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Digiday Mobile with Business Insider: Will Mobile Ever Live Up to Its Promise?

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Marketers are not focusing enough on the opportunities presented by mobile, according to Business Insider's Henry Blodget. They need to understand that mobile isn’t just another platform but a …

Marketers are not focusing enough on the opportunities presented by mobile, according to Business Insider's Henry Blodget. They need to understand that mobile isn’t just another platform but a marketing, communication and sales channel. In this session, he'll discuss the growth of the industry, including emerging ad formats and strategies.
Moderator: Brian Morrissey, editor-in-chief, Digiday @bmorrissey
Presenter: Henry Blodget, CEO, Business Insider @hblodget


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  • 1. The Future Of MobileHenry BlodgetCEO & EIC, Business Insider
  • 2. 2+ billion people online Global Internet Popula on 2,500 2,000 1,500(millions) 1,000 500 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Interna onal Communica on Union, Google
  • 3. 2/3 of the world left to go Global Internet Popula on 7,000 6,000 5,000 4,000(millions) 3,000 Global Popula on 2,000 1,000 Internet Popula on 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Interna onal Communica on Union, Google
  • 4. Something profoundhappened last year…
  • 5. Smartphone sales blew past PC sales Global Internet Device Sales 1,000,000,000 900,000,000 800,000,000 Tablets 700,000,000 600,000,000Units 500,000,000 Smartphones 400,000,000 300,000,000 200,000,000 100,000,000 Personal Computers - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Gartner, IDC, Strategy Analy cs, company filings, BI Intelligence es mates
  • 6. PC growth stalled Global PC Shipments By Manufacturer100,000 iPad released 90,000 80,000 70,000 Other 60,000 50,000 Apple 40,000 Acer 30,000 Dell 20,000 Lenovo 10,000 HP 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Source: Gartner, IDC
  • 7. Tablets are now driving all the growth in PC market Global Computer Shipments 140,000 120,000 100,000 Tablets (thousands) 80,000 60,000 40,000 PCs 20,000 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Source: Gartner, IDC, Strategy Analy cs company releases
  • 8. So the future is mobile G-20 Internet Access 3,000 2,500 2,000 Consumer Mobile Broadband 1,500Connec ons (milions) 1,000 Mobile 500 Fixed Fixed Fixed 0 2005 2010 2015 Source: Boston Consul ng Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight
  • 9. Where are we in themobile revolution?
  • 10. Globally, we’re still early… Global Smartphone vs. Mobile Phone Users, 2012E 7,000 6B Mobile Phone Users 6,000 5,000Global Users (millions) 4,000 3,000 2,000 1B Smartphone Users 1,000 0 Smartphone Mobile Phone Source: Strategy Analy cs, Interna onal Telecommunica ons Union Note: Some users own more than one device
  • 11. But growth slows after 50% penetration
  • 12. U.S. and other markets are past halfway point U.S. Smartphone Penetra on 80% 70% Feature Phones 60% 55% 50% 50% 45% 40% Smartphones 30% 20% 10% 0% Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Source: Nielsen
  • 13. US smartphone growth starting to slow U.S. Smartphone Market: Year-Over-Year Net Adds 40 35 30 25 Users Added 20(millions) 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2013 Source: comScore, Nielsen
  • 14. Most future US smartphone buyers will be older and poorer Smartphone Penetra on By Age And Income (U.S.)90% 80%80% 77% 74% 75% 69% 70%70% 65% 65% 65% 63% 60%60% 58% 56% 53% 52% 50% 51%50% 48% 43% 44% 41% 42%40% 38% 31% 32% 30%30% 27% 23% 24% 21%20% 18% 16% 17% 16% 15% 16%10%0% Ages 18 - 24 Ages 25 - 34 Ages 35 - 44 Ages 45 - 54 Ages 55 - 64 Ages 65+ <15k 15k - 35k 35k - 50k 50k - 75k 75k - 100k 100k+ Source: Nielsen
  • 15. So the focus is on markets like China, whichnow accounts for ~25% of smartphone sales. Global Smartphone Shipments 180,000 160,000 140,000 120,000(thousands) 100,000 80,000 Rest Of The World 60,000 40,000 20,000 China - 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Source: Gartner, IDC, Strategy Analy cs, Canalys, BII es mates
  • 16. China is already twice the size of US market Chinese Internet Users 600 Total 500 Mobile 400 Broadband(millions) 300 200 100 0 June 06 Dec 06 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 June 12 Source: China Internet Network Informa on Center
  • 17. So, what do people do on mobile?
  • 18. Well, first, they do pretty much everything they do online…
  • 19. They play games and social-network… Daily Smartphone App Consump on, Minutes Per Category 7 7 10 10 12 11 24 15 25 24 Q1 2011 Q1 2012 Games Social Networking News Entertainment Other Source: Flurry Analy cs
  • 20. They listen to music... 75% 70% 55%% of Traffic from Mobile Pandora 50% Twi er 33% Facebook 25% 5% 1% 0% 2008 2009 2010 2011 Source: Mary Meeker, Kleiner Perkins, companies
  • 21. They consume content… Top Mobile Categories By Growth In Audience, Dec. 2010 vs. Dec. 2011 (U.S.) 35,000 30,000 25,000 Total 20,000 74% Mobile Audience(thousands) 15,000 72% 94% 77% 70% 80% 74% 10,000 69% 134% 5,000 82% 0 Health Online Retail Mens Electronic Gaming Job Lis ngs General Classifieds Auc on Sites Family Informa on Magazine Payment Informa on Reference Entertainment Content Dec-10 Dec-11 Source: comScore MobieLens, 3 mon. avg. ending Dec-2011 vs. Dec-2010
  • 22. They look at pictures and video. U.S. Video Engagement, Monthly Minutes Per Ac ve User 472 425 378 324 276 231 152 110 93 63 Mar 2011 June 2011 Sept 2011 Dec 2011 Mar 2012 Google Internet Sites iOS & Android Photo & Video AppsSource: Flurry Analy cs, comScore Video Matrix
  • 23. They use their devices while they watch TV Percentage Of Smartphone Users Who Use Their Phones While Watching TV90%80%70%60%50%40%30%20%10%0% Monthly Mul ple Times A Week Daily Source: Nielsen Cross-Pla orm Report Q2, 2012
  • 24. They shop… Ecommerce Website Traffic By Device100% Tablet90% Smartphone80%70%60%50% PC40%30%20%10% 0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Monetate
  • 25. They use smartphones to make buying decisions in stores. U.S. Smartphone Owners Ac vity In Retail Stores 24.0% 22.3% 20.4% 20.2% 19.7% 18.8% 16.2% 14.6% 14.1% 13.1% 12.3% 11.1% 10.9% 10.0% 8.3% 7.2% 6.3% 5.2%Took Picture Of Texted/Called Scanned A Sent Picture Of Found Store Compared Found Coupons Research Product Checked Product Product Friends/Family Product Barcode Products To Loca on Product Prices For Deals Features Availability About Product Family/Friends Males Females
  • 26. They pay for stuff PayPal Mobile Payments Processed $5,000 $4,000 $3,000 TotalPayment Volume(millions) $2,000 $1,000 $0 2008 2009 2010 2011
  • 27. They buy content Media Content Paid For On A Tablet, Q4 201170%60%50%40%30%20%10%0% Downloaded Books Movies Magazines TV Shows Streaming Sports News Music Radio US Italy UK Germany Source: Nielsen
  • 28. And they do stuff they DON’T do online…
  • 29. Play Angry Birds, et al Angry Birds Downloads vs. Nintendo DS Sales 700,000 600,000 500,000 400,000 TotalDownloads Or Sales(thousands) 300,000 200,000 100,000 0 Mar 10 Jun 10 Sept 10 Dec 10 Mar 11 Jun 11 Sept 11 Dec 11 Note: Includes Nintendo 3DS Sales Source: New reports, company releases, BI Intelligence estimates
  • 30. Take and share pictures Instagram Es mated Users 100,000 90,000 80,000 70,000 60,000 Total Users 50,000(thousands) 40,000 30,000 20,000 10,000 0 3/2011 4/2011 5/2011 6/2011 7/2011 8/2011 9/2011 10/2011 11/2011 12/2011 1/2012 2/2012 3/2012 4/2012 5/2012 7/2012 7/2012 8/2012 9/2012 Source: news reports, company releases, BII Es mates
  • 31. BOTTOM LINE: Mobile devices =More Internet usage + New applications
  • 32. Mobile has extended digital “primetime” Share Of Device Page Traffic Over A Day:Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
  • 33. Mobile usage is up across the board U.S. Mobile Content Usage 80% Sent Text Message 70%Share of mobile popula on that has... 60% Used Downloaded Apps 50% Used Browser Accessed Social Network 40% Or Blog Played games 30% Listened to music 20% 10% 0% Feb Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep 10 10 10 10 10 10 10 10 10 10 11 11 11 11 11 11 11 11 11 11 11 11 12 12 12 12 12 12 12 12 12 Source: comScore
  • 34. People are consuming a huge amount of content through mobile… Media Content Accessed Through Mobile Device 59% 57% 53% 53%41% 29% 29% 27% 26% 27% 25% 23% 22% 20% 9% 10% 9% 5%Books Movies TV Shows Magazines News Social Downloaded Sports Streaming Networking Music Radio Tablet SmartphoneSource: Nielsen Q4 2011 Mobile Connected Device Report
  • 35. As mobile increases, all other media decreases Share Of Consumer Time Spent With Major Media 45% 44% 43% 42% 26%26%26% 25% 17% 16% 15% 14% 12% 9% 9% 8% 8% 7% 7% 7% 6% 6% 5% 4% TV Online Radio Mobile Print Other 2009 2010 2011 2012Source: eMarketer, October 2012
  • 36. This leads to another key question…
  • 37. Mobile advertisingwill be huge, right?
  • 38. Hmm…
  • 39. The “bullish” mobile-ad story is the huge gap between time-spent and ad spending. 2011 U.S. Ad Spending vs. Consumer Time Spent By Media 42% 43% 25% 26% 22% 15% 11% 10% 7% 1% TV Print Web Radio Mobile Ad Spend Per Media Time Spent Per MediaSource: Mary Meeker (KPCB), eMarketer, IAB
  • 40. But maybe there’s a good reason for that gap…
  • 41. The screen is really small.
  • 42. Mobile monetization still behind the desktop ARPU, Desktop vs. Mobile $58.95 $25.00 $17.61 $6.62 $5.00 $3.87 Pandora Zynga Tencent Mobile Desktop Source: Pandora, Zynga, Tencent
  • 43. Most “mobile” ads are mainly web search + display ads viewed on mobile 2011 Global Mobile Ad Spend By Category Messaging 10% Display 28% Search 62% Source: IAB
  • 44. Google completely owns mobile search Global Mobile Search Market Share100% Google90%80%70%60%50%40%30%20%10% bing Yahoo! 0% Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 Source: Global StatCounter
  • 45. So Google owns mobile, too Mobile Ad Market Share100%90% Other Microso80% Yahoo Apple70% Pandora60%50% Millennial Media40%30% Google20%10% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Source: news reports, company releases, BII es mates
  • 46. Overall, mobile is still a tiny fraction of digital ad spending. U.S. Digital Adver sing Revenues $35 Mobile $30 $25(billions) $20 $15 $10 $5 $0 2007 2008 2009 2010 2011 Source: IAB, BIA-Kelsey, BII es mates
  • 47. And it’s growing much slower than TV + Internet in the first 5 years Compara ve U.S. Adver sing Media Annual $ Revenue Growth (First 5 Years)$5,000 $4,621$4,500$4,000 $3,698$3,500$3,000$2,500 $2,162 $2,162 $1,920$2,000$1,500 $1,171 $1,012 $907$1,000 $806 $500 $358 $392 $267 $80 $160 $55 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Broadcast TV Mobile Internet Source: IAB, McCann-Erickson, BIA-Kelsey, BII es mates Note: Adjusted for infla on
  • 48. But!
  • 49. “Native” mobile ads are finally beginning to appear… • Ads in timelines (Twitter / Facebook) • Shareable ads • Location-based mobile ads
  • 50. Location-based mobile ads can target users at the mall, restaurants, car dealers … Monthly Ad Requests Per Mobile User By Loca on8070605040302010 0 ry s s s s s rs s l l t al te or r r r pu nt nt le le ale ile ra M Ho rp ra ra m i i Lib ta ta ta De au u Ai Ca Re Re Re ta st r es l Ca oo ox ng cs Re rR ni gB h hi e Sc tro he ot vic Bi Cl Ot ec r Se El ick QuSource: JiWire, Q3 2012
  • 51. Targeted mobile ads have higher CPMs CPMs For Selected Mobile Ad Pla orms xAd local $3.50LSN Mobile local ads $5.00 Adsmobi video ads $5.00 Flurry video ads $10.00 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00Source: Ad pla orms, BII Research, Greg Sterling, Opus Research
  • 52. So, yes, mobile ads are just getting started U.S. Mobile Ad Forecast $7,000 $6,000 Local $5,000Mobile Ad $4,000Revenue(millions) $3,000 We are here $2,000 Media $1,000 $0 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E 2017E
  • 53. APPS
  • 54. App Store downloads on pace to hit 60 billion by mid-2013 Apple App Store Downloads65,000,000,00060,000,000,00055,000,000,00050,000,000,00045,000,000,00040,000,000,00035,000,000,00030,000,000,00025,000,000,00020,000,000,00015,000,000,00010,000,000,000 5,000,000,000 0 1/1/11 2/1/11 3/1/11 4/1/11 5/1/11 6/1/11 7/1/11 8/1/11 9/1/11 10/1/11 11/1/11 12/1/11 10/1/12 11/1/12 12/1/12 1/1/12 2/1/12 3/1/12 4/1/12 5/1/12 6/1/12 7/1/12 8/1/12 9/1/12 1/1/13 2/1/13 3/1/13 4/1/13 5/1/13 6/1/13
  • 55. Smartphone users spend more time on apps than web Total Time Spent Using Mobile Web vs. Apps 140 120 100 80Minutes Spent Per Month (Biillions ) 60 Apps 40 20 Mobile Web 0 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Source: Nielsen Smartphone Analy cs
  • 56. Mobile app revenue is growing fast, but still relatively small. Mobile App Revenue $4,000 $3,500 $3,000 $2,500(millions) $2,000 $1,500 $1,000 $500 $0 2008 2009 2010 2011 Source: iSuppli, Forrester Research, company releases, BII es mates
  • 57. Because most downloads are free Mobile App Store Downloads, Free vs. Paid: 2011 Total Downloads Free Downloads 89%Source: Garner, September 2012
  • 58. “Freemium” is the dominant model
  • 59. Games are the biggest money makers
  • 60. Mobile has become a platform game.
  • 61. Platform markets tend tostandardize around one or two platforms.
  • 62. Right now, mobile is a two-horse race. Global Mobile Pla orm Market Share100%90%80% Other70%60%50% Windows Blackberry40% Apple30%20% Android10% 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Gartner, IDC, Strategy Analy cs, BI Intelligence es mates, and company filings
  • 63. Android has the largest smartphone platform globally. Smartphone Market Share By OS (Global) 100% Microso 90% Other 80% 70% Symbian 60% Share ofGlobal Unit 50% Blackberry Sales 40% Apple 30% 20% Android 10% 0% Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Gartner
  • 64. Partly because it owns China Chinese Smartphone Market Share By Pla orm100% Other90%80% Symbian Apple70%60%50%40% Android30%20%10% 0% Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Analysys Interna onal
  • 65. And it’s the same two-horse story in tablets Tablet Market Share By Pla orm100% Blackberry Nook90%80% Kindle70%60% Android50%40%30% iPad20%10% 0% Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Es mates based on informa on from IDC, Strategy Analy cs, and company filings
  • 66. But a big mystery has arisen...
  • 67. Where are all these Android users?
  • 68. Apple is dominating app revenue Mobile App Revenue By Pla orm $4,000 $3,500 Other $3,000 Android $2,500(millions) $2,000 $1,500 $1,000 Apple iOS $500 $0 2008 2009 2010 2011 Source: iSuppli, Forrester Research, company releases, BII es mates
  • 69. And mobile commerce and web traffic… Ecommerce Website Traffic By Mobile Pla orm100% Other Android Tablets90% Android80%70%60% iPhone50%40%30% iPad20%10% 0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Monetate
  • 70. Do Android folks actually use their devices?
  • 71. Likely Answer:Android is the mass market.
  • 72. Mobile profits are going mainly to two players. Opera ng Profit Share By Vendor 80% 70% Nokia Apple 60% 50% Samsung 40% 30% 20% Sony Ericcson 10% RIM HTC LG 0% Motorola -10% -20% 2007 2008 2009 2010 2011 Q1 2012 Q2 2012 Q3 2012 Source: Company releases, Canaccord Genuity es mates
  • 73. So, what’s the future?
  • 74. Digital?
  • 75. Yes.
  • 76. Mobile?
  • 77. Yes.
  • 78. Mobile ONLY?
  • 79. No.
  • 80. Digital is now a 4-screen world…
  • 81. Maybe 5 screens soon…
  • 82. But mobile FIRST?
  • 83. Only if you have a totally mobile-centric app...
  • 84. ...Or you want to annoy your users and customers.
  • 85. Thank you very much.
  • 86. Henry Blodget Founder, CEO & Editor-in-Chief, Business Insider Marcelo Ballvé, Editorial Director Alex Cocotas, Analyst Josh Luger, Director of Subscription Products Peter Lee, InternBI Intelligence is a new subscription service from Business Insiderthat provides in-depth insight, data, and analysis of the mobile industry.More info at intelligence.businessinsider.com