For years people have been arguing that mobile would be the transformational driver of digital marketing. That transformation has already occurred – design increasingly migrates from mobile to desktop rather than the other way around, mobile has swept away traditional buying patterns and replaced them with a highly informed demand driven process fuelled by mobile devices, it has pushed consumer marketing towards triggered, geo-fenced advertising, and it has moved physical retail and services towards a hyper-competitive adventure in conquesting. In short, the polarity of the internet has changed – it now flows from personal location (and therefore occasions) out instead of from the desktop in. Here are six trends to think about.

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  1. Smartphone penetration, table penetration and mobile usage all continue to rise. Over 129MM people owned smartphones in the US as of the end of January, representing 55% of the cellphone market. The tablet market, though smaller overall, is growing even faster. In fact, since Apple introduced the iPad in April 2010, more than 40 million tablets have been put into circulation, a penetration that took mobile phones nearly 7 years to reach. According to comScore, nearly 40% of all time spent on-line in 2012 was on mobile devices. The average mobile web-user consumes seven hours of media per day, of which about 26% is consumed on mobile devices (not including tablets) – more than any other media channel including television, desktop internet, newspapers etc. Internet users now spend more time consuming social media, maps, weather and music on mobile devices than on desktops, and mobile has surpassed desktop as the top entry point for the internet. For example, Facebook now has more active daily users on mobile devices than on desktop devices. This social trend toward mobile has begun to transform the desktop world as we shall see below.
  2. Mobile will drive structural changes to how we experience the internet. Mobile is a fundamentally different medium than the desktop, because consumers use the devices with fundamentally different intentions. Consumers tend to use desktop applications more for planned activities – for example, researching a product which they intend to buy. They tend to use mobile, in contrast, for on-demand types of activities — price comparison for example. This difference extends to occasions. For example, down-time such as waiting in line represents the single highest occasion for the use of mobile devices, whereas this does not even appear in the top five for desktop or tablet applications. Emerging mobile capabilities by their mere existence have likely shifted consumer media and content consumption patterns from planned to on-demand with potentially significant implications for how consumers will view the world in the future.The screen is small and hard to read, and companies need different designs for usability to succeed. Even though survey data suggests over 50% of mobile users visited a non-mobile optimized website in 2012, most businesses have taken the first step — getting mobile adapted websites up and running. In 2012 for example, 96% of the top retailers had mobile-optimized websites. The number of websites optimized for mobile in this group increased by over 160% between 2011 and 2012. So, mobile is becoming usable in a basic sense.Mobile websites represent just the tip of the iceberg of the changes mobile will drive into media consumption. Facebook, the number one mobile site, recently made mobile-friendly design changes that reduce clutter and give users more control over the newsfeed. Interestingly, the polarity of design now runs from mobile to desktop rather than the other way around, with an objective of consistency across screens. (Just in case you think only Facebook thinks this way, take a look at Windows 8.) This represents a sea change in how developers and agencies will design applications, content and advertising for the web. Design constraints will increase within each medium to assure that mobile objectives can be met with a consistent experience and this in turn will lead everyone to emphasize content flow rather than traditional static webpages. Creative thinking, not just analytics will be at a premium in this environment. And you thought integrated marketing was passé…
  3. Customers are increasingly monetizing on-line. According to Inmobi, about two thirds of mobile customers say they have spent money on-line via mobile as of 2012 and nearly 80% say they will spend money on-line via mobile in 2013. Another study by Intela suggests that about 40% of people using mobile devices, who would not have felt comfortable spending money via their mobile phone last year, would do so this year. Though more transactions are happening through mobile, the vast majority of smartphone transactions are for smaller amounts (i.e. app or media purchases) and the average transaction size remains small. So monetization rates remain a challenge for the industry. Interestingly, the tablets’ profile looks different and these devices monetize even better than the desktop. Device usage by occasion and the associated commercial intent of each may account for these differences – many consumers now use desktops for work, smartphones for filling waiting time or other on-the-go needs, and tablets at home.A quick cautionary note – don’t take monetization as a proxy for influence. The Inmobi study also noted that mobile, desktop and TV ads all had relatively similar influence on consumer purchase decisions. Focusing only on channel-specific monetization could lead to lost sales by missing critical top of funnel activities like researching products, reading reviews or looking for alternatives. In short, if customers do not consider your product or service the will never get to the decision to actually buy.Not surprisingly, this change in attitudes has shown up first and foremost in the apps market. As recently as 2010, Apple, which was far and away the leader at that time, offered only 140,000 apps. The Google and Apple app stores now each offer over 700,000 apps. Time spent on apps has doubled in the last year. An average smartphone owner uses 6.5 apps per month and the market will grow over 60% in 2013 and hit $25B per year. And, the market’s dynamism almost defies belief — 63% of the apps used daily today are different than those used daily a year ago. Part of this proliferation of applications and the dynamism in terms of usage reflects the low cost of developing apps, which can cost as little as $25,000 to produce. Over time, however, as the challenges for generating installs rise and as users demand more sophistication in apps, one would expect this market to consolidate to some degree.
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  5. Back in the physical world, mobile has already driven fundamental changes to purchase processes and behaviors. The digital environment changes so quickly that new trends can creep up on us, but consider for a moment how mobile has already completely transformed the retail purchase process. Consumers use the internet (and mostly mobile) to: find store locations, check to see if the product is in stock, check competitive prices before going to/and while in the store, browse a retailer’s website, and check product reviews. The on-line, off-line channel integration here is remarkable and will only grow in complexity as marketing interventions become more and more precise. In this world, on-demand availability of information defines the customer set, the probability of a physical visit, product selection and the likelihood of purchase in the store. And, mobile has spawned an entire industry based on mobile technologies for local discovery including companies such as FourSquare and Facebook’s Nearby feature. These applications provide information based not only on your location and preference information from others, but also location information from your friends. Choosing a restaurant or nightclub will never be the same. Overall, mobile technology has begun to crush the dichotomy between planned vs. impulse purchases into a highly organized and informed set of on-demand decision-making.
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  7. Geo-targeting increasingly drives success. Historically, the notion of geo-targeted advertising has been more myth than reality for three reasons. First, the various location services (and the associated permissions) often do not use real geo-positioning information. For example, the information returned from the phone may simply provide a DMA, a city or a ZIP. Sometimes information that looks like real geo-positioning is really just a ZIP centroid calculation masquerading as a true geo-position. Second, the latency involved with reporting and executing on geo-position information can mean even if good information does exist, it is no longer accurate by the time the ad is served. Third, for these reasons and others, campaigns were often constructed at the DMA or ZIP level instead of using more precise geo-fenced targeting.This is starting to change. At the beginning of 2012 only 27% of all mobile campaigns were geo-precise and 64% were either ZIP or DMA based. By the end of the year those percentages had flipped with 81% of campaigns run on a geo-precise basis. This change results from many factors. For example, the largest mobile platform, Facebook, now allows mobile targeted ads based on check-ins. This type of check-in technology, which is also offered by companies like FourSquare, can help advertisers precisely locate individuals at a point in time. In addition, the device gap, which made it challenging for advertisers to target users based on cookie or other user ID information in the past, will likely close this year as Facebook and Google roll out mobile retargeting technologies.Increased precision has driven better results. A recent study by xAd suggests that precise geo-targeting drives sixty percent improvement in performance in mobile display and 33% improvement in mobile search. What does this look like? In the report, xAd offers a Calvin Klein apparel (underwear) case study where the mobile banner showed the brand and models wearing the underwear. Shoppers were targeted within a 10-mile geo-fence around Macy’s stores. During store hours users were shown nearby Macy’s store locations; after hours they were directed to an e-commerce site. According to xAd, “the campaign exceeded the client’s CTR benchmark by 26 percent while helping to increase local sales during the campaign period.”Shopkick is another variant on this theme (www.shopkick.com). This company gives you points simply for walking into shops. How can they tell where you are? The app that you install on your smartphone keeps pinging out your geo-location. So now you are rewarded for just being you – as long as you happen to be yourself sitting in Macy’s.
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  9. Conquesting. Conquesting occurs when one competitor attempts to convert another competitor’s prospect while they are already on the competitor’s premise or have an intention to purchase on premise. Behavior geo-targeting and the integration of off-line and on-line shopping made possible by mobile enable this type of digital marketing. Things have already gotten very entertaining in this area. Last week, I was talking with the head of an agency I know well and he described a campaign run by a shoe chain in South America. When a customer entered a competitor’s store, they generated an exploding offer whose value declined rapidly over time depending on the travel distance between the customer and their store. If you ran out of the competitor’s store and straight across the mall to the advertiser’s store, you would get a tremendous discount. If you walked, not so much. Those strange joggers in nice clothes you see in the mall in the future may be shoppers responding to exploding mobile advertising offers.

What does it Mean for Gaming?

These changes will bring an exciting and challenging marketing future for the gaming business. Here are three key mobile gaming trends to consider –

  1. Direct mail will slowly fade as mobile becomes prevalent. As noted above, mobile allows considered decision making on-demand. Increasingly, patrons will make decisions around accepting their offers at their convenience based on what they have on their phone.
  2. Mobile marketing will intensify competition. In this world, patrons will always have offers at hand and so redemption rates may increase. In addition, with all the offer information (and casino information) on the phone it will become easier to compare offers, drive times etc. making the decisions for the patrons that care about these things more transparent and obvious.
  3. Conquesting, the geo-fenced extension of mobile marketing, will provide opportunities, but only for those who work the new technologies aggressively. For the others, conquesting will likely result in a steady drain of revenues and customers.
    • New revenue vs. other entertainment. Recently, we saw a case where a casino located near a mall ran a geo-fenced campaign to target the mall’s restaurants. The casino offered a 2-for-1 for their buffet to drive traffic into the casino. Presumably the mall’s restaurants had no idea what happened when traffic started to fall. The result for the casino: more traffic, more gaming and more buffet customers.
    • Patron snatching by competitors. Get ready for competitors to make real-time offers to patrons when they enter or are near your casino. This will help them snatch valuable patrons from you if you have not considered and proactively countered these types of strategies. Given the legalization of internet gambling, land-based casinos could also face conquesting tactics from online gaming vendors who incent patrons to play on their mobile devices just as they enter a casino.

Time to go mobile!