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©2014 eMarketer Inc. ©2014 eMarketer Inc.

Mobile Bootcamp: Implications for Marketers

October 26, 2014

David Hallerman Principal Analyst

©2014 eMarketer Inc.

It’s not just mobile devices, it’s everything: “The Fragmentation of Attention”


What is mobile, really?


Today’s overview – the basic story

þ Money

þ  People


The US Mobile Ad Market


Total mobile ad spending in the US will soar from $19 billion this year to nearly $59 billion in 2018

billions and % changeUS Mobile Ad Spending, 2013-2018

2013

$10.67

120.0%

2014

$18.99

78.0%

2015

$28.48

50.0%

2016

$40.16

41.0%

2017

$49.40

23.0%

2018

$58.78

19.0%

Mobile ad spending % change

Note: includes classified, display (banners and other, rich media and video),email, lead generation, messaging-based and search advertising; adspending on tablets is includedSource: eMarketer, Sep 2014179426 www.eMarketer.com


Source: eMarketer, October 2014

2014

37%

Reality Check #1: Mobile’s share of total digital ad spending

2018

71%



2014

11%

Reality Check #2: Mobile’s share of total media ad spending

2018

27%


Mobile search will double from 38% of all digital search ad spending this year to nearly 77% in 2018

billions and % of digital search ad spending*US Mobile Search Ad Spending, 2013-2018

2013

$4.92

24.7%

2014

$8.72

38.1%

2015

$12.85

50.1%

2016

$17.87

62.9%

2017

$21.73

70.5%

2018

$25.69

76.7%

Mobile search ad spending % of digital search ad spending*

Note: includes advertising on search engines, search applications andcarrier portals; ad spending on tablets is included; *includes contextualtext links, paid inclusion, paid listings (paid search) and SEOSource: eMarketer, Sep 2014178477 www.eMarketer.com


And mobile display ad spending will triple from less than $10 billion this year to over $30 billion in 2018

billions and % of digital display ad spendingUS Mobile Internet Display Ad Spending, 2013-2018

2013

$5.31

30.0%

2014

$9.65

43.1%

2015

$14.67

54.2%

2016

$20.80

64.2%

2017

$25.69

68.8%

2018

$30.51

71.5%

Mobile internet display ad spending% of digital display ad spending

Note: includes banners and ads such as Facebook's News Feed Ads andTwitter's Promoted Tweets, rich media, sponsorships and video (includingvideo on WAP sites, mobile HTML sites and embeddedin-application/in-game advertising); excludes SMS, MMS and P2Pmessaging-based advertising; ad spending on tablets is includedSource: eMarketer, Sep 2014178478 www.eMarketer.com



2014

26%

Reality Check #3: Mobile video’s share of total digital video

2018

48%



2014

3%

Reality Check #4: Mobile video’s share of total digital ad spending

2018

7%


Programmatic will become extremely essential for mobile display advertising

Programmatic’s soaring share of mobile display means its spend will rise from $1.33 billion in 2013 to $14.15 billion in 2016

§  2013’s share: 25%

§  2014’s share: 46%

§  2015’s share: 57%

§  2016’s share: 68%


Programmatic’s soaring share of mobile display means its spend will rise from $1.33 billion in 2013 to $14.15 billion in 2016


Mobile Audiences: Size, Activities & Attitudes


Internet

79%


In 2014, share of total US population that uses the main digital screens

Smartphone

52%

Tablet

46% Both Phone-Tablet

29% Smartphone

52%


Internet

83%


By 2018, share of total US population that uses the main digital screens

Smartphone

67%

Tablet

53% Both Phone-Tablet

43% Smartphone

67%


In the mobile space, what do people care about? Actions speak, so most-used apps in June 2014:

§  Facebook: 74%

§  Google Play: 52%

§  YouTube: 52%

§  Google Search: 48%

§  Pandora: 46%

§  Google Maps: 45%

§  Gmail: 41% Source: comScore Mobile Metrix, August 2014


Mobile devices are major shopping accessories for a large share of most demographics

% of respondents in each group

US Mobile Device Users Who Use Their Device WhileShopping In-Store, by Demographic, June 2014

18-3457.3%

46.4%

35-5450.5%

55.8%

55+25.7%

44.2%

Male Female

Note: at least frequentlySource: Burst Media, "Online Insights: Mobile Devices and Marketing," Aug14, 2014178299 www.eMarketer.com


For beacons to take off, they will need to be relevant and deliver real value to consumers

“There’s a very strong interest in in-store awarenes—I can’t think of a single client that isn’t very interested in the potential with beacons. Anything that will make shopping easier and more frictionless for people is going to win.”

—Rachel Pasqua, mobile practice lead, MEC Global


Despite their promise, challenges abound for beacons, namely consumers must…

§  …tune in by making sure that they’ve turned on Bluetooth

§  …sign in by downloading and then using specific brand and retailer apps

§  …opt in by giving permission to receive messages on their smartphones


More and more consumers will adopt some kind of smartphone wallet, rising to 27% of smartphone users by 2018

millions, % change and % of smartphone usersUS Proximity Mobile Payment Users, 2013-2018

2013

11.1

59.0%

8.0%2014

15.9

43.1%

10.0%2015

22.6

41.7%

12.7%

2016

36.2

60.5%

19.0%

2017

48.7

34.5%

24.0%

2018

57.0

17.0%

27.0%

Proximity mobile payment users% change % of smartphone users

Note: ages 14+; includes point-of-sale transactions made by using mobiledevices as a payment method; excludes transactions made via tabletSource: eMarketer, Sep 2014179452 www.eMarketer.com


Wearables could be NEXT BIG THING, but need to go beyond niche value

“There are wearables built around security. There are wearables built around monitoring your baby. But until we can find something that hits mass-market appeal, it’s going to be tough to get mass-market adoption.”

—Jeanniey Mullen, founder, Wearable Collective and YellowBean LLC


Many people who bought a fitness tracker stopped using the device after 6 to 12 months

% of respondents

US Smart Watch/Fitness Tracker Owners Who StillUse the Device, by Length of Ownership, Sep 2013 &June 2014

Purchased within the past 3 months83%

88%

Purchased within the past 3-6 months69%

77%

Purchased within the past 6-12 months56%

66%

Purchased more than 12 months ago43%

65%

Still wearing (Sep 2013) Still wearing (June 2014)

Note: ages 18+Source: Endeavour Partners, "Inside Wearables (Part 2)," July 2014178940 www.eMarketer.com


Mobile video has huge potential — but audiences dislike mobile video ads and yet also say rewards are acceptable…hmmm?

% of respondents

Acceptability of Marketing Within Free Mobile AppsAccording to US Smartphone App Users, by MarketingTactic, Jan 2014

Full-screen image ads4% 14% 11% 34% 38%

Very acceptableSomewhat acceptableNeither acceptable nor unacceptableSomewhat unacceptableVery unacceptable

Note: n=1,283; numbers may not add up to 100% due to roundingSource: IPG Media Lab and Kiip, "Moments That Matter," June 16, 2014175388 www.eMarketer.com

Full-screen video ads11% 10% 26% 50%

3%

Small banner ad27% 49% 12% 10%

3%

Rewards42% 42% 10% 5%

2%


Smartphones are very personal, which highlights how marketers need to offer consumers real value

“If the shopper has opted in for an offer, they expect to receive a super-targeted, relevant ad. So the creative needs to be timely, it needs to be relevant. It needs to offer some immediate value to the user or enhance what they are doing at that moment.”

—Bill Clifford, chief revenue officer, SessionM


Coupons, rewards, or some kind of real value is still the best way to woo new customers

% of respondents

Likelihood of Trying a New Brand vs. SwitchingBrands After Receiving In-Store Mobile Coupons*According to US Digital Coupon Users, June 2014

New brand47% 28% 25%

Switch brands36% 37% 28%

Very/somewhat likely Maybe Probably not/not at all likely

Note: n=500 who used a digital coupon in the past 3 months; viasmartphone; numbers may not add up to 100% due to rounding; *includescoupons, offers and online promotionsSource: Forrester Consulting, "The State of Digital Coupons: How DigitalCoupons Are Adapting to Mobile and Omnichannel" commissioned byRetailMeNot.com, 177893 www.eMarketer.com


Opening Thoughts


Experiments are the way to go – even as mobile is established, the medium is still very new

“It’s easy for people to look at new platforms and say to themselves, ‘I’m not sure I want to participate.’ But there’s an enormous amount of benefit to get from experimentation. There’s a lot to learn in the early stages.”

—Kira Wampler, CMO, Trulia


How many companies still treat mobile as a separate entity? Why?

“Digital marketing is not a department.”

“It has officially woven its way into the fabric of all your marketing.”

—Cory Treffiletti, vice president of strategy, Oracle Marketing Cloud


We have gathered here today to join together in secular matrimony…

“I have also seen a lot of what I call ‘digital myopia’ out there, the narrow viewpoint held by some sectors of the ad tech industry that digital is the center of the universe.”

—David Cooperstein, CMO, Simulmedia


eMarketer publishes around 200 reports each year. Here are eight recent ones of interest:

•  2014 Programmatic Advertising Forecast •  US Mobile Payments 2014 •  Wearables: 10 Insights •  How Beacons Are Changing Mobile Marketing •  Tablet and Smartphone Video Viewing •  Maps and Map Marketing •  Mobile Commerce Deep Dive •  Brands Go Mobile in the Grocery Aisle

For more info, contact: Lisa Harvey

[email protected] (646) 863-8860

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