Greg SterlingOpus Research/Sterling Market Intelligence

November 13, 2012

Ten Big Trends in Ten Short Minutes

• Hype-Local: Demand, Awareness Growing

• Mobile Momentum Continues

• Social Media, SMBs & the ‘Now What?’ Problem

• Local Data Tsunami

• Payments and Real-World Analytics

• From Clicks to Local Transactions

Last Year: LSS ‘11

• Continued momentum of mobile and “decline” of the PC

• Growth of tablets (and emergence of smaller tablets)

• Rise of multi-screen consumer

• Mobile shopping and ‘showrooming’

• Mobile payments – not quite there yet

• Bursting of the deals “bubble”

• Decline of Facebook?

• Fragmentation of search, growth of apps and “assistants”

• Slow merchant response (brands, SMBs) to consumer changes

• SMB confusion amid market complexity

• Novel uses for location data (proxy for audiences)

• Indoor location, “turn by turn” directions

• Coming of the “Zombie Apocalypse”

This Year: LSS ‘12

Shift from PC Mobile

Source: IPSOS, Google, ROA Holdings (2011-2012)

Smartphone Penetration Passing 50%

Source: ITU World Telecommunication/ICT Indicators database, Gartner, Morgan Stanley (2011-2012)

Mobile phones (overall)

Smartphones PCs0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Mobile vs. PC Penetration (Q4 2011)

Mill

ion

sGlobal Mobile Penetration

• Total mobile subscribers: between 237-250 million

• Smartphones: 125 million approx

• Current smartphone penetration: 55%, moving to 62% by Q4/Q1 2013

• Pew: 68% with incomes $75K+ have smartphones today

Source: StatCounter, November 2012

Traffic: Mobile vs. PC

2011-10

2011-11

2011-12

2012-01

2012-02

2012-03

2012-04

2012-05

2012-06

2012-07

2012-08

2012-09

2012-10

0

10

20

30

40

50

60

70

80

90

100

Desktop Mobile

• Globally: Mobile 12.3% of global web traffic

• Europe: 6.5% is mobile

Source: StatCounter, October 2012

Mobile vs. PC in India

2009-10

2009-12

2010-02

2010-04

2010-06

2010-08

2010-10

2010-12

2011-02

2011-04

2011-06

2011-08

2011-10

2011-12

2012-02

2012-04

2012-06

2012-08

2012-10

0

10

20

30

40

50

60

70

80

90

100

Desktop Mobile

Apple: 100 Million iPads Sold

• 100 million iPads sold since launch 2.5 years ago• 91% of tablet-generated web traffic comes from the iPad• 94% of the Fortune 500 is testing or using the iPad

Microsoft Attempting to Adapt

Microsoft CEO Steve Ballmer: sales “starting modestly."

Rise of Multi-Screen User

• 90% use screens sequentially to accomplish a task; majority of that activity happens the

same day

• Different “start screens” for different types of activities

• Nearly impossible to track

Source: Google-IPSOS (August, 2012), n= 1,455.

Same Day ‘Sequential Screen Usage’

22%63%

15% 82%

77%

66%

45%

28%

9%

13% 10%

15%

19%

16% 39%

14%

9%

Source: IAB, 5/12 “mobile shopping diaries,” n=260

64%

36%

Yes No

Where  you  using/looking  at  any  other  media  at  the  same  time [when using smartphone]?

Simultaneous Media Usage

Source: Google-IPSOS (August, 2012), n= 1,611

Context, Need, Time Impact Device Use

Source: Google-Ipsos Q1, 2012 n=1,000 US smartphone owners

Top 3 locations:

1. Home2. On the go3. In store

IAB “mobile diaries” study:

1. At home: 47%2. Out and about: 29%3. At work: 10%

At home

On the go

In a store

Restaurant

Work

Social gathering

Dr.'s office

Café

Airport

On public trans.

School

97%

83%

78%

71%

71%

60%

56%

50%

49%

36%

30% AdMob survey (3/11): 82% of tablets used primarily at home

Smartphones Used Extensively at Home

Mobile Shopping (not buying) & ‘Showrooming’

Mobile Comparison Shopping

• Multiple studies: 60% to 80% (approx) of consumers use mobile devices in stores

• Google research: 70% of smartphone owners use them in stores

- What are they doing? Smartphone owners do price comparisons, check product reviews and locate stores

After consulting their smartphones:

• 37% decided to not purchase the product at all

• 35% purchased the product at that store

• 19% purchased the product online

• 8% purchased the product at another store

Source: Pew Research Center (Q1, 2012), n=1,000 US mobile phone owners, Google, InsightExpress surveys 2011

64% of in-store smartphone users decided not to buy on the spot

Restaurant Travel Automotive Restaurant Travel Automotive

84%

43% 49%

85%

48% 52%

16%

57% 51%

15%

52% 48%

Yes NoMade a Purchase Related to Visit on App/Website by Device

Smartphone Tablet

Half of Mobile Lookups Lead to Purchase

Source: xAd-Telmetrics “mobile path to purchase” study conducted by Nielsen (Q2 2012), n=1,500 survey respondents and behavior observed from 6,000 Apple and Android users

M-Commerce Penetration (US)

Source: UC Berkeley School of Law (July 2012), n=1,119

Q: Which of the following do you use your phone for?

Voice calls

Messaging

Email

Playing Games

Accessing internet

Access social networks

Making purchases

Listening to music

Location services/maps

Taking pictures/video

89%

85%

52%

35%

56%

42%

20%

41%

46%

75%

11%

15%

48%

65%

44%

57%

80%

59%

54%

25%

NoYes

Source: Google-Ipsos Q1 2012, n=1,000

• 65% of smartphone owners would prefer to use a PC/laptop for transactions

• 37% researched but later purchased online

• 32% researched and later purchased offline

Mobile-Influenced Purchases: Offline, PC

Mobile Payments

Mobile Payments Are Sort of Here

• Lots of anticipation for mobile commerce and mobile payments

• Mainstream adoption not there

• PayPal has a plastic card

• Google about to introduce one

• Getting from here to there: time frame, device replacement, POS upgrades?

Interest M-Payments (US)

Compare prices when shopping

Receive offers/promotions based on location

Track finances daily

receive and manage coupons

Buy things at in-store POS

As a membership card

As a photo ID

Purcahse tickets to events

Organize and track gift/loyalty cards and programs

As ticket for bus

As house key

Refused to answer

48%

33%

31%

31%

25%

24%

23%

23%

21%

19%

18%

18%

Source: US Federal Reserve (3/12) n=2,002 US adults

Q: Would you like to use your mobile phone for any of the following purposes?

Main Reasons for Not Using M-Payments

Concerned about security

See no benefit from using mobile payments

Easier to pay with cash or credit card

My phone doesn't have necessary feature(s)

Don't trust the technology to process payments

Cost of mobile data too high

Other

Difficult/time consuming to set up

Unaware of stores that accept mobile payments

Not offered by bank/credit union

Refused to state

42%

37%

36%

31%

20%

15%

12%

9%

9%

4%

2%

Consumers express lack of trust, fear and confusion about mobile payments. They also don’t yet see the benefits.

Q: What are the main reasons why you have not used mobile payments?

Source: US Federal Reserve (3/12) n=1,780 US adults

Decline of Facebook?

• Facebook announced 1 billion users globally (October)

• 600MM mobile users

• 17 billion location-tagged posts, including check-ins

• Median age of the user is about 22

• However engagement declining?

- September 2012: 6 hrs 40 minutes (US)

- March 2012: 7 hrs 9 minutes

• Rise of alternatives

Facebook: 1 Billion Users . . . But

Source: Facebook internal data, Nielsen (November 2012)

• 12.8 million local businesses have Facebook pages

• 8 million of them monthly updates

• 3.5 million update weekly

Local Businesses Souring on Facebook?

Source: Facebook internal data (Q3 2012); Reply.com, September 2012 (n=3,270 US SMBs under 99 employees); Manta September 2012, n=614 US SMBs

Does your business have a presence on Facebook?

• Yes, and I find it valuable — 42%

• Yes, but I don’t find it valuable — 30%

• I used to, but didn’t feel it was worth it — 5%

• No — 23%

58% had negative view

Evolution of Search, Rise of ‘Assistants’ in Mobile

Mobile Search Is Almost All Google

66% of mobile users find mobile sites through search engines

Source: Google-sponsored study with 1,088 US adults (25-54); survey/interviews conducted Q3 2012; StatCounter, September 2012.

US Market

• Google: 93.8%

• Yahoo: 3.89%

• Bing: 1.48%

• Others: 0.83%

Global

• Google: 97.1%

• Yahoo: 1.88%

• Bing: 0.65%

• Others: 0.37%

• Android now leading smartphone OS globally

• In US Android has 52% of US smartphone market (comScore)

Google Maps

Yahoo

Mapquest

Bing

YellowBook

YPMobile

Yelp

SuperPages.com

Citysearch

Urban Spoon

Other

64%

52%

39%

38%

38%

36%

31%

28%

24%

23%

3%

Most popular local search apps (among the 49%)

2011

49%

Use of apps for local search on smart-

phones and tablets

Half of mobile users conduct local searches with apps (volume unclear)

Source: comScore-Localeze-15Miles Local Search Study, Q1 2012, n=4,000

Mobile App Use for Local Search

Source: Nielsen (May 2012)

ComScore: “4 in every 5 mobile media minutes” is spent with apps (vs. browser)

Series10%

10%

20%

30%

40%

50%

60%

70%

80%

90%

72%

81%

28%

19%

Apps Mobile web

Time Spent in Mobile: Apps Dominate

May 2011 May 2012

Assistant Metaphor Taking Hold

Merchants Slow to Respond

Source: Google-IPSOS (August, 2012), n= 1,611

Screen Time: 90% of Media Interactions

90% of media Interactions are through one of four screens10% of media time with traditional channels

MINUTESMINUTES

66MINUTES

74MINUTES

81MINUTES

64MINUTES

43

Sources: Mary Meeker, KPCB “Internet Trends” presentation May 2012, Flurry Analytics

US mobile ad revs (IAB 2011) approx $1.7B

Time Spent with Mobile vs. Ad Spend

• Mobile-friendly sites produce 75% higher rate of engagement (revenue, page views, etc.) per visit for mobile users*

• 55% of consumer survey respondents said a frustrating mobile experience hurts opinion of the brand*

• Roughly 80% - 90% of Fortune 500 don’t have mobile-optimized site**

• 79% of large online retailers don’t either***

*Google: Jason Spero (ThinkMobile event 2011), Google, Sterling Research 9/12 (US consumer survey; n=1,088) **iMomentus, August 2012***Magento (Q2 2012)

I’m disappointed

in you

Most Marketers Still Not Mobile-Ready

Is This a Good Ad?

What about This?

New Uses for Location Data

Location As ‘Context,’ Proxy for Audience

Skyhook Wireless, Factual, PlaceIQ, Placed, JiWire and others using location profiling to enable brands and marketers to target audiences

Mapping the Great Indoors

Indoor Location, Turn-by-Turn

Range of companies:

• Google

• Bing

• Nokia

• Micello

• Meridian

• Point Inside

• Aisle411

• Wifarer

• Others

Greg Sterling greg.sterling@gmail.com

Twitter.com/gsterling

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