Mobile Fix: Retail

Simon Andrews, founder of the full service mobile agency addictive!, rounds up this week’s mobile news.

As the Christmas shopping season gets underway we can expect a huge impact from mobile. From the US we’re seeing more innovation around mobile and shopping.

Wal-Mart are one of the most aggressive; they expect that 40% of their digital traffic this Christmas will be mobile – much of it from within their stores. This is their description of their new iPhone app: If you opt in, Wal-Mart will use your location to provide you with an app designed specifically for that store.

Head to another Wal-Mart and your app will work for that store. It has useful features. You can make a list by speaking into the phone. You can search a product by typing in a word or phrase and the app will show you what aisle to go to. It has an interactive map. It shows you promotions specific to that store. And Wal-Mart is testing a feature called ‘Scan & Go’ that would let you scan can items as you shop, so you can go quickly through self-checkout.

And PayPal are also trialling different ways to facilitate more mobile shopping – looking at ways to stimulate demand as well as manage the payment. In Amsterdam they have partnered with 30 stores on a key shopping street – using QR codes on shop windows. Here’s how it works. Participating stores have affixed QR codes to their shop window. With a dedicated De 9 Straatjes mobile app you can scan the QR code, which will automatically direct you to a mobile website where you’ll see the products displayed in the shop windows. You can then select the product of your choice, in your desired colour or size, buy it with PayPal and have it delivered to your home.

And a new service is leveraging location to deliver coupons – hoping to take share from the Free Standing Inserts that fund much local press in the US – supplements with page after page of paper coupons.

RetailMeNot is delivering coupons based on a user’s location – when a user is near one of 500 malls they are alerted to coupons that can be used at retailers in that mall.

Given how valuable store traffic is, we believe smart retailers will embrace a behaviour which is endemic anyway and look for ways to benefit. It seems a more promising strategy than the King Canute alternative. It will be fascinating to see who gets this right over the coming weeks.

Social embraces brands

Pinterest now allow brands to claim their names and access better data and analytics. Clearly at some time soon, they’ll be able to add a commerce element too – with Pinterest taking a ‘tax’ on transactions. And Tumblr have gone all brand friendly too.

But some claim that moving to a more traditional model, where brands pay the media owner for access to the audience they have aggregated – as Facebook have done – is somehow immoral.

Whilst GAFA can and does have a number of business models – selling hardware and software and taking a tax on transactions on the platform – advertising remains a major source of revenue. With Amazon increasing its focus on the opportunity to use its data to sell advertising, only Apple remains slightly aloof. Despite the talent in the iAds team, they don’t seem to have been let off the leash to really maximise the ad opportunity – yet. We can’t imagine that Apple will let other ad networks take a dominant position on their platform in the long term.

But for the other smaller tech players that are building a significant audience, advertising has to be one of the key revenue sources. But maybe this advertising won’t look like what has gone before.

Advertisers like P&G innovated with new media like radio and TV, creating content that would attract the audience they wanted and trading that content for ad space around these soap operas. The rise of native formats of advertising seem like the early manifestations of a new model – with brands creating content that their audience value and investing in ways of driving the right audience to that content.

Just like any other medium, the ones who aren’t as clever will end up paying more than the smart ones; those who get the content right benefit from the network effect of social engagement at scale, whilst those with the less attractive content have no alternative but to pay the tax that is media buying.

Just look at Nike, who spend more and more on content and services, which attract and engage the relevant audience and spend less and less on traditional media. Why? Because they don’t need to.

But of course the key issue is that brands should build an audience of their own – rather than having to pay to rent the eyeballs. A crucial question is where this audience lives? If it is on YouTube or Facebook you risk having to pay to guarantee reaching them.

But you could argue that some of the traditional agencies welcome Facebook acting like good old fashioned media owners, as it suits their business model – buying audiences at scale and earning a commission for doing so.

So where will brands turn for help in navigating this new landscape? Traditional agencies or new companies like Percolate – who have just received US$9 million in VC funding to grow their business, creating brand funded content that will thrive in the world of GAFA.

YouTube

Another thread in this new ecology is the growth of video. YouTube is seeing huge growth – with four billion hours of viewing a month – up from three billion a year ago. And around a quarter of this is now mobile.

And this audience is attracting content creators – especially with YouTube commissioning content. An interesting question we keep coming back to is whether brands will get involved in funding this type of content, or will they be happy to fund it indirectly through buying ads around it? We suspect some of the smarter ones will leverage their success in social and start to invest in these new channels as a way to aggregate their own audience.

Of course the typical TV viewer watches more video in one day than YouTube viewers do in a month. But Simon Cowell thinks that YouTube will be Channel 6 one day.

And VC Mark Suster is making lots of investments in Hollywood. In just two years we’ve gone from garage start-ups to more than 600 people across just five companies: Maker Studios, Machinima, FullScreen, BigFrame and Zefr. And video views now produced and managed by these five companies’ totals more than four billion per month.

Finally

Finally…Spotify is now worth US$3 billion – remember that Universal bought EMI for just US$1.2 billion. It is interesting that a business that delivers music is worth more than one which owns so much music. And Coke has invested US$10 million in Spotify as they look to revive the music strategy that brought us MyCokeMusic a few years back. Is this a green shoot, supporting our theory that brands will invest in content and services that attract the right audiences?

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