SMARTPHONE DOMINANCE

T H E S H I F T T O

2

W H A T ’ S C O V E R E D

Rapid Adoption:

What are the drivers impacting the pace of

smartphone ownership?

Factors expediting the shift:

How should advertisers and publishers be building for a mobile majority first world?

Thinking Beyond Ownership:

Now the majority of consumers own a

smartphone, but so what?

The purpose of this study is to understand mobile migration patterns and which factors will accelerate the shift to a mobile-first world for consumers and advertisers.

Background

US: 2,768

UK: 1,010 GR: 1,016

FR: 1,011

Methodology: Quantitative + Analytics WHO §  5,805 18-64 year old

smartphone owners

§  Data population and ownership

WHEN January 2015

WHAT 30-minute online survey

FLURRY ANALYTICS Aggregated All Global Data from January 2015

•  600K apps •  250M phones •  1/3 of all app opens

3

This is the most comprehensive data set we’ve ever used in Yahoo over the past decade to garner insights

RAPID ADOPTION PATTERNS H O W S M A R T P H O N E S A R E D I F F E R E N T

4

ADOPTION CURVES FOR MODERN CONVENIENCES

100

50

1900 1915 1930 1945 1960 1975 1990 2005

The adoption curve for modern conveniences has shortened considerably Adoption curves since 1900

Source: Visual Economics

TELEPHONE

ELECTRICITY

AUTO RADIO

STOVE

CLOTHES DRYER

MICROWAVE

DISHWASHER

COLOR TV

CELL PHONE

INTERNET

VCR

FRIDGE

CLOTHES WASHER

AIR CONDITIONING

COMPUTER

5

2012 2013 2014 2015 2016 2017 2018

Smartphone ownership will reach majority ownership rates in the next 3 years

6 Source: eMarketer | 2015

UK USA Germany France 73.6% 69.1% 66.9% 64.9%

50% ADOPTION

Adoption Rate

The speed of smartphone adoption can be attributed to the multiple products it has replaced

7 Source: eMarketer Report / Press Play: Infographic by Nicolas Rapp / Source: Appliance, Sept Issue, multiple years

REPLACEMENT CYCLES FOR ELECTRONICS PRODUCTS

PRODUCT AVG. LIFE (YEARS)

Cordless telephone 8

Color TV 8

CD Player 6

Telephone answering machine 6

VCR 5

Camcorder 5

Fax 4

PC 2

Mobile Phones 1

REPLACEMENT TIME

Beyond Ownership W H O I S D R I V I N G S M A R T P H O N E D O M I N A N C E ?

8

What does a

Smartphone Dominant consumer look like?

9

MOBILE FIRST.

67% state that their smartphone replaces their PC, and is the main way they access the internet

MOBILE LEAD.

75% of their digital time is on a mobile device +50% vs. an average smartphone owner

MOBILE IMMERSED.

+50% more activities performed on a mobile devices vs. an average smartphone owner

Users who spend most of their time on their smartphones and are using them to replace their PC

Nearly 1/5 of users are Smartphone Dominant

10

SMARTPHONE DOMINANT

18% TODAY

Smartphone Dominant users also dominate sessions and time spent on mobile devices

11

21%

87% 78% 30%

11% 19%

49%

2% 3%

DEVICES SESSIONS TIME SPENT

Medium Light

Heavy: Smart Phone Dominant

DEVICE USAGE

Source: Flurry by Yahoo Analytics, mapped devices only, Jan 2015

Dominant Indeed

Currently Smartphone Dominants tend to be female Millennials and parents… Proportion of subgroups that are Smartphone Dominant

12

FEMALES  W/  CHILDREN    18-­‐34  

37%  

FEMALES    18-­‐34  

29%  

MALES    18-­‐34  

21%  FEMALES    35-­‐64  

16%  MALES    35-­‐64  

11%  

18-34 35-64 Age Groups │

SMARTPHONE  DOMINANT   50%  0%  

In the US only, Hispanics

38%

…due to the smartphone being tuned to the active lifestyle of parents with young kids

13

AGREE STATEMENTS TOTAL WOMEN 18-34 PARENTS 0-6

I'm using multiple devices at the same time more often than I did in the past 51% 62% 61%

My smartphone is the main way I access the internet, and I only use my computer to fill in the gaps with the things that aren't easy to do on my smartphone

28% 40% 42%

I often start things on my computer but move to my smartphone because I need to continue the activity on the go 28% 33% 37%

14

SMARTPHONE DOMINANT

67% IN TOTAL

33% NOT LIKELY TO BE

Future of Smartphone Dominants The vast majority of users will eventually become Smartphone Dominant

15

Developing for larger screens

Creating experiences for cross-screen, not

mobile only

Adapting to trends in the app revolution

Factors that will expedite the shift to a Smartphone Dominant world

More efficient, better user experiences will accelerate the shift to Smartphone Dominance Factors that are holding back consumers from being Smartphone Dominant among future Smartphone Dominant users

16

UX (easier to type, read, easier

to browse/compare) 67%

Data & Internet Improvements

54%

Better Apps 44%

FULL-SIZE TABLETS 9.74 MIN

As screen sizes grow, engagement will increase

17

SMALL TABLETS 6.88 MIN

MEDIUM PHONES 4.18 MIN

SMALL PHONES 3.8 MIN

Average time spent per session | Minutes

Source: Flurry by Yahoo Analytics, mapped devices only, Jan 2015

Developing for larger screens

Creating experiences for cross-screen, not

mobile only

Adapting to trends in the app revolution

Factors that wi l l expedi te the sh i f t to a mobi le lead wor ld

18

Smartphone Dominant users are more digitally active across PC and Mobile # of different activities done last day used

19

SMARTPHONE DOMINANT USERS

# OF ACTIVITIES DONE ON DEVICE CURRENT SD FUTURE SD

Smartphone 16 11

Computer 11 14

TOTAL 27 25

Smartphone Dominant users want digital experiences to go across devices % smartphone users agree

20 D4_12. How much do you agree or disagree with the following statements about devices? / Smartphone Dominant In Future (n=2913)

“I'm using multiple devices at the same time more often than I did in the past”

51% TOTAL

66% CURRENT SD

56% FUTURE SD

In fact, 2 in 5 smartphone owners go across devices daily to continue the same digital activity In the past day, I continued a digital experience across the following devices

21

42%

28%

23%

16%

15%

14%

DEVICE TO DEVICE – CURRENT SMARTPHONE DOMINANT USERS

Smartphone to Computer

Computer to Smartphone

Smartphone to Tablet

Tablet to Computer

Computer to Tablet

Tablet to Smartphone

42% Will go across devices on at least one digital activity (Among total smartphone users)

Communication, content & search related activities span across devices most Sequential experience activities for any device – mobile, tablet & PC among those who had a sequential activity

22

PHOTOS 29%

ONLINE VIDEO 35%

SOCIAL NETWORK 44%

EMAIL 59%

SEARCH 42%

CONTENT 48%

OTHER MENTIONS

Banking 29%

Shopping 29%

Playing games 28%

Streaming music/radio 26%

Using an IM or a texting app 26%

Work/school 20%

Finding directions/using GPS 20%

% smartphone dominant users agree

23 D4_12. How much do you agree or disagree with the following statements about devices? / Smartphone Dominant In Future (n=2913)

“I wish the tasks that I started on one device could transfer more easily to another device”

43% TOTAL

57% CURRENT SD

51% FUTURE SD

Despite high crossover, sequential experiences are not smooth, especially among the Smartphone Dominant

24

Consumers will transfer across devices differently based on content, social, & utility experiences Device switches done In last day used by specific activities

§  Email §  Search §  Shopping

§  Games §  Short-form Video §  Content §  Photo’s §  GPS §  Streaming Music

§  Long-form Video §  Work Activities §  School Activities

■ Social Networking ■ Texting ■ Banking

Developing for larger screens

Creating experiences for cross-screen, not

mobile only

Adapting to trends in the app revolution

Factors that wi l l expedi te the sh i f t to a mobi le lead wor ld

25

Saw an ad about it 39%

I need it for a specific task

53%

Task-based apps and replacing an existing app are top reasons users download new apps

Replace an existing app

49%

Read about in an article

39% Friend told me about it

41%

How did you hear about these apps | Among Actively Downloading

Motivations to download apps | Among Total

26

App replacement is done by ~1/2 of Smartphone Dominant users each week I’m replacing apps currently on my device

27

A FEW TIMES A WEEK OR MORE

TOTAL 34%

CURRENT SD 44%

FUTURE SD 43%

AT LEAST ONCE A MONTH

TOTAL 52%

CURRENT SD 64%

FUTURE SD 62%

Notable Quotable

“I am searching for apps that might replace some of the apps I currently have on my phone…”

Growth in sessions is driven by lifestyle, productivity and messaging apps Changes in annual growth in app usage | Sessions

28

74% 48%

32% 28%

171%

116%

100% 88% 87%

LIFESTYLE & SHOPPING

AVERAGE 76%

UTILITIES & PRODUCTIVITY

MESSAGING HEALTH & FITNESS

TRAVEL SPORTS NEWS & MAGAZINES

MUSIC, MEDIA & ENTERTAINMENT

GAMES

Source: Flurry by Yahoo Analytics, mapped devices only, Jan 2014-2015

However, what will move media experiences even further is phablet ownership

29

30%

53%

29%

158% 144%

130%

SPORTS NEWS & MAGAZINES MUSIC, MEDIA & ENTERTAINMENT

Phablets All device types % growth in category usage % over index

427% 172% 255%

Source: Flurry by Yahoo Analytics, mapped devices only, Jan 2014-2015

Engage future Smartphone Dominant users around life management & immersive content experiences Smartphone activities done last day

30

CURRENT SD FUTURE SD % GAP | CURRENT VS. FUTURE

Banking 33% 17% Shopping 21% 11%

Online video 32% 19% Streaming music 31% 19% Social networking 66% 41% Photos 34% 22% Search 50% 33%

Emailing 64% 46% IM or text 47% 34% Directions & mapping 23% 17% Playing games 37% 28% Reading digital content 49% 38%

94% 91%

68% 63%

61% 55%

52%

39% 38%

35% 32%

29%

31

FINDINGS

WE ARE JUST AT THE BEGINNING. In the next 5 years, 71% of Future Smartphone Dominant users will migrate and make mobile first This group will expand throughout the next 5 years to include all demographics, not just the early adaptors: Millennials, parents with young kids or Hispanics

DEVELOPING EXPERIENCES FOR LARGER SCREENS. Bigger screens sizes drive mobile engagement. They also offer opportunity for more viewable & engaging experiences to develop around

IMPROVING CROSS DEVICE EXPERIENCES. Communications, content, and search the biggest opportunities as 2/5 of all smartphone owners already attempt to port experiences across multiple devices

ADAPTING TO TRENDS IN THE APP REVOLUTION. Apps are where digital time is spent & app replacement is what is driving app downloads. Developers of experiences need to think about iteration, innovation and marketing to drive trial

32

IMPLICATIONS

MORE SPACE. When building a mobile strategy, companies should account for the rapid adoption of larger phablet devices. More space = more ways to connect with your user. Native ad formats account for this size naturally and beautifully

INTEGRATED MOBILE BUDGETS. Mobile ad budgets should not be thought in isolation. With 2 in 5 consumers crossing devices daily, siloed mobile budget should evolve to larger cross-device buys. Native advertising, specifically, which runs on responsive design is a must-buy that creates that efficiency and ease for marketers

CONSTANT ITERATION & INNOVATION. In order to be a major player in the app game, the messaging to drive your app trial must evolve as consumers are constantly replacing apps. Message what’s innovative & better, not what’s necessarily new

GET THE WORD OUT. In order to drive app downloads and app adoption, developers & companies need to have a multi-pronged marketing strategy that uses paid advertising, creates opportunities through content marketing through articles, and ultimately drives WOM