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L2′s Intelligence Report: Mobile examines key data, trends, and insights across five prestige industries, identifying strategies to unlock the potential of smartphone and tablet platforms.
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MobileFEBRUARY 14, 2013
IntelligenceReport
© L2 2013 L2ThinkTank.comCirculation of the report violates copyright, trademark and intellectual property laws.
ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
2
February 14, 2013Intelligence Report
MobileExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
M-Commerce: OverhypedM-Influence: Underhyped
T hrough 2016, e-commerce revenues will grow at twice the rate
of overall retail, and m-commerce’s share of online commerce will
more than double, from 11 percent to 24 percent. In real terms,
however, mobile sales will remain a pimple on the elephant of U.S. retail.
Mobile is the next big thing, but its influence will register on other devices
and offline. Just as Google, which produces no content, is now the most
powerful media company on Earth, mobile will become a key arbiter of
1. “Record Retail Sales on Smartphones, Tablets Take Great Ecommerce Share,” eMarketer, January 20, 2013.
influence in retail. A more old-school device, the television, provides an apt
analogy: while home shopping (TV commerce) is a relatively small business,
broadcast advertising continues to drive sales of beer, cars, insurance, and
cures for Restless Legs Syndrome. For every dollar spent via a mobile phone
today, the new appendage of choice will inspire $13 of purchases in-store (and
$22 by 2016).2
tomorrow Becomes today Nearly one in four site visits originate from a mobile or tablet device (up
84 percent year over year).3 One fifth of search traffic is driven by queries
received from mobile users (evenly split between smartphones and tablets),4
including 23 percent of searches for prestige brands (up from 14 percent last
year). And as of May, the average time spent on Facebook’s mobile properties
(441 minutes per month) exceeded that spent on the social network’s
desktop site (391 minutes) for those who use both platforms.5
poorly prepared The majority of prestige brands are not prepared to capitalize on this tectonic shift.
Sites actively promoting daily deals, including Amazon, eBay, Gilt Groupe, and
Groupon, generate a third of all m-commerce retail revenues.6 Their primary point
of differentiation: targeted offers combined with express checkout functionality,
often requiring only “one click” to purchase.
2. The Dawn of Mobile Influence: Discovering the value of mobile in retail, Deloitte Digital, 2013.3. “Mobile Traffic Has Quadrupled in Last Two Years,” Heather Leonard, Business Insider, January 10, 2013.4. RKG, Digital Marketing Report: Q4 2012, Rimm-Kaufman Group, January 2013.5. “Americans Now Spend More Time On Facebook Mobile Than Its Website,” Josh Constine, TechCrunch, May 11, 2012.6. “M-commerce sales via smartphones hit $8 billion in 2012,” Bill Siwicki, Internet Retailer, January 16, 2013.
While U.S. e-commerce revenues represent about 7 percent of overall retail sales, revenues from m-commerce (including sales from tablet devices) remain at less than one percent.1
U.S. retail M-commerce Sales ($ in Billions)
2011
$13.6
169%
81%
56% 36% 31% 27%
24%21%18%
15%11%7%
$24.6
$38.4
$52.2
$68.3
$86.9
2012 2013 2014 2015 2016
Retail M-Commerce Sales % of Retail E-Commerce % Change YoY
Source: eMarketer
Watch theMobile VideoClick to Play
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February 14, 2013Intelligence Report
MobileExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
Data replaces Opinion The aging “site vs. app” debate is becoming moot in the
face of real data. During the 2011 holiday season, the top
five retail mobile apps and sites (in combination) reached
nearly 60 percent of U.S. smartphone owners.7 Mobile sites
reached 51 percent of smartphone users while mobile apps
reached just 28 percent. For brands and retailers outside of
the top five, which often struggle to build awareness in the
app store, the scale tips even more staggeringly in favor of
sites. Several successive industry developments, including
Google’s endorsement of responsive design in June and
Apple’s support of new developer tools (iOS6: file input
type, web audio API, app caching, etc.) in September, have
served to further undermine the advantages of native app
development.8,9
L2 Intelligence In January 2012, L2 examined the mobile competence of 100
prestige brands. This supplemental report attempts to update key
data and provide insight as the industry rethinks its approach to
mobile and tablet platforms. Our aim is not to examine mobile in
isolation, but to define and illustrate its impact on brands’ digital
marketing, e-commerce, and in-store sales. Like the medium we
are assessing, our approach is dynamic. Please reach out with
comments to improve our methodolgy and findings. You can
reach me at [email protected].
7. “A Store in Your Pocket: Retailer Mobile Websites Beat Apps among U.S. Smartphone Owners,” Nielsen Wire, March 12, 2012.8. “iOS6: The Benefits for HTML5 Web App Development,” Aaron Lumsden, September 12, 2012.9. “Recommendations for building smartphone-optimized websites,” Pierre Far, Google Webmaster Central Blog, June 6, 2012.
Scott GallowayProfessor of Marketing, NYU SternFounder, L2
Mobile-Influenced Store Sales vs.M-commerce and E-commerce Sales
($ in Billions)
M-cOMMErcE E-cOMMErcE SaLES
12 31
226
327
MOBILE InfLUEncE On StOrE SaLES
158
689
2012 2016
Q1 2012
percentage of Site traffic from Mobile DevicesQ4 2011–Q4 2012
Q4 2011
23.1%
Q2 2012 Q3 2012 Q4 2012
17.5%16.6%
13.4%12.6%
Sou
rce:
Del
oitte
Sou
rce:
Wal
ter S
ands
Com
mun
icat
ions
Spotlightthe Year of Mobile (again):
Different Screen / Different User Behavior:
traffic vs. time:
flash forward:
Customers spent 525% more time withretailer apps in December 2012 vs. December 2011
smartphone owners use device to shop4 in5
consumers are now“showrooming”
1in5More than1 in3 emailsare opened on a mobile device
by the end of 2013
54% of phones globallywill be smartphones
searches for L2 100 brands by Device Type:
14% 23%December 2011 january 2013
Mobile Search
Growth in Desktop searches
+3%YoY
Growth in Mobile searches
+94%YoY
mobiLe Web
95.2 million+82% YoY
mobiLe Web
28.1billion+22% YoY
unique audience:(U.S., July 2012)
Total minutes per month:(U.S., July 2012)
mobiLe apps
101.8 million+85% YoY
mobiLe apps
129.4 billion+120% YoY
DeskTop
204.7million-4% YoY
DeskTop
367.7billion+4% YoY
couch surfing: out and about:
Visit businesses either in store or online after a local search
of smartphone owners look for local information on their phones
94%
66%Visit social network
44% 38%iPad iPhone
35% 23%iPad iPhone
Info related to TV program
Smartphone Market Share:
Mobile Payments:
in 2012 in 2016E
2009
2012
2015
Active mobile phone accounts worldwide
Active credit/debit card accounts worldwide
Number of mobile payment users in 2012:
5billion
1.3 billion
112.3 million vs. 447.9 million
Symbian
44%
3%0%
Android
4%
67%62%
iOS
14%
20%22%
Blackberry
20%
5%8%
Windows
8%
3%5%
Tablet Shipments:
(iPad released April)
forecast
20102011
20122013
17million
122 million
65 million
200million+
Unrelated shopping
45% 22%iPad iPhone
…use their device daily while watching TV; activities performed on devices include:
38%41%
of tablet owners
of smartphone owners…&
Sources: Business Insider, CNNMoney, comScore, GigaOM, Google, Litmus, Nielsen, Statistica, Teradata, & TechCrunch.
26% 15%iPad iPhone
Info related to TV advertisements
Intelligence report
Mobilefebruary 14, 2013
ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
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February 14, 2013Intelligence Report
MobileExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
Digital Marketingpaid Search Strategy: symmetrical vs. asymmetrical
Mobile ads: campaigns
the Methodology
L2 intelligence reports complement L2’s flagship Digital iQ index® with a deeper dive on platforms or geographies driving future growth. This report examines mobile and Tablet data across 100 brands in five industries. critical areas of investigation include:
by combining longitudinal data on the brands that L2 tracks with third-party research, this report helps illustrate mobile progress observed since january 2012 and define areas of future investment.
Brand Experience Support and Influence
foursquare vs. Instagram: brand presence, Followers, campaigns
Legacy platforms: impact of mobile promotions
new platforms: Wechat
Social Mediapresence: ios, android, blackberry, Windows phone
app Store performance: ratings, comments
app Lifespan: initial release, update Frequency
Mobile Apps
Methodology
adoption: e-commerce, mobile-optimized sites, m-commerce
next-Generation Implementations: responsive / adaptive Design, mobile Web apps
ability to transact: paypal support, interoperable iD, mobile offers
Site
6
February 14, 2013Intelligence Report
MobileExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
Brand List
Fashion (29) Beauty (18) Hospitality (20) Retail (9)Watches & Jewelry (24)
Key Findings
February 14, 2013Intelligence Report
Mobile
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ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
classification of paid Search activityDesktop vs. Mobile
January 2013, n=100
average Google Search results returnedBy Screen Size Without Scrolling
January 2013
10 Results + Sidebar 5–6 Results 2–3 Results
1256 × 14401024 × 768
640 × 960
Paid Search on Both(Different Ad) Paid Search on Both
(Same Ad)
Paid Search Onlyon Desktop
Not Engaged inPaid Search
Paid Search Onlyon Mobile
25%37%
19% 16%3%
Search: Space premium on the Small ScreenIn January 2012, only 57 percent of the 100 brands
assessed were engaging in paid search for brand terms on
mobile devices. This has risen to 65 percent in 2013—still
shy of the 81 percent that buy their own terms on desktop
search engines.
The absence of parallel activity on mobile search is
surprising. Desktop search is responsible for generating
more traffic, but real estate on mobile search is arguably
more valuable given space constraints imposed by the
smaller screen size. On average, a Google search query
on an iPhone for the 100 brands examined yields only
three initial results visible on the device’s four-inch screen.
Consequently, the addition of a new paid ad can easily
push a brand’s first organic search result “below the fold.”
Google’s next iteration of AdWords, announced on February
6th, may address some of these challenges.10
While all of the brands reviewed own the top organic
search result for their brand term, one fifth of these links do
not appear in the default view returned, requiring the user
to scroll down. On mobile screens, 58 percent of immediate
results are paid ads, which require a different approach
altogether. Still, the majority of brands engaged in mobile
paid search mirror their desktop efforts—only 25 percent
alter content by pushing mobile offers, embedding direct
phone numbers, or including directions to local boutiques.
10. Google, “Enhancing AdWords for a constantly connected world,” Inside AdWords Blog, February 6, 2013.
Key Findings
February 14, 2013Intelligence Report
Mobile
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ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
70%
2012
2013
70%
37%
7%
3%
22%
7%
2%
196apps
28apps
7apps
2apps
238apps
65apps
7apps
3apps
iOS
iOS
Android
Android
BlackBerry
BlackBerry
Windows Phone
Windows Phone
Brand participation in competing app Storesn=100
January 2012 January 2013
Mobile Apps: churnIn the past 12 months, the 100 prestige brands reviewed
introduced 94 new apps for the iOS platform (and removed
52). This mixed investment is indicative of an industry still
struggling with the underlying utility of native mobile apps.
Although participation on the iOS platform remained fixed,
this figure obscures the ecosystem’s “revolving door.”
Specifically, six brands (Bare Escentuals, Chloé, De Beers,
Morgans Hotel, Prada, and Tory Burch) joined the platform,
while six brands (Calvin Klein, Clinique, David Yurman, Diane
von Furstenberg, Harry Winston, and Piaget) exited.
Predictably, in the last year there has been a notable
uptick in iPad app development—53 percent of the new
apps are either iPad native or provide dual iPhone/iPad
support. More important, 35 percent of the new apps
released on the iTunes store now have a direct counterpart
in the Android store.
Key Findings
February 14, 2013Intelligence Report
Mobile
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ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
Mobile Apps: Gimmick Graveyard vs. Utility ShedAcross the 238 apps assessed, the average app has been
live on the App Store for 17 months. Twenty-seven percent
of the apps reviewed have never been updated after initial
release—signaling inattention to fixing bugs, ensuring
compatibility with new devices, incorporating user feedback,
and enhancing features and functionality.
Other observations:
Mobile app proliferation by IndustrySeptember 2008–January 2013
iPhone 3G
July 2008 April 2010 June 2010 March 2011 September 2012
iPad 4 iPhone 4 2 iPad 2 5iPhone 5
App Store
10
0
20
30
40
50
60
70
80
July 2008 January 2013
3
num
ber
of
ap
ps
Live
on
Giv
en D
ate
Hospitality Watches & Jewelry Fashion Beauty Retail
fashion brands are the most likely to release an app and not support it with incremental updates (40 percent).
58 percent of Beauty brand apps found in the U.S. App Store were created for APAC markets (45 percent have no user ratings).
Watch & Jewelry brands are the most likely to create iPad apps (89 percent).
Hospitality brands brands remain the most prolific app developers (45 percent of available apps released within the past year, driven by the steady release of property-specific apps).
retail brands release far fewer (but better) apps, update them with much greater frequency, universally support in-app cart functionality, and solicit substantially higher user feedback (1,032 user ratings).
% of brands producing apps
average # of apps per brand
% of apps released in past 12 months
time average app has been live in app Store
average # of updates over app lifespan
% apps nEVEr updated
average # of days since last update
average # of ratings received per app
% of brands supporting ipad
55% 2.8 29% 590 days 4 40% 269 days 310 80%
50% 4.1 43% 463 days 3 22% 291 days 15 67%
75% 3.4 38% 546 days 3 30% 277 days 139 89%
95% 4.1 45% 495 days 3 30% 234 days 66 79%
89% 2.9 24% 554 days 6 13% 89 days 1,032 88%
Table of Contents
February 14, 2013Intelligence Report
Mobile
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ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
15
23
24
flash of Genius15 Ermenegildo Zegna: Zegna LIVE
16 Benefit Cosmetics: Mobile Site Redesign
17 Montblanc: Worldsecond
18 Nordstrom: Déjà Vu
19 Conrad: Concierge
20 Starwood, Hyatt, and Sephora: Mobile Wallet (Lite):
Third-Party Loyalty Programs
21 Crate&Barrel, Clarins, and Kiehl’s:
Showrooming: Friend or Foe?
22 Kiehl’s, Clinique, Barneys, and Burberry: The Blurring
of Online vs. Offline
L2 team
about L2
Key findings8 Mobile Sites: Commerce Anywhere, Anytime
9 Tablet Sites: Touch Folly
10 Search: Space Premium on the Small Screen
11 Mobile Ads: The Bad Kind of Disruptive?
12 Social Media: New Platforms, New Opportunities
13 Mobile Apps: Churn
14 Mobile Apps: Gimmick Graveyard vs. Utility Shed
85
6
7
Spotlight
Methodology
Brand List
ExcErpt Intelligence report: Mobile To access the full report, contact [email protected]
a tHInK tanK for DIGItaL InnOVatIOn
51 east 12th street, 2nd Floor new york, ny 10003 L2thinktank.com [email protected]
© L2 2013 L2thinktank.com reproductions prohibited
This report is the property of L2 Think Tank. no copyrighted materials may be reproduced, redistributed, or transferred without prior consent from L2. L2 reports are available to L2 members for internal business purposes.
