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2013 Intelligence Report: Mobile


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L2′s Intelligence Report: Mobile examines key data, trends, and insights across five prestige industries, identifying strategies to unlock the potential of smartphone and tablet platforms.

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2013 Intelligence Report: Mobile

  1. 1. Excerpt Intelligence Report: Mobile To access the full report, contact MobileFEBRUARY 14, 2013 Intelligence ReportCirculation of the report violates copyright, trademark and intellectual property laws. © L2 2013
  2. 2. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact membership@L2ThinkTank.comMobileM-Commerce: Overhyped Watch the Mobile VideoM-Influence: Underhyped Click to Play While U.S. e-commerce revenues represent about 7 percent of overall retail sales, revenues from m-commerce (including sales from tablet devices) remain at less than one percent.1 T hrough 2016, e-commerce revenues will grow at twice the rate influence in retail. A more old-school device, the television, provides an apt of overall retail, and m-commerce’s share of online commerce will analogy: while home shopping (TV commerce) is a relatively small business, more than double, from 11 percent to 24 percent. In real terms, broadcast advertising continues to drive sales of beer, cars, insurance, and however, mobile sales will remain a pimple on the elephant of U.S. retail. cures for Restless Legs Syndrome. For every dollar spent via a mobile phone Mobile is the next big thing, but its influence will register on other devices today, the new appendage of choice will inspire $13 of purchases in-store (and and offline. Just as Google, which produces no content, is now the most $22 by 2016).2 powerful media company on Earth, mobile will become a key arbiter of Tomorrow Becomes Today Nearly one in four site visits originate from a mobile or tablet device (up U.S. Retail M-Commerce Sales 84 percent year over year).3 One fifth of search traffic is driven by queries ($ in Billions) received from mobile users (evenly split between smartphones and tablets),4 Retail M-Commerce Sales % of Retail E-Commerce % Change YoY including 23 percent of searches for prestige brands (up from 14 percent last year). And as of May, the average time spent on Facebook’s mobile properties 169% (441 minutes per month) exceeded that spent on the social network’s $86.9 desktop site (391 minutes) for those who use both platforms.5 $68.3 Poorly Prepared $52.2 The majority of prestige brands are not prepared to capitalize on this tectonic shift. 81% $38.4 Sites actively promoting daily deals, including Amazon, eBay, Gilt Groupe, and Groupon, generate a third of all m-commerce retail revenues.6 Their primary point $24.6 56% 36% 31% of differentiation: targeted offers combined with express checkout functionality, $13.6 27% 11% 15% often requiring only “one click” to purchase. 7% 18% 21% 24% 2011 2012 2013 2014 2015 2016 Source: eMarketer 2. The Dawn of Mobile Influence: Discovering the value of mobile in retail, Deloitte Digital, 2013. 3. “Mobile Traffic Has Quadrupled in Last Two Years,” Heather Leonard, Business Insider, January 10, 2013. 4. RKG, Digital Marketing Report: Q4 2012, Rimm-Kaufman Group, January 2013. 5. “Americans Now Spend More Time On Facebook Mobile Than Its Website,” Josh Constine, TechCrunch, May 11, 2012. 1. “Record Retail Sales on Smartphones, Tablets Take Great Ecommerce Share,” eMarketer, January 20, 2013. 6. “M-commerce sales via smartphones hit $8 billion in 2012,” Bill Siwicki, Internet Retailer, January 16, 2013. 2
  3. 3. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact membership@L2ThinkTank.comMobileData Replaces Opinion Mobile-Influenced Store Sales vs. M-Commerce and E-Commerce SalesThe aging “site vs. app” debate is becoming moot in the ($ in Billions)face of real data. During the 2011 holiday season, the top 2012 2016five retail mobile apps and sites (in combination) reachednearly 60 percent of U.S. smartphone owners.7 Mobile sites 689reached 51 percent of smartphone users while mobile appsreached just 28 percent. For brands and retailers outside ofthe top five, which often struggle to build awareness in theapp store, the scale tips even more staggeringly in favor ofsites. Several successive industry developments, includingGoogle’s endorsement of responsive design in June andApple’s support of new developer tools (iOS6: file input 327type, web audio API, app caching, etc.) in September, haveserved to further undermine the advantages of native app 226development. 8,9 158 Source: DeloitteL2 Intelligence 31In January 2012, L2 examined the mobile competence of 100 12prestige brands. This supplemental report attempts to update keydata and provide insight as the industry rethinks its approach to M-Commerce Mobile influence on E-Commerce Sales Store Salesmobile and tablet platforms. Our aim is not to examine mobile inisolation, but to define and illustrate its impact on brands’ digitalmarketing, e-commerce, and in-store sales. Like the medium weare assessing, our approach is dynamic. Please reach out with Percentage of Site Traffic From Mobile Devices Q4 2011–Q4 2012comments to improve our methodolgy and findings. You canreach me at 23.1% Source: Walter Sands CommunicationsScott GallowayProfessor of Marketing, NYU SternFounder, L2 17.5% 16.6% 13.4%7. “A Store in Your Pocket: Retailer Mobile Websites Beat Apps among U.S. Smartphone 12.6%Owners,” Nielsen Wire, March 12, 2012.8. “iOS6: The Benefits for HTML5 Web App Development,” Aaron Lumsden, September 12,2012. Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 20129. “Recommendations for building smartphone-optimized websites,” Pierre Far, GoogleWebmaster Central Blog, June 6, 2012. 3
  4. 4. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileSpotlightThe Year of Mobile (Again): Traffic vs. Time: Unique Audience: (U.S., July 2012) searches for L2 100 brands by Device Type: Customers spent 525% more time with retailer apps in December 2012 vs. December 2011 Mobile Web Mobile Apps Desktop 95.2 million 101.8 million 204.7 million 14% 23% +82% YoY +85% YoY -4% YoY4 in 5 owners use device to shop by the end of 2013 December 2011 january 2013smartphone Mobile Search Growth in Desktop searches Total Minutes per Month: +3%YoY (U.S., July 2012) 54% of phones globally will be smartphones 1in 5 Mobile Web Mobile Apps Desktop More than consumers are now “showrooming” Growth in Mobile searches 28.1billion 129.4 billion 367.7 billion 1 in 3 emails are opened on a mobile device +94%YoY +22% YoY +120% YoY +4% YoY Flash Forward:Different Screen / Different User Behavior: Smartphone Market Share:Couch Surfing: Out and About: Symbian Android iOS Blackberry Windows 2009 44% 4% 14% 20% 8% 41% 3 8% of smartphone Info related to TV 94% of smartphone owners look 2012 3% 67% 20% 5% 3% advertisements 0% 62% 22% 8% 5% of tablet owners & owners… for local information on their phones 2015 26% 15% …use their device daily while watching TV; Tablet Shipments: activities performed on devices include: iPad iPhone Mobile Payments: 5 billion Info related to 66% Active mobile phone accounts worldwide TV program Visit businesses either Unrelated shopping Visit social network in store or online after 2010 17million (iPad released April) 1.3 billion 45% 35% 23% a local search 2011 65 million Active credit/debit card accounts worldwide iPad 22% 44% 38% iPad iPhone 2012 122 million Number of mobile payment users in 2012: iPhone iPad iPhone 2013 200 million+ forecast 112.3 million in 2012 vs. 447.9 million in 2016ESources: Business Insider, CNNMoney, comScore, GigaOM, Google, Litmus, Nielsen, Statistica, Teradata, & TechCrunch.
  5. 5. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileMethodology The Methodology L2 Intelligence Reports complement L2’s flagship Digital IQ Index® with a deeper dive on platforms or geographies driving future growth. This report examines Mobile and Tablet data across 100 brands in five industries. Critical areas of investigation include: Brand Experience Support and InfluenceSite Mobile Apps Digital Marketing Social MediaAdoption: Presence: Paid Search Strategy: Foursquare vs. Instagram:E-Commerce, Mobile-Optimized Sites, iOS, Android, BlackBerry, Windows Phone Symmetrical vs. Asymmetrical Brand Presence, Followers, CampaignsM-Commerce App Store Performance: Mobile Ads: Legacy Platforms:Next-Generation Implementations: Ratings, Comments Campaigns Impact of Mobile PromotionsResponsive / Adaptive Design, Mobile Web Apps App Lifespan: New Platforms:Ability to Transact: Initial Release, Update Frequency WeChatPayPal Support, Interoperable ID, Mobile Offers By combining longitudinal data on the brands that L2 tracks with third-party research, this report helps illustrate mobile progress observed since January 2012 and define areas of future investment. 5
  6. 6. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileBrand List Fashion (29) Watches & Jewelry (24) Beauty (18) Hospitality (20) Retail (9) 6
  7. 7. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileKey Findings Search: Classification of Paid Search Activity Space Premium on the Small Screen Desktop vs. Mobile January 2013, n=100 In January 2012, only 57 percent of the 100 brands assessed were engaging in paid search for brand terms on 37% 25% mobile devices. This has risen to 65 percent in 2013—still 19% 16% shy of the 81 percent that buy their own terms on desktop 3% search engines. The absence of parallel activity on mobile search is surprising. Desktop search is responsible for generating Paid Search Only Not Engaged in on Mobile more traffic, but real estate on mobile search is arguably Paid Search Only on Desktop Paid Search more valuable given space constraints imposed by the Paid Search on Both (Different Ad) Paid Search on Both smaller screen size. On average, a Google search query (Same Ad) on an iPhone for the 100 brands examined yields only three initial results visible on the device’s four-inch screen. Consequently, the addition of a new paid ad can easily Average Google Search Results Returned push a brand’s first organic search result “below the fold.” By Screen Size Without Scrolling Google’s next iteration of AdWords, announced on February January 2013 6th, may address some of these challenges.10 While all of the brands reviewed own the top organic 1024 × 768 search result for their brand term, one fifth of these links do 1256 × 1440 640 × 960 not appear in the default view returned, requiring the user to scroll down. On mobile screens, 58 percent of immediate results are paid ads, which require a different approach 10 Results + Sidebar 5–6 Results 2–3 Results altogether. Still, the majority of brands engaged in mobile paid search mirror their desktop efforts—only 25 percent alter content by pushing mobile offers, embedding direct phone numbers, or including directions to local boutiques. 10. Google, “Enhancing AdWords for a constantly connected world,” Inside AdWords Blog, February 6, 2013. 7
  8. 8. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileKey Findings Brand Participation in Competing App Stores Mobile Apps: n=100 Churn January 2012 January 2013 In the past 12 months, the 100 prestige brands reviewed introduced 94 new apps for the iOS platform (and removed 70% 52). This mixed investment is indicative of an industry still 196 apps struggling with the underlying utility of native mobile apps. iOS Although participation on the iOS platform remained fixed, this figure obscures the ecosystem’s “revolving door.” Specifically, six brands (Bare Escentuals, Chloé, De Beers, Morgans Hotel, Prada, and Tory Burch) joined the platform, 22% 28 while six brands (Calvin Klein, Clinique, David Yurman, Diane 2012 apps Android von Furstenberg, Harry Winston, and Piaget) exited. Predictably, in the last year there has been a notable 7% uptick in iPad app development—53 percent of the new 7 apps BlackBerry apps are either iPad native or provide dual iPhone/iPad 2% support. More important, 35 percent of the new apps 2 apps Windows Phone released on the iTunes store now have a direct counterpart in the Android store. 70% 238 apps iOS 37% 65 apps Android 2013 7% 7 3% apps BlackBerry 3 apps Windows Phone 8
  9. 9. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileKey Findings Mobile Apps: Mobile App Proliferation by Industry Gimmick Graveyard vs. Utility Shed September 2008–January 2013 Across the 238 apps assessed, the average app has been Hospitality Watches & Jewelry Fashion Beauty Retail 80 live on the App Store for 17 months. Twenty-seven percent of the apps reviewed have never been updated after initial 70 release—signaling inattention to fixing bugs, ensuring Number of Apps Live on Given Date compatibility with new devices, incorporating user feedback, 60 and enhancing features and functionality. 50 Other observations: 40 Fashion brands are the most likely to release an app and not support it with incremental updates (40 percent). 30 58 percent of Beauty brand apps found in the U.S. 20 App Store were created for APAC markets (45 percent have no user ratings). 10 0 Watch & Jewelry brands are the most likely to July 2008 January 2013 create iPad apps (89 percent). July 2008 April 2010 June 2010 March 2011 September 2012 3 iPhone 3G iPad 4 iPhone 4 2 iPad 2 iPhone 5 5 Hospitality brands brands remain the most prolific App Store app developers (45 percent of available apps released within the past year, driven by the steady release of property-specific apps). % of apps Time average Average # % of brands Average # released app has been Average # of % apps Average # of of ratings % of brands producing of apps per in past 12 live in App updates over NEVER days since received per supporting apps brand months Store app lifespan updated last update app iPad Retail brands release far fewer (but better) apps, update them with much greater frequency, universally 55% 2.8 29% 590 days 4 40% 269 days 310 80% support in-app cart functionality, and solicit substantially 50% 4.1 43% 463 days 3 22% 291 days 15 67% higher user feedback (1,032 user ratings). 75% 3.4 38% 546 days 3 30% 277 days 139 89% 95% 4.1 45% 495 days 3 30% 234 days 66 79% 89% 2.9 24% 554 days 6 13% 89 days 1,032 88% 9
  10. 10. Intelligence Report Excerpt Intelligence Report: Mobile February 14, 2013 To access the full report, contact MobileTable of Contents 5 Spotlight 8 Key Findings 15 Flash of Genius 8 Mobile Sites: Commerce Anywhere, Anytime 15 Ermenegildo Zegna: Zegna LIVE 6 Methodology 9 Tablet Sites: Touch Folly 16 Benefit Cosmetics: Mobile Site Redesign 1 0 Search: Space Premium on the Small Screen 17 Montblanc: Worldsecond 7 Brand List 1 1 Mobile Ads: The Bad Kind of Disruptive? 18 Nordstrom: Déjà Vu 1 2 Social Media: New Platforms, New Opportunities 19 Conrad: Concierge 1 3 Mobile Apps: Churn 20 Starwood, Hyatt, and Sephora: Mobile Wallet (Lite): 1 4 Mobile Apps: Gimmick Graveyard vs. Utility Shed Third-Party Loyalty Programs 21 Crate&Barrel, Clarins, and Kiehl’s: Showrooming: Friend or Foe? 22 Kiehl’s, Clinique, Barneys, and Burberry: The Blurring of Online vs. Offline 23 L2 Team 24 About L2 10
  11. 11. Excerpt Intelligence Report: Mobile To access the full report, contact A Think Tank for DIGITAL INNOVATION51 East 12th Street, 2nd FloorNew York, NY 10003 © L 2 2013 L 2 Reproductions This report is the property of L2 Think Tank. No copyrighted materials may be reproduced, redistributed, or without prior consent from L2. L2 reports are available to L2 Members for internal business purposes.