1

t

The State of ‘SoLoMo’: Where Are We Today, Where Are

Going?

Greg SterlingJune 14, 2012

Greg Sterling, Internet/Mobile Analyst

• Former lawyer, editor, startups, analyst, blogger

• Search, social media, mobile, local, multi-channel shopping, SMB advertising/marketing

• “The Impact of the Internet on Offline Buying”

• Twitter: @gsterling

Daunting Task

The SoLoMo ‘Mandala’

A Mandala is a kind of symbolic representation of the universe used to help “access progressively deeper levels of the unconscious, ultimately assisting the meditator to experience a mystical sense of oneness with the ultimate unity from which the cosmos in all its manifold forms arises.”*

*Author David Fontana, “Meditating with Mandalas”

LocalSocial

Mobile

.

Coherent or Just a Catchphrase?

Social + Local + Mobile . . .The convergence of three major “online” trends:

• Social: word of mouth, user-generated content

• Local: online research offline buying

• Mobile: the internet “in context” (time/space)

Is it “necessary,” inevitable or “organic”?

Brought to You by ‘Post PC’ Devices

"This transformation is going to make some people uneasy...because the PC has taken us a long ways. It's brilliant. We like to talk about the post-PC era, but when it really starts to happen, it's uncomfortable." -- SJ June, 2010

Is SoLoMo ‘Web 3.0’?

• Just hype or real shift in the direction of the market?

• Deskltop or laptop PC is just one of multiple Internet devices (joined to varying degrees by “the cloud”)

• Internet: from “always on” to “always available”

• We use mobile devices to communicate and document our experiences in the world

• Mobile devices help us literally navigate the real world

It’s App-tastic and App-centric

comScore (5/12): “4 in every 5 mobile media minutes” is spent with apps (vs. mobile browser)

Source: Flurry Analytics, comScore, Alexa (2012)

PC-based Internet Mobile apps

72

94

Time Spent - Minutes per Day

Apps Surpass PC Time Spent?

Nielsen says smartphone owners have 41 apps, spend roughly 39 minutes a day using apps

Increasing Audience Fragmentation

Many marketers finding challenges in addressing all these channels coherently . . . then tracking, doing attribution

Multiple Media in an X-Platform World

1. Response to traditional media/ads (68%)

2. Word of mouth (61%)

3. Saw something in a store (44%)

4. Responding to mobile ad (27%)

5. Responding to online ad (18%)

Source: Google-Ipsos Q4 2010, n=5,000

Performed a mobile search after seeing an ad (66%);

Ad medium:

1. TV (58%)

2. In-store (57%)

3. Magazines (48%)

4. Outdoor ad (36%)

Source: Google-Ipsos Q1 2012, n=1,000

2010 2012

Other Media Stimulate Mobile Search

22%63%

15% 82%

77%

66%

45%

28%

9%

13% 10%

15%

19%

16% 39%

14%

9%

Source: IAB, 5/12 “mobile shopping diaries,” n=260

64%

36%

Yes No

Where  you  using/looking  at  any  other  media  at  the  same  time [when using smartphone]?

Simultaneous Media Usage

Generation ADD?

Are we creating a generation of anti-social, narcissists with ADD?

Source: Pew Internet & American Life Project, 2012

PC Ascent Has Stopped

Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-060%

10%

20%

30%

40%

50%

60%

70%

80%

90%

50%

63%

73% 75%79% 78%

Source: Surveys conducted in 2012 by each of the sources identified

Smartphone Penetration

Pew Nielsen comScore

53.0%49.7%

44.0%

Likely: 75% to 85% of mobile subscriber population in 3 years

Source: Opus Research, Pew, wireless carrier data (2012)

Mobile Internet Grows with Devices

109+85

Millions of users (US) Total US PC Internet Audience 220M (comScore)

Source: Opus Research (2012), Pew American Life & Internet Project (2011)

25%

17.6%

Pew 4/11 n=2,277 Opus 3/12 n=1,502

• Over 100 million on mobile internet

• More than 20 million people prefer smartphones and tablets to PCs for internet access

Sizable Segment Prefers Mobile to PC

Source: Google-AdMob, March 2011

Tablets Cannibalizing PC Usage

28% of respondents said that the tablet is their primary computer

Yes No

77%

23%

Since you started using a tablet, has your desktop/laptop usage decreased?

Source: StatCounter (June, 2012)

Developing World: Mobile Passing PC

2011

-05

2011

-06

2011

-07

2011

-08

2011

-09

2011

-10

2011

-11

2011

-12

2012

-01

2012

-02

2012

-03

2012

-04

2012

-05

01020304050607080

India: Mobile vs. PC Internet Traffic

Desktop Mobile

Perc

en

t of

traffi

c

Apple Gets into Local in a Big Way

• How good is it and how widely used will it be?

• What will Google’s response be?

• Will there be any paid advertising?

• Will there be potential Siri or Apple Maps optimization?

Local

US Ad Spend by Major Segments (2011)

Source: IAB-PwC (2012), Opus Research, Kantar Media*Total US ad revenues exceed $230 billion

Broadcast TV

Cablet TV

Magazines

Yellow Pages

Mobile

In theater

38.5

31.7

30.0

20.7

18.0

15.2

10.0

6.5

1.7

1.0

0.7

$ Billions

Total $174 billion*

The only traditional medium to see a positive CAGR since 2005 has been cable TV

Local range: $95 to $130 billion

Top 10 Advertising Categories (2011)

Sources: Kantar Media (2012); categories are not all-inclusive

About $60 billion of this is

local ad spending

Source: US Census Bureau Q1 2012

E-commerce is 4.9% of total US retail

$4T in annual US retail spending

95% of Retail in Stores

Source: Opus Research, Yahoo, e-Taling Group (2010-2011)

90% (or more) of online consumers conduct online research before buying offline

Online Research Offline Buying

Local Never Got Any Digital Respect

I told my wife the truth. I told her I was seeing a psychiatrist. Then she told me the truth . . . that she was seeing a psychiatrist, two plumbers, and a bartender.

Despite billions in potential ad revenue digital marketers haven’t given Local much respect . . .

It’s been seen as a “niche” or a “vertical”

SMB Market Hard to Crack

Sources: US Census Bureau, Opus Research

Nonemployer firms

Firms with 1 to 4 employees

Firms with 5 to 9 employees

Firms with 10 to 19 employees

Firms with 20 to 99 employees

79%

16%

94% of all US businesses have 4 or fewer employees

“Last mile” problem: very tough to reach SMBs w/o sales outreach.

Low value: majority of SMBs spend less than $5K per year on marketing/advertising

Challenges Facing National-Locals

Source: CMO Council October, 2011 (n=300 brands, agencies)

Mobile

Mobile Helps People ‘Get Local’

• Mobile phones can be located in a place at a point in time

• Bridges and brings more transparency to online offlline pattern

• Marketers’ own smartphone adoption and behavior helps them understand

• Roughly 40% to 50% of browser-based mobile search “related to location”

• Local-mobile users take action:

- MSFT: within 1 hour (70%)

- Google: within a day (88%)

Source: Google-Ipsos, Microsoft (2010-2011)

Mobile Users More Active, Engaged

Mobile Search Local Action

• 94% of smartphone users have looked for local information

- 90% have taken action as a result

- 70% connected with the business

- 66% visited the business

- 36% made a purchase

- 23% told others about it

• 58% search for local information at least once a week

• 27% search for local info daily

Source: Google-Ipsos Q1 2012, n=1,000 US adults

22%63%

15% 82%

77%

66%

45%

28%

9%

13% 10%

15%

19%

16% 39%

14%

9%

Users Prefer Locally Relevant Ads

Source: JiWire, Q4 2011; survey of adults in the US and UK using JIWire ad-supported WiFi networks

20%

80%

Would you prefer ads that are locally relevant to you?

NoYes

22%63%

15% 82%

77%

66%

45%

28%

9%

13% 10%

15%

19%

16% 39%

14%

9%

Source: IAB, 5/12 “mobile shopping diaries,” n=260

Local Targeting Increases Relevance

Mobile Growth in Paid Search Clicks

“Between 15% and 25% of paid search traffic is now coming from mobile devices . . .

In local-heavy categories, such as dining, auto services and entertainment this jumps to 50% or more.”

-- DataPop CEO Jason Lehmbeck

Source: Marin Software (Q1 2012)

PC Smartphones Tablets (iPad)

2.39%

4.12%

3.12%

Search Ad CTR Comparison

Mobile Users Click More

PCs Smartphones Tablets

5.2%

2.0%

4.9%

Comparative Conversion Rates

Source: Marin Software (Q1 2012)

But Do They Convert?

Source: Google-Ipsos Q1 2012, n=1,000

Conversion Happens Somewhere Else

• 65% of smartphone owners would prefer to use a PC/laptop for transactions

• 37% researched but later purchased online

• 32% researched and later purchased offline

Only 26% Tracking Offline Impact

Source: Google/MMA , Global Perspectives: The Smartphone User & Mobile Marketer, June 2011

26%

74%

Tracking offline impact

Not tracking

DataPop: “In some rare but interesting cases [paid search marketers] are tracking mobile ads down to the offer level and they have seen 5 – 10X sales when accounting for in-store conversions.”

Smartphones/Tablets: Local Nuances

Mobile Phone Tablet

45%

29%

21%

29%

12%17%

22% 24%

Throughout the en-tire process

At the end

In the middle

In the beginning

Stage of local business search when device is used

Source: comScore-Localeze-15Miles Local Search Study, Q1 2012, n=4,000

Where Do You Use Your Smartphone?

Source: Google-Ipsos Q1, 2012 n=1,000 US smartphone owners

Top 3 locations:

1. Home2. On the go3. In store

IAB “mobile diaries” study:

1. At home: 47%2. Out and about: 29%3. At work: 10%

At home

On the go

In a store

Restaurant

Work

Social gathering

Dr.'s office

Café

Airport

On public trans.

School

97%

83%

78%

71%

71%

60%

56%

50%

49%

36%

30% AdMob survey (3/11): 82% of tablets used primarily at home

MINUTESMINUTES

66MINUTES

74MINUTES

81MINUTES

64MINUTES

43

Source: IAB June, 2012

IAB: US Mobile Ad Revenues (2011)

Search where local-mobile revenues concentrated today.

Overall about 25% to 28%

Search Display SMS Total

811

572

295

1678

(in millions)

MINUTESMINUTES

66MINUTES

74MINUTES

81MINUTES

64MINUTES

43

Sources: Mary Meeker, KPCB “Internet Trends” presentation May 2012

Meeker: $20B Mobile Opportunity

Marketers Not Mobile-Ready

• Google: Mobile-friendly sites produce 75% higher rate of engagement (revenue, page views, etc.) per visit for mobile users

• Feb 2011: “Of top 800 Google customers, 79% are not ready to engage mobile customers.”*

• Feb 2012: Only 9% of 1,000,000 sites “mobile ready”**

• Q1 2012: Only 5% of independent restaurants have a mobile website***

*Google: Jason Spero (ThinkMobile event 2011) **Mongoose Metrics, February 2012*** Restaurant Sciences Restaurant Internet Marketing Study (2012)

I’m disappointed

in you

Social

Social Sites Follow Users: Mobile

901 million monthly active users; 526 million daily active users; 500 million mobile users

500M registered users; 140M active users (55% to 60% active on mobile). Twitter generated more ad revenue from mobile than from PC site “on many days in the last quarter” (Twitter CEO Dick Costolo, 6/12)

Making a big push into mobile . . . with Google+ Local content

Source: Company information, comScore (3/12)

80.4% reach; time spent: 20% (browser), 80% (apps)

Mobile Minutes on Social Apps/Sites

Source: comScore March, 2012

Facebook Twitter LinkedIn Pinterest Foursquare Tumblr

441.3

114.4

12.952.9

145.6

68.4

Average Monthly Minutes (US Smartphone Users)

Reviews Preferred Information Source

Source: Nielsen and NM Incite (2011)

Consumer ratings

Consumer reviews

Company website

Call Center

Email

Video clip

Live chat

Company's Facebook Page

Mobile app

Online ad

Company's Twitter account

63%

62%

50%

47%

45%

34%

30%

15%

9%

8%

7%

Which is the preferred source for product/service information?

Top two reasons consumers write reviews and share experiences online:

1. Give recognition “for a job well done”

2. Protect others

Source: AMEX/Network Solutions 2/11 (n=400 US small businesses who did some form of online marketing)

Wor

d of

mou

th

Searc

h en

gine

s/in

tern

et

"Adv

ertis

ting"

Yello

w p

ages

Newsp

aper

s/m

agaz

ines

Store

fron

t

Oth

er

82%

66%

37%

23% 23%17%

21%

SMBs: How Do Customers Find You?

Small Business Embracing Social Media

Facebook

Google

LinkedIn

Google Places

Yahoo

Yelp

Twitter

Bing

YP.com

Youtube

Other

Groupon

70%

55%

52%

42%

36%

34%

32%

26%

23%

20%

13%

5%

Source: Opus Research-MerchantCircle (Q4, 2011) N=2,096 US small businesses under 100 headcount; Implied-Intelligence analysis of 1.3 million US SMB websites

Which sites do you use to promote your business?

Other surveys: 45% to 60% adoption of Facebook Pages

Source: Palore July 2011

Study: 58% on Either FB or Twitter

Search Social Feedback Loop

Search

Social

Bing teamed up with FB for “social search” to differentiate from Google.

Google responded with social/personalized search and Google+

Also: Google+ Local

“Local is social” (M. Mayer, June 2012)

Search + Social (Bing)

Google+ Local: SoLo Convergence

Foursquare: SoLoMo

Most well-known “organic” SoLoMo app

Mobile was necessary for check-ins and real-time social notifications

Other Developments to Watch

• Siri: the further evolution of the voice interface and intelligent assistant

• Facebook mobile initiatives (Local? Deals? Facebook search?)

• Evolution of Facebook Credits (as offline [loyalty] currency)

• Mobile payments and convergence of payments + deals + offline analytics (“closing the loop”)

• Big (Local) Data: e.g., Skyhook, PlaceIQ

• Telematics and other new Internet access points

• Visual search (AR, scanning, Goggles)

And Remember, Wherever You Go . . . There You Are

You Are Here

Questions?

greg.sterling@gmail.com@gsterling

LocalSocial

Mobile

.