Mobile: think out of the box - rdcom-global.com 2016 OSSERVATORIO MOBILE B2C STRATEGY FEBBRAIO 2017...

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Mobile B2c Strategy ObservatoryMobile: think out of the box

February 2017

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RESEARCH

Executive Summary 5 by Marta Valsecchi

Work Team 29

AUTHORS

School of Management 33

Research Supporters 35

Table of Contents

February 2017


Research

| 5 |Mobile: think out of the boxCopyright © Politecnico di Milano | Department of Management, Economics and Industrial Engineering

Consumers turning increasingly to Mobile devices

Even in Italy, the ubiquity of Mobile systems is a fact of life. Data on consumer use sets this point out very clearly.

• Every month, over 25 million Italians go online with their smartphones, which is rough-ly equal to 70% of all internet users. This percentage is rising by double digits compared to last year, while the number of desktop computer users is actually dropping1.

• About 60% of the time users spend online is via a smartphone2.• Apps take up about 90% of the time people spend online using Mobile devices. Google

and Facebook are the big beasts and capture nearly half of the total time3. • For 50% of Mobile web users4, Mobile devices have displaced – or are gradually replac-

ing – their PCs while, for 32%, the two are equally important5.

Apart from attracting a greater amount of traffic and more time spent online in general, Mobile devices are central to the purchasing process of many Mobile web users, and 80% of them use their smartphones to make decisions about what to buy or to engage with their favourite brands. In addition, one third of Mobile web users go shopping on their smart-phones, leading to a surge in the Italian e-commerce market.

The role /centrality of Mobile systems in big digital trends

Observing, among other things, the main technological and business centrepieces of digi-tal innovation, it is clear that Mobile systems have a major strategic role.

For greater details, see the report on “Mobile purchasing: the behaviour of Italian Mobile internet users”

1 Source: comScore, November 2016.2 Source: comScore, November 2016.3 Source: comScore, November 2016 – percentage calculated for Android smartphones only.4 By Mobile web users, we mean people who browse the internet using a smartphone.5 The survey is part of this Observatory’s research and was carried out in collaboration with Doxa. Data in the next section also refer to this survey.

Executive Summary

by Marta Valsecchi

| 6 | Mobile: think out of the boxCopyright © Politecnico di Milano | Department of Management, Economics and Industrial Engineering

Executive Summary

B2C E-Commerce6

With a growth of 63% up on 2015, Italians spent 3.3 billion euros on Mobile commerce shopping8 in 2016, a three-fold increase in value in just two years. M-commerce is now worth 17% of the Italian e-commerce market, but in some fields, it is already well above 50%. For products, the websites set up for business models like flash sales – where what counts is the instant the purchase is made – have an important place in this world, as do the sites offering a simple and effective customer experience (first and foremost the marketplace sites). For services, buying travel tickets (air and rail) and booking accommodation (in private homes and hotels) are by far the areas of greatest use. In general, however, as users become more familiar with the ins and outs of Mobile purchasing, growth is expected in all sectors.

Digital payments and Mobile Wallets8

The recent advances in digital payment methods have led to interesting developments in smartphone use. Banks, Mobile phone operators, Over-the-Top players (Samsung, Apple, Google) merchants and start-ups across the world are investing in Mobile Wallet technology to provide virtual Wallets with all their accoutrements (payments cards, loyalty cards, cou-pons, identity cards, etc.). In parallel, even the big names in instant messaging (like WeChat) and social media (like Facebook, which secured an Irish e-money licence in 2016) are show-ing increasing interest in peer-to-peer payments systems9. These players want to give their users the freedom of sending money to each other while chatting or when shopping, while, in the meantime, they acquire valuable information about their customers.

Big Data Analytics and Data-Driven Marketing10

The customer-centric vision is leading companies to assemble all their customer data into a single domain (gathering these data from CRM, physical and online transactions, call

6 For greater details, see the reports by the

Observatory for 2BC E-Commerce

(www.osservatori.net).7 By Mobile commerce,

here we mean e-commerce shopping

on smartphones in Italy.

8 For greater details, see the reports by the

Observatory for Mobile Payment & Commerce

(www.osservatori.net).

9 Money changing hands between users.

10 For greater details, see the reports by

the Observatory for Big Data Analytics &

Business Intelligence (www.osservatori.net).


Executive Summary

centres, social media activity and over the internet in general), and so be able to send in-creasingly personalised messages (for marketing and services purposes). In this landscape, Mobile devices are worthy allies since they can be used for hypertargeting (being the only truly “personal” media).

The data available on Mobile devices range from socio-demographic information and the users’ behaviour on their smartphones and their personal interests, to localisation data. The latter can be used, for example, to send geo-localised messages. Furthermore, since Mobile devices live in their owners’ pockets, they can provide data on behaviour (as long as this is within current legislation on privacy) that can then we used to filter users according to the places they visit regularly or to identify the routes taken by people within real physical shops (using in-store heat charts and traffic data, points of interest, optimal range on display, etc.). Finally, new solutions are emerging to measure the impact of online Advertising and pro-motional campaigns on the physical sales points, exploiting the smartphone’s localisation features. The purpose of all these initiatives is to improve communication and be able to measure the consumers’ online and offline purchasing pathways.

Mobile devices give retailers and businesses a whole array of possible channels for push messaging (apart from emailing, they can use SMSs and push notifications). Within data-driven marketing, a critical success factor is the ability to use the data gathered on one’s customers to select the best channel for communication, according to who they are and their location/environment.

Consumer IoT (Internet of Things)11

Various manufacturers of lasting goods (automotive, consumer electronics, white goods,

11 For greater details, see the reports by the Observatory for the Internet of Things (www.osservatori.net).


Executive Summary

etc.) are working on another field of development, to exploit the Internet of Things (IoT) paradigm in a consumer setting and use Mobile devices as the means to interact with physical objects. In this setting, smartphones are used to send commands, and can control and interact with the user’s personal objects in real time (for example, smart home applications to turn household appliances on or off, or to regulate light bulb settings, such as colour or intensity). For this kind of approach to work, Mobile strategies must be an integral part of the product design and development process (in an “Mobile per design” sort of perspective12). In turn, this leads to creative revenue models based on subscribing to services rather than selling the physical items directly. This course of action has been spreading for some time in the insur-ance world for personal assistance services. Consumers are offered kits containing medical equipment to monitor their health at home (for example, by measuring blood pressure and heart beat) plus a personalised assistance service (which can involve, for example, sending alerts to the customer’s smartphone if any abnormality is found in the parameters monitored, or even activating a video call with the customer’s doctor directly from their smartphone).

Proximity technology (including BLE systems13 like beacons, or augmented reality solu-

tions) can be used in activities to engage consumers within a sales point. Currently, this trend is still relatively uncommon, apart from a few tests, to the point that suppliers are often more interested in enterprise rather than consumer solutions. For these projects to become wide-spread initiatives, they must be framed within a clear strategy concerning digital cus-tomer relations, an arrangement that has yet to take hold within the retail landscape.

Artificial IntelligenceSeveral Italian companies, especially those most innovative digitally, have begun testing

chatbots, which are virtual assistants based upon artificial intelligence algorithms that talk

12 With this term, we mean a product or service developed

expressly or principally for the Mobile world.

13 Bluetooth Low Energy.


Executive Summary

with consumers through instant messaging (through proprietary services or peer-to-peer communication apps commonly used among consumers, if they are enabled to do so). These services can become effective channels for customer care or user engagement.

Impact of the growth of Mobile systems on B2C businesses

The rapid and growing shift in users “consuming” internet on smartphones and the fact that Mobile devices have a wide-spread impact on all big digital trends has, in our opinion, four implications with respect to how B2C (business-to-consumer) companies manage their customer relationships (from Advertising to pre-sales, sales and post-sales).

Thinking digital in a Mobile First logicIn first place, today – and increasingly in the future – digital strategies must be conceived

above all with smartphone users and their experience in mind. It is no longer enough to get oneself a responsive website or include Mobile versions in the design of an Advertising pro-motion. The intricacies of web-browsing on smartphones must be thoroughly understood (very fast and intermittent, often guided by time restrictions), as must be the methods and various channels of interaction (web, apps, chat rooms, phone calls, SMS messages, etc.) and the possible technologies (cameras, accelerometers, fingerprint readers), if users are to have the experience they expect. Personal, always on and geo-located are, then, the three main smartphone by-words that conclusively distinguish these devices from desktop computers. As a result, businesses have the means to personalise the messages they send to their customers in real-time. By reflecting “who” their users are and their actual location in time and space, companies can increase their marketing, Advertising and customer retention operations.


Executive Summary

Mobiles at the helm of omni-channel retailing and marketingThe second implication is that Mobile devices are driving omni-channel retailing and the

company’s customer-centric vision. Smartphones provide precisely the right means to create integrated experiences connecting various points of contact. The possibilities of integrated Mobile-business services are many and include employing proximity marketing operations to bring users into the retail point and sending geo-located information about retail points with a given product available in store. Other possible applications involve using Mobiles as a self-caring channel integrated in real-time with the company’s contact centre, finding out information about a product simply by focusing on it with your smartphone, and being able to count the number of people entering a sales point subsequently to an Advertising campaign. Smartphones can even be used as the key to access given services, to trace users’ behaviour within a retail point and to manage till queues.

Mobiles need a “lean approach”Lean principles (slick decision-making model, rapid time-to-market, continuous learning-

by-doing and fine-tuning mechanisms) are even more important when applied to innova-tion projects for the Mobile world. Looking at how users access internet on smartphones and the speed of change in technology, to the Mobile devices currently in circulation, to graphic interfaces and how trends in Mobile user-friendly features rapidly shift, it is clear that a critical factor of success is the speed with which a proof of concept14 is introduced on the market, tested, the results measured and the product/service then developed further. This approach affects both the technical development and the design of each item or service to be channelled through Mobile devices. In reality, only market response can determine whether any given service (or simply a special function or interaction technique) offers value to con-sumers. Companies must gear themselves up to measure user feedback on an ongoing basis.

14 In the lean approach, this is known as

minimum viable product (MVP).


Executive Summary

Mobile systems: towards new business modelsThe final – but most significant – implication is that Mobile devices have shown that they

have a say in the process of reviewing current business models and creating new ones. Put-ting all the impacts listed above together, the Mobile world can clearly transform all business model parameters by:

• Reviewing the value proposition (in the light, for example of personalising the service offered and satisfying new needs).

• Introducing new openings for customer relationships (in terms of the channels and tools used to communicate as well as when to engage with users).

• Restructuring the infrastructure for the operations, resources and key partners (Mobile devices require special Mobile assets and skills are needed, to be developed internally or acquired on the marketplace).

• Having an impact on business results (measured as increased sales or reduced costs for some processes).

Because of this, the new business models emerging are centred on smartphones. Putting aside the big international social networks, concrete examples include using smartphones to interact with smart home services, new “Mobile only” banking services that only work from a smartphone, car sharing services that can be booked and accessed on a Mobile app, driving parameters read from an app downloaded to a smartphone, remote monitoring applications in healthcare (Mobile health), products configured to take in augmented real-ity applications, new “futuristic” physical stores (see Amazon Go), where customers are recognised through smartphone applications and can go shopping without going through the checkout process.


Executive Summary

The Mobile Transformation Journey and emerging evidence

Because of the impact of Mobile devices described in the previous sections, for some time we have stated that companies must approach this world strategically to manage their cus-tomer relationships. It follows that this Observatory is concerned with Mobile B2C Strategy (or Mobile Consumer Strategy). With this term, we mean asking how Mobile solutions can help to achieve the company’s business targets.

The shift from a tactical to a strategic vision of Mobile systems implies working in several directions and also that most organisational levels must be involved, starting from upper management. In greater detail, we have identified six key levers that constitute the variables of the interpretive model (known as the Mobile Transformation Journey) used to identify a company’s level of maturity in terms of using Mobile solutions for their customer relation-ships. These variables are given below.

1. Upper management’s vision, defining and governing a Mobile strategy: This area iden-tifies how senior management perceives the breadth of scope made possible by Mobile innovation, whether there is a clear strategy in place concerning the company’s business objectives that can be achieved through Mobile devices and the relative governance, together with the priorities for Mobile investment.

2. Organisation and middle management’s commitment: This area assesses whether the company has set up explicit responsibilities for defining and implementing its Mobile strategy, and if it is capable of positively involving the various lines of business (LOB) concerned (marketing, communications, sales, operations, IT, etc.). When the approach to the Mobile world remains a lever in the hands of a single business unit (typically marketing), there is the risk of executing stand-alone projects and not having any real


Executive Summary

return. A further factor we analysed is whether companies are working towards trans-forming their internal culture, organisational models and performance evaluation logic, in order to galvanise acceptance towards the digital universe (and the Mobile sphere in particular).

3. Mobile Skills: This area sets out the company’s maturity in the field of Mobile trans-formation. By developing internal skills, the company can implement a more effective Mobile strategy.

4. Re-engineering back-end processes to support the omni-channel model: This area meas-ures whether the company’s back-end systems are ready to implement a Mobile strategy. In particular, it examines whether the company has a single view of the customer, which is important when offering a personalised customer experience.

5. Implementation of a Mobile strategy in terms of developing Mobile assets15: This area is divided into various elements, that go from having a responsive website or offering a Mobile app that clearly sets out the value proposition for the customer, to exploiting the special functions on Mobile devices or integrating Mobile assets with other company touch points. Having a clear Mobile strategy also means knowing and exploiting the en-tire portfolio of contact points offered on smartphones as effectively as possible (brows-ing, apps, SMSs, social media, chat rooms, etc.).

6. Implementation of the company’s Mobile strategy in terms of “Mobile Advertising”: This area involves the ability to exploit Mobile devices, which is another variable that shows how this channel can be used strategically.

15 By Mobile assets, we mean all intellectual property like websites, apps, use of SMS messaging on proprietary customer databases, etc.


Executive Summary

www.osservatori.net Workshop to anticipate research findings 16 January 2017

The Mobile Transformation Journey: a maturity model for the Mobile world

Governance/ Upper Management Commitment (CEO and C-level staff)

Mobile Advertising

Mobile Asset Development

Re-engineering back-end processes

Mobile Skills

Organisation/Commitment Middle Management

Strategic Approach

Tactical Approach

Once in a blue moon

Passive

Independent Silos

Non-dedicated Absent/Very

Limited

Ready

Coopetition

Need strengthening High

Spot /Tactical

In search of a reason why

In search of funding

Limited/Low Priority

Integration Achieved

Exclusively

Multi-Platform

Transformation Started

Work in progress People First


Executive Summary

In the course of our 2016 research, we carried out an online survey to determine the point of view expressed by companies in Italy for each of the variables listed above. We received responses from 170 medium and large-sized companies16, and carried out semi-structured interviews in more than 60 of these, to expand on and provide additional notes to the an-swers these companies had provided in the questionnaire.

Mapping companies in their approach to “Mobile Transformation”

After gathering the results of our survey, we then analysed the positioning of Italian com-panies in relation to the six key variables used for the Mobile Transformation Journey. We found five different categories of behaviour.

Mobile FirstThis category contains 14% of the companies. These are businesses strongly engaged in im-

plementing Mobile solutions, with both strategy and investment driven by upper management. These businesses see Mobile solutions as particularly important for achieving their company objectives. The organisation shares the upper management’s commitment towards the Mobile world and, in most cases, they work closely together on their projects, sharing the same objec-tives and measuring the outcome on an ongoing basis. In around three quarters of the compa-nies, their back-end systems maintain a dialogue with all the company touch points in an inte-grated fashion, and data gathered through the various channels are used to provide a single view of the customer. The companies generally have good internal Mobile skills and the departments affected are well-organised with the right people to manage projects and achieve their objectives. The company’s intellectual/Mobile assets exploit the special features of Mobile devices well and

16 The sample is heterogeneous in terms of business sectors, but is statistically representative of all Italian companies.


Executive Summary

are fundamental in how they manage their customer relationships, especially in their interac-tion with those who are most loyal. Mobile channels are fully included in the media mix, and are expected to weigh more over time. Measuring these aspects is a basic part of promotional campaigns, and is seen as a means to learn from the process in view of continuous improvement.

Work in progressNearly one third of the sample belongs to this category. In these businesses, upper man-

agement believes in Mobile transformation and investment in this area has a relatively high priority in relation to other business requirements. In most cases, the company has a well-defined Mobile strategy, which is consistent with its digital plans. Companies in this cat-egory vary in terms of their level of maturity for commitment and collaboration among the various business units. Nearly all of them are working, albeit at different speeds and timings, on updating their back-end systems or on solutions to get the new technology to talk with their legacy systems, as well as on creating a single view of their customers. For this reason, Mobile assets play an important role in these companies’ relationship with their consumers, although, so far, the various touch points are not integrated perfectly in terms of customer experience and data gathering, and only a few companies have a well-defined app strategy. The skills in the various departments involved in Mobile transformation are, in general, medium-high. Mobile channels are included in the media mix, with companies investing in both multi-platform and ad hoc solutions. In some cases, the outcome of promotional cam-paigns is measured regularly, including through attribution modelling.

Digital-DrivenThe companies in this category make up 14% of the sample. The upper management in these

businesses has only a low commitment to Mobile transformation. In most cases, the company’s


Executive Summary

digital pathway includes no Mobile strategy. For these reasons, Mobile solutions are not an investment priority. Mobile projects are defined and managed nearly exclusively by the busi-ness unit in charge of the process (generally the digital area), with other company departments collaborating marginally. In some of these companies, Mobile skills are perceived to be of medium-high importance, in the others, they are only medium-low. In general, however, it is clear that those involved see the need for greater resources if results are to be improved. Back-end systems are still somewhat limited. These companies have a modest Mobile presence, but it is not implemented strategically and differs only marginally from desktop computer solutions. Mobile channels are always included in media planning, and sometimes include ad hoc invest-ments and strategies. The outcome is measured regularly, often through attribution models.

WannabeThe Wannabe category contains 19% of all companies in the sample. The back-end systems

in these businesses are rather restricted and this is a considerable curb to Mobile transforma-tion. For this reason, Mobile planning has no strategic place in their customer relationships, although, in some cases, the companies are working towards improving their presence on this channel (redesigning websites to make them responsive and developing strategic Mobile apps). With regards to upper management commitment and business organisation, the companies in this category are split equally three ways between those driving from below but with an upper management that is not really interested, those that, on the contrary, see Mobile systems as criti-cal to their business results but where there is the need for cultural change within the company, and those where upper and middle management believe in Mobile solutions but are up against a technological barrier. Even in terms of skills, the companies in this category present a non-uni-form front. They are, however, moderately keen to push Mobile adverting, sometimes through ad hoc strategies and investment, or by measuring results through attribution modelling.


Executive Summary

Nice to HaveThe companies in this category make up 22% of the sample. In these companies, upper

management has little or no commitment to Mobile solutions. Half of them do not even have a general digital plan, nor is this a short-term objective. It is no surprise that Mobile solutions are not a priority for investment in these companies. Some Mobile-based projects are, nevertheless, carried forwards, but, by and large, they are handled by a single person or team (within the digital area) with no support from other business units. Very often, the task of managing Mobile solutions is passed on to external suppliers. Internally, Mobile skills are scarce or medium-low, however there is no particular drive to acquire additional resources, because the company’s Mobile objectives are, as mentioned, very modest. The company’s back-end systems are not fit for digital development and a roadmap for progress has yet to be clearly defined. Mobile channels are poorly used or not at all in customer relationships, and most actions are random or exploratory. In most cases, the company’s website has no Mobile version and there are no clear ideas about Mobile apps. Mobile Ad-vertising does not always take place, no specific investment is contemplated and no formal measurement system is in place. The Nice to Have group, therefore, scores lowest for all the variables considered.

The sample also contains 19 medium-sized companies. In terms of their positioning, these businesses are skewered towards the less mature categories. One of them, however, does belong to the Mobile First group, so company size is not necessarily a barrier to ex-ploiting Mobile opportunities. More flexible medium-sized businesses with less complex IT systems can, indeed, embark more easily upon a Mobile transformation pathway. There is also further evidence of the high level of heterogeneity among the sectors in the various categories.


Executive Summary


The categories of behaviour

MOBILE FIRST

23 firms (14%)


Executive Summary

The dynamics of the Mobile Advertising market (“Mobile Advertising”) in Italy

The rapid growth in Mobile Advertising holds true for 2016. The sector is now worth 715 million euros17 (up by 53% on the previous year). As a consequence, its percentage relating to the Internet Advertising market is also up (from 21% in 2015 to 30%)18, as is that relating to all means of communication (now 9% compared to 6% in 2015). Furthermore, most of the growth in online Advertising comes from Mobile channels, with turnover from desktop computer Ad-vertising down at the year end. The quota reached by Mobile systems as part of the total inter-net systems (30%) is still a long way from the time spent by users accessing internet on their smartphones (about 60%). There are clearly still some limitations linked to the formats avail-able and the capacity to build communication channels and funnel conversations effectively.

The main factors driving growth in 2016 were as follows. Users are increasingly moving from desktop computers to Mobile channels, which is linked to the previously mentioned improvement to the Mobile versions of websites. There is high growth in multi-platform planning (that is, the purchase of a given space independently of the channel that will then be used)19 for live transmissions or programmatic adverting20. Ad hoc investments have gone up, exploiting target data linked specifically to the channel, and predominantly via in-apps. Finally, Mobile-based performance has improved, both in Mobile commerce and in terms of lead generation.

As mentioned early in the report, it is now rare to find companies whose planning excludes the Mobile world entirely. Investment is, therefore, growing in all sectors (as are the average sums for each project planned). The most important are automotive, telecoms, entertain-ment, e-commerce, finance and Mobile gaming.

For further details, see the report on “Mobile

Advertising: Italian market dynamics”.

17 Source: Observatories for Digital Innovation Politecnico

di Milano – IAB Italia. This value includes Advertising

turnover from smartphones only, excluding tablets.

18 For this assessment, Mobile Advertising is taken net of the SMS component, which is not part of Internet

Advertising estimations.19 In other words, it is

increasingly rare to find companies that totally

exclude smartphones from their Advertising plans. In

these cases, it goes without saying that, with growth in

traffic and therefore of Mobile impressions, the quota of

Mobile solutions compared to the total is also increasing.

20 By “Programmatic Advertising”, we mean

the purchase and sale of individual Advertising

impressions in real time through automated

technological platforms (with or without auction-based

assignment modelling).


Executive Summary

By far and large the greatest growth in 2016 is linked to intellectual property owned by Over-the-Top (OTT) companies (88%, equal to nearly 220 million euros, with Facebook and Google being the main players). We are dealing with a market that is even more concentrated than that of the total internet Advertising market, with the big international players, known as Over-the-Top companies21, making up 82% (against 68% of the entire market).

Nearly half the market is composed of display formats (excluding videos) up by 29% on 2015. Keyword Advertising follows, at 26% and up by 48%. Video Advertising is the most rapidly growing format (+164%) and is now 22% of the total. This has led to an increase in in-vestments with branding purposes. SMS Advertising is also up (+11%) but, in absolute terms, it has been relatively insignificant for some time.

One of the most critical features in Mobile Advertising are the formats. The trade-off be-tween the impact of a publicity campaign and its invasiveness is even more relevant than for PC-based Advertising. The space available for showing advertisements is much less on Mobile devices and often no premium price is paid. Companies must also be careful not to use up internet traffic (especially for videos). A critical factor of success is, accordingly, to develop Mobile First Advertising formats that engage users rather than annoying them, providing consumers with an optimal experience that fully reflects the smartphone’s design.

The other obstacles than came out of our research can be listed as follows. Scarce attention is being paid to investing in focused channel-specific creativity (for the formats and landing pages), a point that is also important when considering multi-platform investments (desktop computers and Mobile devices). Some very performance-orientated companies find it diffi-cult to recognise the “true” impact of Mobile channels on their purchasing funnels without

21 We refer, in particular, to Google and social media networks.


Executive Summary

employing cross-device measurements or adequate attribution models. For some large com-panies, especially multinationals, the limitations included in promotional campaign certifica-tions (especially in terms of viewability)22 have slowed investments with branding objectives.

For the future, the Mobile channel is expected to continue growing, carving itself an im-portant niche within the media mix over the next few years. The speed with which this will take place will depend on whether the Mobile channel can knock down the barriers hinder-ing the process. These areas of expected growth are:

• The strategic value of the Mobile channel as perceived by user companies, which will drive up investment, more thought going into creativity features developed for Mobile devices23 and an improved set of skills for measuring Mobile Advertising returns.

• Improvement to the available formats (native, vertical ads, square ads, audio ads, etc.) which could reduce, at least for a bit, the market quota held by the big OTTs.

• Improvement in the certification of the outcome of Mobile promotional campaigns.• The increase in data available on Mobile users and how these data are employed, to offer

targeted messages, with many types of data being on tap. These range from socio and demographic information (more precise than that acquired from other channels, since smartphones are the ultimate personal devices, and the data can be certified) to geo-location data (to reach users wherever they are in a given moment) and geo-behavioural data (monitoring the users’ movements to identify the places they visit and what they do once they are there). Finally, information is available on the users’ interests (gathered by analysing the sites they visited and the applications they used). The opportunities for personalising promotional campaigns are evident, so this tendency is tracked, excluding, however, any disruptive intervention by the authorities on privacy management matters.

• More mature solutions – and companies being more knowledgeable on the subject –

22 This aspect is particularly important for in-apps, because of the cost of introducing

the various tracking and measuring systems

demanded by the market.

23 Greater expertise in Mobile matters

means, for example, understanding why

captions are needed in videos, given that most

are watched without audio.


Executive Summary

to measure Mobile Advertising performance (for example, in-app publisher attribu-tion solutions24) and to assess how Mobile methods contribute to desktop computer conversations (cross-device tracing). Developing cross-device attribution models will help investment to grow in sectors where there are fewer face-to-face conversations.

As well as growth in the “consumption” of smartphone-based publicity, another element that highlights the strategic role played by Mobile devices in the Advertising market is that of being able to measure the impact of digital Advertising on physical sales points.

Mobile Couponing in ItalyFor several years, the discussion has been all about dematerialising coupons (along with

loyalty and payment cards) and placing them on Mobile devices, so users simply show their smartphones at checkout tills.

During the course of 2016, there were no significant evolutions to services for end users in the retail grocery area, but many more organisations made back-end changes to redeem dis-count vouchers electronically in real time, to the benefit of the entire industry. We, therefore, expect that 2017 will bring about an increase in services for customers.

There is still the open topic of retailers developing user-friendly Mobile apps with high added value services for their customers, to justify them for being downloaded and used regularly. Mobile couponing is potentially such as application, but we are unsure whether what it offers is enough. On this point, third party apps common among users could play a central role, acting as a sort of multi-device Wallet for more than one brand. Two thirds of Mobile internet users have, in addition, expressed interest in this kind of solution.

24 With this term, we mean analytics systems used to identify the publicity channels that give the best results in terms of retaining loyal customers.


Executive Summary

The numbers for Bulk SMSs in Italy

Italian companies are increasingly using SMS messaging (+10% in 2016) to send informa-tion and service warnings to the customers (including sending messages about their transac-tions). In 2016, over 3.2 billion such messages were sent.

SMS messages can reach users still without smartphones and anyone not interested in downloading the brand’s app.

In more evolved companies, for customers who can be reached over more than one chan-nel, this method is often integrated with other au-tomated marketing tools, to vary the message de-pending on the chan-nel. The best channel to use is identified user by user, so an (expensive) SMS can be replaced by a free message (like a push notification), with SMSs used as fall-back when the user cannot be reached directly in-app.


2012 2013 2014 2015 2016

+15% +17%

Data in millions of SMSs

Dynamics of social SMS messages sent from companies to their customers

+13% ~+10%

1,918 2,205

2,581 2,917 ~ 3,200


2012 2013 2014 2015 2016

+15% +17%

Data in millions of SMSs

Dynamics of social SMS messages sent from companies to their customers

+13% ~+10%

1,918 2,205

2,581 2,917 ~ 3,200


Executive Summary

Internationally financed Mobile B2C start-ups

In the course of the research, together with the Observatory on High-Tech Start-ups, we analysed the main Italian and international start-ups operating in the Mobile B2C landscape financed by institutional and informal investors over the past two years. Our sample now contains more than 830 start-ups. We have identified start-ups operating in all the phases of purchasing (Advertising, promotion, sales, pre and post-sales services). Below are the prin-ciple business lines identified.

Mobile Services is the area with the most start-ups (28%). The largest category is Mobile Health, which contains many solutions for doctors and patients to communicate at a dis-tance (such as Chunyu-Yisheng and Lybrate) and to monitor healthcare (for example, Baby-scripts, Bigfoot Biomedical and Hello Heart). But many start-ups operate in communication services between companies and customers and are based on a whole array of technologies (SMS, live chatting and chatbots). Examples include: Brndstr, Intercom and Welcome. These are followed by start-ups providing company-customer relationship services to many sec-tors, from transport to tourism and from retail to finance and real estate.

In second place is the category of Vertical Technical Solutions, at 24%, with a whole range of services.

• Start-ups that work with companies in developing sites and apps (like Holaverse and Woowa Bros). Among these are businesses specialising in planning and designing Mo-bile strategies (for example, Mobiquity).

• Solutions to measure in-app customer experience and, at the same time, activate auto-mated marketing operations (by, for example, sending push notifications that are per-

For greater details, see the report on “Mobile B2C strategy: start-ups receiving Italian and international financing”


Executive Summary

sonalised according to the user’s behaviour, see Appboy and Swrve) or make dynamic changes to the material displayed (see Mobile RQ). This category also contains deep-linking solutions to increase the users’ pathway fluidity during their online operations (see Branch) and tools to monitor and manage a number of different aspects (such as analytics, attribution, AB testing, crash reporting, push notifications, remarketing, monetisation – see, for example, LeanPlum).

• Proximity marketing technology to channel proximity communications using differ-ent kinds of technology (Bluetooth, Wi-Fi, ultrasound, geo-magnetism). Here we are referring to, for example, IndoorAtlas, LISNR and Roximity.

• Companies involved in testing Mobile apps (for example, Testin Technologies). Oth-ers concerned with protecting smartphone information, Mobile app security and with identifying any vulnerable areas in the applications (see 360 Mobile Security and Ap-pDome). Others still working on optimising app and website technical performance, such as the speed to download pages (see Neumob).

• Augmented and virtual reality solutions used in sales points, for example to configure products (examples include Blippar and Marxent Labs).

Start-ups in Mobile Advertising (19%) follow the main market trends:• Proposing specific formats for Mobile devices: Native, with particular emphasis on

gaming apps (for example, Disrupted Logic). Videos, particularly those in outstream format25 or dedicated Mobile apps (see ViralGains). Formats that try to engage the user, such as 360° videos (see Omnivirt) and rich media (see Adludio). Viewable ban-ners on the phone’s blocked screen with trade-offs for the user (see Unlockd). Interac-tive formats that can dialogue with the user, based on artificial intelligence algorithms (see Instreamatic).

25 Outstream formats are video advertisements

that are not linked to the video’s actual editorial content. An

“outstream” space can run in a corner of a page

or within an article on display.


Executive Summary

• The offer of target audience solutions and data management platform solutions, that is, all those companies that offer investors highly personalised information on consumers. Companies can focus their planning by using various types of data. These include geo-localisation information (with companies like Adtena based on Wi-Fi networks), de-terministic data, like the socio-demographic information gathered through agreements with telecom companies (see Cinarra System and Zeotap). Other companies combine a variety of data types (see AlikeAudience). This group also includes start-ups like Ad-brain and Crosswise, whose core business is gathering data for user cross-device tracing.

• Analytics tools to analyse and measure the performance of delivered Advertising campaigns (see SOOMLA). Some start-ups work on identifying the channels that provide the best re-turn in terms of life time value of acquired users (see AppsFlyer). Others estimate the impact of digital campaigns on the physical world through attribution modelling (see S4M).

• Programmatic Advertising platforms (DSP26, SSP27, Ad-exchange28), including those that are palpably Mobile (like BigaBid, Go2Mobi, Marfeel and Pocketmath).

The picture is completed by several agencies that help companies to maximise their app downloads, not necessarily with Advertising material. For example, SearchMan offers app store optimisation and competitive intelligence and Scientific Revenue helps developers to identify the best price for their app.

In fourth place is the Mobile Commerce category (18%), which includes the sales of goods and services in the retail area, including click&collect services, food delivery services and booking services for restaurants, taxis, chauffeur-driven cars and holidays, as well as for buying tickets to events and for car parking. Examples include: Curbside, DoorDash, Maple, OfferUp and Velocity.

26 DSP (Demand Side Platform): technological platforms that can help to select publicity spaces in the SSPs, with the features desired by the advertiser.27 SSP (Supply Side Platform): technological platforms that designers can use to present their company’s inventory to the market – using a single impression – in an automated manner.28 Ad Exchange: technological platform used to automate display Advertising campaigns and manage them in real time (“Programmatic Advertising”) by integrating DSPs (demand-side platforms) and SSPs (supply-side platforms).


Executive Summary

Finally, Mobile Promotion services (11%) concentrate mainly on e-Wallets for making payments (see Coinbase and MoMo), followed by Wallets that apart from dematerialised payment cards, also have discount vouchers and loyalty cards (see Wrap). Other applications combine flyers, coupons and loyalty cards (see DoveConviene, Ibotta and Stocard).

Marta Valsecchi


Work Team

Thanks also to: Filippo Renga e Federico Di Marco

For comments and clarifications, contact: [email protected]

Raffaello BaloccoScientific Officer

Marta ValsecchiResearch Director

Luigi AlicanteResearcher

Giorgia SaliResearcher

Claudio ContiResearcher

Flavia CastellarinResearcher

February 2017


Authors


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