A mobile application with in-app purchase capability is an advertiser’s dream. In one well-designed app, a company can both brand and sell. But, believes eMarketer, those who make in-app purchasers are not consumers at large, but a segment of power users who are ultra-comfortable with mobile applications.
eMarketer quoted a study called the “Mobile Application Business Model,” released in February by Boston-based intelligence company ABI Research. ABI projects that overall revenues from mobile applications, which include in-app purchases, pay-per-downloads, in-app advertising and subscriptions, will reach $46 billion by 2016. That is a greater than 300% jump over the $8.5 billion earned in 2011.
ABI expects 2012 to the year in which revenue from in-app purchases surpasses pay-per-downloads, fueled by greater availability of in-app in applications other than mobile games.
So far so good.
Media researchers and consultants IHS Screen Digest made their own projections in a January report called “Mobile Media Intelligence Service,” and predicted that in-app purchases will ultimately garner the majority of revenue from smartphone apps. In-app purchases worldwide reached $970 million in 2011, for 39% of total smartphone app revenues, and will reach $5.6 billion or 64% of those revenues by 2015. Smaller figures, but ABI included subscriptions and ad sales in its forecast.
But a third firm, Localytics, discovered that the majority of in-app purchases to date are made by high-level or “power users” of applications—chiefly games. In January, Localytics (a mobile app analytics provider) found that 44% of those users who made an in-app purchase did so after their 10th session in the app. Only 22% did so in their first session.
eMarketer remarks that to capitalize on in-app purchasers, developers and marketers must “get non-power users interested in making purchases,” and include in-app purchase options in applications besides games.
But developers, advertisers and marketers have already done so. The way Localytics describes its own research, “Although it may seem like getting users to the sale proposition quickly is ideal…building relationships with app users and fostering long-term usage are more important.” Loyal customers generate 25% more in-app purchases. Games are not the only type of application that generates multiple visits. Loyalitics' own customer base includes publishers Bonnier, National Geographic, The New York Times and The Boston Globe, as well as Hulu and Rhapsody. Presumably, apps for newspapers, music download and streaming media sites generate repeat and loyal customers as well.
The takeaway may be to cease to define the "power app user" as a mobile-game-addicted millennial, but to include the daily news reader or music enthusiast. He or she may not make a purchase immediately, but this research suggests, they will in time.
Yesterday at Social Media Week in New York, Microsoft’s General Manager of Brand Advertising Jennifer Creegan introduced what she calls “a new social advertising solution I am pretty excited about.” As Creegan describes on her MS blog, “With People Powered Stories (PPS), advertisers can incorporate real peoples’ ratings and reviews about their products within a rich brand ad.” Microsoft partnered with Bazaarvoice, a social marketing monetization provider.
PPS integrates consumer ratings and reviews into the rich PPS ad format (see graphic). Creegan told AdExchanger that the company conducted research across both the consumer and marketer landscapes, and “it became clear that there was a crossover need around word-of-mouth marketing, and specifically, ratings and reviews.”
But those reviews have to be real reviews, with real metrics. In a poke at Facebook, Creegan promises that PPS gives marketers the ability to create ads that “tell powerful stories and create brand relevancy beyond just a ‘Like,’” by including real stories and reviews (see graphic).
Microsoft used itself to pilot PPS, by integrating the ad format into a Windows 7 “back to school” ad campaign, targeting college students in the market for a new computer. The campaign ran across Microsoft properties with targeting capabilities, to ensure a student audience. Microsoft claims that in market tests, the campaign delivered—
- A boost in ad believability of 20 points above market norms for technology ads
- A 6.3% lift in purchase intent
- A 13.5% lift in unaided brand awareness
PPS will be generally available in the coming weeks.
- In over-the-top (OTT) broadcast news, Total Beauty Media Group (operators of TotalBeauty.com and BeautyRiot.com) is launching its first live Web show during Fashion Week in New York, reports Adweek. The monthly “Total Beauty Live” debuts on TotalBeauty.com, and the Total Beauty Facebook page. show airs on Valentine’s Day at 1:15 p.m. Total Beauty editor Dawn Davis will lead viewers through product demos with makeup experts NYX Cosmetics. Viewers will be able to interact live, posting questions and comments through Twitter.
- The National Hockey League (NHL) just signed a three-year extension with Verizon Wireless, and will create a premium mobile application exclusively for Verizon mobile subscribers, reports Sports Business Daily. Customers will receive exclusive content via Verizon’s edition of the NHL GameCenter smart phone and tablet apps; and live broadcasts from NBC will be available on the GameCenter app.
- Runners World magazine (Rodale) is claiming booming impressions through its social media initiatives, reports Folio. The magazine in one year increased its Facebook following by 111% to 309,070 likes as of February 8; and its Twitter following by 293%, to 212,000. The magazine’s Twitter platform has increased by 18.4% since January 1. If or how this translates into print readership, Runners World editors did not say. But the magazine claims 16 straight years of positive growth, and a rate base of 660,000, with 4.1 impressions per copy, for a total audience of 2,827,000. The Facebook page is heavy on Runners World exclusive content, and draws advertisers like New Balance Shoes.
- CommScope has unveiled GeoLENS Locate, which the mobile-location technology provider describes as a platform-agnostic technology for area-targeted messaging. The uses? Emergency messaging, friend finding, and and mobile marketing. The technology uses real-time location updating support from the company’s own location centers, and CommScope promises first-of-its-kind precision in geotargeting.
Advertiser Perceptions, provider of research-based advertising insights, has announced its 2011 Advertiser Perceptions Highest Rated Media Brand awards. The company based its rankings on what advertisers think of a mix of websites, magazines, television networks, mobile sites and digital ad networks.
ABC took top honors as the highest-rated media company, out of more than 25 such companies.
In terms of brand strength, the winners were fairly obvious: People Magazine in print, Facebook in digital, ESPN in cable, YouTube in mobile, Google Display Network in ad networks. But the winners for overall satisfaction held some surprises.
In mobile—the humble Weather Channel, which claims 15 million+ unique visitors to its mobile applications per month. According to Nielsen data, that places Weather Channel as the #1 content provider on the mobile web, with over 24% reach of the mobile web audience.
In print, Sports Illustrated took top honors. SI is one of very few consumer journals to see a rise in subscribership in 2011, albeit by a modest .14%, to 3.174 million
In cable TV, Comedy Central. The network claims a median age of 37.1, with 46% of its demographic aged 18-34, 59% of it male, tuning into “South Park” and “The Daily Show.”
Advertiser Perceptions surveys thousands of U.S. agencies and marketers every spring and fall to gather their opinions and perceptions of the media brands they are considering for advertising. Through the Advertiser Intelligence Reports (AIR), these advertiser opinions provide the basis for insight-metrics used to gauge media brand and media company performance. The media brands and company that rank highest for each insight-metric and that possess a minimum required level of advertiser consideration are selected as the highest rated media brands.
“We're looking for houses to paint. In fact, paint is an understatement. We're looking for homes to turn into billboards,” goes the proposal from Los Angeles based marketing firm Brainiacs from Mars. “In exchange, we'll pay your mortgage every month for as long as your house remains painted.”
Brainiacs prides itself on “Unconventional Marketing,” and as a Reuter’s story describes, plans to market itself on 1,000 homes across the U.S.
The Reuters story profiles a Los Angeles family who were one of 38,000 applicants (and counting) for 1,000 home/billboards. Brainiacs CEO Romeo Mendoza launched the scheme in April 2011, and has received applications from as far afield as Japan and Russia. Homeowners fill out a short application on the Brainiacs from Mars site, answering simply where the applicant heard of the offer, and “Why should we paint your house?”
The usual response is that the homeowner has money troubles, and Mendoza looks to accept the applicants who are “most deserving.’ The family profiled, named Hostetler, has an underwater mortgage and high credit card debt. Most U.S. applicants are from the hard-hit areas of California, Nevada and Florida. Applicants must agree to a one-month contract, which can be extended for up to a year, thus taking a one year holiday from mortgage payments. Forty four percent of homeowners are “underwater,” and in the Buena Park neighborhood covered in the Reuters story, one in 270 homes has been foreclosed upon.
The reaction from neighbors and the Buena Park city council run the gamut from amusement to fury. The city has no restrictions on colors, but according to a city councilman, does on advertising. Housing finance expert Charles Mclaughlin told Reuters the scheme is unlikely to take off; it will be perceived as graffiti, and will run into zoning challenges frequently.
For now, Brainiacs is achieving what it set out to do, which was gain publicity; the house/billboard scheme has been a homepage news story on CNN and MSNBC among other outlets, has been a feature story on Fox News, and the subject of a Jay Leno “Tonight Show” monologue. Mendoza claims $55 million in free advertising from the press.
Brainiacs has launched a similar campaign to in essence turn your chest into a billboard: applicants pay $25 for a Brainiacs t-shirt, then upload creative photos of themselves wearing the shirt to the Brainiacs Facebook page. "If we like what we see, we'll pay 3 months of your mortgage," goes the offer.
As required in its IPO filing, Facebook has released its ad revenue, for 2009-2011. Ads brought in $3.2 billion in 2011, a year-over-year (YOY) growth of 69% from $1.9 billion in 2010, leading Business Insider’s Jim Edwards to declare, “Wow. This is a massive ad sales business.”
In terms of volume, there was a 42% increase in the number of ads delivered in 2011, and, an 18% increase in the price of ads.
In its prospectus, Facebook described its value to advertisers: “Advertisers can engage with more than 800 million monthly active users (MAUs) on Facebook or subsets of our users based on information they have chosen to share with us such as their age, location, gender, or interests. We offer advertisers a unique combination of reach, relevance, social context, and engagement to enhance the value of their ads.” In terms of growth, Facebook claims those 845 million MAUs as of December 31, 2011, is a YOY increase of 39% as compared 2010. Facebook went on to describe how it creates value for advertisers, with—
- Relevance, as ”Advertisers can specify [user subsets by] demographic factors and specific interests that they have chosen to share with us on Facebook or by using the Like button around the web.”
- Social Context, which highlights a user’s friends’ connections with a particular brand or business (e.g., that a friend Liked a product or checked in at a restaurant). We believe that users find marketing messages more engaging when they include social context."
- Engagement, as the shift to the more social web “creates new opportunities for businesses to engage with interested customers. Any brand or business can create a Facebook Page to stimulate an ongoing dialog with our users.”
The Economist summed it up this way in a poll: “It collects huge amounts of data about its 800m plus users, can serve up creepily well-targeted ads.”
But does it work?
Advertisers use Likes as a kind of social media “Nielsen rating,” but the ratings can be disappointing. In terms of engagement, only slightly more than 1% of Facebook users who “Like” brands like Procter & Gamble or Coca-Cola actually engage with the brands, according to research. And engagement can include reposting a clever ad from YouTube—good for branding, but without measurable sales.
Earlier this month, TBG Digital (TBG) in its Global Facebook Advertising Report observed “considerable savings” were possible in cost-per-clicks (CPCs), up 45%, for advertisers on Facebook. But, those advertisers must keep the clicker within Facebook: directing a visitor away from Facebook and onto the advertiser’s own website drives up the CPC.
So the ad revenue is impressive, as are the claims. But as an effective ad platform, Facebook still defies analysis. Likely it will have to come up with more solid figures for its annual investor calls.
Twitter CEO Dick Costolo said yesterday that while the company is tempted to pursue e-commerce and brand-sentiment analytics, it is focused near-term on its ad products, reports Ad Age.
Costolo was speaking at All Things D's media conference on Monday night. As tempting as it is to produce a slew of related products, Costolo said the company does not need to add more components to its business. Rather, “We just need to scale it up" he said, referring to the ad business. He went on to describe the company’s strategy of increasing the number of advertisers, and expansion into geographic markets.
At present, Twitter offers a streamlined ad inventory, which has most of that functionality. The portfolio includes:
- Promoted tweets that appear in search results, and in target geographies
- Promoted trends, currently in beta, placing advertisers alongside discussion strings
- Promoted accounts, which appear at a premium in Twitter’s “Who To Follow” suggestions
- Enhanced profile pages, visible without logging into Twitter; in use by just a few invited companies (like Coca-Cola and Virgin Atlantic, depicted below), but reportedly available to all brands as of February 1
- And Advertiser Analytics, three dashboards depicting campaign metrics like total impressions, retweets, replies and follows.
Costolo ducked the question about the Enhanced Profile price—is it truly $25,000? But with prompting by a reporter/interviewer, Costolo described the price as seeming “Perfectly reasonable.” Enhanced profiles enable rich background graphics, embedded video and guided promotions, versus the simple 140-word "micro-blogs" available at no cost.
- Twitter will launch its enhanced brand ads on February 1, according to Business Insider. The Facebook-like functionality has been available to a few select brands, including Coca-Cola, but now will be generally available—at a pricetag of $25,000.
- ESPN and Jeep caught heat from Digiday, which named the network and automaker in its Bad Ad of the Week.”ESPN covered the memorial service of former Penn State head football Joe Paterno. A rich-media ad for Jeep had a Jeep Wrangler “crash through” the computer screen, as well as Paterno’s casket, which sat dead center.
- The Sundance Film Festival and YouTube have cut a deal to rent out Sundance titles, reports Streaming Media. Most Sundance titles will rent for $2.99 to $3.99 for a 48-hour rental--$1 or more cheaper than from Comcast. The Sundance Film Festival wrapped over the weekend.
- Consumer-goods maker Procter & Gamble will “throw caution to the digital wind,” reports AdExchanger. Chairman and CEO Bob McDonald in an earnings conference call said the company would eliminate 1,600 non-manufacturing jobs, and invest heavily in its digital marketing. "In the digital space, with things like Facebook and Google and others, we find that return on investment of the advertising when properly designed, when the big idea is there, can be much more efficient."
- Angry consumers used Facebook to storm the gates of clothing retailer H&M last week. They accused the company of lifting a designer’s ad idea, reports Adweek. The company has begun marketing goods with the simple tagline “You look nice today,” with a red heart shape. Atlanta artist Tori LaConsay created the tagline—complete with red heart—for a sign in her neighborhood, in 2008. She was unpaid for the sign. Supporters have since deluged H&M’s Facebook site with hate messages. H&M at first attempted to dismiss the similarities as a “coincidence,” but is now seeking a resolution with LaConsay.
When asked where Americans get their political news, fully 44% of Americans responded “Television,” reports Poll Position. Only one segment—adults 30-44—responded “From the Internet.” In that 30-44 segment, 35% chose the Internet, 32% said television was their source for most political news, 18% said somewhere else (e.g., radio, magazines), and 14% picked newspapers.
The overall results are grim for newspapers, at only 16% among all surveyed. 2011 was a tough year for newspapers, with ad revenues a mere $24 billion in comparison to the record high of $49.4 billion in 2005.
Poll Position surveyed 1,113 registered voters nationwide, and claims a margin of error of ±3%.
Marketers can better justify their Google, Android and Facebook ad spends. The Association of National Advertisers (ANA) has revealed its findings that integrated marketing communications (IMC) programs are on the rise; and that mobile marketing and social media are especially significant in those communications.
ANA surveyed a cross-panel of its membership on integrated marketing, a topic it studied in 2003, 2006 and 2008. Of those sruveyed, more than half are currently developing and executing IMC programs, aimed at creating a unified message to all stakeholders (including consumers, employees, retailers, stockholders, etc.) and across all media. Since 2006, the percent of marketers developing and executing integrated marketing programs for all brands/products/services has steadily grown:
- 2011: 51%
- 2008: 33%
- 2006: 19%
Also true, 42% rated the effectiveness of IMC as excellent or very good, up from 25% in 2008.ANA attributes that perceived effectievness to the greater availability and use of newer media platforms, such as mobile platforms, which enable better targeting and enhanced metrics.
The period 2008 to 2011 saw a significant leap in the percentage of marketers rating mobile marketing and social media as "important" or "very important" to their efforts. Because of their relative insignificance at the time, neither mobile marketing nor social media were measured in the 2003 or 2006 studies.
Finally, 74% measured IMC success by sales growth, and 61% by brand tracking (e.g., awareness, usage, purchase intent).