Mobile beacon and mobile payment technology is increasingly in the news, and there is huge money at play. Some $20 billion dollars alone in transaction fee savings can be had by retailers and up to $300 per active wallet user in advertising revenue per year alone can be realized. The race is on and the winners will be the organizations that not only provide ease-of-use to the consumer, but also data and security while effectively marrying mobile beacon and mobile payment technology.
Mobile beacons are particularly attractive to the out-of-home advertising (OOH Advertising) sector. Beacons are devices that communicate with a users mobile smartphone via Bluetooth. Out-of-home advertising is just that, it is the marketing to consumers when they are out on the go. Examples of out-of-home advertising include billboards, transit stations and retail locations, to name a few.
Mobile beacons can work had-in-hand with mobile payment systems to not only increase ease of use for consumers, but they can also provide vast amounts of invaluable data to merchants and valuable interaction to consumers. In the increasingly data-driven connected world we all live in, it is no longer about one-to-many marketing pushes, but rather about creating one-to-one marketing experiences. Big data combined with mobile beacon and mobile payment systems are making this one-to-one consumer experience a reality. Organizations are now able to individually track consumer behaviors while in store, with their purchasing history, and provide relevant data to not only pull consumers back, but to increase purchase amounts through value-added mobile interactions. With the increasing culmination of multi-device marketing, the data becomes even more valuable.
Beacons can be placed in a store entrance location(s) or behind a billboard(s) or poster(s) at a bus stop. Beacons use technology to detect nearby smartphones and push advertisements such as coupons, product information, transit delays, etc. The technology can also be utilized by point-of-sale (POS) systems to collect audience measurement – such as interactions and consumer maneuvers through stores. The technology can also be utilized by advertisers to count the number of people who not only interact with the advertisement, but also that pass by it. So for advertisers, it is the ability to message consumers while in a specific location, and the ability to collect valuable consumer data. But the uses go beyond that. Think about real-time transit updates on your mobile phone, while at the gate waiting for a flight or at a bus stop for a bus – the uses are endless.
Apple Pay Vs CurrentC – Apple Vs Walmart
With the recent release of Apple Pay, only available for iPhone 6 users whom have also upgraded to iOS 8.1, the ease-of-use issue have largely been solved. All consumers need to do is to hold an iPhone 6 up close to a contactless reader and confirm payment with a finger or Touch ID. Consumers do not need to open an app or even wake the display. The technology works through Near Field Communication (NFC). The purchase is then affirmed through a subtle vibration and beep to let the consumer know the transaction went through. With Apple Pay, consumers have access to over 220,000 locations to use their iPhone 6’s to pay, as well as some new iPads and the upcoming Apple Watch, set to be released in 2015.
Retailers can also combine forces to increase ease of use and adoption, such as what Merchant Customer Exchange (MCX) has done with it’s CurrentC product. MCX was established by Walmart and is made up of a consortium of brands such as Lowes, Dunkin Donuts, Rite Aid, Target, Shell, Sunoco, and Wendy’s to name just a few. According the MCX Linkedin company page, “collectively, these companies operate more than 110,000 locations and process more than $1 trillion in payments annually”. This makes the consortium of MCX potentially a huge enabler of not only mobile payments, but also beacon technology to track consumer data and provide value to consumers through rewards and coupons. Organizations that make up the MCX consortium are provided with ample amounts of consumer data, something that Apple Pay currently does not offer directly and that will further be enabled by beacon technology.
Of critical importance is the merchant processing fees that retailers must pay. Organizations like Walmart believe they are paying too much to credit card issuers such as Visa, MasterCard and American Express – CurrentC aims to cut down on these fees as well as to be able to debit consumers banks accounts directly, all which result in increased to their bottom lines. At one trillion dollars in payments annually, and merchant fee’s between 2-4% of the transactional value, this means MCX represents some $20 billion dollars in credit card fees alone – this is huge! According to MCX, they represent more than one-fifth of retail store transactions in the United Sates.
Since Apple Pay does not provide consumer data and minimal if any processing fee savings, CVS, Rite-Aid, and Best Buy disabled their NFC technology and no longer accept Apple Pay. They have since committed to MCX’s CurrentC system.
The challenge and importance with consumer adaptation
In order for an advertiser to use beacons to reach their consumers, the consumer has to first download that store’s specific app. The consumer then needs to enable Bluetooth, enable location services and opt-in to receive notifications. These are clearly a lot of steps that the consumer has to complete. Once the consumer do go through with these steps, advertisers also need to ensure their message is relevant and valuable.
The beacon space is very fragmented today, there is no one universal beacon technology making it a closed network. Beacon technology today is many companies competing for the same consumers, most with the same cumbersome consumer actions required to enable the beacon technology. Google is working on facilitating open beacon technology through it’s open web initiative, but this is still some time away.
For mobile payments, consumers previously needed to open the specific app to pay, often making it less convenient and not conducive to the importance of ease-of-use. Apple Pay has changed that and is by far the most consumer friendly when it comes to ease-of-use, and at this time, security. But large retailers are revolting and taking a stance now against credit card issuers transactions fees, which they have long had issue with.
As the mobile payment and mobile beacon space continue to expand, it is paramount to keep consumer ease-of-use in the forefront. Ease-of-use and relevancy is what is going to win the mobile payment and mobile beacon war, not just cheaper merchant processing fees.
Best Practices For Mobile App Advertisers
To be successful in the mobile app space, you need to respect the (limited) available real estate and time constraints of consumers. The best mobile commerce apps have simple sequentially served content that is presented in a consistent and straightforward manner, always focused on reducing complexity. Organizations also need to constantly test and improve their apps, ensuring that the the consumer always has the best possible product experience.
When it comes to mobile consumer acquisition, always keep the following best practices in mind:
- Transparency. Only work with reputable partners that will offer you real time transparency into the performance of your campaign.
- Lifetime Value (LTV). This is specific to the vertical your app is in. This could be an impression, time spent in the app, purchase, shares, etc.
- Usage. How long are consumers using your app, how frequently, what are the demographics, Geo-locations, are they using the app on a smartphone, tablet, Andriod, iOS, version etc.
- Active Users. What are you Daily Active Users (DAU) your Monthly Active Users (MAU) and what days and times are they accessing your app?
- Retention Rates. What are your one, seven and 30 day retention rates? With so many apps and increasing competition and costs to acquire users, you want to ensure your app is as sticky as possible. Did you know 20% of apps are only used once and that if an app is only opened once in 7 days, there is a 60% chance it will never be opened again (Localytics)!
- Session Time. How long are users in your app? The stickier your app, the longer the sessions. Ensure your content is relevant and targeted.
- Average Revenue Per User. The average revenue per user (ARPU) is key to understanding the bigger picture of your users and ensuring your are acquiring only the most valuable of users and getting a return on any paid acquisitions. Also track the daily active revenue per use (DARPU).
- Load Time & App Launch. If the user has to ask themselves what is taking too long, then it is simply too long.
- User Acquisition. Ensure you have all the metrics in place to clearly define where your users are coming from and proper attribution. Know the differences between organic and paid LTV’s.
- Native. Focus on partners that can offer you native placements. Native is the future of mobile advertising and monetization.
Mobile internet usage continues to rapidly accelerate. Earlier this year, internet consumption via mobile devices surpassed time spent browsing the web with a PC. Therefore, it only makes sense for mobile internet investment to align with this trend. In the early part of 2014, the landscape forever changed when mobile internet usage surpassed PC usage.
Since comScore released the data earlier this year, mobile usage has continued to grow, now accounting for some 60% of time spent online, with PC usage slipping to about 40%. These are drastic increases in mobile usage, in a very short time frame. Given these statistics are now a few months old, mobile usage rates will only be higher now. For advertisers already behind the curve on how to interact with their consumers, the mobile acceleration posses even more of challenge, but one that most definitely can not be ignored.
All of this would help to explain why mobile internet investment is up some 232% in the last 12 months! Mobile internet companies took in some $19.2 billion in new investment over the last year – more than double that of the previous period, according to investment advisory firm Digi-Capital.
With mobile app usage alone accounting for 51% of time spent online, the investments are of course pouring into mobile app companies, particularly mobile commerce, which received $4.2 of the $19.2 billion. The companies that are living and breathing mobile will continue to lead the charge, and organizations that are late to adapt to mobile risk being left behind.
Mobile Commerce Is King
The below infographic is courtesy of TrinityVentures which breaks mobile commerce down into six main categories: Mobile Payments, Retail Enablement, Mobile Retail, Marketplaces, On-Demand Services, and App-Based Services. As you can see from the graph, there is some serious competition to acquire new users in these categories.
Trailing behind mobile commerce was Travel/Transport with $3.3 billion and Utilities with $1.8 billion accounting for the top 3 of the 16 stock market sectors. Digi-Capital expects Mobile Commerce alone to hit over $500 billion dollars in revenue by 2017. These are astronomical growth numbers, some 300% growth in just four years.
If you are advertising on Facebook and want to target users who have set their relationship statuses to Domestic Partnership or Civil Union you’re out of luck, kind of.
Previously, Facebook users could set their relationship status to: single, in a relationship, married, engaged, it’s complicated, in an open relationship, widowed, separated, and divorced. Facebook has now added two new additions to the relationship status, Domestic Partnerships and Civil Unions. With these additions, you would think that Facebook would allow for online marketers to target these users. Domestic Partnerships and Civil Unions theoretically open up new doors for marketers to reach these demographics. The problem is, as of today, Facebook only allows advertisers to target by the following; Single, Engaged, In a relationship, and Married.
Advertisers will hopefully be able to create specific campaigns and corresponding landing pages to target gay and lesbian users on Facebook in the near future through Facebook Ads.
As it currently stands, advertisers and marketers have to get a little more advanced and target users that have previously granted permission through the Like button and application installs to be able to target users who’s statuses are set to Domestic Partnerships and Civil Unions. An advertiser would in theory need to go through a company like Zynga, or a company that had access to large amounts of user data to be able to target users whose relationship statuses were set to Domestic Partnerships or Civil Unions.
Hopefully in the near future, Domestic Partnerships and Civil Unions will be added to the advanced demographics section through Facebook advertising to make this a more mainstream option for marketers.
This past week there has a been a lot buzz surrounding Apple’s announcement that they would be offering a subscription service, only to be followed by Google’s announcement of their own subscription service a day later. Both services support auto-renewal, a huge opportunity for advertisers to increase revenue. This is obviously a great revenue generator for Apple and Google, but what about the advertisers?
Apple will charge advertisers 30% of the revenue through iTunes and its App Store, while Google will charge an estimated 10% of the revenue through its own Android mobile operating system, or what is being rolled out as “One Pass”. Advertisers are already balking at the price. Many advertisers claim this would make the transaction unprofitable, but is that the truth?
Let’s use the Wall Street Journal as an example. If you search for Wall Street Journal Subscription, the sponsored listing takes you to. Let’s assume this is one of their better offerings online (it should be noted that both Apple and Google will require the product/service they promote must be at the same price-point as what can be found outside of their platforms). The promotion states that the user can subscribe for $1.99/week if the user is a first-time subscriber.
Outside of the promotional method used, after scrolling down, I noticed there were two payment options (assuming the user is not a first time subscriber).
There are two price points. The first is the annual Payment of $103, and then there is the Monthly Payment of $8.62. Most users will of course take the Monthly Payment of $8.62, particularly as there is no fiscal advantage or call to action, driving users to the annual payment of $103. There is a small advantage to this – if the user pays for the annual subscription, they do save $0.44 cents. Outside of this promotional method, the WSJ should consider incentivizing the user towards the annual service with a 10-20% reduction in price, in order to get more users to convert to this more profitable (annual) plan. All that being said, the model is simple.
If you look at what the WSJ pays affiliates, it is generally anywhere from 15% – 35% on a revenue-share. Let’s assume the average user is worth about $80.00. This means the cost to acquire a new users is anywhere from about $12 – $28 per user using this model. The same cost on a Cost per Action (CPA) model may be anywhere in the $35 – $55 range, so perhaps a bit higher acquisition cost. Internally, through targeted search, the WSJ may acquire users on average, lets say for about $25 per user. All acquisition models have pro’s and con’s and will of course produce different LTV’s. You get the picture.
Apple and Google are now stating that they want 30% and an estimated 10% respectively of the revenue for themselves. It’s probably safe to assume that publishing companies like the WSJ are against this, but should they be?
Look at the cost to acquire users using the above models, it’s not cheap and it takes a lot of effort to do so. Apple and Google in this regard are the marketers and the distribution source. Is a new $80.00 newspaper reader not worth the 30% cost of $24.00? I am not in the newspaper or publishing business, but I’m guessing it is.
If the current model does not work for advertisers, perhaps the below models could. Here are a few ideas:
- Charge advertisers a tiered percentage of revenue with performance metrics tied in. For example, a subscriber to the WSJ subscribes to a monthly plan but subscribes for less than six month. Instead of Apple charging 30%, it could charge 10%. If the user stays on for more than six months, but less than twelve, charge 20%. Finally, if the user stays on for more than twelve months, charge 30%. There are clear advantages for the advertiser using this model, but less so for Apple, particularly given their current model.
- Charge advertisers on a set CPM, with advertisers paying for premium placements. This way, advertisers have more control over their placements and can asses value and placements appropriately based on their individual goals.
- A hybrid model incorporating performance with organizations individual goals.
Regardless of the model, by presenting alternative models to what is currently offered, and perhaps viewed by some, at least in the press, as being perhaps to aggressive, Apple and Google could remove these barriers and provide other options. Obviously the model will continue to evolve. With this evolution, one would anticipate more options down the road.
Tien Tzuo, the CEO of Zuora, provides some great examples in an article that appeared through PaidContent.org. Among the examples:
• “Amazon (NSDQ: AMZN) is a great example. Through the Amazon Prime program, Amazon customers are provided unlimited, free shipping for a $79-per-year membership fee. Though Amazon is primarily a transaction-oriented company, Amazon Prime provides a stream of ongoing, predictable subscription revenue. (Prime provides arguably a much bigger benefit to Amazon, too: by offering free shipping, customers are far more likely to purchase their goods at Amazon and remain a loyal customer.)”
• “Software developers realize they stood to make a lot more money by offering their iPad and iPhone apps on subscription vs. simply as one-time purchases. They stand to make significantly more money by offering an annual subscription to their applications (say, $3) as opposed to merely getting paid 99 cents up front.”
This is an exciting time and clearly there is a lot of opportunity for all parties involved. To capitalize on it, advertisers and developers need to have a clear and open mind. Let the creativity flow!
No matter how you look at the model, it is a work in progress and clearly holds a lot of promise, particularly given the scale of Apple and Google. Right now there are only so many players in this arena. There is Apple, Google and let’s not forget Facebook and their 600 million users with Facebook credits. Like Apple, Facebook takes a 30% cut of revenue, but is much more at this time, focused on social gaming.
One thing is for sure; advertisers simply cannot ignore these new opportunities. Advertisers need to jump on this now, test the model, assess the lifetime value of the users and hope that the space becomes more competitive, so the prices drop. Advertisers need to ask themselves if the 30% fee Apple charges for the subscription service and the increased conversion from once click purchasing justify the acquisition costs. Likely for some companies this will make sense and for others, it will not.
- U.S. and EU regulators eye Apple subscription plan
- Google One Pass is a payment system that enables publishers to set the terms for access to their digital content
- Apple Launches Subscriptions on the App Store
I recently came across a very interesting article on CNN.com titled, How to brand a disease — and sell a cure. Initially, I was drawn to the article because of the branding spin in the title, but after reading it, I started getting a few ideas. How could creating conditions, or what I interpreted as alternative calls to action increase conversion in online marketing campaigns?
Before I answer that question, I will use an example from an online dating advertiser that had a great campaign, I will call it, “lt’s ok to look”. To give readers some perspective, the campaign emphasized an innocent and curious looking Facebook type profile picture of an attractive female or male user (depending on the targeting). The ad copy simply said, “It’s ok to look”. The campaign was prevalent on sites such as MySpace, Bebo and Classmates.com and was targeted to users from 18-49 years of age. It was a very well thought out performance branded online marketing campaign.
As all media buyers know, a big challenge is getting the highest possible CTR or click-through-rate after you have already negotiated the rates you need. This dating advertiser created a condition, users simply had to click; after all, it was ok to look. This condition-focused call to action was highly effective, particularly when incorporated with sequential messaging and tailored, consistent ad copy not only on the creative, but landing page and when applicable lead/sale flow. This performance based branded marketing online increases conversion.
This is a primary example of an advertiser that understood their user and branded the “condition” in a manner that the user would imply as a call to action. The condition was to elicit the user to follow their impulse through a targeted well thought out campaign. After all, dating and much of CTR’s for that manner are emotional and impulsive responses. Good advertisers understand this and capitalize on it.
The disease branding is of course nothing new, all you need to do is watch the nightly national news to see just how pronounced this type of marketing actually is. Does Viagra or Cialis ring a bell on commercials between the nightly news segments? There is of course condition based branding going on online as well, but perhaps online marketers should consider incorporating this further into their campaigns.
Perhaps one of the biggest take-always outside of the power of disease branding or what I refer to as interpreted calls to action marketing is a question that I will pose to readers. Where have all the well through out performance branded online marketing campaigns gone? I will attempt to address this in a later post…
It was last spring while attending F8, Facebook’s annual developers conference that it hit me during a presentation on Facebook Credits by Debie Liu, that the rise of alternate payment methods online had now become very important. I left the presentation motivated by the sheer amount of opportunity. Facebook had a made a very good move and understood the market and where it was going.
Facebook credits allow Facebook users to pay for goods and services through credits. These credits can be earned through taking actions, for example liking a page, filling out information, or beating a section of a game. Alternatively, these credits can be used to purchase virtual goods and services. As Facebook Credits expands, there will be more than just virtual goods that can be purchased through Facebook Credits. This of course will increase conversion for products and services purchased online, thus attracting more advertisers.
Today, there are some 200 games and 75+ developers using Facebook Credits. There have also been some significant partnerships announced with organizations such as Rockyou, who will exclusively support all virtual payments for the next five years. Most recently, Facebook has partnered with Playspan which has a larger global reach for accepting different payment methods outside of the primary payment methods in North America, Credit cards. Users of course can also purchase Facebook credit gift cards at stores such as Target, GameStop, Safeway, Walmart, RadioShack, and Best Buy.
While doing some Black Friday and Cyber Monday shopping on Amazon.com last week, I noticed that American Express was allowing Amex users to pay via their Membership Rewards program. I had previously only seen this payment method available through a partnership Amex had with Ticketmaster. Clearly, Amex is expanding their offering to users as a means to use Membership Rewards.
Just last week, it was announced that Amex and Zynga had formed a partnership that will allow Amex users to use their Membership Rewards towards the purchase of virtual goods through Zynga’s games. This is the first time that virtual goods can be purchased through rewards points and further legitimizes (as if it was needed) the virtual goods business.
Perhaps this will lead into Amex also becoming a partner with Facebook to allow users to use their Membership Rewards to purchase Facebook credits in the near future. One thing is for sure; these alternate forms of payment could prove to be very lucrative to all players involved.
As an American Express cardholder, I am very familiar with the Membership Rewards program and the pros and cons. For example, some rewards are highly beneficial and cost-effective with others are less beneficial and cost-effective. A lot depends on the end users perception of value. Clearly with the scale of Zynga with their games online and huge virtual goods business rumored to be north of $500 million annually, there is huge demand for what they have to offer.
What will be interesting to assess is how many users actually opt to use their Membership Rewards towards virtual goods like windmills for Zynga’s hit game, FarmVille. To increase usage and introduce the alternate payment method to Zynga’s users, there is a planned release of some 20 exclusive virtual goods products in the very near future.
Look for more alternate payments methods to made available, particularly with high-growth online business that are hungry to acquire and retain new affluent users. Perhaps in the near future, we will be paying for our purchases on sites like Groupon through Amex Membership Rewards.
Marketers should be paying very close attention to this growing opportunity as a highly efficient way to attract new users to their products. After all, who wouldn’t want affluent American Express cardholders to purchase their products! Throw in a recession where consumers are looking for added value and you have a nice recipe for success.
If you are like so many other professionals, you are always online. You may not physically be in front of your computer, but you are “online” at all times via your Blackberry, iPhone, iPad or other smartphone devices. I am one of the individuals that is always online. In fact, it was not until my honeymoon last fall that I even knew there was an option to turn off data on my Blackberry . This (arguably) good feature disabled my email – how pathetic is that!
Now, with more recent studies and media attention, the “always online” mentality is being addressed. Naturally the news is not always that positive. Recently, the New York Times started an investigative series addressing how computers are affecting us called Your Brain on Computers. The first part of the series, Hooked on Gadgets, and Paying a Mental Price is a great read.
Like many of us who are always online, there are really no vacations. However what price are we paying for the effects on family and children? I’ll leave readers to figure these questions out for themselves. For a little more perspective, read Working At Home: Family-Friendly?
While attending the F8 Conference last month in San Francisco, I remember sitting through the Keynote and individual breakout sessions thinking to myself, “Wow Facebook really has something big going on.” I left the conference excited by what I had heard. During Mark Zuckerberg’s demo, he showed how the Facebook social plugins would integrate into sites like CNN. Of course, right when I went back to my hotel room that night, I tried it out.
There is was, right on the CNN homepage, the activity feed. I could see not only what Facebook users were recommending or had liked, but also what my Facebook friends recommended and liked. This of course made me that much more interested to read the articles they were referring to. After all, these were my friends and we have many shared interests.
Today comes news that since F8, there are now 100,000+ sites that are using Facebook’s social plugins. This is very impressive. By the way, if you haven’t noticed, this site uses the, “like” button also, go ahead try it! Below is an except from the blog post:
More than 100,000 sites have already integrated social plugins. Across various industries, people have shown that they want to interact and share and see what their friends recommend. We are excited to report some early results that website developers have shared with us:
- News: News sites have implemented social plugins to help surface individualized content for readers, and in the process seen significant increases in daily referral traffic from Facebook. For instance, Facebook referral traffic increased by 290% for The Washington Post, 250% for ABC News, and 80% for The Globe and Mail, Canada’s largest-circulation national newspaper. The Globe and Mail has also found that people who have liked their Facebook Page are more engaged on their site — and comment, share, and read more.
- Movies & Video: IMDb.com has seen daily referral traffic from Facebook double, and its users have generated more than 350,000 likes. Dailymotion, one of the top 50 most-trafficked websites in the world, has seen users click the Like button tens of thousands of times per day on their site. As an example, more than 250,000 users have engaged with one of the most popular videos on Dailymotion, PIXELS by Patrick Jean, and a quarter of its views are from Facebook users.
- Sports: NHL.com, the official website of the National Hockey League, has seen an 80% increase in referral traffic from Facebook, as people interact with articles, scores and videos.
- Publishing: Scribd, a site that helps authors publish their writing, has seen their referral traffic from Facebook double as authors gain followers among groups of Facebook friends.
No matter how you put it, the Facebook social plugins add value. As an avid Facebook user, I enjoy them – particularly as I am also a news junkie.
Facebook has been in the news a lot lately regarding their privacy changes and at times, issues. I came across a great interactive post recently titled, The Evolution of Privacy on Facebook by Matt Mckeon that all readers should spend some time with.
Click on the years on the right-hand-side and you can see how over the last few years, more and more of users information has become public. Search and organic listings, obviously played a role in doing this, but Facebook also has a philosophy to open-up the internet or to enable sharing. As much as this has come under fire by privacy watchdogs, there has also been a lot of good that everyone seems to forget about.
For myself personally, Facebook has been about getting in touch with old friends and staying in contact with new and existing friends. Friends I otherwise with my schedule would not be able to keep in contact with. The challenge for Facebook now seems to be balancing the ambition to share or map the social graph, as Facebook refers to it, with the need to protect users privacy.