Vol1: Managing The Hype - The Reality of Mobile in Canada

Issue April 2010 Managing the Hype: T reality of mobile he in Canada Insights for your business

in this issue Introduction.......................................................... 3 - 4 Delvinia DIG is a quarterly report prepared by Delvinia Interactive. Smartphone ownership..............................................5 The report is a compilation of the GPS awareness and usage.................................... 6 - 8 perspectives of Delvinia’s interactive Mobile applications.............................................. 9 - 10 experts based on data generated by Mobile cameras .................................................11 - 12 our proprietary online consumer Mobile games ...........................................................13 research panel, AskingCanadians™ Summary............................................................14 - 15 and its French counterpart Qu’en Data methodology.....................................................16 pensez vous MC.

introduction From 99% of the Net Generation (NGen) of users 18 to 34 to 87% of Canadians 65+, the number of Canadians who own mobile devices has never been higher. However, Delvinia’s 2009-2010 study of Canadian mobile behaviours conducted through AskingCanadians™, revealed that most mobile owners don’t appear to be using the more advanced features that mobile providers tout and marketers dream of fully leveraging. In fact, Canadian mobile device users seem to be most comfortable with the basic features that have existed on phones for years such as sending and receiving text messages, using the clock/alarm feature, and taking photos. Use of mobile device features (Total Canada) Phone calls 89% Clock /alarm 56% Text messaging 52% Camera 52% Calendar/agenda / organizer 40% Email 28% Emergencies Only 19% Instant messaging/Blackberry messenger 18% MP3’s / music / videos 18% Picture/ video messaging 18% Web browsing 15% GPS or mapping services 14% Downloading (games, ringtones, etc) 14% Search 13% Facebook mobile 11% Contests /promotions 5% Subscriptions /alerts 4% Twitter mobile 3% 2009 Insights for your business 3

Even high-tech NGen, despite being the most mobile savvy group, primarily use more basic aspects of their mobile phones. Use of mobile device features (NGen) Phone calls 92% Clock /alarm 77% Text messaging 76% Camera 67% Calendar / agenda / organizer 55% Email 37% MP3’s / music /videos 30% Picture/video messaging 29% Instant messaging / Blackberry messenger 26% Web browsing 25% Downloading (games, ringtones, etc) 24% Facebook mobile 22% GPS or mapping services 21% Search 20% Emergencies Only 13% Contests / promotions 8% Subscriptions /alerts 7% Twitter mobile 6% 2009 Insights for your business 4

smartphone ownership But what about those Canadians who own more feature-loaded mobile devices like Blackberries, iPhones and other smartphones? It’s important to “ Canada’s slow adoption of smartphones and their advanced realize that although smartphone ownership in Canada functionality may be tied to the is significant and growing, the majority of Canadians do not yet own smartphones. long-term contracts that owners are forced into by the major mobile And while those Canadians who don’t own smartphones are only ever exposed to a limited number of mobile providers. Three-year contracts are features, Delvinia’s follow up survey and subsequent commonplace, with significant analysis revealed that even those Canadians who DO own smartphones keep it relatively simple when it comes buy-out fees imposed for early to the features and functionality they currently use. contract cancellation: customers may make do with their phone for longer than they’d like to, rather than pay the Total smartphone ownership fee to cancel. There may also be 38% confusion over different rate 33% packages for smartphones. “Talk 26% only” packages may be relatively easy to understand, but rates for SMS and 15% data can be more complex. Smartphone owners may be reluctant NGen GenX Boomers 65+ to use more advanced features for ” fear of high data charges. A closer look at certain smartphone features and how Randy Matheson Canadians use them creates a more precise snapshot of Director, Emerging Media Platforms the current smartphone landscape. In this report, we’ll focus on four specific mobile features and functionality: GPS, applications, cameras and games. Insights for your business 5

gps awareness & usage GPS awareness and usage on smartphones is still Mobile GPS awareness by generation relatively low among Canadians, particularly among Boomers and the 65+ crowd. While it would be too easy and short-sighted to assume that delay in NGen 62% 27%11% adoption follows generational lines, limited awareness appears in younger demographics as well. Some 38% of NGen don’t know or aren’t sure whether their GenX 49% 40% 10% smartphones are GPS-equipped. Boomers 49% 39% 12% Based on these results, it isn’t surprising that few Canadians use their mobile GPS on a weekly basis, and over 50% of most generations do not use this 65+ 26% 58% 16% feature at all (with the exception of NGen, 41% of whom do not use this feature). Yes No Don’t know / not sure Have you enabled the GPS feature on your mobile and used it to locate your position on a map? NGen 5% 10% 28% 16% 41% GenX 6% 9% 12% 21% 52% Boomers 3%3% 15% 15%2% 61% 65+ 100% Every day Several times a week Several times a month Several times Used it but not anymore Never used it a year or less Insights for your business 6

I don’t need it, nor do I want to pay for it. - NGen “ Why this lack of awareness and relatively low usage rates of GPS across all generations? Perhaps it’s the fact that most customers were first introduced to this capability in their cars with the introduction of in-car GPS systems in the 1990’s. When consumers think GPS, they automatically think of in-car systems – not their mobile devices. Additionally, handling your mobile GPS while in transit is unsafe; the in-car systems all offer real-time voice navigation and onscreen directions, which mobile GPS is only beginning to offer now in Beta or to business subscribers. According to many survey respondents, they do not see a need for it because they already have a separate GPS that is clearer and more user-friendly. Moreover, most Canadian consumers think that setting up GPS on their mobile phones is complex and time-consuming, stating “it’s too small and I haven’t had time to investigate how to set it up” or “I don’t know how it works.” Marketers and product developers take note: as with any other feature, customers want ease of use. They don’t want to have to learn how to set it up or use it – they just want something intuitive. This is an opportunity for product developers and marketers to keep it simple in terms of design and communication. Insights for your business 7

Another opportunity for marketers lies in better communicating a carrier’s data plan. Canadians cited the cost of GPS (primarily the data exchange) as another reason why they did not use their mobile GPS feature. Many were either not certain of the cost or didn’t want to pay for the service. Cost is always going to be a factor but in our current economic climate, consumers are smart spenders and on the lookout for value. If they already own an in-car device, many will not pay again to add it to their mobile, nor will they be willing to risk paying for it if they aren’t sure about coverage under their data plan. Another implied factor which could affect the relatively low usage is consumer habits. Respondents indicated that they didn’t need mobile GPS as they determined a route for their destinations in advance. In the case of an impromptu need for directions, many Canadians fell back onto existing behaviours such as calling their destination directly, ” looking it up online before leaving home, or even using paper-based maps. Grace Marquez Creative Director No turn by turn directions! - GenX Insights for your business 8

mobile applications While the majority of smartphone owners claim to prefer downloading applications to visiting a website in order to access information via their mobile devices, open-ended responses indicated a great deal of If I want the info, confusion over what in fact a mobile application is. I want all of it, not just a partial like some apps show. I am happy using - GenX a browser and Google to search for the information I need. I guess Google is a website instead of an app. - Boomer Mobile applications vs. websites optimized for mobile by smartphone type 67% 58% 53% 47% 42% 33% I prefer a permanent application that I prefer to access a website optimized accessed information right on my device for my mobile's internet rowser Blackberry iPhone Other smartphone Insights for your business 9

Meanwhile, 50% of those surveyed had never downloaded an application at all. Even among the highest app users – NGen and GenX – over 30% have “ For those who are engaging with mobile applications and leveraging never downloaded a mobile application. this aspect of their smartphone functionality, they prefer experiences Never downloaded a mobile application that are fun and relatively basic. The (Total Canada) top application types are gaming, 95% social networking, music, and entertainment. More practical, 64% 50% information-based applications are 32% 36% far less popular. NGen GenX Boomers 65+ Total So while fun mobile apps may appeal to a certain audience, marketers must Types of mobile applications downloaded recognize that creating a (Total Canada) downloadable mobile application may not always be the way to meet their Games 32% objectives through the mobile Social networking / Instant messaging 22% channel. And when an application is Music 21% the right tactic, making it entertaining ” 21% and keeping it simple is important. Entertainment News 15% Jim Morrison Productivity & Director, Technology reference (e.g 10% calendar) Health & fitness / 9% lifestyle Work related 7% Travelling 6% Finance & money 5% management Student-related 4% Insights for your business 10

mobile cameras The mobile camera is one of the more popular mobile of Canadians, and like most features this is especially features, well-used by all Canadians. It’s a true for NGen and GenX. straightforward, easy-to-use feature that requires no set-up – exactly the kind of feature that mobile owners But while the majority of smartphone owners are use most often. taking pictures with their mobile devices, most are not using another arguably more complicated functionality Canadians cite a variety of reasons for using the for the purpose of sharing the pictures they take. For camera on their smartphones, like snapping social example, MMS, Facebook and Twitter are only outings and live events, and capturing information to leveraged by 18%, 15% and 1% of Canadians help describe something or for future reference, but respectively. Instead, almost 60% show their mobile 70% of smartphone owners don’t consider it their pictures to others in person, while over 30% don’t share primary camera. Nevertheless, the camera feature on the images they take with their mobile devices at all. mobile devices has become a mainstay for the majority To what extent do each of the following statements about mobile cameras sound like you? (Total Canada) I take pictures with my mobile when I'm out with friends in social situations (like parties, 19% 21% 21% 10% 29% restaurants, and bars). I take pictures with my mobile to capture information that I want to refer back to at a later time or date (like the features or the price of a product). 19% 20% 19% 14% 28% I take pictures on my mobile phone and use them to describe or explain a thing or situation to someone. 15% 23% 22% 10% 30% I take pictures with my mobile to take pictures of live events, like concerts and sporting events. 17% 15% 25% 12% 31% I take pictures with my mobile when I'm shopping to get feedback on a potential purchase from someone who isn't mobile device with me. 14% 13% 19% 12% 42% My mobile camera is my primary camera - I use it more than any other camera. 10% 6% 14% 14% 56% 5 Sounds like me a lot 4 3 Neutral 2 1 Sounds nothing like me Insights for your business 11

In which of the following ways, if any, I saw do you share the pictures you take using your a coolproduct in mobile device with other people (Total Canada) the store. It was hard to describe it but when I took a picture Show pictures on my mobile 59% my friends knew what to others in person I was talking about. Don’t share pictures taken with my mobile 31% - GenX Send pictures from mobile 24% via email Send pictures from mobile 18% via MMS Post pictures from my mobile to Facebook 15% The mobile camera allowed Post pictures from my 5% mobile elsewhere online me to document a faulty Post pictures from my item when it came to making mobile to Twitter 1% an immediate in store refund claim.” - GenX “ Canadian mobile camera behavior reinforces the idea that mobile owners gravitate towards the easier-to-use features and functionality associated with mobile devices and shy away from more complicated functionality. But understanding the extent to which mobile cameras have been adopted by the Canadian masses and recognizing the marketing potential of this feature could be a powerful tool nonetheless. Imagine dynamic campaigns designed to leverage this already inherent behavior, while gradually and effectively educating consumers on how to take mobile camera functionality a step further ” to truly interact with brands. It doesn’t have to be leading edge – it has to be effective! Julianne Smola Vice President, Insight Insights for your business 12

mobile games Mobile gaming is a feature that has been adopted Although future marketing opportunities may include primarily by younger Canadians. The NGen and GenX the new wave of augmented-reality and location-based groups who grew up with video games are beginning games, users are still limited in their adoption. After all, to move their gaming experiences to mobile, while only 2% of NGen and 1% of overall users are engaging Boomers and the 65+ group are engaging in mobile in networked or social gaming on their mobile devices. gaming in a more limited manner. Ways in which games are played on mobile devices (by Generation) 65% 54% 34% 16% 9% 5% 6% 5% 2% 1% 1% 0% Play games by myself Let others (e.g. my child) play games Play networked games with others Ngen GenX Boomers 65+ “ With the launch of Apple’s iPad and their embrace of gaming for the iPhone as well as the growth of multiple smartphone platforms, the outlets for delivering mobile games are continuing to expand. But meanwhile, the most popular use of mobile games on smartphones currently comes in the form of basic pre-installed or downloaded game applications (think BrickBreaker). Marketers must remain aware that experiential and console-like gaming on ” a mobile device is still a new and unfamiliar concept to most users. Jim Morrison Director, Technology Insights for your business 13

summary If you’ve ever left your mobile phone at home, you’ll understand how heavily Canadians have come to rely on mobile technology. Without it there’s an emptiness your landline, email and social media outlets can’t fill. We’re social by nature and 3G mobile devices provide us with every method of communication we require: Personal communication (talk, text and email); group communication (email, blogging and social media); and event management (social media, calendar and browser). It’s accessible from anywhere you are. And if you’re somewhere you can’t talk, you can type. This sense of personal connection through our phone is compounded through companion features, including: entertainment (music, gaming), organization (alarm, calendar, tasks), and convenience (camera). Your mobile device helps kill the time, manage your life and keep you informed of, well, everything. With the emergence of mobile dating and banking, is there any aspect of our lives our phones aren’t getting personal with? As marketers, we see unlimited potential in connecting Case in point: not long ago, getting from point A to point to consumers through their mobile devices. But, B required a map. Something you kept in your glove Canadians are far behind other countries in mobile box. Now, we pre-plan our routes online feature use adoption. They are eagerly using features (Bing/Google/Mapquest) or rely on an in-car GPS that have a low to moderate learning curve like mobile system. As mobile mapping and GPS usage increases gaming and camera functionality, but have yet to we may see a new shift in mapping behaviour, where embrace the deeper features like their European and we begin to rely on real-time mapping as opposed to Asian counterparts. pre-planning. More likely, we will see cross-platform usage, such as send map to phone online or in-car GPS So, what can a Canadian marketer do to connect with for driving and mobile GPS for walking/public our customer on a meaningful level? transportation. We need to build mobile programs that have high-value In the meantime, it’s important to keep your strategy to the consumer. Obvious value inspires a willingness simple. Mobile is one touch point in your marketing mix. to adopt change. And adopting change requires Ask yourself, what value will mobile have for my education (on value, usage and set-up). “First customer? There are a few other things you should adopters” will influence usage with peers and in time, consider when developing a mobile program: we can instigate a shift in consumer behaviour. Insights for your business 14

1. UNDERSTAND THE CUSTOMER EXPERIENCE 3. EDUCATE CONSUMERS Take advantage of the portability of the device but Don’t expect your customers to understand the think about the interaction from the consumer’s technology to the extent that you do. Explain the steps perspective. Subway advertising may reach engaged clearly. Build trust. Show value. And when they’ve done commuters, but without a mobile connection, your it once, they will be more likely to do it again. As call-to-action is lost. The interaction needs to be simple consumers begin to understand the value and potential and convenient. And it needs to work. of their mobile device, their behaviour and usage will shift. Also, be sensitive to the personal nature of a mobile device. When you communicate through mobile, it’s like There’s a big opportunity for marketers who are first to reaching into their pocket to deliver your message… the mobile market. However, don’t enter the market and that notification could come at a very inconvenient because mobile is “the next big thing”. It works for time. some – but not for all. Understand that there is a difference between being first and being good. 2. PROVIDE VALUE No matter what your objective, if mobile is going to be part of your marketing mix, it’s good to test what works We need to rely on deeper insights into consumer now and build from there. Creating a mobile friendly wants and needs in order to deliver value. The more newsletter or website may be the first step in value you bring to the consumer, the more willing they understanding your audiences’ acceptance and usage are to engage. The value needs to be clear, aligned with of mobile. Tracking and metrics can also tell you what your brand and relevant to your offering. mobile devices your consumers are using. Continually test, measure and optimize your campaigns. The best mobile strategies leverage the portability of the device, location-based services and pull marketing Our role as marketers is continually evolving. It’s no tactics. Give customers control of how and when they longer about traditional and digital. It’s about Customer interact with your brand. Experience with integrated traditional and digital touch points. And as new digital platforms emerge, we need to distinguish between opportunity and hype. There is a lot of hype around mobile marketing being the next big thing. If we manage the hype, it will turn into endless opportunity. Insights for your business 15

DATA METHODOLOGY AskingCanadians™ and its French counterpart Qu’en pensez vous MC is Delvinia’s proprietary online research panel of Canadian consumers who have opted in to participate in ongoing market research studies. In October/November 2009, Delvinia conducted its annual re-profiling initiative with all of its AskingCanadians panelists. From the entire pool of responses, Delvinia extracted a statistically representative subset of 5,680 responses (50/50 gender split, age and province breakdowns as per Stats Can) and discovered high mobile phone ownership in Canada, but relatively basic mobile phone feature use. Delvinia then conducted a follow-up survey in January 2010 with 1,000 statistically representative AskingCanadians smartphone owners to uncover further insights. Results of this survey were obtained within a week. All analysis and reporting was carried out using SAS analytics platform. Insights for your business 16

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Vol1: Managing The Hype - The Reality of Mobile in Canada

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