Mobile consumers: Showrooming

As more consumers get smartphones and data packages that enable them to have low cost access to the web outside their homes, “showrooming” is on the increase.

Showrooming (looking at items in a shop and then searching for the cheapest place to buy it on-line) is a major headache for many retailers. According to Pew research, over half of all shoppers use a mobile phone to research purchases while in a store and almost 30% of them either bought on-line or bought in a different store, a loss of 15% to retailers.

The good news is that these figures show that not everyone is a showroomer. In fact shoppers can be divided into “maximisers” (showroomers) who will focus on getting exactly what they want (price, features) and satisficers who, as the name suggests, are happy with “good enough”. And most people it seems are satisficers.

Also, not everything is worth showrooming. The lower the price, the less likely showrooming will happen; so greetings card shops and confectioners are pretty safe from this phenomenon.

But nonetheless, this is a problem for hard pressed retailers, and one that is likely to increase as smartphone penetration increases and as consumers learn maximiser behaviour.

Are brands the answer?

Will the solution come from brands? Brands need high street stores so that consumers can see their products. Some brands like Samsung and Sony have set up their own retail outlets. But that won’t be possible for all brands.

In an ideal world, brands would help retailers to maintain high street sales, for instance by offering them items that are not available on-line. That might be part of the solution but it won’t solve the problem on its own.

Retailers need to find solutions

The solution lies in the hands of the retailers themselves. Charging customers for “just looking” or trying clothes on doesn’t seem sensible, although it has been tried. But there are plenty of other tactics that can be used.

The simplest is to drive increased in-store footfall. Increasing shop visitors by 15% will largely wipe out the effect of showrooming. This can be done through localised marketing, including geo-targeted mobile advertising. Alternatively offering rewards for visiting a shop through schemes like Shopkick can pay dividends as well.

Once the consumer is in a store then a number of other tactics available. Price matching is perhaps the most obvious. In the USA Best Buy claims to be killing showrooming by offering price matching against local retailers and major on-line retailers such as Amazon.

Another important strategy is to make maximising behaviour more difficult or less attractive. Tactics here include:

  • Selling on service, rather than price; many people would ay that this is what John Lewis do; despite their “never knowingly undersold” tagline many shoppers choose John Lewis because of service such as no-quibble returns, rather than because of price.
  • Emphasising things in-store that are hard to compare on line – brand values such as quality, complex sets of features; doing this can increase uncertainty that going online will result in the best deal.
  • Emphasising with overt messaging the positive aspects to shopping in store: “the best choice”, “the best quality”, “the best service” etc.
  • Providing in-store give-aways to increase the shopper’s sense of obligation to the store.
  • Reducing the risk of shopping in-store by providing customer endorsements about service quality and, if possible, price.

There are plenty of other tactics too:

  • In-store wifi can connect shoppers to the shop’s own website before they are able to visit any other sites. And of course the retailer’s website can then display special offers or be used to up-sell and cross sell products.
  • Customer loyalty schemes may also have a place; while these can easily be neutralised by online customer loyalty schemes, it may be possible to provide loyalty schemes that have immediate benefits such instant rewards in-store.
  • High Street retailers can band together to provide reciprocal vouchers so that a shopper who purchase in shop A is given a voucher for shop B and vice versa.
  • There is a saying “Don’t give me choice; make it easy for me to choose”: online choice can be bewildering and stores can help people to choose through service and information. Making it easy to find things in a store can help here.

Finally remember that for many people shopping is an important leisure activity. High Street retailers can enhance the shopping experience through added services, free gift wrapping, in-store events, a glamorous environment etc. They can even use data about the shoppers in store to “personalise” visits, either by encouraging customers to register and log into a store’s website, or even (as Burberry has been trialling with their “Smart Personalisation” scheme) by putting RFID tags in goods which can then provide a personalised in-store or after-store experience.

All in all, retailers don’t need to give up on showroomers. Instead they can use technology to drive more customers into their stores and convert them more effectively.

Of devices and desires

Attending an early morning session at the bustling AdTech conference and exhibition this week in Olympia I heard Theo Theodorou promoting the Apple iAd format.

His pitch was interesting and persuasive, full of data on how mobile apps generate far more engagement than online rich media or even (so he claimed) TV.

He started by saying that iPads were massively dominant in the world of tablet computers. And to prove this he asked how many people in the room had iPads. Everyone in the room, apart from me, put their hands up. Theo turned to me with a sad smile and admitted that iPad use wasn’t universal yet.

At that point I admitted that I did have a tablet, but that it was a Samsung Galaxy (bought because it fits nicely into my jacket pocket). And therein lies a moral or two, I think.

First of all, don’t assume that because almost all London media types have an iPad it means that everyone has one. While smart phone possession is on the way to becoming ubiquitous in the UK (although even that will take a few years yet), tablet possession is limited to a small minority: 7.5% of the adult population this autumn according to Kantar.

And second don’t assume that all tablets are iPads. While no doubt the iPad is dominant in the UK market with nearly 75% market share, the market is changing fast and Apple may well see a market share nearer 50% within the next year or two.

The marketplace for apps though is different. In the smart phone market, iOS is far less dominant and Android devices lead Apple strongly. That is reflected in app downloads with Ovum predicting that 2011 will see over 8 billion Android app downloads compared with 6 billion iOS app downloads. And that difference is only set to widen.

But back to Theo. His proposition was this. TV is a great medium for driving emotion, but it is a one way medium. Online is a two way medium, but poor at driving emotional story telling. But iPad apps take the best of both worlds being both emotionally engaging and two way.

Because of this, long form ads work well on the iPad – they show a 6% click through rate and indeed time spent on an iPad ad is on average 60 seconds compared with 9 seconds on a web based rich media ad. The examples Theo showed us, ads for a car and a camera, bore out the potential.

Those are powerful data to support using iPad apps (and I suppose apps on any tablet device) as an advertising vehicle. So why is it that tablet apps are so engaging?

Accurate targeting, said Theo. And because the ads are intuitive and fun. And because you can touch the ads.

I’m not convinced that accurate targeting would have such a massive effect although I am sure it has some. It probably does enhance click through rate (although those of us with long memories can remember the (brief) time that online ads had similar CTRs).

But I think perhaps it is the game like nature of the ads that generates that length of engagement. And that is of course helped by the fact that you can touch the screen, and also because you are holding the device in your hands so that it is physically closer to you.

So perhaps it isn’t surprising that game-like ads do work well on a tablet.

But creating good interaction is difficult, risky and expensive. And it is not going to be appropriate for every brand. So much digital advertising (especially as TV advertising isn’t going to disappear any day soon) will remain as long form video.

The question for Theo is, will video ads on a tablet drive engagement, or will advertisers who want to use this format be forced into using “advergaming”. If that is the case then the market for tablet advertising must surely be limited.

Galaxy Tab or iPad?

Last month it was reported that Apple was suing Samsung because they felt that the Galaxy Tab was copying its design of the iPad.

So as the recent proud owner of a Samsung Galaxy Tab, I thought I’d give some thought to the extent to which the two devices are similar.

Well there is one big difference for a start. I bought my Galaxy because I needed a new phone, my old one having been liberated from my car by some scally in Putney. And the Galaxy does function as a phone, albeit with an element of Dom Joly about it! However, a Bluetooth headset solve that reasonably well. Of course you can use the iPad as a phone – but only using VoiP such as Skype: and of course that limits who you can call.

Another big difference is the size and weight. iPads are surprisingly heavy, even the iPad 2 weighs in at 600g, around a third more than the Galaxy Tab. That makes it less comfortable to hold for a long time: important if you are using it to read eBooks or magazines.

The big difference is the size though. iPads, with their 10 inch display are much larger than the Galaxy with only 7 inches. That’s a good thing and a bad thing. OK, the iPad’s screen is great for reading magazines and typing. But the downside is that it is bulky. It certainly doesn’t fit into any of my pockets while the Galaxy Tab slips into a coat pocket very nicely. For me at least, the 7 inch screen is plenty big enough for most things I want to do, and a lot better than a smart phone.

There are plenty of other differences too. With the Tab I can buy extra memory if I need to – a 16 GB memory card is a lot cheaper than upgrading from a 16 GB to a 32 GB iPad. The cameras on the Tab were an important point of difference too – but the new iPad 2 has caught up with that feature.

So is the Tab a rip off of an iPad? Decidedly not. It’s a completely different beast. While it has pros and cons compared with the iPad in terms of the technology behind it, the reasons for buying it will be very different for many people.

The Tab is something to take out with you – a genuinely portable web enabled computer which doubles as a phone.

In contrast the iPad is something to keep at home (or perhaps in your briefcase) – which is perhaps why the majority of iPads sold are not 3G enabled. Bigger screen, admittedly. But far less useful, at least for me.

The future of newspapers

The future of newspapers is an old debate, but the terrible events in Japan throw a spotlight on how the role of newspapers is changing – or perhaps needs to change.
Buying my copy of the Sunday Times yesterday, I was shown pictures and news that I had already seen or heard – on TV, on the radio and of course online.
But as well as the slightly redundant news, there was the analysis and explanation that can be done so much better in newspapers than it can on TV or on the radio.  TV is powerful, but the type of analysis it can deliver is inevitably different and in many ways lighter than the analysis press, with its ability to deliver extensive articles as well as diagrams that can be pored over, can deliver.
Online of course combines the benefits of TV (video) with the benefits of press (long form text) – and adds a few others all of its own (e.g. the ability to manipulate data such as making calculations, buying products or playing games).
The disadvantages of online come down largely to convenience (who wants to lug a laptop around with them instead of a newspaper on the morning commute?) but also to functionality (paper makes a pretty good interface which you can for instance scrawl on or tear off).
Tablet PCs change all that. For example, newspaper iPad apps (and we will inevitably soon be seeing their equivalent for Android devices) can mimic paper’s advantages because they potentially allow the user to annotate pages and to “cut out” pieces of text such as ads or articles. OK, they can’t be folded in quite the same way as a newspaper but the 10 inch screen is still pretty light and convenient.
And that’s the opportunity for newspapers. Tablet PC apps from newspapers that allow updated news (like TV and online), long form text and convenient functionality (like paper), and additional interactive functionality (like the web), combined with trusted brands (i.e. credible analysis from well-known reporters) will be a pretty hard combination to beat.
And not only that, it does increasingly appear that people are much more willing to pay for content on a tablet PC app than they are for content from a website.
So don’t write the press off just yet. Paper may well be (slowly) dying as an interface for news, but the tablet PC revolution may well be the market change that secures the future of newspaper brands.
PS. My tips for must-have mobile app functionality
1. Ability to interact with content
• Write notes on content
• Take clippings, save images etc into a scrapbook
• Zoom in on images, pan across images, swivel images
• Enlarge font
2. Ability to share content and opinions
• Share with other websites e.g. twitter, facebook
• Share via email, chat and IM
• Share opinions on the app via comments pages or polls
3. Appropriate content
• Customisable content
• Constantly updated content
• Extra content compared to web and paper
• Different horizontal and vertical experiences – e.g. horizontal might mimic paper product while vertical has different layout and extra content
4. Good usability
• Navigation: e.g. clickable table of content, thumbnail images, click for previous article/next article
• Text only and images only versions
• Video and audio with appropriate play controls
• Full screen slide show/article view
• Gestures in interface (which should be intuitive) e.g. rapid page turn using gesture
• Search functionality
• Content viewable offline; ability to browse content before a full download; ability to download some but not all content
• Ability to click through to ads or shopping (but while staying within environment of the app)

Mobile music: phone manufacturers have a way to go

The consumption of music online and via mobile devices continues to rise – and is predicted to increase by 15% in 2010 according to recent report from Accustream. And according to Mintel (January 2009) 41% of UK mobile phone owners have downloaded music to their device.

Many of those 41% may well also use a dedicated portable music device. But at least they are sampling music on a mobile phone. And this gateway behaviour means that they are more likely to continue doing this in the future of the experience is a good one.

The continued rise in mobile music consumption is both an opportunity and a frustration for mobile phone manufacturers and networks.

On the one hand people plainly want to listen to music on the move. But on the other many are still wedded to their MP3 devices and so ignore any music playing potential of their mobile phones.

Is this behaviour likely to change? Well, to some extent this depends on phone manufacturers.

If they are going to compete with MP3 players, and especially iPods, they will need to make the transition from using an MP3 player for music to using a mobile phone simple and beneficial.

So what cards do they hold? Quite a few in fact.

First many mobile music fans like to listen to radio. And most smartphones have FM radio as standard while many music players don’t; FM radio functionality is a relatively recent addition to the iPod family for instance.

Also smartphones have screens. That means better functionality: the ability to search for tracks by name instance; and the ability to play music videos.

And of course smartphones come with the ability to access the web to research music or to buy further tracks.

 Unfortunately learned behaviour and time invested in setting up and downloading music to MP3 players will inevitably inhibit many people from transferring their mobile music habits to the mobile phone.

Apple has a head start here – its music devices and smartphones are highly compatible so the move away from (inexpensive) iPods to (expensive) iPhones is an easy one to make.

Other manufacturers need to learn from this. It will only be by making sure that it is very simple and intuitive to download music to a smartphone, whether that is from the Web or from an MP3 player, that they will succeed in persuading people to use their phones as music players.

And if the current economic downturn and continued youth unemployment mean that consumer electronics manufacturers start to find their most attractive markets are Boomers and GenXers then the imperative to ensure easy-to-use interfaces will become even stronger.

Apple pi?

It’s not often that Apple is out of the news. But recently a couple of quite negative stories about their mobile strategies have been circulating.

First publishing, and Apple are facing accusations of censorship. Apple, in pious pursuit of a moral web, have been upsetting some major and perfectly respectable German publishers. The story goes that not only have Apple refused to allow certain mobile apps they disapprove of to be sold via their apps store, they have also demanded a zero nipple count on content accessible via iPhones.

This, some say, leaves them open to the accusation of trying to censor printed material!

Well maybe. But remember, Apple is an independent corporation and is, surely, quite entitled to sell whatever it likes in its own shops. And if publishers don’t like that, then they need to get their publications distributed elsewhere.

The second story is about advertising. According to Addictive’s excellent weekly Mobile Fix email, Apple have effectively banned Google and Microsoft from serving ads with any iPhone apps. This means that advertisers will need to serve ads via Apple’s own iAds system. 

That is likely to be a pain for advertisers. A new system to design ad formats for; new media and ad serving processes to understand; and perhaps worst of all the danger of yet another stream of data which doesn’t use quite the same assumptions and measurement methods as other data streams.

Not ideal!

And yet does it all really matter? To many Apple is synonymous with mobile apps. But the truth is subtly different. There are other mobile platforms out there. And they are already delivering substantial numbers of apps to mobile users.

After all, while i-phones may have 25% of the Smartphone market, they don’t have 75% of it!

So if other platforms are more flexible than Apple then they have an opportunity to outflank them and attract publishers and advertisers frustrated by the restrictions imposed by Apple. And that could well lead to a mobile content market that is larger and more competitive than it would be if a single retailer has a quasi monopoly. And that would be to everyone’s benefits. Even Apple’s.

Will the GSMA’s mobile metrics herald the “year of mobile advertising”?

The GSMA announced the launch of their mobile media metrics tool, delivered by Comscore, at the London Imax yesterday.

It was certainly a popular event, and massively over-subscribed by all accounts. So I went along ready to be impressed.

Well, to their credit, the GSMA have managed to get the five main UK mobile operators, O2, Vodafone, Orange, T-Mobile and 3UK, into one space, sharing usage data to allow robust reach and frequency numbers to be accessed by media planners.

That’s useful. We can see that 16 million people in the UK accessed the web via mobile devices (by which they mean phones – small screens, limited ease of use, but always on and always with you).

And we can see where they go: Facebook, Google, the operators, the BBC… (Actually, when you look at the figures in a bit more depth and examine page views and minutes of use, you find that mobile media is really little more than Facebook Media, but that’s another story.)

And, because GSMA have negotiated a survey of a section of mobile users we can even make some assumptions about the socio-demographics of mobile web site visitors. (Although these are assumptions and I believe will be open to some question.)

But. And it’s a very big but:

There is still no independent data. At the moment all the data comes from the operators. So you buy some media. And the operators will tell you whether or not it has been delivered.

For mobile media to have any credibility (and Michael Smith of the COI was quick to point this out yesterday) we do need to see independent campaign data such as that which is delivered by third party ad servers in “fixed” internet advertising.

Without that (and irrespective of whether you feel the heavy dominance of Facebook is an issue), it will be hard to justify serious spending on mobile media.