2013 Intelligence Report: Mobile

Excerpt Intelligence Report: Mobile
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MobileFEBRUARY 14, 2013

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Intelligence Report
Excerpt Intelligence Report: Mobile February 14, 2013
Mobile

M-Commerce: Overhyped Watch the
Mobile Video

M-Influence: Underhyped Click to Play

While U.S. e-commerce revenues represent about 7 percent of overall retail
sales, revenues from m-commerce (including sales from tablet devices) remain
at less than one percent.1

T
hrough 2016, e-commerce revenues will grow at twice the rate influence in retail. A more old-school device, the television, provides an apt
of overall retail, and m-commerce’s share of online commerce will analogy: while home shopping (TV commerce) is a relatively small business,
more than double, from 11 percent to 24 percent. In real terms, broadcast advertising continues to drive sales of beer, cars, insurance, and
however, mobile sales will remain a pimple on the elephant of U.S. retail. cures for Restless Legs Syndrome. For every dollar spent via a mobile phone
Mobile is the next big thing, but its influence will register on other devices today, the new appendage of choice will inspire $13 of purchases in-store (and
and offline. Just as Google, which produces no content, is now the most $22 by 2016).2
powerful media company on Earth, mobile will become a key arbiter of
Tomorrow Becomes Today
Nearly one in four site visits originate from a mobile or tablet device (up
U.S. Retail M-Commerce Sales 84 percent year over year).3 One fifth of search traffic is driven by queries
($ in Billions) received from mobile users (evenly split between smartphones and tablets),4

Retail M-Commerce Sales % of Retail E-Commerce % Change YoY
including 23 percent of searches for prestige brands (up from 14 percent last
year). And as of May, the average time spent on Facebook’s mobile properties
169% (441 minutes per month) exceeded that spent on the social network’s
$86.9
desktop site (391 minutes) for those who use both platforms.5
$68.3
Poorly Prepared
$52.2 The majority of prestige brands are not prepared to capitalize on this tectonic shift.
81%
$38.4 Sites actively promoting daily deals, including Amazon, eBay, Gilt Groupe, and
Groupon, generate a third of all m-commerce retail revenues.6 Their primary point
$24.6
56% 36% 31% of differentiation: targeted offers combined with express checkout functionality,
$13.6 27%
11% 15% often requiring only “one click” to purchase.
7%
18% 21% 24%
2011 2012 2013 2014 2015 2016
Source: eMarketer 2. The Dawn of Mobile Influence: Discovering the value of mobile in retail, Deloitte Digital, 2013.
3. “Mobile Traffic Has Quadrupled in Last Two Years,” Heather Leonard, Business Insider, January 10, 2013.
4. RKG, Digital Marketing Report: Q4 2012, Rimm-Kaufman Group, January 2013.
5. “Americans Now Spend More Time On Facebook Mobile Than Its Website,” Josh Constine, TechCrunch, May 11, 2012.
1. “Record Retail Sales on Smartphones, Tablets Take Great Ecommerce Share,” eMarketer, January 20, 2013. 6. “M-commerce sales via smartphones hit $8 billion in 2012,” Bill Siwicki, Internet Retailer, January 16, 2013.

2

Intelligence Report
Mobile

Data Replaces Opinion Mobile-Influenced Store Sales vs.
M-Commerce and E-Commerce Sales
The aging “site vs. app” debate is becoming moot in the
($ in Billions)
face of real data. During the 2011 holiday season, the top
2012 2016
five retail mobile apps and sites (in combination) reached
nearly 60 percent of U.S. smartphone owners.7 Mobile sites
689
reached 51 percent of smartphone users while mobile apps
reached just 28 percent. For brands and retailers outside of
the top five, which often struggle to build awareness in the
app store, the scale tips even more staggeringly in favor of
sites. Several successive industry developments, including
Google’s endorsement of responsive design in June and
Apple’s support of new developer tools (iOS6: file input 327
type, web audio API, app caching, etc.) in September, have
served to further undermine the advantages of native app 226
development. 8,9
158

Source: Deloitte
L2 Intelligence 31
In January 2012, L2 examined the mobile competence of 100 12
prestige brands. This supplemental report attempts to update key
data and provide insight as the industry rethinks its approach to M-Commerce Mobile influence on E-Commerce Sales
Store Sales
mobile and tablet platforms. Our aim is not to examine mobile in
isolation, but to define and illustrate its impact on brands’ digital
marketing, e-commerce, and in-store sales. Like the medium we
are assessing, our approach is dynamic. Please reach out with
Percentage of Site Traffic From Mobile Devices
Q4 2011–Q4 2012
comments to improve our methodolgy and findings. You can
reach me at scott@stern.nyu.edu.

23.1%

Source: Walter Sands Communications
Scott Galloway
Professor of Marketing, NYU Stern
Founder, L2 17.5%
16.6%

13.4%
7. “A Store in Your Pocket: Retailer Mobile Websites Beat Apps among U.S. Smartphone 12.6%
Owners,” Nielsen Wire, March 12, 2012.
8. “iOS6: The Benefits for HTML5 Web App Development,” Aaron Lumsden, September 12,
2012. Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
9. “Recommendations for building smartphone-optimized websites,” Pierre Far, Google
Webmaster Central Blog, June 6, 2012.

3

Intelligence Report
Mobile
Spotlight
The Year of Mobile (Again): Traffic vs. Time:
Unique Audience:
(U.S., July 2012)

searches for L2 100 brands by Device Type:
Customers spent 525% more time with
retailer apps in December 2012 vs. December 2011 Mobile Web Mobile Apps Desktop

95.2 million 101.8 million 204.7 million
14% 23% +82% YoY +85% YoY -4% YoY

4 in 5 owners use device to shop by the end of 2013 December 2011 january 2013

smartphone
Mobile Search

Growth in Desktop searches Total Minutes per Month:

+3%YoY
(U.S., July 2012)

54% of phones globally
will be smartphones 1in 5 Mobile Web Mobile Apps Desktop
More than consumers are now
“showrooming” Growth in Mobile searches 28.1billion 129.4 billion 367.7 billion
1 in 3 emails
are opened on a mobile device +94%YoY +22% YoY +120% YoY +4% YoY

Flash Forward:
Different Screen / Different User Behavior:
Smartphone Market Share:
Couch Surfing: Out and About:

Symbian Android iOS Blackberry Windows

2009 44% 4% 14% 20% 8%
41% 3 8%
of smartphone
Info related to TV 94%
of smartphone owners look
2012 3% 67% 20% 5% 3%
advertisements
0% 62% 22% 8% 5%
of tablet owners
& owners… for local information on
their phones
2015

26% 15%
…use their device daily while watching TV; Tablet Shipments:
activities performed on devices include: iPad iPhone
Mobile Payments:

5 billion
Info related to 66% Active mobile phone accounts worldwide
TV program Visit businesses either
Unrelated shopping Visit social network
in store or online after
2010 17million (iPad released April) 1.3 billion
45% 35% 23%
a local search 2011 65 million Active credit/debit card accounts worldwide

iPad
22%
44% 38% iPad iPhone 2012 122 million Number of mobile payment users in 2012:
iPhone
iPad iPhone 2013 200 million+ forecast 112.3 million in 2012 vs. 447.9 million in 2016E

Sources: Business Insider, CNNMoney, comScore, GigaOM, Google, Litmus, Nielsen, Statistica, Teradata, & TechCrunch.

Intelligence Report
Mobile
Methodology

The Methodology
L2 Intelligence Reports complement L2’s flagship Digital IQ Index® with a deeper dive on platforms or geographies driving future
growth. This report examines Mobile and Tablet data across 100 brands in five industries. Critical areas of investigation include:

Brand Experience Support and Influence

Site Mobile Apps Digital Marketing Social Media
Adoption: Presence: Paid Search Strategy: Foursquare vs. Instagram:
E-Commerce, Mobile-Optimized Sites, iOS, Android, BlackBerry, Windows Phone Symmetrical vs. Asymmetrical Brand Presence, Followers, Campaigns
M-Commerce
App Store Performance: Mobile Ads: Legacy Platforms:
Next-Generation Implementations: Ratings, Comments Campaigns Impact of Mobile Promotions
Responsive / Adaptive Design, Mobile Web Apps
App Lifespan: New Platforms:
Ability to Transact: Initial Release, Update Frequency WeChat
PayPal Support, Interoperable ID, Mobile Offers

By combining longitudinal data on the brands that L2 tracks with third-party research, this report helps
illustrate mobile progress observed since January 2012 and define areas of future investment.

5

Intelligence Report
Mobile
Brand List
Fashion (29) Watches & Jewelry (24) Beauty (18) Hospitality (20) Retail (9)

6

Intelligence Report
Mobile
Key Findings
Search: Classification of Paid Search Activity
Space Premium on the Small Screen Desktop vs. Mobile
January 2013, n=100
In January 2012, only 57 percent of the 100 brands
assessed were engaging in paid search for brand terms on 37%
25%
mobile devices. This has risen to 65 percent in 2013—still 19% 16%
shy of the 81 percent that buy their own terms on desktop 3%
search engines.
The absence of parallel activity on mobile search is
surprising. Desktop search is responsible for generating Paid Search Only
Not Engaged in on Mobile
more traffic, but real estate on mobile search is arguably Paid Search Only
on Desktop Paid Search
more valuable given space constraints imposed by the Paid Search on Both
(Different Ad) Paid Search on Both
smaller screen size. On average, a Google search query (Same Ad)
on an iPhone for the 100 brands examined yields only
three initial results visible on the device’s four-inch screen.
Consequently, the addition of a new paid ad can easily Average Google Search Results Returned
push a brand’s first organic search result “below the fold.” By Screen Size Without Scrolling
Google’s next iteration of AdWords, announced on February January 2013
6th, may address some of these challenges.10
While all of the brands reviewed own the top organic 1024 × 768
search result for their brand term, one fifth of these links do 1256 × 1440
640 × 960
not appear in the default view returned, requiring the user
to scroll down. On mobile screens, 58 percent of immediate
results are paid ads, which require a different approach
10 Results + Sidebar 5–6 Results 2–3 Results
altogether. Still, the majority of brands engaged in mobile
paid search mirror their desktop efforts—only 25 percent
alter content by pushing mobile offers, embedding direct
phone numbers, or including directions to local boutiques.

10. Google, “Enhancing AdWords for a constantly connected world,” Inside AdWords Blog,
February 6, 2013.

7

Intelligence Report
Mobile
Key Findings
Brand Participation in Competing App Stores
Mobile Apps: n=100
Churn January 2012 January 2013
In the past 12 months, the 100 prestige brands reviewed
introduced 94 new apps for the iOS platform (and removed
70%
52). This mixed investment is indicative of an industry still 196
apps
struggling with the underlying utility of native mobile apps. iOS

Although participation on the iOS platform remained fixed,
this figure obscures the ecosystem’s “revolving door.”
Specifically, six brands (Bare Escentuals, Chloé, De Beers,
Morgans Hotel, Prada, and Tory Burch) joined the platform, 22%
28
while six brands (Calvin Klein, Clinique, David Yurman, Diane 2012 apps
Android
von Furstenberg, Harry Winston, and Piaget) exited.
Predictably, in the last year there has been a notable 7%
uptick in iPad app development—53 percent of the new 7
apps BlackBerry
apps are either iPad native or provide dual iPhone/iPad 2%
support. More important, 35 percent of the new apps 2
apps Windows Phone
released on the iTunes store now have a direct counterpart
in the Android store.

70%
238
apps
iOS

37%
65
apps
Android

2013
7%
7
3% apps BlackBerry

3
apps
Windows Phone

8

Intelligence Report
Mobile
Key Findings
Mobile Apps: Mobile App Proliferation by Industry
Gimmick Graveyard vs. Utility Shed September 2008–January 2013
Across the 238 apps assessed, the average app has been Hospitality Watches & Jewelry Fashion Beauty Retail
80
live on the App Store for 17 months. Twenty-seven percent
of the apps reviewed have never been updated after initial
70
release—signaling inattention to fixing bugs, ensuring

Number of Apps Live on Given Date
compatibility with new devices, incorporating user feedback,
60
and enhancing features and functionality.

50
Other observations:
40
Fashion brands are the most likely to release an app
and not support it with incremental updates (40 percent).
30

58 percent of Beauty brand apps found in the U.S. 20

App Store were created for APAC markets (45 percent
have no user ratings). 10

0
Watch & Jewelry brands are the most likely to July 2008 January 2013
create iPad apps (89 percent). July 2008 April 2010 June 2010 March 2011 September 2012

3 iPhone 3G iPad 4 iPhone 4 2 iPad 2 iPhone 5 5
Hospitality brands brands remain the most prolific
App Store
app developers (45 percent of available apps released
within the past year, driven by the steady release of
property-specific apps).
% of apps Time average Average #
% of brands Average # released app has been Average # of % apps Average # of of ratings % of brands
producing of apps per in past 12 live in App updates over NEVER days since received per supporting
apps brand months Store app lifespan updated last update app iPad
Retail brands release far fewer (but better) apps,
update them with much greater frequency, universally 55% 2.8 29% 590 days 4 40% 269 days 310 80%
support in-app cart functionality, and solicit substantially
50% 4.1 43% 463 days 3 22% 291 days 15 67%
higher user feedback (1,032 user ratings).
75% 3.4 38% 546 days 3 30% 277 days 139 89%

95% 4.1 45% 495 days 3 30% 234 days 66 79%

89% 2.9 24% 554 days 6 13% 89 days 1,032 88%

9

Intelligence Report
Mobile
Table of Contents

5 Spotlight 8 Key Findings 15 Flash of Genius
8 Mobile Sites: Commerce Anywhere, Anytime 15 Ermenegildo Zegna: Zegna LIVE
6 Methodology 9 Tablet Sites: Touch Folly 16 Benefit Cosmetics: Mobile Site Redesign
1 0 Search: Space Premium on the Small Screen 17 Montblanc: Worldsecond
7 Brand List 1 1 Mobile Ads: The Bad Kind of Disruptive? 18 Nordstrom: Déjà Vu
1 2 Social Media: New Platforms, New Opportunities 19 Conrad: Concierge
1 3 Mobile Apps: Churn 20 Starwood, Hyatt, and Sephora: Mobile Wallet (Lite):
1 4 Mobile Apps: Gimmick Graveyard vs. Utility Shed Third-Party Loyalty Programs
21 Crate&Barrel, Clarins, and Kiehl’s:
Showrooming: Friend or Foe?
22 Kiehl’s, Clinique, Barneys, and Burberry: The Blurring
of Online vs. Offline

23 L2 Team

24 About L2

10

Excerpt Intelligence Report: Mobile

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