Pinterest, the darling digital pin board that’s turned the social media world upside down, is now a top traffic driver for brands. That’s a good sign marketers should get their butts up to speed on the latest pinning tips and tricks. Fortunately for you, MDGadvertising has created an infographic explaining the nooks and crannies of the social network. Many brands — such as Etsy, Real Simple, Whole Foods and West Elm — are on board and have already amassed significant followings. This infographic explains some Pinterest basics, such as explaining what a Pin, Repin and Board are, and provides five tips. You should first decide whether Pinterest is a fit for your product. Selling life insurance? This might not be a helpful platform for you. If you think Pinterest is right for your brand, go ahead and add a “Pin It” button to your site. Make sure to use great visuals. Pin products you love but don’t sell — this site isn’t all about self-promotion. Add some early Pinterest all-stars and learn from their strategies.
You’re probably not surprised that 87% of Pinterst users are women. However, you may not realize that the site has a significant age range, with 80% of users fairly evenly distributed between 25 to 54. If you haven’t caught the Pinterest bug yet, be assured many others have. According to a comScore report, it was the fastest standalone site in history to pass the 10 million users mark, which happened in January. Are you a marketer using Pinterest? How have you jumped on board the Pinterest train? Share you best practices in the comments.
On closer inspection, many of them turned out to be wearing tiny earpieces that connected wirelessly to their smartphones.
What’s next? Perhaps throngs of people in thick-framed sunglasses lurching down the streets, cocking and twisting their heads like extras in a zombie movie.
That’s because later this year, Google is expected to start selling eyeglasses that will project information, entertainment and, this being a Google product, advertisements onto the lenses. The glasses are not being designed to be worn constantly — although Google engineers expect some users will wear them a lot — but will be more like smartphones, used when needed, with the lenses serving as a kind of see-through computer monitor.
“It will look very strange to onlookers when people are wearing these glasses,” said William Brinkman, graduate director of the computer science and software engineering department at Miami University in Oxford, Ohio. “You obviously won’t see what they can from the behind the glasses. As a result, you will see bizarre body language as people duck or dodge around virtual things.”
Mr. Brinkman, whose work focuses on augmented reality or the projection of a layer of information over physical objects, said his students had experimented on their own with virtual games and obstacle courses. “It looks really weird to outsiders when you watch people navigate these spaces,” he said.
They have not seen the Google glasses. Few people have, because they are being built in the Google X offices, a secretive laboratory near Google’s main Mountain View, Calif., campus where engineers and scientists are also working on robots and space elevators.
The glasses will use the same Android software that powers Android smartphones and tablets. Like smartphones and tablets, the glasses will be equipped with GPS and motion sensors. They will also contain a camera and audio inputs and outputs.
Several people who have seen the glasses, but who are not allowed to speak publicly about them, said that the location information was a major feature of the glasses. Through the built-in camera on the glasses, Google will be able to stream images to its rack computers and return augmented reality information to the person wearing them. For instance, a person looking at a landmark could see detailed historical information and comments about it left by friends. If facial recognition software becomes accurate enough, the glasses could remind a wearer of when and how he met the vaguely familiar person standing in front of him at a party. They might also be used for virtual reality games that use the real world as the playground.
People flailing their arms in midair as they play those games is a potentially humorous outcome of the virtual reality glasses. In a more serious vein is the almost certain possibility of privacy issues and ubiquitous advertisements. When someone is meeting a person for the first time, for example, Google could hypothetically match the person’s face and tell people how many friends they share in common on social networks.
This month, the Electronic Privacy Information Center, a research and advocacy group for Internet privacy, asked the Federal Trade Commission to suspend the use of facial recognition software until the government could come up with adequate safeguards and privacy standards to protect citizens.
Mr. Brinkman said he was very excited by the possibilities of the glasses, but acknowledged that the augmented reality glasses could pose some ethical issues.
“In addition to privacy, it’s also going to change real-world advertising, where companies can virtually place ads over other people’s ads,” he said. “I’m really interested in seeing how the government can successfully regulate augmented reality in this sense. They are not really going to know what people are seeing behind those glasses.”
Consumers believe brands need Facebook pages in order to remain relevant, but they “hate” intrusions by those brands. A new study from research and strategy outfit Insight Strategy Group illustrated the no-win situation brands face when it comes to marketing on Facebook:
53 percent of respondents believe brands must maintain Facebook pages for relevancy, but
64 percent said they “hate” when they are targeted via their social network profiles, and
58 percent find marketing via social media to be invasive.
Continuing the mixed messages sent by consumers, 54 percent like when a brand has a Facebook page or presence on another social network, but 60 percent find it annoying when brands communicate with them via Facebook or Twitter. Consumers view their relationships with brands on social media as purely one-way, as 58 percent of respondents indicated that they liked or followed brands in order to receive special news and deals, and 55 percent mentioned giving feedback to brands. Other findings from the study by Insight Strategy Group include:
53 percent of respondents agreed that it is not clear to them who can see a comment or post they write on Facebook
55 percent feel that they can have a strong impact on a company by writing about it on a social networking site
55 percent believe writing about a product, service, or show on a social networking site is the best way to give a company feedback
47 percent agree that Facebook allows them to be who they really are
51 percent feel that Facebook does not capture the “real me”
64 percent disagree that you can learn more about someone online than you can in-person
Insight Strategy Group Founder and Chief Executive Officer Boaz Mourad said:
Consumers are definitely of two minds when it comes to a corporate presence on social media. They seem to have an instinctive aversion to a brand’s invasion of their social space, yet much of that resistance falls away when they perceive that there is something in it for them — a deal or an exclusive offer, for example. This study shows that the consumers’ relationship to companies and social media is complex, fluid, and difficult to generalize.
Readers: What are your feelings on marketing via Facebook and other social networks?
Struggling to increase engagement and exposure on Twitter?
You’ve spent hours creating your article and naturally want to get as much exposure as you can for your literary masterpiece. Sharing it with your social network, specifically through Twitter, is probably something you’re doing already. After all, Twitter is the information network so why not share it with your followers? So you send your tweet, sit back, and wait. And wait… What happened? Why hasn’t anyone retweeted you? According to a Sysomos study (involving the examination of 1.2 billion tweets over a two month period) you only have a short time span of 3 hours for your Tweet to be effective.
Source: Sysomos
In fact 92.4% of retweets happen in the first hour, which drops to 1.63% in the second hour, and down to 0.94% in the third hour. If your tweet isn’t retweeted within the first hour, you can assume that it won’t be. So how can you make your tweets stand out from the dozens of tweets being sent each second so that followers read, reply and/or retweet it? Here are some tips to help you increase engagement with your community while continue to gain exposure for your article.
Twitter Strategy 1: Make your tweets thought provoking, informative and newsworthy
As mentioned earlier Twitter is the information network with well over a thousand tweets being sent every minute. For your tweet to have any chance of being shared, it has to be informative, newsworthy and relevant to your audience. Dull, boring and irrelevant – just won’t cut it. Tweeting ‘Here’s my latest article’ is hardly going to spark interest and engagement. Make it interesting and compelling so that readers not only click through to your article, but also feel inspired to share it with their followers.
Twitter Strategy 2: Repurpose Your Tweets
Not all of your followers are going to see your tweet when you initially send it. Retweeting your article at different times throughout the day (or across several days/months) is another way to reach a fresh audience. Guy Kawasaki schedules the same tweet 4 times, 8 hours apart in order to capture more views from his followers who are located across different time zones. Other Twitter gurus use this strategy as well, with the same tweet spread over several weeks or months. I’ve tried this strategy myself, with great success. Every so often I’ll tweet about one of my older articles, which allows me to share it with my most recent followers who haven’t had the opportunity to read it yet. The snapshot below shows my article: Are you developing (or destroying) your online reputation and relationships, which I’ve tweeted every-so-often over several months. Each time it generated new views and retweets.
A word of caution; don’t be tempted to schedule your tweets too close together. You don’t want to turn off your followers by being repetitive.
I’ve only just learned about another tool – Buffer, which claims that users saw a 200% increase in clickthroughs to their links, after two weeks of ‘buffering’ their tweets.
Twitter Strategy 3: Ask a question and encourage opinions
Asking for opinions is a great way to engage with your followers. I often do this when I’m doing some research for an article and want to find out what other people are doing. It’s also a great way to generate interest in your upcoming article. As I was putting together this article I wanted to see what other people were doing to leverage and repurpose their material on Twitter. So I asked my followers. As you can see, I received some interesting responses. I even asked my Facebook friends, who added their thoughts to the conversation as well.
And neither call to actions still resulted in a 12% of people retweeting
Source: Dan Zarella
Use this call to action sparingly though as asking people to retweet each of your articles (especially if you update your blog weekly) could become repetitive and turn off some of your followers. Consider joining a Triberr group instead.
Twitter Strategy 5: Shorten your tweets to 120-130 characters
Shorten the length of your tweets to make it easier for your followers to retweet it. If people are required to abbreviate and rewrite your tweet so that they can fit in their twitter handles, they probably won’t bother. And, it may just lose your brand voice if they make drastic changes to fit it into 140 characters.
Twitter Strategy 6: Use different hashtags
A great way to reach an audience that may not be following you directly is by using hashtags. [This # symbol]. By placing a hashtag in front of a keyword will allow your tweet to be found when people are searching for that specific keyword. Some of my favorite keywords that are relevant to my target market is #smallbusiness, #smallbiz, #branding, so I will regularly include one (or more) of those keywords in my tweet.
[Source: TweetReach
To find out which hashtags (keywords) are most popular, use these two resources:
So there are six ways you can leverage Twitter to gain exposure for your article. Remember though, one of the best ways to get your tweets to capture the attention of your audience so they feel compelled to share it with their community, is to make it interesting, inspiring and relevant. What about you? Do you retweet your tweets? How often? What results have you seen? I’d love to hear from you in the comment box below.
Smartphone penetration is closely linked to income and age levels, according to survey results released in February 2012 by Nielsen. Increased levels of smartphone penetration correlated with higher income levels among all age groups studied, with the greatest disparity between those making over $100k per year and those under $15k per year seen among those aged over 45, and the least amount of disparity for those between the ages of 18 and 24. For example, Americans aged 45-54 making over $100k per year are 3.3 times more likely than those making under $15k per year to own a smartphone (60% vs. 16%), while in the 55-64 age group, they are 3 times more likely (48% vs. 16%). By contrast, those aged 18-24 and making more than $100k per year are only 37.5% more likely than their lower-income-earning counterparts to own a smartphone (77% vs. 56%).
Ownership Skews Young
The Nielsen data indicates that Americans aged 25-34 have the highest levels of smartphone ownership, with two-thirds saying they own a smartphone. The 18-24 age group follows relatively closely, at 62%, ahead of those aged 35-44 (58%). After that, there is a significant drop-off to the older age groups, with less than half of adults aged 45-54, and only one-third of those 55-64 owning a smartphone. Just 22% of Americans over 65 report owning a smartphone. Similar patterns hold among those who had acquired a new device in the past 3 months. 80% of the 18-24 and 25-34 age groups who had acquired a new device chose a smartphone, followed by those aged 35-44 (74%), 45-54 (65%), and 55-64 (56%). Although smartphone penetration is low among those over 65, 43% of that group who had acquired a new device in the past 3 months chose a smartphone. Overall, Nielsen found smartphone penetration to stand at 48% in January. Google results released in January found lower penetration of smartphones in the US, but that consumers are increasingly shifting from feature phones to smartphones. According to the report, 38% of US consumers responding to Phase 2 of Google’s survey, conducted in September and October 2011, reported ownership of a smartphone, up 22.5% from 31% of respondents to Phase 1 of the survey, conducted in January and February 2011. By contrast, during that time period, the proportion reporting ownership of a feature phone dropped 17% from 47% to 39%.
Income Plays Significant Role
Meanwhile, according to Nielsen, although age is an important determinant of smartphone ownership, the influence of a consumer’s income level is not to be underestimated. For example, Americans aged 55-64 making over $100k per year are more likely to own a smartphone than those aged 25-34 making less than $15k per year (48% vs. 43%), and almost as likely as 18-24-year-olds making $15-35k per year (48% vs. 53%). Indeed, consumers older than 65 with over $100k per year in income are more likely than those aged 45-54 making less than $50k per year to own a smartphone.
Scott Anthony, of Innosight and the author of The Little Black Book Of Innovation: How It Works, How to Do It, shows how to find hidden opportunities for innovation.
The insight that sparks innovation appears to occur randomly. After all, the iconic shorthand for innovation is a light bulb, implying that ideas come from sudden flashes of inspiration. While such flashes are surely good things, it is hard to depend on them, particularly if you are at a company that needs to introduce a steady stream of innovative ideas. Steve Jobs once said, “It is not the customer’s job to know what they want.” That’s absolutely right. It is yours. And don’t think you don’t have a customer because you work in an internal support function or for a company that provides components or services. Everyone has a customer, whether it is a purchaser, user, or co-worker. The quest to identify opportunities for innovation starts with pinpointing problems customers can’t adequately solve today. More than 50 years ago Peter Drucker wrote, “The customer rarely buys what the company thinks it sells him. One reason for this is, of course, that nobody pays for a ‘product.’ What is paid for is satisfaction.” Companies think they are selling products and services, but in reality people hire those products and services to get jobs done in their lives. As marketing guru Ted Levitt quipped to his students a generation ago, “People don’t want quarter-inch drills--they want quarter-inch holes.” A problem arises, and the customer looks around and chooses the solution that gets the job done better than competing alternatives. To discover your quarter-inch holes, obsessively search for the job that is important but poorly satisfied (for more on the underlying theory of jobs to be done, see The Innovator’s Solution by Clayton M. Christensen and Michael Raynor). Innosight’s research and field work over the past decade suggests that following three specific activities can increase the odds of identifying innovation opportunities.
In 2000, when A.G. Lafley became CEO of Procter & Gamble, he found a company that had lost its way. The stock had plunged almost 50% after a March 2000 warning that the company would miss earnings estimates. Lafley looked for simple ways to reenergize that company’s innovation energy. He came to the conclusion that P&G needed to fundamentally reorient itself. The company was world renowned for driving decisions based on deep customer understanding, but upon reflection, Lafley realized that the company had drifted away from that understanding. Lafley is gifted at communicating complicated ideas in simple ways. He developed a simple mantra to refocus P&G: The consumer is boss. He would say something along these lines: “Fellow P&G-ers, I’d like you to meet your new boss. You may think that I, as your CEO, am boss. That’s not right. You might think that the board of directors to which I report is boss. That’s not right. You might think our shareholders are the bosses. That’s not right. You might think your line manager is boss. That’s not right. We have one and only one boss that matters. The consumer. The consumer is boss.” Lafley urged P&G to understand their boss as never before. P&G had to hear what the consumer was saying and, much more importantly, tease out what the consumer wanted but couldn’t articulate. To do this, Lafley worked to create a culture where everyone in P&G--from the chairman down--would spend time living with consumers, shopping with consumers, or working alongside consumers. He would describe invaluable insights he personally obtained in his career by spending time in the market. For example, while Lafley worked on Tide branded laundry detergent, P&G would regularly administer quantitative surveys to assess the quality of its product and packaging. Consumers reported that they loved Tide’s packaging (at the time, Tide was packaged in cardboard boxes). Yet, when Lafley was interacting with a consumer, he noticed that she almost always used a screwdriver or scissors to open the Tide box. Lafley realized that the woman didn’t want to risk breaking her nails opening the cardboard box. She said she loved the packaging because she didn’t know of any alternatives, but in reality, she had to find a creative way to open the box because of its design limitations. Many P&G products trace their inspiration to these kinds of observations. For example, watching a woman grow frustrated when she spilled coffee grounds on her floor helped to inspire P&G’s Swiffer quick cleaning line, which today produces more than $1 billion in annual revenue. One of the dirty little secrets of innovation is that even the most well-intentioned people lie. They say they will do things they won’t, and purport to have interest in things they don’t. Spend time in the market so that you can know the customer better than they know themselves. How to get started: Detail the amount of time you spent with customers or key stakeholders in the last three months. Find a way to triple that time.
Carefully studying current and potential customers often highlights workarounds that customers create to make up for the limitations of existing solutions. Drilling into these compensating behaviors can help to unearth innovation opportunities. Consider jeans shopping. Research shows that women find it the second-most intimidating shopping experience, behind shopping for swimwear. In 2009, as part of an ambitious innovation program, VF Corporation, which makes Wranglers and Lee Jeans, began to spend more time with customers in order to understand specific points of frustration. One trip to a local department store proved particularly illuminating. Executives watched as a prospective female customer shopped for a new pair of jeans. She wandered around the endless racks of clothes in the store, picking up pair of jeans after pair of jeans. The VF team was struck by two observations: First, the sheer volume of jeans the woman brought into the dressing room. Second, the fact that the woman had picked up multiple sizes of just about every pair she was trying on. The executives assumed that she must have recently experienced a weight change, so she was unsure of her size. But in fact it turned out that her experience taught her that the sizes that appeared on the labels of jeans only loosely related to what would actually fit. Her workaround involved bringing in volumes of pairs of jeans in order to find one good fit.
These observations helped the company focus its innovation efforts on the jeans-buying process. VF changed the labeling on its jeans, developed innovative display mechanisms in retail stores, and launched an online campaign where noted style icon Stacey London helped women find jeans that would be most appropriate for their body type. In early 2011, VF reported that these and related innovation efforts had created $100 million in incremental revenue in its jeanswear division. How to get started: Lead a round-table discussion to identify compensating behaviors that your company’s solution forces customers to follow.
The natural tendency for would-be innovators is to study existing customers who participate in existing categories. By all means do that. But also look for people who face some kind of constraint that inhibits their ability to solve a pressing problem they are facing in their lives. Apple, Southwest, Ikea, Nintendo, and many more companies trace their success to unlocking demand that was pent up because existing solutions were too expensive or complicated. These companies found a market opportunity just sitting there, waiting for someone to develop a convenient, affordable solution. Indian conglomerate called Godrej & Boyce used this approach when it developed its ChotuKool refrigerator, designed for 85% of the Indian population who didn’t purchase refrigerators. These consumers wanted some of the benefits of refrigeration, but needed something that was smaller, more portable, and less power hungry. The ChotuKool addressed these barriers to consumption. The size of a small cooler, it costs an affordable $70 and is battery powered, so it can run off the grid when electricity is down. The product exceeded sales expectations during a trial launch in 2010. In early 2011, Godrej won an award from the Indian prime minister for its efforts, with sales accelerating dramatically. It takes some mental discipline to look to markets that don’t exist. But that discipline can pay off in the form of growth opportunities that are hidden in plain sight. How to get started: Write down five things that a coworker or friend can only do by relying on an expert or going to a central location. Think about ideas that would let these people do it themselves. * * * Spending time with customers, watching for workarounds, and exploring nonconsumption helps to highlight exciting innovation opportunities. Of course, there’s more to innovation than the spark of an insight. Innovators have to translate that insight into an idea that gets the innovation job done and delivers against whatever metric matters (revenues, profits, process performance, employee satisfaction, and so on). But the right starting point makes the journey infinitely easily.
Search and social management platform BrightEdge reported explosive growth for the top 100 brands on their Google Plus pages. So should Facebook be concerned? According to BrightEdge, Google Plus fans, or the number of users in circles, for the top 100 brands soared by more than 1,400 percent in January, to 3.1 million, from 222,000 in December. BrightEdge provided Google Plus follower totals for the top brands, which it refers to as the G+ Ten. While the growth rate of the these pages is impressive, we’re not sure Facebook needs to start sweating yet. Below is BrightEdge’s G+ Ten, with Google Plus fans followed by Facebook likes. The differences are staggering.
H&M, 462,000 on Google Plus, nearly 9.7 million on Facebook;
Samsung, 372,000 versus more than 6.4 million;
Pepsi, 350,000 versus more than 7.5 million;
Coca-Cola, 336,000 versus nearly 39.3 million;
Starbucks, 335,000 versus more than 28.3 million;
Sony, 258,000 versus more than 2.1 million;
Intel, 258,000, versus more than 6.2 million;
eBay 253,000, versus more than 2.1 million;
Google 193,000, versus nearly 7.6 million; and
Amazon 184,000, more than 2.8 million.
Facebook obviously had a head start, with Google Plus launching this past June, but closing these gaps will take time, and plenty of it, unless Google Plus can actually maintain monthly growth rates comparable to the one it posted in January. And even at that pace of growth, it would take a while before Google Plus becomes big enough that people want to log on more frequently. Readers: How long do you think it will take for Google Plus to pose a significant threat to Facebook when it comes to brands, or will it ever happen?
The devices that power our digital lives have undergone disruptive changes over the past several years. Smartphones have evolved from text-based communication tools to multimedia hubs. Ereaders and tablets have grown from cool ideas to transformative technologies. Televisions, game consoles and media players have gained internet connectivity, and with it access to new worlds of digital content.
Most of the major device categories are poised for further growth and convergence. Tablets, smartphones and connected TVs will be even more integral to consumers’ lives in the coming years than they are today. Ereaders will look more like tablets. Game consoles will continue to develop into home entertainment centers. Even mature devices such as PCs will endure, thanks to their inherent strengths and future refinements that will keep them relevant. Stimulated by these massive changes in the way technology plays into people’s day-to-day activities, participants in the device-and-content ecosystem are assessing the landscape in search of opportunities. Brand marketers, consumer electronics manufacturers, content owners, media companies, retailers, web publishers, internet technology firms and consumers are focused on getting the most out of a digital economy driven by connected devices and the media that flows through them. This economy is made up of complex, interconnected factors. Innovations in product design, changes in consumer behavior, decisions around content licensing and the development of software and apps are just a few of the triggers that affect the marketplace. Companies that understand these dynamics will be in the best position to compete over the next several years.
Key Questions
How many people are using key devices?
What marketing opportunities does the current device landscape present?
How will the leading smartphone and tablet operating systems fare in the next few years?
Which devices will play the biggest role in shaping the future of digital media?
A new generation of smart devices has revolutionized the way people communicate, socialize, stay informed and entertain themselves. Smartphones, tablets, ereaders, connected game consoles, internet-enabled TVs and other connected gadgets have become essential to a society that demands instant and constant access to digital media. These devices are seeing steep adoption curves and rapid technological changes, resulting in a fluid market that involves stakeholders across a broad spectrum, including consumer electronics manufacturers, marketers, content owners, internet technology firms, web publishers and consumers. As these device categories evolve and new ones come into being, consumers will continue to expect digital content to be available on all screens, at all times, in all locations. They will rely less on their laptop and desktop computers and more on their mobile gadgets, but PCs will remain strong anchor points in people’s digital lives. This will be especially true in office environments and for tasks that require substantial computing power. The growing presence of smartphones and tablets raises the stakes for competitors in the mobile operating system (OS) race. Apple and Google have emerged as key players as other companies, notably Research in Motion and Palm, have squandered their once-dominant positions. Microsoft is also expected to make a serious play for a larger share of the mobile OS market later this year when it unveils Windows 8, widely expected to be a hybrid computer/mobile platform. Each of these competitors is betting on a strategy that involves software, hardware, a digital content storefront and an app marketplace, all powered by operating systems that work across a growing range of devices, especially smartphones, tablets and PCs. As devices evolve, the lines between them are blurring. Competition and consumer demand will push manufacturers to develop devices that do more, thereby resembling one another. Already, we are seeing tablets morph with ereaders and portable game systems with smartphones. People use phones as GPS systems and remote controls, and they use tablets for a growing number of functions that may include TV viewing, gaming, video conferencing and social networking. Realizing that consumers expect more power, more flexibility and more functionality at affordable prices, device-makers are gravitating toward convergence. Some are experimenting with hybrids of smartphones and tablets; others are equipping TVs with browser-like interfaces to enable online video viewing, web surfing, social networking and other pursuits. Digital content is the raison d’être for advanced devices. Without movies, TV shows, games, photos, books, magazines, newspapers, video clips and music, few would care to own a tablet, a touchscreen smartphone, a connected console or an internet-enabled TV. These devices are designed for media consumption, particularly video. Consumer electronics manufacturers and marketers understand that people engage with video on an intimate level, so they have tailored their product designs and marketing strategies accordingly. Still, we have only scratched the surface with digital content on connected devices. As consumers continue to gravitate toward digital media consumption, and as content owners and device manufacturers continue to find ways to meet the demand for it, more content will become available in the digital domain. Monetization models will come into focus as digital content scales to meet the demands of marketers. Advertisers that understand the complexities of the device landscape will be able to realize greater reach and measurability than those that cling to traditional marketing concepts. But achieving success amid the tumult of technological change will not be easy for marketers. Budgetary constraints will force some to gamble on select devices or operating systems. Consumer preferences will shift as people become accustomed to certain devices or tire of others. The path forward won’t always be clear. Nevertheless, the market for ad-supported content on digital devices will continue to expand, so opportunities will abound for those who know where to seek them out.
The past five years have brought about massive changes in the way consumers interact with technology. Devices such as smartphones, tablets, ereaders, connected game consoles and internet-enabled TVs have undergone massive adoption, to the point that many are essential to how people communicate, socialize and consume digital media. Forecasts for major device categories call for substantial growth in the next several years, promising a future in which technology will be even more intricately woven into people’s lives.
PCs Despite the attention lavished on tablets, smartphones, ereaders and other newer technologies, the PC is still the centerpiece of most people’s digital lives. In the US, computers—whether in desktop or notebook form—accounted for 93% of internet traffic in mid-2011, according to comScore. International Data Corp. (IDC) estimated that more than 71 million PCs were shipped in the US in 2011. Although that number represents a nearly 5% drop from 2010, the US PC business is still considerably larger than that of newer technologies such as tablets and smartphones. On a global basis, IHS iSuppli estimated that PC shipments would grow to 479.1 million units in 2015, from 433.7 million in 2013 and 345.4 million in 2010. Notebook PCs will drive much of the growth in the PC category, according to NPD DisplaySearch. In January 2012, the company estimated that worldwide notebook PC shipments—a category that does not include netbooks—would rise to 432 million in 2017, from 187.5 million in 2011. This represented a slight upward revision of an earlier NPD DisplaySearch forecast. Within the notebook category, the emerging Ultrabook form factor is expected to become a major growth driver, according to NPD DisplaySearch and Juniper. Ultrabook laptops feature thin, lightweight designs that emphasize portability, efficiency and affordability compared to more fully-featured laptops. Ultrabooks typically feature solid-state storage drives, long battery life and fast load times. The name Ultrabook is an Intel trademark that applies to Windows-based systems, but Apple’s popular MacBook Air meets many of the design criteria of Ultrabooks. Further, the MacBook Air is widely considered to be the benchmark that Intel and other manufacturers are aiming to emulate. DisplaySearch indicated that worldwide shipments of Ultrabook-type notebooks would exceed 175 million in 2017, up from a negligible amount in 2011. The company’s “Quarterly Mobile PC Shipment and Forecast Report” noted: “Demand for ultrabooks will be driven by consumer interest in sleek design and convenience like instant-on and long battery life.” Similarly, Juniper Research estimated that worldwide shipments of Ultrabook-type devices would reach 176 million by 2016. Although personal computers are expected to hold their own amid a flurry of innovation from other device areas, some of the activities that people have been conducting on PCs are migrating to other devices. For example, a KPMG tracking survey from 2007 to 2011 noted that the percentages of respondents who preferred accessing news and information on PCs dropped to 76% from 96%. During the same period, the percentages of those who preferred mobile phones (including smartphones) for this activity rose to 14% from 1%. Similar patterns were noted for social networking and chatting/instant messaging. In another sign of a shift away from PCs and toward smartphones and tablets, a Sandvine report noted that, in September 2011, 55% of North American internet network traffic to entertainment destinations came from devices other than PCs, including connected TVs, tablets and smartphones. The company indicated that the pattern represents a significant change from earlier behavior.
Smartphones The number of US smartphones users will grow to 148.6 million in 2015 from 106.7 million in 2012, according to eMarketer estimates. This category will enjoy double-digit user growth every year of eMarketer’s forecast period, and by 2014 smartphone users will make up the majority of mobile phone users. The number of US smartphone subscriptions is significantly higher than the number of users, indicating that many customers own more than one smartphone. MobileSQUARED and adsmobi estimated that US smartphone subscriptions would increase to 155.6 million in 2012 from 117.9 million in 2011. Even though feature phone users outnumbered smartphone users overall in 2011, smartphone sales made up 59% of total mobile phone sales in Q3 2011, according to NPD. By contrast, a year earlier, smartphones accounted for only 46% of the total. This acceleration in smartphone sales is a clear indication of the direction of momentum in the mobile phone market. A 2011 Yankee Group report provided further evidence of the growing presence of smartphones in the mobile phone universe. The company noted that smartphones accounted for 51.6% of US mobile phones in 2011 and forecast that this figure would grow to 83.8% by 2015. These figures measured number of units, as opposed to number of users or subscriptions.
Tablets Nearly two years since the introduction of the Apple iPad, the US tablet market has blossomed into one of the most vibrant areas of the personal computing ecosystem. Growth prospects are excellent, with eMarketer forecasting double-digit increases in US tablet users over each of the next three years. By the end of 2014, there will be 89.5 million tablet users in the US, representing 35.6% of US internet users and 27.7% of the population. In 2011, 83% of US tablet users were iPad users, indicating the dominance of Apple’s category-defining product. By 2014, Apple’s share will contract to 68% as competitors continue to enter the fray, notably in the form of the lower-priced Kindle Fire and tablets from the likes of Samsung, Asus, Sony and Barnes & Noble. Despite this reduction, Apple will remain the clear leader in both market share and mind share. Its competitors will continue to imitate the iPad and play catch-up. Because tablets are often shared within a household, users exceed the number of units shipped. Using International Data Corporation figures, J.P. Morgan estimated US tablet shipments of 26.2 million units in 2011 and forecast growth to 50 million in 2013. Evolving pricing dynamics are playing a role in tablet shipment and sales gains. Amazon broke the $200 price barrier with its Kindle Fire tablet in 2011 and is expected to continue pushing the lower end of the market. In January 2012, Barclays Capital raised its forecast for Kindle Fire tablet sales based on robust holiday business in late 2011. The company expects Kindle Fire sales to reach 18.4 million in 2012 and grow to 27.8 million in 2014. Amazon’s aggressive pricing strategy assumes that its tablet customers will buy more of the company’s digital content and physical merchandise than customers who do not own tablets. Barclays estimated that combined revenue from ebooks, apps, video-on-demand and MP3s purchased through Kindle Fire tablets will top $5.2 billion in 2014, compared with $982 million in 2012. Barclays further estimated that the Kindle Fire would drive additional revenue in the form of subscriptions to Amazon’s Prime membership program. Prime memberships give Kindle owners free access to streaming video content, the ability to “borrow” a certain number of books at no charge, and other benefits. The study noted that incremental tablet-driven Prime spending would reach approximately $600 million in 2012 and roughly $4 billion in 2014. As much as 90% of this revenue will come from goods purchased by Prime members, with the rest coming from the annual $79 fee associated with the program. Even though Amazon is in a unique position to sell Kindle tablets as a loss leader against its formidable ecommerce and digital content portfolios, competitors will likely follow the company’s lead and populate the low end of the market with tablets aimed at specific segments such as readers of ebooks and eperiodicals. This will result in a bifurcation of the tablet market along price lines, with fully featured products such as the iPad and Samsung Galaxy series at the upper end and lower-priced, feature-limited products such as the Kindle Fire at the other end.
Ereaders The ereader market has already experienced the price bifurcation that is just beginning in the tablet universe. Over the past year, price drops virtually eliminated cost as a purchase consideration, resulting in higher growth in 2011 compared with 2010. However, US ereader user growth will taper off to single digits by 2014, reflecting the inherent limitations of the market and the disruption caused by tablets. As device prices continue to drop and technological advances result in more attractive features and functionality at a lower cost of entry, dedicated ereaders will settle into a niche among users who value their unique benefits, including eye-friendly e-ink and simple interfaces geared toward reading as opposed to rich media.
Portable Media Players Most smartphones and tablets support music software and apps that essentially turn those devices into fully featured portable players. Further, since those devices are usually connected to the internet, they allow users to access increasingly popular streaming services such as Pandora and Spotify. Nevertheless, MP3 players and iPods remain popular, particularly among the young. According to a 2011 study by YPulse, iPods and other MP3 players were among the most popular listening device categories for high school and college students, surpassed only by car radios and trailed closely by laptops. Those devices were far more popular than music streamed online or stored on mobile phones. Marketers and retailers targeting content or services on media players should not overlook their role in people’s digital lives, particularly among teens and young adults. Even though iPod sales have been declining on a quarterly basis since 2009, Apple continues to sell millions of units each quarter and has sold more than 336 million worldwide from the product’s October 2001 launch through the end of 2011, according to the company. That compares with 183 million iPhones and 55 million iPads sold through the end of 2011. In October 2011, Apple CEO Tim Cook estimated that iPod accounted for 78% of the portable player market, indicating that the total universe is considerably larger than the iPod’s installed base. Marketers and retailers should take these statistics into consideration, particularly when their target audience aligns with the youth-oriented demographics that make up the bulk of the iPod touch user base.
Home Entertainment Devices As consumer electronics manufacturers continue their quest to make the living room the center of the digital home, connected TVs, game consoles, set-top boxes and Blu-ray players are all playing an important role in helping consumers access video and other digital entertainment content on their flat screens. A Leichtman Research Group (LRG) study estimated that, in February 2011, 30% of US households had at least one connected device to watch online video, and 10% of US adults watched online video via a connected device at least once per week.
Connected TVs At a time when devices ranging from home security systems to refrigerators to automobiles are linked to the internet, consumer electronics manufacturers are focused on expanding built-in connectivity among TV sets. The vision of a digital home centered on the living room flat screen is driving innovations in product design and content offerings. The Consumer Electronics Association (CEA) estimated that US sales of internet-connected TVs would reach 9 million units in 2012, an increase of 52% over 2011. Despite average prices for these sets dropping, US revenue from internet-connected TVs will increase 27% to $7.7 billion in 2012, according to CEA. LRG estimated the US household penetration rate of connected TVs at 10% in early 2011. Similarly, a 2011 Frank N. Magid Associates survey found that 11% of US online video viewers watched through TV sets that were connected directly to the internet. These are promising numbers, but they will need to increase significantly to fulfill the promise of the connected home anchored by the TV screen. Fortunately, growth prospects are positive, both in the US and on a worldwide basis. In-Stat estimated that shipments of connected TVs with integrated apps would grow by a compound annual rate of 36% from 2011 to 2015. International forecasts also point to a breakthrough in the connected TV business. Digital TV Research estimated that the installed base of sets connected to the internet either directly or through intermediary devices would rise to 20% in 2016 from 6% in 2010. On a unit basis, this translates to 551 million sets in 2016, up from 124 million in 2010. If these increases materialize, they will translate to a 43% penetration rate for internet-connected TVs worldwide in 2016, compared with 11% in 2010.
Game Consoles Although the video game console market is mature and ripe for a new generation of hardware to energize sales, the installed base of connected consoles is growing at a more rapid pace than consoles themselves. This indicates that more consumers are connecting preexisting consoles to internet services such as streaming video and online games. MAGNAGLOBAL estimated there were 61.6 million internet-connected consoles in the US in Q3 2011, a 34.2% increase over Q3 2010. By comparison, Nielsen found only a 3.9% increase in the penetration rate of game-console households in the US. In Q2 2011, there were 51 million households with consoles, compared with 49.1 million a year earlier. Because these figures measure households and not console units, they are not directly comparable to MAGNAGLOBAL’s. However, the growth rates noted by both firms point to the health of the US console market. During the same period, time spent on consoles jumped 14%, according to Nielsen. This statistic supports other Nielsen data that points to an increase in media activity on game consoles, particularly video consumption. These trends are likely to continue as more content and services become available on console systems, and as a new generation of hardware enters the market in coming years. Nintendo is expected to launch a new version of its popular Wii system in 2012, but the true next generation of consoles is not expected until 2014.
Set-Top Boxes Despite phenomenal growth in online video viewing in recent years, no company has been able to tap into the obvious opportunity for technology that allows people to watch this content on their TVs. Manufacturers including Apple, Roku, Boxee, TiVo and others have marketed set-top boxes, but none has gained enough traction to emerge as a leader. Apple is rumored to be planning a bigger foray into the TV market, possibly with a connected TV that would presumably bypass the need for a dedicated box. Google is also flexing its muscle in this market, but with a different strategy. Since 2010, the company has been pushing the Google TV platform, which incorporates its Android operating system, a TV-optimized version of its Chrome browser and hardware interfaces manufactured by partners such as Sony, LG, Samsung and Vizio. At the same time, Google has licensed Android to some consumer electronics manufacturers that have incorporated the system into their connected TVs but not included the Google TV interface. These include Samsung, which is also a Google TV partner. This situation creates a complicated scenario for Google, but ultimately may spur market innovation by putting more web-enabled TVs in the hands of consumers. If Apple and Google continue along their respective paths, and if TV makers continue to focus on internet-connected models, dedicated set-top boxes will become legacy products. Similarly, Blu-ray players have garnered a place in the device ecosystem because they are the only technology that can deliver full-scale HD programs on disc, and because they are a good streaming conduit for users who do not have other options. Further, their prices have come down to within reach of large numbers of consumers. However, the emergence of web-enabled TV sets, coupled with widespread streaming choices, will eventually obviate the need for dedicated Blu-ray units.
As the universe of connected devices expands, the number of operating systems that power these devices is contracting. The market has turned into a virtual horse race between Apple’s iOS and Google’s Android. Research in Motion (RIM) and Palm, once prominent in the smartphone OS space, have seen their shares dwindle, and Microsoft has yet to succeed in carving out a presence on smartphones and tablets.
comScore estimated that Apple led the US mobile device market with 43.1% of the installed base in mid-2011, followed by Google at 34.1%. By comparison, onetime market leader RIM captured only a 15.4% share, reflecting the company’s ongoing struggle to recapture the luster it once had with its BlackBerry brand. comScore’s estimates of mobile internet traffic showed an even wider gulf between Apple and Google, and between the two market leaders and the rest of the pack. The company estimated that 58.5% of US mobile internet traffic came from iPhones and iPads in mid-2011, compared with 31.9% from Android devices. RIM’s share was a mere 5%. Apple’s dominance of US mobile internet traffic means iOS device owners are using a disproportionate share of internet bandwidth, likely because those gadgets have been successfully marketed for their ability to deliver high-capacity content such as video.
Smartphone OS In 2011, Google and Apple started to pull away from RIM with regard to their share of the smartphone OS market. This pattern will continue through 2013, according to eMarketer estimates. In a sign of the rapidly shifting dynamics in this market, RIM’s share will shrink to 15% from 30%, while the combined shares of Google and Apple will increase to 74% from 52%. Google, which captured a leadership position in 2011, will retain that distinction through the end of the forecast period. During this period, the number of US smartphone users will double to 120 million from 60.3 million, according to eMarketer estimates. The number of Android smartphone users will more than triple and iPhone users will more than double. Like eMarketer, Kantar Worldpanel ComTech noted a steep gravitational shift away from RIM and toward Google and Apple in mid-2011, compared with a year earlier. Kantar estimated that Android more than doubled its share of US sales to 57% from 24.2% while Apple increased its share to 28.6% from 20.4%. Meanwhile, RIM’s share plummeted to 8.1% from 31.8%. comScore MobiLens took a longer historical view of the US smartphone market and came to similar conclusions for 2011, with Android, Apple and RIM in the first three spots, respectively. Data reaching back to 2005 show how Palm and RIM have lost their once dominant shares of this market to Google and Apple. Other researchers that noted a similar breakdown in the US smartphone OS share in 2011 included Nielsen and Yankee Group.
Tablet OS Because of the iPad’s dominance, the OS landscape looks considerably different when viewed from the tablet perspective. Strategy Analytics estimated that Apple had a 57.6% share of the worldwide tablet OS market based on unit shipments in Q4 2011, compared with Android’s 39.1% share. Other developers had negligible shares. Although these figures point to a market lopsided in Apple’s favor, Google is actually gaining ground. Its share grew from a negligible 2.3% in Q3 2010, indicating a proliferation of Android-powered tablets in that timeframe. In addition to licensing its operating system to manufacturers that develop and market tablets as Android-based systems, Google is working with partners such as Amazon, whose Kindle Fire uses the Android kernel but is customized beyond recognition. End users might regard a Kindle Fire as a completely different animal from a Samsung Galaxy, but from Google’s perspective they both use its Android OS. This decentralized approach, which is markedly different from Apple’s, is helping Google grow its share of the tablet OS market. Another player likely to expand its presence in the tablet space is Microsoft. Windows 8, the next version of the company’s popular computer operating system, will support ARM-based processors, which power tablets, smartphones, media players and other portable devices. By designing Windows 8 as a hybrid system, Microsoft could gain long-sought traction in the tablet market and set a precedent for other software/hardware manufacturers.
The success of smartphones, tablets, ereaders and game consoles has raised consumers’ expectations of what these devices can do. Manufacturers are constantly trying to strike a balance between product specialization and versatility. One result of this tension has been a gradual morphing of smartphones and tablets into control units for the digital home.
For example, the Samsung Galaxy Note, which was released in most major markets in fall 2011 and is expected to debut in the US in early 2012, is a hybrid smartphone and tablet. It features a 5.3-inch screen, a touch interface and a stylus for applications where more precision is needed. “We’re trying to target people who use smartphones and are thinking about getting a tablet, but don’t necessarily want to commit to spending that much money.” —Kris Parris, market representative for Samsung, as quoted in The Las Vegas Sun, January 11, 2012 Although others such as Dell have not fared well with smartphone/tablet hybrids, this strategy makes sense considering the amount of multitasking occurring in people’s homes. Nielsen estimated that 81% of US tablet owners and 78% of smartphone owners used those devices at least several times a month while watching TV. Further, 42% of tablet owners and 40% of smartphone owners multitasked using those devices daily. A Yahoo! and Razorfish study found that 66% US laptop or desktop PC owners used those devices daily while watching TV. By comparison, 49% of smartphone and 46% of tablet users reported this kind of activity on a daily basis. More research is needed to fully grasp the implications of this data for marketers. Are consumers turning to their laptops, tablets and smartphones when they are bored with the TV program? Are they flipping to those other screens during commercials? Are they using smart devices to respond to calls to action in the shows or commercials they are watching? As more granular data emerges about how consumers are interacting with their devices while watching TV, marketers will be able to fine-tune their strategies for reaching their target audiences via multiple touch points. In the meantime, data on purchase activity among device owners and the effects of tablet ownership on the use of other gadgets could be useful for marketers. Ipsos OTX MediaCT found that owners of both smartphones and tablets made more m-commerce purchases in the year leading up to August 2011 than people who owned only smartphones. The company reported that 41% of owners of both tablets and smartphones made more than 20 mobile purchases during the span of that year, compared with 12% of smartphone-only owners. There has been no shortage of debate on the effects of tablets on other devices. Do they cannibalize or complement other products such as laptops, netbooks and portable gaming systems? A Nielsen study of US device usage in Q1 2011 found that tablets had a net-negative effect on usage of many categories of consumer electronics products, including game consoles, ereaders, laptops, desktops, netbooks and portable media players. On the other hand, the purchase of a tablet seemed to encourage greater use of portable gaming consoles, internet-connected TVs, set-top boxes (referred to in the survey as “internet-to-TV players”) and smartphones. The device market is evolving toward convergence of devices and functions. People use tablets as media players, smartphones as GPS devices, game consoles as home entertainment systems, laptops as secondary video screens, and so on. The more powerful the device, the more likely it is to be drafted into action for a variety of scenarios. Marketers, content owners, device-makers and other stakeholders need to keep a close watch on consumer behavior patterns to find new and productive ways to target their digitally diverse customers.
If internet access is the common thread that unites the current generation of smart devices, digital content is the object of that connectivity. Video, games, books, periodicals, audio and news media content are among the biggest drivers of adoption of tablets and other connected devices.
comScore estimated that, over the month leading up to polling in September 2011, 67% of US tablet owners had played a game, 65% had watched a video clip, 62% had listened to downloaded music and 57% had streamed music on their devices. Large numbers of respondents had also read electronic magazines, newspapers and books, and watched movies, on-demand videos, TV episodes and live broadcasts. This range of activities helps explain why tablets are one of the most rapidly growing device categories. People assimilate tablets into their lives in any number of ways, and tablets supplement their digital media consumption on other devices.
Video Of all content types, video has been the most transformative because of its deep hold on people’s lives, its ability to cross from one device to another, and its marketability as an ad medium. With the exception of e-ink ereaders, most smart devices support video-rich tasks such as TV viewing and teleconferencing. Smartphones, despite their limited screen size, offer unparalleled convenience for people who watch short clips or sports broadcasts on the go. eMarketer estimates there will be 51.2 million smartphone video viewers in the US this year, and that number will rise to 77.3 million by 2015. A key tipping point will occur in 2013, when 50% of smartphone users will watch video on their phones at least once per month. Game consoles are another natural venue for video viewing. Consoles are typically installed in living rooms and dens, where they are connected to the same screen that tends to serve as the family TV. The three major console manufacturers have been pushing online connectivity for years. Sony and Microsoft, in particular, have built extensive content portals to entice customers to stream video through their PlayStation and Xbox units, respectively. Thanks to these efforts, game consoles were the top home entertainment device used to access video on TVs in early 2011, according to LRG. Recent data from Nielsen showed increases in video viewing activity on the three major console systems over the past year. In 2011, the percentage of console time users spent watching video on demand and streaming video increased on all systems compared with 2010. Strategy Analytics also highlighted the popularity of game consoles for online video viewing. In November 2011, the company estimated that 12% of US households watched online video content via their game consoles on their TV screens. This made consoles the most popular device to transfer video from an online source to a TV. A 2011 Yankee Group survey of US consumers’ online video viewing platforms found that tablets experienced the biggest upswing in usage compared with 2010. The percentage change in tablet owners who watched video on those devices was 26% for that period, compared with 4% for live TV, 2% for PCs and laptops and 1% for game consoles. Set-top boxes and DVRs experienced decreased usage by viewing audiences. Although newer technologies such as tablets, smartphones, connected consoles and internet-enabled TVs are on the radars of device-makers, content owners, marketers and consumers, most long-form online video content is consumed directly on computer screens. This is particularly true of streaming service Hulu, which specializes in episodic TV fare. According to Nielsen, 89% of Hulu users watched on their PCs in March 2011, compared with 20% who connected their computers to their TVs. Other viewing methods barely registered in the survey. There was more variety in the devices used to watch movies, which makes sense given that movies are typically enjoyed from the comfort of the couch on the best available screen. Further, the leading movie downloading and streaming services are fee-based, so paying users are more likely to go through the trouble of viewing films on devices connected to their TVs or internet-capable sets. In Nielsen’s survey, 42% of Netflix users watched on computers, 25% on Nintendo Wii game consoles, 14% on computers connected to TVs, 13% on Sony PS3 consoles, 12% on Microsoft Xbox consoles and 11% on connected Blu-ray players. Internet-enabled TVs, iPads, smartphones and set-top boxes did not register above 6% representation in the survey. These findings with regard to Hulu and Netflix users serve as another reminder of the staying power of the personal computer. An April 2011 Frank Magid Associates study provided further corroboration, noting that 89% of US online video viewers watched on PCs. The next-most-selected category was mobile phones, almost an order of magnitude lower at 15%.
Ebooks and Periodicals Electronic book, magazine and newspaper content helped make a success of the first generation of the Amazon Kindle and, to some extent, the Apple iPad. As ereaders and tablets evolve, events on the content side will have strong market repercussions in 2012 and beyond. Key developments over the past year have included:
Apple’s early-2012 announcement of a textbook initiative for the iPad that includes book-creation software for consumers and publishers, a textbook reading app and a content storefront. Given Apple’s track record of redefining entire categories of products and digital content, the company’s entry into this space is almost guaranteed to have a disruptive effect.
Apple’s February 2011 rollout of a subscription program for epublications on the iPad and its October 2011 launch of the Newsstand feature in iOS 5. The latter development resulted in significant bumps in app downloads and digital subscriptions for publishers including Bonnier Corp., National Geographic and The New York Times.
Amazon’s ebook lending program based on membership to its Prime rewards program. That development, combined with Amazon’s decision to sell Kindles partly subsidized by marketer support, is part of the retailer’s strategy to use content and hardware as an incentive for customers to join the Prime program and—presumably—buy more merchandise on Amazon.com.
Price fluidity in the ebook market. Having fought bitterly with Amazon to keep ebook prices above the $9.99 baseline that Amazon preferred, publishers are now leading experiments to dynamically price some ebook titles at far lower levels. These experiments include limited-time offers for certain titles at 99 cents, book subscriptions and budget-priced deals of the day. Some self-published authors have also opted for bargain price points.
These moves are driven partly by consumer demand for lower-priced ebooks. A Verso Advertising survey of US ereader and tablet owners found that 29.4% were willing to pay a maximum of $9.99 per title. Another 20.3% were willing to pay up to $12.99 and 10% would pay up to $14.99, but willingness to go above that level was limited to small portions of the survey population. According to a 2011 Pew Research study, US tablet users have little appetite to pay for news content either. Only 21% were willing to pay $5, and an even smaller 10% were willing to pay $10. Pricing volatility is likely to continue, much to the chagrin of publishers, device manufacturers, retailers, content portals and consumers. From a marketer’s perspective, however, the current landscape provides opportunities to attach brands to print-driven digital content while keeping prices within the ranges consumers expect.
Games Before the emergence of casual games, smartphones and tablets, gamers’ playing options were limited to consoles, handheld systems and PCs. Today, virtually any digital device can serve as a gaming platform. Not only has the technological landscape opened up for the gaming community, but changes in the types of games people play—notably social games—have also turned PCs and laptops into mass-market gaming devices. In fact, 96% of social gamers play on computer screens, according to a September 2011 PopCap Games study. By comparison, only 28% of social gamers use smartphones, 20% use game consoles and 12% use tablets. According to Nielsen, US video game console owners still spend most of their time on those devices playing games, as opposed to watching videos, listening to music or surfing the web. Time spent varies among console models, but the common theme is that avid gamers still use their consoles primarily for gaming. For game developers, app-makers and marketers looking to target the gaming population, the key to success is pinpointing which devices their target audience is using. A casual puzzle game might get most of its playing time on a smartphone or a tablet, whereas an immersive first-person shooter will still be played primarily on a console. The device mix will vary widely from game to game.
Audio The recorded music industry has struggled more than any other in the transition from packaged media to digital files. Despite a better-than-expected year in 2011, the industry has contracted almost every year for over a decade. It is by no means clear whether the latest innovation in recorded music business models, cloud-based streaming, will reverse the industry’s sagging fortunes. However, what is fairly certain is that devices will play a central role in driving the next phase of the industry. Music content is the main asset for portable media players such as iPods, and many music listeners also use tablets, smartphones and game consoles to access their digital libraries. Apps from the likes of Pandora, Spotify and Shazam are among the top downloads on iOS and Android devices. The stakes in this industry will rise as Apple, Google and Amazon expand the cloud-based streaming services they launched in the past year. To some extent, all three companies will be using music as a lure to sell devices and subscriptions. These strategies will leave room for marketers to participate in the content economy to a far greater degree than was possible in the days when music was sold only in shrink-wrapped packages.
The shift from 20th century technologies to digital platforms built on connected devices affects participants across the spectrum of content, technology and media—including brand marketers, retailers, content owners, media companies, consumer electronics manufacturers, internet technology firms and consumers. Like all major disruptions, this one will bring about its share of opportunities and challenges.
Advertisers that understand the new ecosystem will be able to connect the dots between traditional marketing paradigms and new ones that rely on connectivity, social sharing, geotargeting, search optimization and a frictionless flow of content across devices. In January 2012, an ABI Research report estimated that consumer adoption of new formats such as video-on-demand (VOD) and viewing on smartphones and tablets would cause up to 30% of the US pay-TV advertising market to shift to new formats by 2016. This will amount to approximately $22 billion in advertising dollars moving to new platforms, according to ABI. The report noted that new audience measurement and tracking methods, targeted advertising, and VOD and multiscreen advertising would facilitate the transition for marketers and broadcasters. Online advertising is also changing as a result of smart devices. Advertisers and web publishers are working toward the common goal of delivering relevant ads to as many people on as many devices as possible. However, the two sides are not completely aligned in the technologies they support. For example, a November 2011 survey by DIGIDAY and Adap.tv found that at least 41% of advertisers bought online video ads on the iPad and iPhone but only 35% of publishers supported those platforms. There was a similar discrepancy with Android ads. Conversely, only 8% of advertisers bought ads on connected TVs, but 17% of publishers supported that platform. Further, the number of publishers who were on board with connected TVs grew substantially from 2010, according to the survey. There is too much flux in the device and content market to prescribe simple formulas for marketers to profit from the transition. However, the path to monetization begins with an understanding of how consumers are using smart devices to access content and advertising. Consumption trends are changing rapidly and product designers are responding accordingly, so grasping the dynamics of the market requires an ongoing examination of prevailing factors. Marketers should be asking themselves how they can best tap into surging interest in specific devices, changes in content consumption patterns, convergence among devices and other shifts.
Major devices are in a rapid growth phase that will continue in the next several years. Forecasts for tablets, smartphones and connected TVs call for aggressive growth in the US and other markets. More mature product categories such as PCs and game consoles will not grow as rapidly, but they will hold their own because of their unique strengths and ongoing refinements. Consumers are less interested in differentiating among device categories than in accessing content seamlessly on all screens at all times, so marketers should target both emerging and established products. Smartphone and tablet operating systems are coming into focus. What started as a contest among several developers has coalesced into a two-horse race between Google and Apple. Their Android and iOS systems now power most smartphones and tablets, and account for the majority of the internet traffic that those gadgets engender. The outlook for the next several years is for those companies to solidify their hold on the OS market. Brands should focus their efforts on making their campaign materials pop on both platforms. Devices will continue to evolve and converge. As consumers’ demands increase and competition intensifies, device-makers will be challenged to create gadgets that do more. This will inevitably lead to convergence among devices. For example, ereaders and tablets will become indistinguishable, and more companies will focus on hybrids of smartphones and tablets. Downward pricing pressures on devices will create opportunities for marketers to attach brands to products through sponsorships, ads and licensing partnerships. Content is the currency that drives the device economy. Most of the activity that takes place on smart devices centers on accessing digital content, including video, books, periodicals, games, audio and social media. Consumer appetite for all forms of content shows no sign of abating, which is good news for marketers whose businesses hinge on attaching brands to content. Monetizing digital content has proven to be a formidable challenge for content owners and marketers. As new business models emerge in areas such as video streaming, epublishing, gaming and recorded music, these parties are jostling for position at the negotiating table. The better they understand the dynamics of the device-and-content economy, the better their chances to secure a solid stake in it.
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