-IPSOS Q2 2013, n=1,600 US adults

“Smartphones are the backbone of [ ] daily media use. They are the devices used most throughout the day and serve as the most common starting point for activities across multiple screens.”

M o re M o b ile T im e S p e n tUS internet time spent via mobile devices in May

exceeded internet time spent on the PC (477 billion minutes vs. 481 billion)

Source: comScore (May 2013)

Mobile Eats Local

M o b ile Tra ff ic : 2 0 %

Source: StatCounter (November 2013)

0

10

20

30

40

50

60

70

80

90

100

Desktop

Mobile

Global Internet Traffic

L o c a l n o t E a t in g M o b ile

• Assumption (esp. ad forecasts) that local to dominate/define mobile

• So far it’s the other way around

M o b ile C o lo n iz in g L o c a l

Source: public filings, company data

• 59% of searches on Yelp are from mobile

• 40% to 50% of search/lookups on various YP sites are from mobile (globally)

• Nearly 50% of Groupon transactions in Q2 (North America) came from mobile

• Google Maps has more mobile than PC users (as of Q4 2012)

Rise of ‘Local Commerce’ or ‘E-commercification of Local’

V e r t ic a l o r N ic h e M a rk e ts• Car sharing/ride apps

• Made possible by mobile

• Generally two-sided marketplaces

• Offer car sharing or inventory mgmt for drivers

• Convenience and/or efficiency for consumers

The power of limits: often mobile is preferred experience because it’s simpler, more streamlined

Online Booking, Offline Fulfillment

• Older:- Tickets/events- Restaurant reservations- Travel

• Newer:- Groupon- Others: Seamless, Yelp, Uber, Hailo, MyTime,

Square/PayPal, OpenTable/Top Table

Bifurcation: Winner Take All & Perennial Insurgents

B ig B ra n d s v s . N ic h e P la y e r s

In s u rg e n ts A t ta c k

Source: Andrew Parker, 2010

F a c e b o o k v s . C o m p e t ito r X

Search Free Local Search

D a ta : P u s h + P e r s o n a liz a t io n

Using social + offline data to offer recommendations or personalization

Real world provides context and more data

Virtual assistants: learning and pushing information based on behavior and context

Real-World Analytics

O2O Sales: 10X EC

E-commerce (2012):

US$186 billion

Retail + services (2012):

US$7.3 Trillion

Online-to-Offline (2012):

US$1.83 Trillion

Source: comScore, US Commerce Department, Opus Research estimates

For display ads:• CTR became de-facto currency for

performance-based ads (because trackable)

• Don’t reflect real value of digital ads• comScore (2012): Clicks had lowest

correlation (0.01) with conversion vs other metrics

• Nielsen (2011): CTR “showed no connection” to actual offline sales lift

C l ic k s a B a d M e t r ic

Marketers not seeing mobile “conversions” … because they happen offline

PC: 3.3%

Tablet: 2.2%

Smartphone: 0.7%

M o b ile ’s M is s in g R O I

Source: various SEM platform and industry reports from Q2, Q3 (US data)

‘Estimated Total Conversions’

Source: Google (Q3 2013)

Through signed-in Chrome users, Google will determine cross-device and offline conversions

S e e k in g to ‘C lo se L o o p ’• Proxy metrics: calls/map look-ups• Coupons (challenges at the

register)• Check-ins, scanning QR codes in-

store/at POS• Mobile wallets/in-store payments• Data partnerships: Facebook,

Twitter & Datalogix (offline loyalty cards)

Indoor Location

Cameras WiFi Bluetooth 4.0 RFID Magnetic LED

LightingSound/Aco

ustic

 Buyers Seeking

Accuracy Ubiquity Cost Speed to implement

Privacy

R a n g e o f In d o o r L o c a t io n Te c h

Source: Opus Research (2013)

• Venue mapping (extension of outdoor)• Retailer/B2B analytics (sales, operations, staffing)• Offline ROI/ad impact tracking• Enhanced in-store consumer experience• In-store digital advertising/indoor marketing

P h a s e s o f M a rk e t D e v e lo p m e n t

Wearables

Sm a r t /C o n n e c te d D e v ic e s

H e re b u t N o t M a in s t re a m• No experience: More than 80% of US smartphone

owners had no direct experience with Google Glass, smartwatches or fitness wristbands

• But demand/interest exits: - Glass: roughly half under 43 interested or willing to

consider Google Glass if more conventional designs became available

- Smartwatches: More than 40% under 53 w/o one said they were interested: 1) Samsung, 2) Apple, 3) Google (corresponding to phone ownership)

- Report: Only 50K Galaxy Gear watches sold

Source: August 2013 survey of more than 1,100 US adult smartphone owners, BusinessKorea

Privacy

P r iv a c y : O lé

• Smarter use of location (incl. geo-conquesting) by mobile advertisers

• Increasing merger of online and offline data sets (can the humans make sense of it all?)

• Return of mapping competition:- HERE (one of the surviving parts of Nokia)- Facebook? - Waze (part of Google) - Apple Maps stablizing - Google Maps slipping

B o n u s R o u n d

Greg Sterling greg.sterling@gmail.comTwitter.com/gsterling

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