Wearables aren’t part of most marketing plans today, but forward-looking estimates suggest they should be soon. Topics in this webinar include: Who wants wearable devices, and what will consumers do with them? Which types of wearables will take hold in the marketplace? What are the opportunities for marketers to reach consumers via such devices? How are companies integrating wearables into their business plans?

1. © 2015 eMarketer Inc.
Made possible by
Wearables: 10 Insights on Device
Adoption and Business Opportunities
Cathy Boyle
Senior Analyst, Mobile
June 25, 2015

2. © 2015 eMarketer Inc.
Agenda
 Ownership rates
 Awareness levels
 Most popular device types now
 Challenges hampering adoption
 Biggest business opportunities
 Where the market is headed
Rolled together = 10 key insights

3. © 2015 eMarketer Inc.
“Wearables”
is a
convenient
term for
categorizing a
new class of
tech devices
But it fails to convey the
complexity of the
marketplace

4. © 2015 eMarketer Inc.
Wearable devices’ varied uses create one layer
of complexity
Consumer Enterprise Medical
Medical photo credit: Gracie Trinidad, University of Michigan Medical School Information Services

5. © 2015 eMarketer Inc.
The multiple
subcategories
of devices
that fall under
the wearables
umbrella add
another layer
of complexity
There is a wearable
device for nearly
every body part
Product images sourced from manufacturers’ websites and Vindrico Inc.

6. © 2015 eMarketer Inc.
10 Insights on Device
Adoption and Business
Opportunities

7. © 2015 eMarketer Inc.
#1
Consumer awareness
levels are high, but
ownership rates are low

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Depending on
the country,
40% to 68% of
mobile media
users
worldwide
were aware of
wearable
devices last
year

9. © 2015 eMarketer Inc.
But only 1.5%
of the world’s
population
used a
wearable
device in 2014

10. © 2015 eMarketer Inc.
As of March
2015, 17% of
internet users
worldwide
owned a
wearable
device

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#2
Wearables are slightly
more popular in the US

12. © 2015 eMarketer Inc.
US consumers
are more likely
than their
international
counterparts to
use a wearable
device
22% of the US internet users
polled by Accent Marketing
Services in February 2015
owned a Fitbit device

13. © 2015 eMarketer Inc.
But not all
research
aligns:
16% of US
households
owned a fitness
tracker or smart
watch as of
January 2015,
according to the
CEA

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#3
Interest and ownership is
all in the wrist at this point

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Fitness
trackers
continue to be
the most
commonly
owned
wearable
device type

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Consumers
are more
interested in
owning a
fitness
tracker than a
smart watch
As of February 2015, more US
internet users were excited
about owning a fitness tracker
than a smart watch

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#4
Being a smartphone extension
is a double-edged sword

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The link to the smartphone is a positive and
negative
On the plus side …
1. Manufacturers and retailers can bundle
wearables with smartphones to raise
awareness and drive sales
2. Consumers who are addicted to
smartphones are more prone to buy a
wearable device
 More than a third (35%) of smart watch owners
bought the device to supplement their
smartphone addiction (Nielsen)

19. © 2015 eMarketer Inc.
The link to the smartphone is a positive and
negative
On the negative side …
1. Smartphones are growing more
sophisticated, which raises questions
about the value of a wearable device
2. Operating system (OS) capability can be
a hindrance to adoption

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#5
Value-to-price ratio needs
more work

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The value
proposition is
not always
clear or big
enough to
motivate
consumers to
buy a
wearable
device

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At this early stage of wearable device
development, consumers are price sensitive
 On average, proposed retail prices were 41% higher than
what consumers were willing to pay for the wearables
studied by technology solution provider First Insight
 Consumers expressed an unwillingness to pay $200+ for
new-to-the-world products

23. © 2015 eMarketer Inc.
Pricing is a hurdle that needs to be overcome
“You shouldn’t be paying $150 for a
fitness tracker; you should be paying
$35, right? Pricing has got to be
addressed.”
—Niall Murphy, founder and CEO of
Evrythng

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#6
Mass adoption requires a
“killer application”

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Wearables’ low adoption rate suggests the
devices lack a compelling use case
“There's been a lot of niche wearable
development. But until we can find
something that hits mass-market
appeal, it's going to be tough to get
mass-market adoption.”
—Jeanniey Mullen, founder of Wearable
Collective and YellowBean LLC

26. © 2015 eMarketer Inc.
What will
motivate
consumers to
buy a smart
watch?
 Activity Tracking
 Time Telling
 Phone call
management
 Navigation
 Apps

27. © 2015 eMarketer Inc.
Mobile experts say a robust app ecosystem is
needed for smart watches to succeed
“The development of an
app ecosystem is
one of the
fundamental core
tenets of adoption
because these devices
need to be useful to
the end consumer.”
—Scott Weller, CTO and
co-founder of SessionM
“Developing smart watch
and wearable-native
apps will be
imperative. Over the
next two years we’re going
to see a massive influx of
application developers for
wearables.”
—Ramsey Masri, CEO of
OtherLevels

28. © 2015 eMarketer Inc.
Discover is experimenting with wearable apps to
gain knowledge and competitive advantage
“We developed apps for watches and
glasses to experiment and try to
figure out what a great consumer
experience would be. If we don’t
experiment, we’ll be taking somebody
else’s advice.”
—Mike Boush, chief digital officer at
Discover Financial Services

29. © 2015 eMarketer Inc.
Under Armour has found that wearables make
app experiences richer
“We take the data that we can get from
those devices and create engaging
experiences on our mobile
applications, which are the hub for a lot
of wearables at this point.”
—Chris Glode, general manager at
Under Armour

30. © 2015 eMarketer Inc.
#7
Data is the big win for
businesses, but it comes
at a cost

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Wearable users are willing to share personal
data─if they get something in return
75% of US fitness
tracker users were
somewhat to
extremely
comfortable sharing
their personal data
if it meant ads
would be more
personalized

32. © 2015 eMarketer Inc.
A more tangible reward increases consumers’
willingness to share data from wearable devices
 40% of US consumers said they would share data
from their wearable devices with retailers or brands
in exchange for coupons, discounts or information
(Acquity Group, 2014)
 Only 9% of those polled said they would share data
without such incentives

33. © 2015 eMarketer Inc.
Under Armour used data from fitness trackers to
boost sales for its advertising partners
“Last year we launched a program with
Zappos on the MapMyRun platform.
We called it Gear Tracker. This was a
feature where consumers could
use the data that’s collected
via a fitness tracker and stored in
MapMyRun to track how much mileage
they’re putting on their running shoes.”
—Chris Glode, vice president of digital,
connected fitness at Under Armour

34. © 2015 eMarketer Inc.
Zappos used data from fitness trackers and the
MapMyFitness app to retarget sneaker buyers
1 2 3 4

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#8
Notifications are the easy
way in─and out, if businesses
aren’t careful

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Offloading calls, text messages, email and app
alerts to a wearable is common
“Push notifications are
critical in the world of
wearables. Particularly
from a retail and a brand
perspective, they’re going to
become more and more
powerful.”
—Jeff Malmad, managing director
and head of mobile and life+ for
Mindshare
 The highly personal
nature of the device
heightens the
importance of
notifications
 In turn, delivering
value is paramount

37. © 2015 eMarketer Inc.
Pandora is approaching push notifications with
caution
“Watch users are just starting to figure
out notifications and how to make
sure they get the right thing at
the right time. We need to be aware
[of that learning curve] so that we’re
not annoying people all of the time.”
—Carl Edwards, director of device
engineering at Pandora
Just because you can send a push, doesn’t mean you should

38. © 2015 eMarketer Inc.
#9
Paid advertising will be
native and new

39. © 2015 eMarketer Inc.
Mobile
marketers see
good potential
in advertising
on wearable
devices
66% of mobile marketers
polled by the IAB in
January 2015 gave
wearables a high rank for
advertising potential

40. © 2015 eMarketer Inc.
Native ad formats are one way advertisers are
connecting with wearable users
“In order to get reach, advertisers are
going to need an ad format that is
ubiquitous, that works across
every one of the different
devices. The marketing industry is
moving toward native advertising as a
result, and for us, audio ads are native
ads.”
—Jonathan Eccles, product manager for
native ads at Pandora

41. © 2015 eMarketer Inc.
Sponsorships are another way
American Family Insurance
partnered with Mindshare and Under
Armour to launch a fitness program, the
2015 Challenge.
 People with wearables synced their devices
to Under Armour’s MapMyFitness app, and
then opted in to participate in the 2015
Challenge
 The participants needed to work out 20
minutes a day for 15 days over the course
of the month.
 People could unlock specific achievement
level badges and unique Spotify playlists
based on their workout routines.
“There were over 50,000
participants in the
challenge and we logged
over 1 million workouts
based on people syncing up
their wearable to the
MapMyFitness apps.”
—Jeff Malmad, managing director
and head of mobile and life+ for
Mindshare

42. © 2015 eMarketer Inc.
Still, ads will not appear in volume until one or
more devices attain significant market share
“There is a bit of a wait-and-see
approach right now, primarily
because we have yet to see how
consumers are going to be using
wearables in their lives.”
—Jonathan Eccles, product manager for
native ads at Pandora

43. © 2015 eMarketer Inc.
#10
Looking ahead: Smart
watches are expected to
take off faster than tablets

44. © 2015 eMarketer Inc.
Most
forecasting
firms expect
smart watch
shipments to
increase
dramatically
in 2015

45. © 2015 eMarketer Inc.
Projections suggest the smart watch market will
grow faster than the tablet market did
 Gartner projected 19.5 million
tablet devices would ship
worldwide in 2010, the year the
iPad was introduced
 Investment firm PiperJaffrey was
more conservative in its estimate,
projecting 11.32 million tablet
shipments for the same year

46. © 2015 eMarketer Inc.
Smart watch shipment projections for 2015 are
much higher than tablet projections were
 On the low end, Gartner projects 21
million smart watches will ship
worldwide this year
 On the high end, Yano Research
Institute expects 65 million smart
watches to ship in 2015

47. © 2015 eMarketer Inc.
Wrap-Up
1. Consumer awareness levels are high, but ownership
rates are low
2. Wearables are slightly more popular in the US
3. Interest and ownership is all in the wrist at this point
4. Being a smartphone extension is a double-edged sword
5. Value-to-price ratio needs more work

48. © 2015 eMarketer Inc.
Wrap-Up
6. Mass adoption requires a “killer application”
7. Data is the big win for businesses, but it comes at a
cost
8. Notifications are the easy way in—and out, if
businesses aren’t careful
9. Paid advertising will be native and new
10.Looking ahead: Smart watches are expected to take off
faster than tablets

49. Marketers are leading digital customer experience
Source: Altimeter

50. Wearables require customer identity

51. Janrain connects customer identity with wearables
Ad Serving CMS Analytics Email CRM
Web Mobile Apps Social
Sam
Feb 9
1983
User
Profile
Devices +
Touchpoints
Marketing
Technologies
Unified
Customer
Identity

52. Identity drives more meaningful customer experiences
Hi Sam,
Here’s a
tailored offer

54. © 2015 eMarketer Inc.
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Cathy Boyle
Wearables: 10 Insights on
Device Adoption and Business
Opportunities
 Wearables: Putting Consumer Interest and Device Adoption
into Perspective
 How Four Brands Leverage Wearables
 Wearables and Gender: Women Prefer Dedicated Fitness
Trackers
 Wearables: 10 Insights on Device Adoption and Business
Opportunities