Mobile Commerce Outlook 2013

Mobile CommerceOutlook 2013

Mobile Commerce DailyTHE NEWS LEADER IN MOBILE COMMERCE AND RETAIL

A CLASSIC GUIDEFebruary 2013

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www.MobileCommerceDaily.com

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CONTENTS

PAGE

3 INTRODUCTION Mobile commerce to make customers pickier By Mickey Alam Khan

4 ADVERTISING Mobile advertising is the linchpin that will drive purchases By Rimma Kats

7 ANALYTICS As merchants build mobile chops, analytics become even more imperative By Chantal Tode

9 APPLICATIONS App discoverability will still be an ongoing obstacle for mobile marketers By Rimma Kats

11 BANKING Mobile popularity challenges banks to keep features fresh By Chantal Tode

13 CARRIER NETWORKS 2013 a pivotal year for wireless carriers, mobile commerce By Chantal Tode

15 CONTENT Stronger mobile content experiences will be in demand in 2013 By Chantal Tode

17 EMAIL Mobile commerce emails to get a lift with loyalty By Lauren Johnson

19 GAMING Rewards-based mobile advertising takes shape in 2013

PAGE

21 LEGAL/PRIVACY Privacy a bigger concern as regulation grows By Chantal Tode

23 MULTICHANNEL RETAIL SUPPORT Mobile opportunities outweigh any negatives for merchants By Chantal Tode

25 MARKETING Privacy, measurement to continue to challenge location- based marketing By Lauren Johnson

27 MUSIC Music industry split on subscription and library-based revenue streams By Lauren Johnson

29 RESEARCH Loyalty integration crucial to mobile wallet success By Lauren Johnson

31 SEARCH Mobile search will help grow purchase intent By Lauren Johnson

34 SOFTWARE AND TECHNOLOGY QR codes, augmented reality will anchor mcommerce success By Rimma Kats

36 WEB SITE AND DEVELOPMENT Forget about cookie-cutter mobile sites in 2013 By Rimma Kats

PAGE 2 Mobile Commerce Daily MOBILE COMMERCE OUTLOOK 2013

Mobile Commerce Daily covers news and analysis of mobile commerce and retail. The Napean franchise comprises Mobile Marketer, MobileMarketer.com, the Mobile Marketer Dai-ly newsletter, MobileMarketingDaily.com, MobileCommerceDaily.com, McommerceDaily.com, the Mobile Commerce Daily site and newsletter, MobileNewsLeader.com, Classic Guides, webinars, Mobile FirstLook, the Mobile Marketing Summit and the Mcommerce Summit and awards. ©2013 Napean LLC. All rights reserved. No part of this publication may be reproduced without permission.

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Mickey Alam KhanEditor in [email protected]

Chantal TodeAssociate [email protected]

Rimma KatsAssociate [email protected]

Jodie SolomonDirector, Ad [email protected]

Lauren JohnsonAssociate [email protected]

Kristina MayneContent [email protected]

INTRODUCTION

Mobile commerce to make customers pickier

T he runaway hit for retail this year will be mobile com-merce. The best way to leave money on the table is not

to have a commerce-enabled mobile site and application.

Retailers and financial institutions are undergoing the biggest business-model shifts in a generation. Technology has changed the relationship between retailers and their customers, shifting the balance towards those who buy away from those who sell. Mobile is hastening this evolu-tion, or as it will be for some merchants, revolution.

Basket caseWhile it is hard to quantify, it is obvious that mobile is helping boost the basket size for smart retailers offering seamless shopping and checkout experiences on smart-phones and tablets.

Whether the sales are incremental or channel shift is up for debate, echoing some of the same discussions over ecommerce and retail stores. Mobile is also driv-ing traffic in-store, thus giving it its biggest edge of PC- based ecommerce.

The early advantage in mobile commerce goes to play-ers already invested in the ecommerce space: eBay and Amazon. EBay’s PayPal unit last year closed $14 billion in transactions via mobile devices – one-tenth of the on-line total. This year, eBay expects to close $20 billion in transactions on mobile and another $20 billion via Pay-Pal, clearly putting it in the lead for mobile payments yet again.

Amazon, for its part, is the great disruptor. Online was its killer weapon and now mobile serves the coup de grace. Take any retail category and Amazon is forcing its com-petitors into the uncomfortable position of defending their turf at the risk of losing loyal customers. Amazon thrives on extreme loyalty from a customer base addicted to quick and easy shopping on PC and mobile. It also ben-efits from its 1-click ordering process that is a natural for mobile.

As a disruptor, Amazon is dangerously close to becom-ing the search engine of choice for retail searches, thus upsetting Google’s plans for continued search world

dominance. And mobile is where most searches will soon migrate.

But retailers’ biggest beef with Amazon is what threatens their stability and customer relationships – the growing phenomenon of showrooming where consumers compare product prices on Amazon’s mobile site and apps while in the competitor’s store.

Amazon is training consumers to shop mainly by price and then for convenience, threatening retailers’ business models that rely on customer relationships for repeat purchases and loyalty to brand over pricing. Amazon is not going away anytime soon, nor is the behavior it is ingraining in consumers.

Shop shop or chop chopThat said, brand still does count for much in retail.

Those retailers investing in smart marketing, attractive pricing, convenient product delivery and a quick and seamless shopping experience on mobile will continue their growth momentum. Mobile brings the store closer to the consumer.

This Mobile Commerce Outlook outlines some of the op-portunities and challenges in the year ahead for mobile commerce. Many thanks to Mobile Commerce Daily’s Chantal Tode, Rimma Kats and Lauren Johnson for their reporting and analysis. Thanks also to Rimma for her art direction and to ad sales director Jodie Solomon and con-tent assistant Kristina Mayne for their support.

Please read this Outlook from cover to cover. Mobile will change the world of retail even more than ecommerce did, redefining the relationship between shop and shopper to the extreme advantage of the latter.


Mickey Alam [email protected]

Mobile advertising is the linchpin that will drive purchasesBy Rimma Kats

While interactive mobile advertising is certainly not a new concept, few brands and their agen-cies have taken the additional step of execut-


ADVERTISING

Marketers such as Macy’s, J.C. Penney and Target have continually used mobile advertising to drive consum-ers to their mobile-optimized sites and applications and bolster sales. Mobile commerce-enabled advertising is becoming more than just click-throughs and provides companies with ways to offer consumers relevant, tar-geted offers and incentives.

“The mobile user experience is defined by immediacy, speed and efficiency,” said Scott Forshay, Austin, TX-based mobile and emerging technologies specialist at Acquity Group, Chicago.

“Deep linking interactive mobile video ad units directly to product detail pages on a mobile-optimized site builds upon the momentum gained by the ad engagement to facilitate a transaction almost instantaneously, irrespec-tive of time or space,” he said.

Importance of testingThe most glaring issue with current mobile advertising is an adherence to big browser display principles scaled down to a smaller form factor.

The ineffectiveness of banner display in big browser digi-tal advertising is well documented.

Adhering to traditionally ineffective engagement meth-ods on such an intensely personal medium with display real estate constraints will only make the user experi-ence more frustrating, further alienating the audience and the advertiser alike.

Moreover, some would say that mobile advertising has failed, by and large, to deliver additive user experience functionality unique to the capabilities of the medium.

ing commerce integration as a central component in execution strategy. That said, the outlook for mobile commerce-enabled advertising in 2013 looks bright.

Contextually additive functions such as location recog-nition for store location and click-to-call should be con-sidered in every mobile ad execution.

“Unfortunately, it is a fact that a considerable percent-age of brands still do not yet have a mobile- optimized site presence to direct user clicks,” Mr. Forshay said. “A mobile-optimized site experience is table stakes for re-tail brands, providing the primary foundational corner-stone around which all mobile marketing efforts should be constructed.


“Those brands with that foundation securely in place have significant opportunities to competitively differen-tiate in mobile advertising as Web traffic and content consumption continue to migrate away from the big browser to the pervasive screen,” he said.

As media consumption on device continues to increase and time spent by consumers engaging with apps begins to rival television, spend on mobile advertising will con-tinue to increase significantly.

Also, as the competitive landscape evolves and competi-tion for on-device attention increases, brands will look

to include interactive video advertising with integrated commerce capabilities as a point of differentiation and advantage, seeking to capitalize on the immediacy of the mobile experience to influence this new breed of con-stantly connected consumer.

“I recommend a heightened focus on targeting for ad-vertisers and publishers alike and an emphasis on being relevant and additive to the user experience,” Mr. For-shay said. “Traditional digital spray-and- pray ad models simply do not work in mobile.

“Additionally, calls to action in creative execution need to be more comprehensive in terms of taking into ac-count the potential variability of the user experience,” he said. “It is not simply enough to link an interactive video unit to a product page and be done with it.

“If the consumer viewing the ad wants to find the near-est store to purchase the product or wants to call a sales associate to inquire about it further, those basic func-tions need to be available if the entirety of the mobile user experience is taken into consideration.”

Building experiencesA large challenge in mobile commerce is the small screen size and the consumer having to enter a plethora of fields with accuracy, per Sarah Hodkinson, head of sales strategy at PayPal Media Network.

“Fortunately, with PayPal’s Mobile Express Check-out functionality we can help brands avert this chal-lenge and increase conversions in mobile commerce,” she said.

“In 2013, you will also see the service help brands drive commerce in-stores, but also providing the flexibility to blend it with someone’s online purchasing experience to utilize relevant offers wherever you shop, whether online or in the store.

“We will accomplish this through highly targeted of-fers that close the loop at point of sale through Pay-Pal’s acceptance offline, yielding full-funnel metrics that span from impression through to redemption and total

transaction size.”

This year, it goes without saying that there will be an increase in mobile advertising growth. Mobile ads will need to be hyper-relevant to be effec-tive and for closing the loop from a reporting standpoint, which will enable brands to effectively measure the ROI of offers delivered.

“We anticipate increased growth and further advances in 2013 that will enable us to build on mobile strate-gies that help close the loop between advertisers and consumers, enabling them to establish more meaningful relationships,” Ms. Hodkinson said.

“That will be the future, and both PayPal and the Pay-Pal Media Network will continue to be at the forefront of the new technologies that make mobile commerce-enabled advertising better and more targeted,” she said. Marketers are beginning to recognize a need in the mar-ketplace and are finally beginning to pay the necessary attention to their mobile initiatives.

This means that companies are beginning to develop standalone mobile assets, and in turn enabling stand-alone commerce-enabled mobile advertising.

“The issues and challenges that companies will face are directly linked to whether or not they have set up a mo-bile ecosystem capable of supporting standalone com-merce pages that are not directly linked to their PC as-sets,” said Marci Troutman, CEO of SiteMinis, Atlanta.

“Only if companies are able to quickly create stand-alone mobile content for ads will that content be able to be tied to commerce pages and even be commerce-enabled,” she said. “However, the obvious problem that they will face is how to handle secure payments in an ad environment, and perhaps more importantly, how to make the consumer feel comfortable purchasing some-thing through an ad.

“The opportunities are absolutely staggering though. This is a situation in which a consumer can make a purchase decision at the exact same instant they are being adver-

tised to, complete-ly enabling the impulse-purchase ability, and result-ing in massive po-tential profits for the companies employing this.”

What to expectIn 2013, consum-ers will see a lot more mobile ad content delivered to them at incredibly personal levels.

The data has been collected and the analytics and adver-tising platforms are beginning to emerge.

Additionally, marketers will begin to fully understand what consumers want, when they want it, and they will give them the ability to buy products through mobile advertising campaigns.

As devices and network speeds improve, mobile com-merce will continue to accelerate and build momentum in 2013.

“I predict that many retailers that started with quick and dirty transcoded sites will move to API-linked integrated solutions that leverage and extend their ecommerce op-erations into the mobile space,” said Wilson Kerr, Bos-ton-based vice president of business development at Unbound Commerce.

“Even today, the majority of retailers still do not have a mobile-optimized site catered to the 50-plus percent of Americans who own smartphones,” he said. “This past Cyber Monday, we saw a 410 percent increase in mobile commerce transactions across our 360-plus retailer net-work.

“PayPal reported that mobile checkout transactions in-creased 96 percent year-to-year. Again, mobile com-merce will continue to accelerate and gain traction in 2013, as more consumers find better and faster experi-ences when shopping on their mobile devices.”


As merchants build mobile chops, analytics become even more imperative

By Chantal Tode

As the early days of mobile gives way to bigger, more thoughtful strategies, merchants are begin-ning to realize they have unlocked a treasure trove


ANALYTICS

No one denies the importance of analytics, but mobile has presented some challenges on this front, namely the complexity of the platform and the closed-loop metrics

of meaningful customer data, keenly focused on figuring out the most effective way to leverage this information.

that have been elusive. However, now that merchants are gaining a better understanding of how mobile works, they are ready to tackle how to optimize their efforts via better analytics.

“The mobile space has been a bit of a wild frontier, with everyone chasing shiny pennies,” said Ken Madden, executive vice president and head of digital for North America and analytics – global at OgilvyAction. “But now we are starting to see a quickening pace, moving to-wards true test and learn scenarios.

“On top of that, merchants are looking to make more direct connections between mobile users and in-store shoppers and purchases,” he said. “So, in 2013 we will see more merchants connecting the dots from mobile usage to actual purchase transactions through loyalty cards and email addresses.”

Analytics a core focusThe biggest difference in 2013 will be that mobile ana-lytics will become a core focus for many merchants.

This is because merchants increasingly recognize that mobile provides an opportunity to connect personally and deeply with their customers. Mobile also adds a layer of context that is deeper than in any other channel.

“Mobile gives us user, place and time in addition to the transaction/interaction data which provide a tremen-dous amount of data around how a consumer interacts with brands and retailers,” Mr. Madden said.

“The best thing merchants can do is not waste that op-portunity to learn more about their customers,” he said.

“Build a measurement plan that helps us understand the effectiveness of your marketing activities, while also helping us better understand the customers’ needs.”

Eliminating silosOne of the biggest challenges that most merchants face

when it comes to mobile analytics is that mobile has created many data silos, which makes the process of un-derstanding a given customer that much harder.

Today, most marketers’ mobile data is broken into silos for mobile Web, applications, SMS, QR codes, location-based programs and display advertising.

However, as merchants start to embrace multichannel analytics solutions, they will be able to get a better view of customers. “We’ve witnessed most successful mcommerce provid-ers move aggressively towards multichannel analytics


solutions that are capable of tracking a given consumer across any channel they happen to be present in,” said Michael Ricci, vice president of digital and product mar-keting at Webtrends. Several trends are also driving the need for better mobile analytics, including a move toward hybrid HTML5 apps, the effect of tablets on the mobile shopping experience and growing interest in responsive design.

“We’re also witnessing a huge move towards hybrid apps that in turn drives a need for solid measurement approaches – SDK or otherwise – where metrics can be accurately tracked,” Mr. Ricci said. “The vast majority of solutions in the marketplace struggle very badly to mea-sure hybrid apps and that’s why we created our hybrid SDK to make this process simple for app developers.

“We’re seeing more and more of our mcommerce cus-tomers appreciate just how vital the tablet is to the mobile shopping experience and develop apps that are tailored towards this form factor,” he said “We expect to see much more of this in 2013 and also the beginning of a move towards responsive design.”

Now that many merchants have a little history behind them when it comes to creating mobile campaigns, they are recognizing that they need to be able to optimize their efforts more effectively going forward if they want to create the kind of relevant experiences that drive higher repeat visits and fuel sales.

“Measurement and analytics are squarely in focus for 2013 for any player in the mobile commerce space,” Mr. Ricci said.

“We’ve witnessed a large trend taking place where these marketers are getting very serious about making mobile analytics one of their top strategic priorities,” he said.

“Marketers are coming to understand that solid mea-surement is critically important to forging coherent strategies, evolving user experience, optimizing sites and apps, driving higher conversions and ultimately increasing ROI.”

With so many apps available, it is very hard for market-ers to be noticed. The problem is even greater for brands that are encouraging consumers to download their mo-bile apps to make purchases from them.

“In 2013, users will be more selective about which apps they chose to download, screens have gotten clut-tered and users are becoming more picky with which apps make the cut,” said Kunal Gupta, CEO of Polar Mobile, Toronto.

“I would recommend that more time be spent on the marketing of apps to drive downloads as well as in-creased engagement,” he said. “For mobile commerce apps especially, brands want users to return again and again to their apps.

“Integration into larger marketing campaigns – like tele-vision ads and social media campaigns – is a way this can be managed.”

Key strategyMobile apps continue to gain traction as more users turn to them for everything from ordering dinner to their holiday shopping.

Industry experts believe that customer demand will drive brands and companies to create more innovative, us-able and dynamic apps that can make these experiences more simplified.

“I suspect that many brands will continue to use cookie-cutter platform solutions that fall short on user experi-ence,” said Melody Adhami, president and chief operat-ing officer of Plastic Mobile, Toronto.

“Brands need to understand that in the same way they

App discoverability will still be an ongoing obstacle for mobile marketers

By Rimma Kats

Discoverability will continue to become increasingly important as more mobile applications are added to app stores daily. Standing out from the crowd-


ed app stores will become an even bigger challenge for brands in 2013.

APPLICATIONS

merchandise their store, they need to build their digi-tal properties with the customer, design and usability in mind,” she said.

“A one-size solution wouldn’t fly when building a new store, so I can’t help but wonder why it continues to be seen as OK when building a digital storefront?”

App revolutionThere is more traction and metrics, as well as case studies available for brands to make decisions about


mobile apps. And without doubt, 2013 will bring about a lot more players into the space.

To achieve success, marketers must look at their custom-ers and see if they are asking for mobile. If the answer is yes, companies need to look towards building a digi-tal commerce strategy that includes mobile. From there, marketers must build an engaging mobile app that in-centivizes their customers to shop.

“We see continued growth in both volume of apps, as well as the quality of the user experiences available in the market,” said Russ Whitman, chief strategy officer of

Ratio Interactive. “The biggest challenge we see for 2013 is for consumers to trust mobile commerce the way they do ecommerce today. The good news is it’s a step, not a leap, for this to happen.

“We believe in the shift from using mobile to inform and search to transactions in 2013 in a big way,” he said. “There will be broader usage, increased capabilities and cross-platform support.

“It is important to support all relevant platforms for your market, increase testing to ensure quality and provide users excellent support to build trust.”

Most of the larger banks and many mid- and small-sized ones now offer customers at least some basic mobile banking features. However, banks will need to start look-ing at upgrading their mobile services with features such as remote deposit capture, bill pay and integration with existing loyalty programs if they are to stay relevant to consumers’ increasingly sophisticated use of mobile.

Mobile’s popularity challenges banks to keep features freshBy Chantal Tode

Consumers will continue to embrace mobile bank-ing this year because of its ease, putting pres-sure on banks to stay ahead of the curve with the


latest features.

BANKING

“Mobile banking will continue to grow as a mission-critical application on every mobile phone,” said Drew Sievers, CEO of mFoundry, San Francisco. “The need to be connected to your money is universal and mobile bank-ing is a bank’s best channel.

“Mobile banking will continue to evolve rapidly, adding new money movement and payment features all year long,” he said.

“Consumers are getting used to seeing robust new fea-tures that help them save money so we fully expect the trend to continue in 2013. Banks that can deliver these valuable features will retain their customer base and drive new revenue as well.”

Mobile payments groundworkRemote deposit capture capabilities were introduced by many of the larger banks in 2012 and there is likely to be a big expansion of this service in the coming year as more banks join in.

The service enables users to snap a photo of a check with a smartphone to deposit it into an account.

“In the next 12 months, remote deposit capture will be included in the applications provided by some of the big-ger regional banks, and customer use of RDC will increase as awareness spreads,” said Dave Kaminsky, emerging technologies analyst at Mercator Advisory Group, May-nard, MA.

Coupled with the growing availability of remote bill pay features and person-to-person payments, banks will be-gin to lay the groundwork for mobile payments by getting consumers comfortable with using their smartphones as a payment device.

While a few banks have already introduced mobile pay-ments offerings, in 2013 most are likely to begin to eval-uate a proprietary or third-party wallet in the near term as a means to enable point-of-sale payments.

As they continue down the mobile commerce/payments path, banks are also likely to enable existing loyalty and rewards programs via mobile to begin to establish a mo-bile commerce value proposition for customers.

Additionally, they will evaluate the potential for a broad-er mobile-offers program to compete with non-payments players that are offering wallets, payments and other banking products via mobile, per Jeff Crawford, senior consultant at First Annapolis Consulting, Linthicum, MD.

Omni-channel approachBanks are also likely to shift to a more omni-channel ap-proach so they can maintain a consistent look and feel across channels. With this goal in mind, many will begin exploring opportunities to integrate mobile and physical


channels, such as with POS payments and ATM access via mobile.

“We foresee three primary challenges for providers: sup-porting the overall business case for mobile given the near-term expenses and lack of direct revenue oppor-tunities, managing the diverse mobile platform require-ments, and keeping up the feature and functionality arms race,” Mr. Crawford said.

Another trend likely to gain steam this year is the avail-ability of personal financial management tools in mobile applications.

Banks should also keep security a primary focus, as the mobile platform is developing at a rapid pace, resulting in new opportunities for hackers and fraudsters.

“Mercator expects some financial institutions to intro-duce certain elements of personal financial management in their mobile applications, likely first focusing on spend tracking as opposed to budgeting tools,” Mercator’s Mr. Kaminsky said. “The expectation is that while this intro-duction will take place in 2013, significant uptake will not take place until 2014 or ‘15.”

“It’s important for banks to utilize multifactor authenti-cation, encryption, transaction limits and any other rea-sonable security functions that are possible,” he said.

Last year, Isis launched a mobile wallet – a joint venture of AT&T, Verizon Wireless and T-Mobile USA – and it was one of the first big moves by carriers in the United States in mobile commerce.

However, with their access to existing relationships with tens of millions of mobile subscribers and their access to real-time usage data, there is significant growth poten-tial for carriers in the mobile commerce space.

“I think operators are going to play a bigger role in mo-bile commerce in 2013,” said Lara Albert, vice president of global marketing for Globys, Seattle. “By leveraging their existing relationships with millions of subscribers and unique access to real-time usage data, carriers will not only support commerce via their networks and de-vices, but proactively drive mobile commerce adoption.

“The key will be in their ability to identify and monitor individual customer behavior in ways that allow them to act in the right context to encourage more transacting via mobile,” she said.

“With the promise of mobile commerce comes the ex-pectation of a faster, easier and better transaction ex-perience – and a big factor in delivering against these expectations is expediting the discovery of the enhanced experience. By continually monitoring behaviors to en-able a relevant experience at the right time, carriers will leverage new forms of customer engagement to acceler-ate mobile transacting.”

Leveraging controlThere is an opportunity for wireless carriers to have a defining role in the way mobile commerce develops be-cause they run the actual networks and therefore are ca-

2013 a pivotal year for wireless carriers, mobile commerceBy Chantal Tode

While mcommerce and mobile payments are taking off, wireless carriers are treading care-fully as they look for ways to insert themselves


into the equation. And as growth and competition accel-erate, 2013 could be a pivotal year in determining how big a role carriers will ultimately play.

CARRIER NETWORKS

pable of layering on security and prioritization capabili-ties that can allow a more efficient, secure transaction.

Already, carriers are leveraging their capabilities around behavioral analysis and real-time decisions to influence specific behavior, whether it is stimulating usage, en-couraging higher spend or migrating customers to high-er-value service plans.

Additionally, late last year, AT&T and Verizon also jumped

into the daily deals space with mobile-offers services that leverage their customer data to deliver more per-sonalized deals.

“Mobile payments are real-time transactions where there’s a need to be quick and received correctly,” said Andrew Till, senior vice president of smartphones and consumer electronics at Symphony Teleca.

“Carriers have so much control, they will find a way to monetize that in 2013,” he said. Building trustHowever, wireless carriers will need to work together to standardize their efforts if they are to gain enough adoption of their mobile commerce solution to play a meaningful role.

Carriers also need to work on building trust with their customers.

“People trust Apple,” Mr. Till said. “They’re willing to give them their credit card details on their iPhone or iPad at any given time. “To build this sort of trust, carriers will need to be laser-PAGE 14 Mobile Commerce Daily MOBILE COMMERCE OUTLOOK 2013

focused on support and protection,” he said. “If they can offer custom-ers a safe, trusted way to pay through their network, they will be successful as the mo-bile commerce trend takes over.

“This need for protection and support will likely bring companies like Visa into the space which will lead to more com-petition or the potential for partnerships.”

While there is no doubt that mobile commerce and mobile payments are

taking off, the carrier role in this market is not guaran-teed. However, with growth accelerating quickly in this space, carriers will need to act fast if they are to carve out a place for themselves. “We’ve seen a lot of proprietary solutions that are gain-ing tractions with delivering the right experience and making sure they are a trusted brand,” Mr. Till said. “It remains to be seen what carriers will do to stay relevant and monetize on this trend.”

Stronger mobile content experiences will be in demand in 2013By Chantal Tode

A s merchants seek to push mobile commerce to the next level in 2013, content strategies will have to become more sophisticated to be able to


CONTENT

Bricks-and-mortar, as well as online retailers, recognize the need for strong content strategies so that custom-ers can experience a product and discover an emotion-al need for it. So far, merchants’ initial stabs at mobile content have varied in quality, but going forward, these

businesses will need to leverage augmented reality, rich media advertising and other content strategies to keep up with consumers.

“Similar to merchants in a brick-and-mortar environ-ment, telling a story on the phone or tablet will increas-ingly play an important role in selling goods,” said Harry Kargman, founder/CEO of Kargo, New York.

“I believe the best retail experiences on the phone will involve some type of rich media advertising or content creation or video to immerse the user around the story of the product,” he said.

“It makes sense that content will be a key driver in the mobile commerce experience and it is only a matter of time before retailers get the plumbing working around the transaction and then want to create a content expe-rience around their products.”

Embracing new technologiesIn 2013, it will no longer be enough to have simple prod-uct images and information available for mobile users or to have a text-messaging program in place.

As consumers become comfortable using their smart-phones and tablets, merchants are going to become more sophisticated in their use of mobile.

Merchants will need to leverage the whole array of mo-bile channels available to them, such as video and aug-mented reality, to create the best user experience.

Staying up to date with the latest advancements in the technology will also be important. For example, making sure mobile content is compatible with Apple’s Passbook has quickly become a priority for many.

“A merchant using augmented reality or interactive video can better display the angles or perspectives of a product or outfit, and consumers are going to demand this type of experience from all of their merchants in 2013,” said

tell the rich product stories that drive sales.

Bjorn Hidahl, vice president of product management at Kony, Orlando, FL.

“Merchants should put together a strategy to embrace these new technologies now, making sure they can meet consumer demand while also taking into account new hardware requirements and operating system updates at a total cost of ownership that makes sense for the com-pany,” he said.

Driving multichannel experiencesOne of the issues that merchants will increasingly face is how to integrate mobile into their multichannel strate-gies, including making content relevant across channels. Merchants should also consider how mobile can be used to supply employees with relevant content. PAGE 16 Mobile Commerce Daily MOBILE COMMERCE OUTLOOK 2013

“Retailers should ask, ‘How does my mobile content fit into the overall experience, including in-store kiosks, at the point-of-sale as well as the Web experience?’” Mr. Hildahl said. “Looking back at 2012, it’s clear that orga-nizations are realizing that mobile can drive this mul-tichannel, multi-platform experience for the consumer.

“It’s worth mentioning that merchants will also have to figure out how to integrate mobile within their employee base in 2013,” he said. “For example, merchants could arm sales floor employees with mobile applications that make the customer experience better.”

Some retailers will need to overcome a variety of issues before they can up their game in mobile content. These may include acquiring the technical know-how to sup-port rich media and custom ad campaigns on both the advertising and mobile Web fronts.

However, the stakes are high and dealing with these is-sues will become imperative in 2013.

“Many chief digital officers set the high level strate-gies and roll out Web sites with mobile style sheets only to find that key features and day-to-day mainte-nance and capabilities don’t exactly align,” Kargo’s Mr. Kargman said.

“This will continue to be a growing problem until retail-ers and content providers realize that mobile-focused ad serving and content creation is very important to suc-cess,” he said.

Mobile commerce emails to get a lift with loyaltyBy Lauren Johnson

W ith the growth in mobile commerce programs in the past year, expect to see mobile loyalty play a particularly strong role in email.


EMAIL

The launch of mobile commerce loyalty programs such as Apple’s Passbook in 2012 gave marketers a way to com-bine loyalty into all of their mobile channels. In 2013, marketers will increasingly apply the technology to mul-tichannel campaigns.

“Apple’s Passbook and Passbook-like features on Android smartphones are the next logical progression of mobile email,” said Manny Ju, director of product management at BlueHornet Networks, San Diego.

“Email marketing has a long and rich tradition for loy-alty programs, coupons and offers,” he said. “Passbook enables email marketers to continue this tradition with a modern twist.

“They can send a coupon attached to a loyalty email and

allow the recipient to store it in his Passbook and then be automatically reminded to redeem it when he is within the vicinity of the store.”

Mobile loyaltyMobile is increasingly taking up a bigger piece of online revenue for retailers and brands.

Thereby, including loyalty initiatives that combine mo-bile and email, brands can incentivize users to shop from their mobile devices.

More often than not, mobile users are looking to instant-ly take an action as they read an email.

In the case of Apple’s Passbook, being able to store and geo-target an offer is a great way to make email cam-paigns more interactive.

Additionally, Mr. Ju expects more brands to use respon-sive design in email layouts.

Location will also play a key role in how marketers can seg-ment an email list into tailored campaigns.

Similarly, marketers will also break apart smart-phone and tablet email campaigns. Calls-to-ac-tion on these campaigns will also be differenti-ated — for example, a tablet-specific email might focus on online commerce more than a campaign designed to drive in-store traffic via a smartphone.

“I believe email market-


ing is an integral component of the overall shopping ex-perience,” Mr. Ju said.

“As mobile-enabled commerce continues its meteoric growth rate, so will mobile-friendly email,” he said.

“Most importantly, remember that email is only one in-tegral component of commerce. Do not just stop with mobile email. The mobile experience that starts with the email must absolutely be carried through to the landing page, the Web site, the shopping cart and finally to the payment page.”

Cross-channel emailsWith consumers increasingly turning to their mobile de-vices to open email, savvy retailers and brands will de-velop tailored, flexible email campaigns in 2013 to grab consumers’ attentions while on the go.

In fact, some marketers are seeing more than 30 percent of their email campaigns opened on mobile devices, ac-cording to ExactTarget.

Moreover, marketers will load these campaigns with ac-tion-driven features that let users take an action directly.

“Our research has found more than half of consumers use their smartphones to check email several times per day, while 29 percent of consumers report they check email constantly throughout the day,” said R.J. Taly-or, vice president of mobile products at ExactTarget, Indianapolis, IN.“With the continued growth of mobile devices, market-ers must respect the variety of experiences and deliver consistent experiences across platforms,” he said.

“2012 marked the first time smartphone sales outpaced PC sales for, according to Canalys. What does all of this mean for mobile email in 2013? It is time to develop flexible, mobile-optimized email templates and start testing innovative and imaginative campaigns unique to your brand.”

Additionally, more marketers will see a return on invest-ment from mobile in 2013, meaning that mobile and email will increasingly be weaved into a multichannel

marketing strategy.

First, marketers need to look at their data to understand which devices consumers are using most often to check their email.

Once a company understands which devices their cus-tomers open email on most frequently, testing keywords, send times and content is crucial.

“After seeing the return on investment, advanced mar-keters will integrate advertising, SMS, social applica-tions and Web sites, abandoning disparate marketing programs for fully integrated cross-channel programs,” Mr. Talyor said.


GAMING

Rewards-based mobile advertising takes shape in 2013By Lauren Johnson

Over the past year, marketers have increasingly incorporated advertising into mobile games as a way to target a specific group of users. However,

In 2012, brands relied on mobile advertising to give mo-bile gamers. In addition to incorporating different ad-vertising models, brands will also need to think of more compelling ways to create content that keeps users coming back.

“Game developers will find it more and more difficult to get their games discovered because of the sheer amount of noise,” said Brian Wong, founder/CEO of Kiip, San Francisco.

“The answers will lie in the battleground around the source of the app distribution — the app stores,” he said. “Right now Google, Apple, Microsoft and Amazon all have their own turf and are defending it. Those four are going to either overcomplicate or simplify things.”

Mobile engagementIn 2012, Kiip rolled out partnerships with brands includ-ing Skittles and Pepsi that let users unlock achievements and offers within mobile apps.

Results from a campaign last year with Pepsi’s Propel Zero Water showed how in-app advertising offers mar-keters more insight into their initiatives than a click-through rate.

The Pepsi campaign increased brand awareness by 28 percent for the Propel Zero Water brand.

Additionally, there was a 51 percent purchase intent in-crease, and roughly 72 percent of users said that they were going to consider Propel Zero the next time they were going to buy enhanced water.

As consumers continue to use mobile games, they will increasingly expect to be offered incentives for playing

from their favorite brands.

According to Mr. Wong, mobile gaming will focus around three areas in 2013 — discovery, retention and quality.

Similar to other app-based marketing, discovery is still an issue in the space.

Not only are marketers challenged to get users to down-load an app, they also have to create a great game that keeps users opening the app repeatedly.

Additionally, marketers need to think about ways to not

in 2013 more brands will need to look at in-application advertising to increase monetization efforts.

only acquire users but also focus on quality users, per Mr. Wong.

“Game developers have been so obsessed with acquir-ing users and the industry has quickly aligned itself to deliver the demand,” Mr. Wong said.

“This means a ton of undifferentiated services sell in-stalls without regard to the quality of the user behind that install,” he said.

“As a result, there is a lingering cliff out there in the hori-zon that some developers will begin to drive over. This cliff is the realization that it’s less about scrambling to buy more and more installs – but rather how to keep the users that have decided to play your games in the first place.”

Death of the banner?Many of the in-app advertising models that brands are experimenting with are full-page units, which some ex-perts say points to the need for more engaging ads in mobile games versus banner ads.

Many industry experts believe that banner ads may be losing steam with creative and formats that do not take advantage of the size of a mobile screen.

In many cases, banner ads cram the same creative from desktop campaigns into a smaller-sized screen.

Depending on a marketer’s goal, campaigns need to have a consumer-first approach in order to entice users via mobile advertising.

“For brand advertisers, the opportunity to emotionally connect with consumers through play is huge and the audience is enormous,” said Bill Clifford, chief revenue officer at SessionM, Boston.

“Too many game developers subscribe to a model of pep-pering users with banner ads and interstitials at a high frequency until consumers get so irritated they choose to pay to not see ads,” he said.

“That’s not conducive to a healthy brand-build-

ing environment, and it’s a horrible user experience for the 98 percent of users who won’t pay for con-tent. We think there’s an enormous opportunity to for brands to embrace advertising that rewards users with access to content or rewards for engaging with their ads.”

With consumers turning to their mobile devices more to play quick games when they have a break in time dur-ing the day, marketers need to be focusing on how to provide value for the users that repeatedly use apps, per Mr. Clifford.

Mobile opportunityAccording to Projjol Banerjea, vice president of market-ing and talent at SponsorPay, Berlin, acquisition and monetization will continue to be challenges for mobile game marketers and developers in 2013.

“On the acquisition side, the app stores and marketplaces are inundated with developers competing for user atten-tion,” Mr. Banerjea said.

“App and game discovery is still a domain that’s largely unsolved and consequently presents massive opportu-nity,” he said.

“The freemium model that’s prevalent in the industry also comes with its challenge of average monetization rates that are in the single digits.”

Although games continue to be a top app category, it is a challenge to keep a user’s attention, meaning that many mobile games have a short longevity.

Additionally, consumers will continue to use multiple screens in 2013 to digest content, meaning that mar-keters will need to create experiences that flow across screens in order to grab a user’s attention.

“In 2013, we expect consumers to place increas-ing demands on games publishers to deliver persis-tent experiences across different platforms, both mo-bile – smartphone and tablets – as well as online,” Mr. Banerjea said.


Privacy a bigger concern as regulation growsBy Chantal Tode

Merchants pursuing a mobile strategy will once again need to tread carefully when it comes to protecting the privacy of consumers and ensur-


LEGAL/PRIVACY

ing their mobile marketing programs are in compliance.

With new guidelines from the Federal Trade Commission coming into effect in 2013 that explicitly address mobile and protecting children’s privacy, any merchants mar-keting to children will need to make sure they are up-

to-date on the new rules. Mobile applications are also a growing area of focus for regulators, so merchants and marketers would do well to have their privacy policies prominently placed in their apps. “Look for increased scrutiny regulation and enforcement actions concerning data collection and use practices re-lating to mobile devices and tablets,” said Linda Gold-stein, chair and partner at Manatt, Phelps and Phillips LLP, New York. “The disclosure of data collection and use practices by e-merchants and others have been found to be wholly inadequate by the FTC and other regulators,” she said. “While the FTC has been largely focused on the lack of disclosures provided for children’s apps on mobile devic-es and tablets in violation of COPPA, California Attorney General Kamala Harris has targeted all app owners that fail to provide users with adequate disclosure of their privacy policy, as violating of California law,” she said. “Marketers looking to market to kids through their mo-bile and tablet devices will certainly face increased scru-tiny and challenges in 2013 and in the years to come.” Governance could growThe FTC also recently released some non-binding guide-lines related to privacy for mobile marketers that point to some of the concerns that the agency has.

Of particular not is that the FTC says mobile platforms should consider offering a Do Not Track mechanism that would enable smartphone users to choose to prevent tracking by ad networks or other third parties as they navigate among apps on their phones.

With concern on the part of regulators and privacy advo-cates growing over how many parties are collecting data from devices and what kind of data they are collecting, Ms. Goldstein expects there will be more bills seeking to govern mobile privacy in 2013, with some perhaps gain-ing more traction than in the past.


Already, one marketer – Delta Air Lines – has been sued by the California attorney general’s office over claims related to a lack of privacy controls for its mobile app. Additionally, the FTC has warned that it is launching multiple investigations to determine whether certain companies violated legal requirements. “Companies that develop or market apps need to think about privacy issues in the early stages of developing an app,” said Gonzalo Mon, attorney with Kelley Drye & Warren LLP, Washington. “For example, developers should generally collect only the information they need in order for an app to function. “Next, developers should work with their legal team to draft a privacy policy,” he said. “The policy should accurately reflect what information is collected through the app and how that information is used. “Finally, developers must ensure that consumers can read the privacy policy before they download the app. If a company fails to take these steps, it could quickly find it-self in the midst of a lawsuit or regulatory investigation.” Data deluge As consumers continue to embrace mobile for a variety of daily activities, the sheer volume of data that is being collected about users will become a growing concern, as well. Data security could take on more importance for merchants as the legal and reputational stakes for breaches increase.

“Look for merchants to migrate to cloud providers for their hosting services, in order to take advantage of new-er technologies, economies of scale and cost efficiencies, while reducing internal overhead costs,” Ms. Goldstein said. “Merchants that embrace these technologies might seek to use these efforts to their competitive advantage.” Other developments in 2012 are also likely to change the legal landscape in 2013 for mobile marketers. On the positive front, a California court and the Fed-

eral Communications Commission both ruled last year that text messages sent to confirm that someone has requested to opt out of a text messaging program are not unlawful. As a result, this may put an end to lawsuits claiming such messages violate the Telephone Consumer Protection Act, which have been expensive and cast a lot of uncertainty in the industry. However, these developments do not eliminate the need for merchants to carefully review their text messaging programs, particularly their opt-in procedures – to en-sure they are in compliance with existing laws. “In particular, merchants should ensure that they get ex-press opt-in consent before they send text messages to consumers,” Mr. Mon said. “Merchants should be careful to ensure that the terms and conditions of their mobile programs accurately re-flect how the programs will run,” he said. “Some market-ers have gotten sued over even minor deviations.”

Mobile opportunities outweigh any negatives for merchantsBy Chantal Tode

Gift shoppers who embraced mobile for exclusive offers and added convenience will be looking for more similar experiences in 2013 and retailers


MULTICHANNEL RETAIL SUPPORT

would be wise to provide them. This means moving be-yond the initial first steps in mobile and delivering more personalized mobile experiences at scale to help support multichannel retail strategies.

Retailers had a lot to be happy about during the 2012

holiday season when it came to mobile, with users em-bracing their smartphones and tablets to shop in re-cord numbers. As a result, savvy merchants will be looking for how to continue drive mobile use in 2013 even as overall sales slog along because of ongoing economic challenges.

“Retailers have really only gone through Mobile 1.0, on both the app and the Web side, and this holiday season will reflect some early adopters of 2.0 – more focus on personalization and localized content,” said Nikki Baird, managing partner at RSR Research, Miami, FL. “I think that will be the big trend for 2013.

“Also, there will be better integration of mobile into the in-store experience, whether that is through simple sig-nage and QR codes or more sophisticated WiFi or app-enabled interactions, she said.

Scaling upMerchants conducted a lot of tests in mobile in 2012 to learn about how best to engage these consumers. How-ever, in 2013 merchants will need to roll out their mobile campaigns on a regional and national basis.

One of the opportunities merchants have with mobile is the emergence of the mobile wallet and the impact it is having on traditional print mailers and weekly circulars.

Merchants are also likely to focus on mobile coupons, as they can be relatively easily deployed and shoppers like them.

“The things that have been presented in a physical way are now really moving into digital as something that is readily available and stored on a smartphone or redeemed in-store,” said Stephen Burke, vice presi-dent of the mobile practice at Resource Interactive, Columbus, OH.

“Safeway and Kroger are making progress in this area, while others are integrating with Apple Passbook or have standalone wallets that they create,” he said.

Cross-department cooperationActual mobile payments may still be a little further down the pipeline for merchants because of the complexities involved and the need to invest in infrastructure, a step many will be reluctant to take until it becomes clearer which mobile payments offerings are likely to dominate.

“The smartphone as a payment vehicle is probably a year or two away in the U.S. market for more than relatively small purchases such as a coffee or a cheeseburger,” Mr. Burke said.

The coming year could also see merchants put a bigger focus on advertising in mobile as a way to drive traffic to either a bricks-and-mortar store or a digital storefront.

Merchants face several challenges in broadening their mobile strategies, including the need to bring together representatives from across several different depart-ments and getting them to work together.

However, as merchants increasingly recognize the need for customer-driven experiences, they are growing num-bers of examples of marketers taking the steps to drive this kind of cooperation.

Another challenge they face is measurement, such as


how does a mobile im-pression lead to a physi-cal sale, how do you trick this and which depart-ment gets the credit for the sale.

Merchants also increas-ingly need to be sure they are focusing on privacy is-sues as it relates to mo-bile. For example, in-store tracking strategies are be-ing closely considered by some retailers as a way to learn more about con-sumers’ in-store shopping habits, but could raise pri-vacy concerns for some.

“If retailers implement some of the in-store tracking measures that they seem to be contemplating right now, there may be a huge privacy blow-up or at least debate in 2013 – how much retailers can and should track, and what they can or should do with the information they collect,” RSR Research’s Ms. Baird said.

Advantage of showroomingOverall, merchants will recognize that the oppor-tunities in mobile far outweigh any negatives there might be.

For example, there was a lot of focus last year on shop-pers using their smartphones in stores to compare prices – or showrooming.

“Everybody is clear that a smartphone-wielding consum-er is a positive opportunity and not an negative opportu-nity,” Resource Interactive’s Mr. Burke said.

“The opportunity to take advantage of showrooming is becoming evident to retailers and they are up to the challenge,” he said.

“For example, in clothing retailers have the advan-tage of immediacy – what is available now – and can compete effectively.”

Privacy, measurement to continue to challenge location-based marketing

By Lauren Johnson

With more consumers using their mobile devices to receive contextual and relevant advertis-ing, location-based advertising will be an area


MARKETING

for marketers to eye in 2013. However, there will still be plenty of challenges including location and measure-ment that may hold the industry back.

Privacy, measurement will continue to challenge loca-tion-based marketing

With more consumers using their mobile devices to receive contextual and relevant advertising, location-based advertising will be an area for marketers to eye in 2013. However, there will still be plenty of challenges including location and measurement that may hold the industry back.

New technologies such as Apple’s Passbook and mobile wallets were set up in 2012 that will help kick location-based marketing into gear in 2013. Although there are challenges, marketers can expect to see more redeem-able mobile coupons and offers that are tied to a loca-tion in 2013.

“In 2013, we will start to see a shift to more perfor-mance-based mobile ad strategies now that some of the early mobile advertisers have blazed the trail to show that real commerce activity can be driven from mobile devices,” said Monica Ho, vice president of marketing at xAd, New York.

“In the past year, we have seen a noticeable shift in campaign focus from overall reach and awareness cam-paigns to campaigns centered around the redemption of locally-focused offers and promotions or other local commerce-based actions that go well beyond just the initial ad click,” she said.

Watchful eyesDespite the opportunities, experts agree that privacy will be an issue with location-based campaigns in 2013.

Although consumers are becoming more comfortable

with the idea of forking over personal information, it is crucial that there is an exchange in getting consumers’ information, per Ms. Ho.

“In the consumers’ eyes, this exchange is their personal location information in exchange for more targeted and relevant content or information,” Ms. Ho said.

“When this balance is maintained, advertisers will ben-efit by seeing strong performance of their ads,” she said.

In return, publishers can expect to see higher CPMs with location-enabled traffic.

Location-based ads also need to work on better mea-surement, per Ms. Ho.

For marketers to see a more complete picture of location-based advertising, marketers need to make sure that they are getting location data and enough of it to scale larger campaigns.

More than brand buildingSome experts say that there will be a shift towards more ROI-based campaigns versus brand-building initiatives in 2013.

In 2013, marketers will increasingly combine mobile and location on redeemable offers and coupons in campaigns that close the loop on sales.

The introduction of Apple’s Passbook and the advance-ment of mobile payments in 2012 will fuel the growth of location-based offers and coupon redemption in 2013.

Not only will these offers help marketers better track ini-tiatives, it will also help educate consumers on the value of interacting with mobile marketing.

For example, using predictive location that anticipates where a user is headed to serve a relevant ad or retarget-ing a user by common behavior in a particular area are two trends on the horizon for 2013, per Ms. Ho.

According to a forecast from BIA/Kelsey, 58 percent of all mobile advertising spend will be location-focused by 2016, showing the shift that the industry will likely take in 2013.

Take controlAs marketers are able to leverage more relevant informa-tion about consumers, marketers will be able to make location-based campaigns more specific and tailored.

“A big opportunity will be control — marketers will have greater control of who they reach and where they reach them, and consumers will have greater control of their

privacy,” said Darrin Clement, CEO of Maponics, White River Junction, VT.

“Challenges will be how to how to keep this balance in check,” he said.

For example, letting users set zones such where purchase intent is high — such as in shopping malls — where they want to receive ads will be key.

“People don’t want to be ad-attacked every time they walk by a retailer,” Mr. Clement said.

“They need the ability to customize their experience,” he said. “What they really want are apps that allow them to set preferences.”

Mobile educationIn 2013, more marketers will incorporate mobile into their marketing mix, according to Greg Hallinan, chief marketing officer of Verve Wireless, Encinitas, CA.

Additionally, marketers will increasingly look at how mobile can be used in a multichannel way as consum-ers continue to rely on their handsets as a primary communication tool.

For example, mobile has traditionally been viewed as the third screen to grab a consumer’s attention while watch-ing television.

However, recent research shows that mobile is in-creasingly becoming the first screen that users go to, whether it is to watch video clips or interacting with advertising content.

According to Mr. Hallinan, retailers in particular are well suited for location-based campaigns because they can target users with both the top and bottom of the pur-chase funnel.

“I think definitions and organic agency knowledge will continue to be a challenge in the early part of the year as brands and their agencies determine how best to deploy mobile at scale and discover what works for their specific brands,” Mr. Hallinan said.


Music industry split on subscription and library-based revenue streamsBy Lauren Johnson

In 2013, there will be a continued shift to more sub-scription-based music streaming services. However, there is also still a place for personal music libraries.


MUSIC

As smartphones and tablets continue to be used by con-sumers’ main device during the day, marketers will con-tinue to find new ways to target groups of engaged us-ers. In fact, some experts argue that the smartphone will be become a primary screen in 2013.

“On the music front, the industry is trying to adjust to

the new paradigm that many music fans don’t necessar-ily need to own their music anymore,” said Brian Colbert, vice president of mobile at Pandora, Oakland, CA.

“Whether it is streaming radio or an all-you-eat subscrip-tion model, the digital music landscape is experiencing another seismic shift, similar to how digital downloads changed the industry a decade ago,” he said.

“What’s encouraging from a music perspective is that smartphones are becoming the first screen for music lovers.”

Music free-for-allIn 2012, the music space continued to heat up with com-panies including Pandora, Spotify and Rdio all clamoring for the attention of mobile users.

These companies also increasingly used their mobile products to lure in brands to help monetize content.

For example, Spotify rolled out a free radio feature to its mobile app to let users stream music by genres.

Brands including Red Bull, McDonald’s and Macy’s all ran campaigns on Spotify’s mobile applications in 2012.

Specifically, there is a growing need from market-ers to tie advertising campaigns to commerce as con-sumers become more comfortable shopping from their handsets.

“Pandora saw a huge spike in mobile shopping and pur-chases after Thanksgiving weekend and that trend will only continue into 2013 as retailers mobilize their Web sites and checkout processes,” Mr. Colbert said.

Additionally, tablets will continue to prove themselves as commerce-drivers with better browsing experiences than smartphones, per the Pandora executive.

“Lastly, concerns over credit card security seem to be easing as consumers get more comfortable making larger

purchases away from their desktops,” Mr. Colbert said.

Owned librariesOn the other hand, some experts believe that music buy-ing services such as iTunes or Amazon will play an im-portant role in 2013 with how consumers buy and listen to music.

“Most people still want to own their own music library, enabling them to listen to it when and how they want


to,” said David Jones, executive vice president of market-ing at Shazam, London.

“While we believe that streaming services will continue to grow over time, it is still relatively early days as most people still buy their music,” he said.

Additionally, new findings from Nielsen show that digital music sales in 2012 increased 14 percent year-over-year, representing 118 million units.

Revenue for digital singles was up 5.1 percent year-over-year, too. This shows how consumers are often turning to their mobile devices and PCs to buy small goods such as music.

For marketers, this leaves big implications for how to tie mobile content into music and commerce.

Take rewards, for instance.

As consumers continue to buy music content from their handsets, marketers can find ways to seamlessly tie a marketing message into campaigns with reward promo codes that let users download music for free.

Discovery remains an issue for music companies in help-ing to match up a user’s music preferences with recom-mended songs and artists.

However, a user’s stored library of music is indicative of what types of music a user is generated.

By tapping into this, marketers can make music and re-wards programs more personalized and relevant.

Discovery will also continue to be a way for marketers to grow incremental revenue, according to Mr. Jones.

“When people discover the name and artist of a new song they hear and like on the radio or in a public place, that inspirational moment will continue to lead many to instantly buying the track or album, especially when we make it so easy through partners like iTunes or Amazon,” Mr. Jones said.

PAGE 29

This year Apple launched its Passbook feature as part of its iOS 6 update that lets consumers store boarding passes, coupons and more on their mobile devices in one built-in place on their devices. Although several big re-tailers have gotten on board with the technology, it is

Loyalty integration crucial to mobile wallet successBy Lauren Johnson

In 2012, marketers integrated technology such as Ap-ple’s Passbook to tie mobile application and in-store experiences together. In 2013, education on how mo-

Mobile Commerce Daily MOBILE COMMERCE OUTLOOK 2013

RESEARCH

bile wallets work with loyalty as part of the customer journey will be key for retailers.

only the tip of the iceberg on how retailers can marry mobile and the in-store experience.

“I hope Apple gets on board and starts demonstrating to retailers how to integrate their apps as part of the entire customer journey,” said Sheryl Kingstone, Toronto-based research director at Yankee Group.

“A lot of it is very deal-oriented, but what retailers want to look at it around engagement, meaning that they find which is the right coupon to drive loyalty,” she said. “It

helps organizationally keep the wallet with the brand.”

Pay via mobileMobile payments made great strides in 2012 for retail-ers, manufacturers and vendors. However, with challeng-es around the preferred method for paying and a lack of consumer education, retailers should be looking at mo-bile loyalty before payments, per Ms. Kingstone.

“There is hype around mobile payments, but there are a lot of users that do not understand it,” Ms. Kingstone said.

“Mobile loyalty is more important than payments for 2013 because it is executable,” she said.

“We will not know if the next Apple devices will have NFC for the next six months – right now retailers can mobilize their loyalty programs.”

Retailers need to look at how to use their mobile apps and sites for more than just sales. For example, incorpo-rating mobile into the in-store experience with features such as mobile bar code scanning and coupons, retailers can tie mobile into broader key performance indicators.

Additionally, personalization will continue to be a focus for smart retailers to drive in-store and online sales. Us-ing location is one step in the right direction to personal-ize mobile, but other features such as browsing history and past purchases also play an important role.

For mobile commerce sales, one of the things that is holding the industry back is streamlined payment op-tions, per Ms. Kingstone.

The process to buy something from a mobile device – particularly on a smartphone – can be tedious. Therefore, marketers need to be looking for ways to streamline the check-out process as much as possible.

A recent study from Yankee Group found that 57 percent of consumers are not interested in mobile payments with 31 percent saying that they might be interested.

However that could change in 2013 with more consumer education around the values of using mobile payments.


“We will see more success in the same areas but with more sophistication this year – more retailers are adopt-ing more sophisticated mobile apps,” Ms. Kingstone said.

“It is not just I have an app for that – it is what that app is doing for the cross-channel customer journey,” she said.

Shop on mobileAccording to Javelin Strategy & Research, mobile pay-ments brought in $20.7 billion in revenue in 2012.

However, only $0.4 billion of that total came from mobile point-of-sale, showing how the majority of commerce is generated through incremental sales made via the device.

In order for mobile commerce to grow, concrete stan-dardizations must be made, according to Mary Monahan, executive vice president and research director of mobile at Javelin Strategy & Research, Pleasanton, CA.

“There are no standards for mobile commerce – thus, a consumer can make a payment using a bar code with the Starbucks wallet or using an NFC chip in the phone with Google Wallet or using the cloud with the PayPal wallet,” Ms. Monahan said.

“The challenge for mobile is making the payment better than a card payment,” she said. “That means mobile must be better than fast, convenient and universal – not an easy task on its own.”

As retailers continue to invest in mobile wallets and pay-ments in 2013, the channel promises marketers a way to marry data and information from the online world with the physical world. Marketers who get it right can deliver targeted, personalized offers at the right time and location.

Marketers can expect to see new players enter the mo-bile payment and commerce space in 2013 in addition to a shakeout from some existing players.

“The prize is big, and no one player has a corner on the market yet,” Ms. Monahan said. “The winning mobile wallet will control mobile payments. For now, focusing on building out the ecosystem is key.”

Mobile seach will help grow purchase intentBy Lauren Johnson

As consumers increasingly become comfortable us-ing their mobile devices to make purchase, indus-try experts predict an uptick in users searching


SEARCH

With users relying more on their mobile devices as a primary device for shopping, savvy retailers will place a stronger emphasis on mobile search. Additionally, mar-keters will need to split tablet and smartphone cam-paigns to keep mobile searches relevant for consumers.

“We believe we’ll see a steady increase in mobile sales actually executed on the device — that is mobile pay-ments versus mobile commerce,” said Rachel Pasqua, vice president of mobile at iCrossing, New York.

“That includes not just people using mobile Web site shopping carts, but an escalation in use of mobile wal-lets, proximity payments and even NFC,” she said.

“Granted, the average user is just warming up to the idea, but it took us a while to be comfortable with sharing our credit card info online too. We believe this is the year when we’ll see the mobile device as a shopping, loyalty and buying tool really take off.”

Search on mobileMobile commerce grew rapidly in 2012.

In fact, a study from Harris Interactive found that 66 percent of U.S. consumers believe smartphone payments will eventually replace card payments.

Sixty-one percent of respondents said that smartphone payments will eventually replace cash.

Although the full shift in consumer confidence to shell out money directly from their devices might not take place for a few years, the space is set up to continue to grow in 2013.

In particular, mobile search plays a big role in how

consumers shop.

Nowadays, consumers do everything via research, from finding store locations and buying directly from search results to click-to-call actions linked to the lo-cal store, meaning that savvy retailers will need to invest in mobile search in 2013 to stay ahead of the curve.

via their handsets to ultimately buy directly from their smartphones.

When it comes to mobile site design, features that speed up the checkout process such as Google Wallet and Pay-Pal will be a priority for mobile retailers in 2013.

“Last year, the majority of brands we work with sourced an average of 10-20 percent of their overall site traf-fic from mobile devices,” Ms. Pasqua said. “This year we will probably see that number increasing to more like 20-30 percent.

“When it comes to shopping, most of that traffic will probably still be relegated to showrooming activities like

searching for comparative product details and pricing,” she said.

“But, as we become more accustomed to signing up for and using mobile wallets, as we see more and more op-tions to pay with Google and PayPal and Square and other mobile and proximity payments popping up all around us, we believe we’ll start to see a slow but steady increase in actual mobile payments as well.”

Differentiate for mobileAs marketers continue to make mobile a focus, some ex-perts believe that higher competition and more data will give brands and retailers a reason to invest in 2013.

“Mobile search impressions continue to grow expo-nentially and show no signs of leveling off, even as mobile users increasingly use apps,” said Dan Mala-chowski, senior strategist of strategy and analytics at Performics, Chicago.

“Advertisers will increase mobile ad spend in 2013 to capture increased impressions, thus creating more clicks and more mobile competition,” he said.

“More competition among advertisers will likely result in slight mobile cost-per-click increases.”

Performics claims that mobile paid search impressions for its clients were up 129 percent in November 2012 versus 2011, showing the implied growth for 2013.

For mobile in particular, the cost-per-click can also be significantly less than desktop campaigns.

According to Performics, smartphone cost-per-clicks are 50 percent less than desktop campaigns.

Tablet cost-per-clicks are approximately 85 percent of the price of desktop mobile search efforts.

Therefore, marketers will also need to continue to find ways to differentiate their mobile search campaigns from their desktop ones in 2013, per Mr. Malachowski.

“Many advertisers are still lagging in terms of mobile


search experiences,” Mr. Malachowski said.

“Many mobile search landing pages are not optimized by device or by mobile user intent,” he said.

“Creating highly engaging mobile experiences remains an issue that advertisers will need help overcoming in 2013 in order to maximize mobile search investment.”

Mobile discoveryMobile search is all about discovery and helping users find relevant information.

As mobile continued to become more sophisticated in 2012, there was a greater focus on personalization to

help customize a mobile search.

According to James Hilton, CEO of M&C Saatchi Mobile, London, marketers need to focus their mobile search ini-tiatives around discoverability.

“In many cases, the mobile Internet will be the main way that some people access content and brands,” Mr. Hilton said.

“Retailers will need to ensure that they are set up for mobile search to help drive footfall or ensure that their backend systems can cope with the changes required for mobile commerce directly through their devices,” he said.

Additionally, consumers will continue to use multiple de-vices to complete the purchasing cycle in 2013.

For instance, consumers may begin research for a prod-uct on their smartphones and tablets while they are away from their desktops.

These searches can be prompted from traditional or word-of-mouth marketing.

From there, consumers may finalize a sale by either go-ing into a bricks-and-mortar store or finishing the trans-action on a PC, both of which involve mobile as a strong influence for purchase.

“There is still some work to do on discoverability, as not all of the mobile experiences are ideal for browsing through retail goods,” Mr. Hilton said.

“Mobile is usually at its best when consumers know what they want and search for it to make a purchase or help influence a purchasing decision,” he said.

“The only issues and challenges are for retailers who, for one reason or another, don’t invest in upgrading their back-end systems to cope with mobile. Other possible issues are around perceived security. Consumers need to know that their payment details are secure and that the apps they are using are legitimate and won’t try to extort funds.”


Mobile technologies such as QR codes and augment-ed reality are a great new way for marketers to offer consumers unique experiences. Brands such as Target, Walmart and Starbucks have invested greatly in these technologies to reach new and existing customers.

QR codes, augmented reality will anchor mcommerce successBy Rimma Kats

Last year, marketers heavily incorporated technolo-gies such as QR codes and augmented reality into their strategies to bolster sales. This year will bring


SOFTWARE AND TECHNOLOGY

in more opportunities and challenges, but companies will need to put a bigger focus on creating incentives to drive participation.

“The audience is there, so now marketers just need to use mobile in relevant and intelligent ways that really add value to the customer experience,” said Mike Wehrs, president/CEO of Scanbuy, New York.

“We are moving from trials to true ROI solutions, which means customers will expect better experiences,” he said. “That means better content, easier to use, more re-warding, and more social.

“Once marketers can bring all of these together, mobile will begin to reach new heights.”

QR codesIn 2013, brands will start to think about how mobile bar codes can be used in more intelligent ways.

Marketers will think about how to make the entire ex-perience extremely relevant and targeted using some of the data available.

“Mobile users that want to interact with brands are highly motivated, but it is up to the brands and market-ers to provide experiences that are relevant and valu-able,” Mr. Wehrs said.

“The ROI of mobile will be realized as brands utilize the intelligence they garner through these platforms and optimize mobile experiences that encourage mo-bile users to interact with the brand again and again,” he said.

Continued successAccording to Laura Marriott, CEO of NeoMedia Tech-nologies, QR codes will become the dominant path to payment.

Mobile bar codes will enable everything from mo-bile couponing, mobile wallet, mobile banking and mobile commerce.

While QR codes and mobile bar codes will continue to


be used for mobile marketing and ad-vertising, QR codes will increasingly be used to facilitate and ease the con-sumer into a seam-less mobile com-merce experience.

“The opportuni-ties for QR codes

are enormous,” Ms. Marriott said. “They are a low-cost means to enable a mobile transaction – whether for marketing or for commerce.

“QR codes can be a simple URL replacement, a mobile marketing enabler or a new means to communicate with the consumer,” she said. “I believe the implementation options are limited only by your imagination.”

Some of the challenges with QR codes are fragmentation and service quality.

Currently, there are many mobile bar code readers in the market and often consumers are unsure of which one to download.

Education also needs to become a priority.

There are still many consumers out there who are unsure of what a QR code is or how to interact with it.

“In 2013, consumers will overcome scan-fear,” Ms. Mar-riott said. “2012 was about education and trials. 2013 will be about building trust and increasing value.

“While there is still some work to do on educating con-sumers, research from PRS shows that 94 percent of smartphone owners recognize QR codes,” she said. “In 2013, the challenge will be to motivate consumers to scan the codes and that means building trust and deliv-ering value each and every time.

“Much like mobile ads had to earn users’ trust before

marketers put dollars into ad spend, 2013 will be a time to build consumer trust with QR codes.”

Augmented realityQR codes are not the only technology taking over the mobile space.

Augmented reality has made quite an impact as well. Indeed, augmented reality and mobile commerce is a potent combination.

This year, marketers will see the technology go mainstream.

More brands are adopting AR as a way to create engage-ment with the consumer that goes beyond the more pas-sive “Like” or “Comment” on Facebook.

Augmented reality is a way for users of a brand to create content and express themselves.

Retailers, entertainment and sports brands, consumer packaged goods and food and beverage brands can all use augmented reality to drive engagement with fans, attract new customers and drive revenue.

“At GoldRun we’ve created what we call virtual com-merce in the mobile space utilizing augmented reality coupled with our ability to geo-fence a physical loca-tion, such as a park, mall or sports stadium,” said Vivian Rosenthal, CEO of GoldRun.

“Once we create a commerce hot zone, the brands we work with can create virtual pop-up stores, which we believe are the future of AR mobile commerce,” she said. “I see more opportunities than challenges.

“All bricks-and-mortar retailers know that they can’t lose consumers to online shopping, so this is where augmented reality can really help a retailer by driv-ing people into physical stores by turning the stores themselves into geo-fenced hot zones that have vir-tual content outside and inside the store that drive sales through time- and location-based discounts and other incentives.”

Nowadays, almost every major retailer out there has a mobile site. Marketers have realized the potential of having an optimized site to drive revenue.

“We are entering an interesting, disruptive phase of market development for retailers and their mobile offer-ings,” said Mitch Bishop, senior marketing manager at Moovweb. “It’s still early days.

“Retailers continue to see explosive growth through their mobile channels, most in excess of 100 percent annu-ally,” he said. “Growth rates of mobile commerce are far out-stripping growth of ecommerce overall.

“Early data suggests that while worldwide growth rates of mobile shopping on smartphones is in excess of 100 percent annually, tablets represent an even bigger op-portunity. All this growth is not just apps. In fact, most of the growth is happening through mobile sites.”

Optimized contentWhile mobile apps are becoming a norm and help to build customer loyalty, mobile sites are a requirement for capturing new customers.

However, marketers need to make sure that new users have a perfect experience.

According to Mr. Bishop, research shows that consumers will jump ship for a different retailer if their experience is disappointing or difficult.

For these reasons in 2013 retailers will have to continue to invest heavily in their mobile sites.

When it comes to mobile sites, there are many challeng-es that retailers face.

Forget about cookie-cutter mobile sites in 2013By Rimma Kats

I t is not enough to simply have a mobile-optimized site. Marketers must go beyond their cookie-cutter presence and make sure they are offering a stream-


WEB SITE AND DEVELOPMENT

lined experience to bolster sales.

Retailers need to move fast to keep up with the latest trends, devices and capabilities to take full advantage of their mobile sites.

There is also the issue of cost.

First-generation mobile site services often times require expensive change orders whenever a retailer introduces a new feature on its desktop site. Not only does this lead to desktop experiences that are out of sync with their mobile counterparts, but ongoing maintenance is servic-es-heavy and expensive.

Additionally, retailers need the ability to innovate quickly

and measure the effectiveness of these changes to stay ahead of the competition.

Features are also transient. A new feature in the mar-ket gets copied quickly. The real way to differentiate is by choosing the right platform that empowers business agility over the long run.

“The focus in the coming year will be on incremental improvement,” Mr. Bishop said.

“Most retailers already have mobile-optimized sites, so 2013 will be all about finding ways to create even more powerful mobile experiences, while at the same time re-assessing their fundamental technology approaches to mobile,” he said.

What the future holdsRetailers need to understand that mobile commerce, while growing exponentially, is still in its infancy.

It is all about creating more powerful experiences. Sim-ply having a mobile site is not good enough anymore.

Retailers need to be taking advantage of mobile-specific features that give an amazing customer experience.

“Retailers need to be trying new experiences and streamlined flows that speed up mobile commerce,” Mr. Bishop said. “A relentless focus on testing, mea-suring and analyzing will help retailers tune their mobile experiences.

“Not all mobile platforms are the same – many retailers are stuck with technology approaches that make it diffi-cult to innovate quickly and expensive to maintain their mobile experiences,” he said. “Cookie-cutter commerce does not work.

“Relying on templates isn’t the best strategy for your business. Retailers care about their features, the things that make them unique as a business. Creat-ing custom mobile experiences that reinforce these features and brand elements will become a necessity in 2013.”

This year, mobile will become a part of the bricks-and-mortar experience and retailers will be challenged to get in-store systems properly upgraded.

Mobile is not just about buying on


the device, it is about extending, connecting and improv-ing shopping experiences.

“A mobile-first philosophy will prevail,” said Chris Ma-son, cofounder of Branding Brand, Pittsburgh. “Re-tailers will develop a better mobile site and then re-address desktop.

“There will be more focus on refinement than func-tionality,” he said. “For many, 2012 was about just getting there.

“This will be a chance to make things right.”

Customers have technological expectations and market-ers need to make sure that they meet the consumer’s basic needs on all relevant channels.

Furthermore, marketers need to realize that mobile will be the customers’ first touch point with the brand.

“Many will be introduced to your brand first on mobile, then go on to explore desktop,” Mr. Mason said. “You also have to simplify your shopping cart flow. The fewer pages the better.

“Keep it simple and keep it consistent,” he said. “Design your site for seamless interaction across all smartphone, tablet and desktop channels.

“Mobile requires a variety of disciplines and a lot of time to do it right. Find a good partner, and develop a long-term relationship to make them part of your team.”