Darcy Travlos, Contributor
I cover Digital Media stocks: devices, delivery, components & content.
8/18/2012 @ 8:51AM |4,259 views
In the US alone, there are 120 M smartphones and almost 60 M tablets accessing the Internet, and the adoption is growing by leaps and bounds. IDC says that worldwide smartphone shipments will grow from 494M last year to 1.6B in 2016. And, NPD says that tablet shipments will increase to 416M by 2017. Combined, the installed base is enormous, ubiquitous and engaging with their owners. Investors, marketers, and companies want to know how to tap into these mobile devices and make money. It is an opportunity and has proven to be a double-edged sword as well. Facebook stock has been clobbered since its IPO largely on greater use of its site on mobile devices with less ability to deliver ads.
Like anything with mobile, the first cut has been to replicate (that is, miniaturize) what was done on the web for a mobile device. Websites were shrunk to fit on a smaller smartphone screen. People didn’t like it because they couldn’t see it. And the situation is even worse for those pesky banner ads. Mobile is its own “animal” and what works varies.
First, not all mobile is “created” equally. The differential in screen size amongst the smartphones (typically four inch) to the standard tables (typically eleven inch) to the newer mini tablets (roughly seven inch) affects the ability to deliver effective advertising or promotional material to users.
Second, not all media is “created” equally. The level of engagement differs substantially amongst banner ads, social networking “likes”, photos, displays and videos. And the presentation and effectiveness of each does depend on the screen size. On larger screens, banner ads are easily spotted and do not take up substantial real estate; however, on the smaller smartphone screens, banner ads are annoying and disproportionately large.
Banner ads on smartphones don’t work. But, video does. And it works even better on the fastest-growing category of “mobile”: tablets.
Invodo, a privately-held company in Austin Texas, creates videos for retailers and brands to enhance their communication to their customers. Invodo has found that videos increase the conversion rates from exposure to sales, and the conversion is even greater on mobile devices. Consider this: According to Invodo research, mobile shoppers are three times more likely to click and view the video than desktop or laptop users. Internet Retailer reports that those that view a video are 144% more likely to place that item in a shopping cart. And, 52% say that watching the video makes them more confident about their purchasing decisions (read: fewer returns).
People love to watch videos on mobile devices. Cisco reports that for the first time, video accounts for over half of all internet traffic on mobile devices, thanks to improved devices and bandwidth. And within four years, mobile devices will access over 70% of the video on the Internet. Tablets appear to be the preferred device. ComScore found that tablets users were three times as likely to watch a video than were smartphone users, and 10% of tablet users watch a video every day.
And, people prefer to shop on tablets more than on smartphones. Monetate reported that in the first quarter of this year, traffic to e-commerce sites on tablets exceeded that from smartphones. Tablet owners are a coveted audience: 38% of tablet owners have an annual household income in excess of $100K. This translates into a higher average order value per transaction on a tablet (almost $125) compared to the PC (about $100) or smartphone (just over $75).
Video on mobile devices, particularly tablets, is shaping up to be a catalyst for e-commerce. Comscore reports that e-commerce visitors who watch a video are 64% more likely to make a purchase than those that don’t. Invodo’s customers also can document that experience. Golfsmith found a 64% increase in conversion rate for those products that had videos compared to those that did not.
Herein lies the opportunity for retailers to avoid being “Amazoned.” Informal surveys by Invodo suggest that customer loyalty for sites that offer informative and promotional videos increases and customers are more likely to stay on the site and purchase.
A final interesting fact: Of the retail videos accessed on a mobile device, over 70% of them are accessed by iOS (Apple) devices.
In the ever-changing world of technology, two emerging trends have created a tremendous opportunity to level the playing field for retailers: the rapid adoption of tablets and the increased bandwidth to deliver video right into the hands of potential customers. Unlike other methods of mobile marketing where the return on investment has been difficult to determine, the results here are stacking up with compelling statistics.