Digital Intelligence Briefing. Taking Advantage of the Mobile Opportunity. in association with

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1 Digital Intelligence Briefing Taking Advantage of the Mobile Opportunity in association with

2 Digital Intelligence Briefing Taking Advantage of the Mobile Opportunity in association with Published July 2016 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright Econsultancy.com Ltd 2016 Econsultancy London 4th Floor, Wells Point 79 Wells Street London W1T 3QN United Kingdom Telephone: Econsultancy New York 350 7th Avenue, Suite 307 New York, NY United States Telephone: Econsultancy Singapore 20 Collyer Quay #23-01 Singapore Telephone:

3 Contents 1 Foreword by Adobe It s time to join the one-in-five Mobile by the numbers The role and challenge of apps The barriers to mobile success Gaining a mobile edge Appendix: respondent profiles...37

4 1 Foreword by Adobe Mobile continues to be a moving target. While marketers are making solid progress with mobile marketing, there s still a lot of room for improvement, such as speeding up the adoption of mobile initiatives. Our third annual mobile research report shows that marketers recognise the enormous power of mobile and understand that it s still challenging to create great mobile experiences. But it also shows they re slow on the uptake. It gives us all the more reason to believe that now is the time for marketers to step back from tactical changes and embrace mobile s potential for largescale business impact. More than 4,000 marketers and digital professionals took part in this year s survey, giving us a great glimpse into how organisations are approaching and implementing mobile strategies across all channels. Interestingly, the number of organisations describing themselves as mobile-first has more than doubled in the last two years (from 13% in 2014 to 27% this year). It s encouraging to see that companies are backing this up, with 98% of respondents either increasing or maintaining their spend on mobile capabilities in This sustained investment is producing positive results, with the average amount of revenue exchanged on mobile devices increasing by 75% since Being able to connect how mobile fits into the customer journey is proving key to marketing strategies. It helps complete the customer story and gives marketers the insights they need to make key decisions. We re excited to see that these results reflect the growing importance of mobile as a key part of the overall customer experience. It s heartening to see marketers embrace this new reality. As you continue your mobile journey, we hope that this report inspires you to deliver better experiences on mobile and beyond. In the words of one survey respondent: Mobile will no longer be seen as an if or maybe platform. It will be integral to any customer experience plan. Mobile is shaping the future of customer experience. We look forward to helping you gain your edge. John Travis VP, EMEA Marketing Adobe 4 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

5 It s time to join the 2one-in-five When you think of your organisation s approach to mobile, do you recall meetings where senior executives wrestled with the fundamental nature of the business moving forward? Or is mobile simply considered in the context of other priorities perhaps it sparks discussion of usability, site redesigns and app features? Chances are that like 80% of respondents to our mobile survey, your company leans towards the latter, more tactical approach. Forty-eight percent of organisations don t have a strategy in place at all, and while the remaining 52% have some level of mobile strategy in place, most of those admit that it isn t well defined. The degree to which it is defined is an important difference, felt on both the long-term planning and execution levels. Figure 1: Does your organisation (or do your clients) have a mobile strategy? 50% 45% 40% 43% 35% 30% 32% 25% 20% 15% 20% 25% 27% 23% 19% 11% 5% 0% Yes, we / they have a defined mobile strategy that goes out at least 12 months Yes, but it isn t very well defined No, but we / they are working on it No, we / they don t have a mobile strategy Agency respondents : 2,038 Agency respondents: 1,444 5 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

6 For most businesses, mobile presents a market shift on a scale similar to the advent of the internet itself Why should companies strive to join the 20% that have a well-defined mobile strategy? For most businesses, mobile presents a market shift on a scale similar to the advent of the internet itself. It challenges them to understand how their customers behave in a form that s very new and very different. The ubiquity of smart devices may give us the mistaken impression that mobile is now universally considered in modern business models. But the reality is that most organisations are adapting old ideas to the small screen, making tactical changes without considering the potential for largescale disruption, positive or negative. Consider the example of retail. Since 2014, mobile commerce has grown year over year by roughly 30%, and now comprise around 30% of all sales. However, like the move from traditional to digital media, the exchange rate isn t one-to-one, with mobile conversion rates ranging from one half to one third of those on desktop devices. And the number of items in shopping carts is consistently lower, with shoppers less likely to browse beyond their initial product interest. Figure 2: The quality of the mobile experience is more important than that on the desktop because there s no room for error or waste agree or disagree 100% 23% 22% 13% 90% 80% 70% 30% 26% 2 60% 63% 50% 40% 47% 52% 30% 20% 0% Agree Neutral Disagree Respondents 2016: 695 Respondents 2015: : 221 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 6

7 Today, the trend to lower conversion rates and revenue per visit in mobile is mitigated by the common preference to buy from the desktop. But the share of mobile-only shoppers is growing steadily and sharply, and retailers have to pay attention to them now, while there is time to learn and develop better experiences that encourage browsing and purchasing, influencing and building a purchase preference on mobile. This challenge isn t unique to consumerdirect businesses. The influence of mobile customers is increasing quickly in every sector, and even business-to-business sales are affected. For a growing share of consumers, the mobile experience and the customer experience are synonymous. In Figure 2 we see that survey respondents recognise the outsized role of mobile and the challenge of providing a great experience when there is no margin for error. Space and attention are at a premium on the small screen. The physical, cognitive and emotional experience of using a smart, mobile device is fundamentally different from that of the desktop, and it deserves a strategic approach. Figure 3: Proportion of organisations who agree with these statements We know what proportion of our traffic comes via mobile devices We know what types of device our customers are using 60% 61% 78% 78% We understand how mobile fits into the customer journey across devices and channels 52% 71% We can track our customers across different devices when they choose to authenticate and log in to the experience We can provide relevant information to different segments of our users We understand the nuances of how our customers use tablets and smartphones differently We can track the effectiveness of paid, owned or earned media in driving user acquisition for mobile apps across the various app stores We can provide real-time messaging and experiences across multiple devices 3 39% 33% 27% 28% 60% 57% 5 53% 49% We can track users across devices in real time 28% 43% Organisations who have a defined mobile strategy 0% 20% 40% 60% 80% 100% Organisations who don't have a defined mobile strategy Respondents: 1,285 7 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

8 Strategy isn t a panacea as often as not companies have a difficult time bringing their best-laid plans to bear in day-to-day operations. But when they re facing true market evolution, it s important for leaders to step back from tactical responses and consider the larger questions. The effects of doing so are manifold. The most important may be the increased focus that can emerge from a successful strategic exercise. Strategically-led efforts provide context for execution by directing resources toward large-scale objectives (generate equal revenue per customer on mobile) and defining practical goals (achieve top rating in Net Promoter Score for ecommerce). When strategy is well constructed, it helps organise resources and investment in the day-to-day capabilities that support larger objectives. As we see throughout Figure 3, there are marked differences between those with a defined strategic approach to mobile and those without one. Knowledge is a competitive advantage for these companies. For example, they are more likely to understand the end-to-end mobile customer journey (from first engagement to purchase), cross-device behaviour and nuances in device usage up until monetisation (or a purchase transaction). Looking across these results, it s clear that most marketers are making decisions about their mobile customers and approach without key pieces of information. Even the forward leaning 20% with a well-defined strategy lack some elements of mobile customer analysis, but they re well ahead of the mainstream. This long list of capabilities in mobile analytics and management shouldn t be viewed as a checklist for marketers to pursue one by one. In that context, the investment will be siloed and the capability limited. The advantage of those with a well-defined strategy is a more holistic approach, which leads to capabilities that are connected in theory and practice. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 8

9 60% are increasing their 2016 investment in mobile Mobile is an important part of the customer experience, but it is still only a part. Companies pursuing genuine transformation in how they serve their customers have to consider every channel, user touchpoint and platform. Just as a powerful strategy for mobile should dictate how the company will grow its mobile experience management capabilities, so too it must link to the larger plans above it that speak to the entirety of the customer relationship. Figure 4: Are you planning to increase your mobile investments in the next year? 70% 60% 62% 60% 50% 40% 30% 35% 38% 20% 0% Yes, increase No, keep the same No, decrease % 2% Respondents 2016: 1,698 Respondents 2015: 1,199 Companies are continuing to invest in their mobile capabilities. As highlighted in Figure 4, 60% are increasing their 2016 spending and only a tiny fraction are moving away from their mobile investments. The question is, how are they investing those resources? For those that start from a well-defined mobile strategy, budget allocation is based on specific objectives determined by leadership and defined by data. For companies without that overarching guidance, investment is a step behind need, with managers and marketers reacting to problems instead of pursuing opportunities. 9 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

10 3Mobile by the numbers Now that one in five companies has a defined mobile strategy, it s easier to see the benefits. As we saw in the previous section, those with a well-defined strategy are more likely to have a better understanding of the channel, customer tracking and mobile personalisation than the mainstream. If that isn t a wakeup call to executives who have yet to engage more deeply with the mobile channel, the year-on-year growth in mobile traffic must be. Looking at Figure 5, businesses surveyed for this research report that, on average, 37% of their total digital traffic is now via mobile up from 31% in At the same time (not shown in the chart below), the proportion of those saying that over half of their digital traffic is via mobile has increased by 56% since last year (from 18% to 28%). Figure 5: Average proportion of total digital traffic via mobile devices 45% 40% 39% 35% 33% 3 37% 30% 31% 31% 25% Agency respondents (2016): 1,690 Agency respondents (2016): 1,151 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 10

11 Tablet use is heaviest in Europe, where it accounts for 35% of mobile traffic Figure 6: Split between tablets and smartphones, by region 100% 90% 25% 35% 30% 80% 70% 60% 75% 65% 70% 50% 40% 30% 20% 0% North America Europe APAC Smartphones Tablets Respondents: 492 According to Figure 6, tablet use is heaviest in Europe, where it accounts for 35% of mobile traffic compared to 30% in Asia Pacific and 25% in North America. Smartwatches and other Internet of Things (IoT) devices continue to reside on the periphery. Smartphones clearly still dominate, with the market having reached near 100% penetration across North America, APAC and Europe. As a result, these devices continue to account for the largest proportion of mobile traffic (68% on average). While companies may not be targeting smartwatches or other IoT devices directly, these devices have the potential to significantly increase the volume of mobile traffic in the future. Innovations such as the Nest or Hive home care systems and Alexa, Amazon s artificial intelligence system, rely on mobile devices creating constant customer engagement. 11 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

12 Innovations in mobile payments, discussed later in this section, have arguably played a pivotal role in securing the channel s future dominance. Payment capabilities are becoming a vital point of engagement for many companies as smart wallet usage grows. Equally important is the ability to integrate payments with other systems such as loyalty programs. For consumers, a killer smartphone app increasingly means one that lets them complete a number of ecommerce tasks simultaneously in one swipe or click. It is to be expected that brands that offer this capability will see their mobile traffic dominate desktop in the relatively near term. Figure 7: What percentage of your overall ecommerce revenue is transacted directly on mobile devices? 80% 70% 70% 60% 62% 50% 40% 48% 30% 20% 22% 26% 27% 0% 8% 15% 8% 2% 0% 6% 2% 0% 0-20% 21-40% 41-60% 61-80% % Respondents 2016: 999 Respondents 2015: 755 Respondents 2014: 204 In the past, retailers designed mobile sites to enable customers to make purchases as quickly and easily as possible, but many failed to take into account that customers have different expectations for mobile devices. Common complaints were that mobile homepages were uninspiring, with fiddly registration processes. In addition, key details like product or stock information were often omitted to make things easier to digest on the smaller screen. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 12

13 As shown in Figure 7, there has been a rise in the proportion of ecommerce revenue obtained directly through mobile transactions. This reflects increased penetration of smartphones, discussed earlier in the section, as well as investments that are now more focused on usability and thinking about how to add value through the mobile experience. For example, can consumers find what they re looking for by scrolling or does it require an extended number of clicks to direct them along the checkout process? On average, 28% of ecommerce revenues are transacted on mobile devices (up from 21% in 2015 and 16% in 2014). This rate is likely to accelerate as bricks-and-mortar retailers use mobile to blur online and offline environments faster and further. For example, Starbucks Mobile Order & Pay platform has become so popular, driving 5 million transactions a month, that more than 20% of the company s mobile transactions are now taking place this way. US retailer Walmart also recently launched Walmart Pay, linking consumers apps to QR codes that trigger a payment and apply gift card balances, promotions and coupons. Catalogue retailer Argos is investing in technology to enable shoppers to sync their handsets with RFID (radio frequency identification)-enabled shopping bags. Placing products into the bag also virtually places them into the checkout on the Argos app. On leaving the store, the app automatically pays for the items, letting consumers skip the queue entirely. Exploring trends via region (not shown in the chart above), APAC organisations are nearly twice as likely as their European and North American counterparts to say that more than half of their overall ecommerce revenue is transacted directly on mobile devices (20% compared to 11% and 12% respectively). Asia is clearly leading the mobile revolution for example, according to the Adobe Digital Index, China saw the biggest shift in desktop to mobile computing in 2015, with 35% of all website visits in the country originating from a mobile device (a 50% increase from the year prior) Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

14 37% of companies with a defined mobile strategy are obtaining more than half of their traffic via mobile devices Figure 8: How much of your total digital traffic (via apps and the internet) is via mobile devices? % 21-30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% % 6% 7% 7% 7% 5% 3% 1% 1% 11% % 16% 13% 15% 16% 20% 0% 5% 15% 20% 25% Organisations who have a defined mobile strategy Organisations who don't have a defined mobile strategy Respondents: 1,690 Strategy means evaluating where mobile fits in the overall customer journey. Companies that have a mature mobile strategy react to signals sent by consumers with helpful, timely messages from taking into account contextual cues (e.g. sending messages when shoppers who are on your mailing list are near a physical store) to building intuitive mobile experiences that tap into the human desire to physically engage with the online environment. Having a strategy is therefore key, enabling marketers to move beyond designing specifically for devices and towards designing a user experience that surprises and delights. This is reflected in Figure 8 above, which shows that 37% of companies with a defined mobile strategy are obtaining more than half of their traffic via mobile devices (taking into account combined response rates for 51% and above). This compares with a total of 25% of companies that don t have a mobile strategy. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 14

15 The opportunity cost of a passive approach to mobile is getting higher by the minute Figure 9: What percentage of your overall ecommerce revenue is transacted directly on mobile devices? % 21-30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% % 5% 5% 2% 2% 1% 5% 1% 7% 20% 16% 19% 17% 1 13% 11% 11% 9% 3 0% 5% 15% 20% 25% 30% 35% 40% Organisations who have a defined mobile strategy Organisations who don't have a defined mobile strategy Respondents: 999 On the flip side, looking at Figure 9, organisations without a defined mobile strategy are far more likely to draw less than of their ecommerce revenues from the mobile channel compared to those who do have a strategy (3 against 20%). With mobile traffic is up by nearly a fifth, the opportunity cost of a passive approach to mobile is getting higher by the minute. Of course, it s not simply a case of deciding to have a strategy. Some state that lack of resources or budget plus the need for a deeper understanding of the channel hinder their efforts to drive more customer engagement via mobile. (See Section 5 for more views on the challenges of mobile engagement.) Over the next year, the volumes of mobile traffic and m-commerce revenues are only expected to grow, as mobile services become even more deeply embedded in consumers daily lives. The proportion of organisations saying that more than half of their digital traffic will be via mobile in the next 12 months has increased by 32% since last year (62% vs. 47%, see Figure 10 above). With nearly two-thirds of companies expecting most of their digital traffic to be mobile in the near future, it s imperative for these companies to enhance their mobile capabilities. 15 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

16 Figure 10: More than half of our digital traffic will be via mobile in the next 12 months agree or disagree 100% 28% 19% 90% 80% 19% 70% 25% 60% 62% 50% 40% 47% 30% 20% 0% Agree Neutral Disagree Respondents 2016: 695 Respondents 2015: 484 The proportion of organisations saying that more than half of their digital traffic will be via mobile in the next 12 months has increased by 32% since last year (62% vs. 47%, see Figure 10 above). With nearly two-thirds of companies expecting most of their digital traffic to be mobile in the near future, it s imperative for these companies to enhance their mobile capabilities. Further examination of the data revealed that North America and APAC are slightly accelerating beyond Europe in this respect, with 68% and 6 respectively stating that more than half of their digital traffic would be mobile compared to Europe s 59%. This more detailed examination also shows that a greater number of companies with a defined mobile strategy (75%) expect to have more than half of their digital traffic via mobile than those with no strategy in place (59%). Despite that gap, as the number of organisations expecting mobile traffic to dominate grows year on year, we can see that a growing number of companies, even those that haven t focused on building a mobile strategy, recognise that the channel is going to be hugely influential if it isn t already. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 16

17 Looking ahead five years, what differences do you think there will be in the way you approach mobile and the technologies you use? Survey respondents Mobile will become separated from the desktop experience and become its own unique channel. It will be integrated more into the customer experience, driving repeat and additional purchases, linked to location and targeted transactional offers. Mobile will be at the forefront of our spend and resource allocation without a doubt if mobile use continues to grow at the rate it is right now. Mobile will be mainstream so will be automatically incorporated into everything we do. Being able to put customer needs ahead of application development as we are still learning how these processes/technologies work and trying to keep up with the latest trends. 17 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

18 There will be no specific need for a mobile approach as it will be fully integrated into what we do. Likewise with technology, where there will be more consolidation of technology. Strategy will be based around customer needs. Currently our digital marketing is a hub and spoke style setup where our desktop site sits at the centre of what we do, and links to social media, video content, information and core systems such as online bookings and client accounts. In the future, the desktop site will become one of the spokes in this model, and mobile will become the hub, allowing us to utilise clients calendars, greater notifications and enhanced two-way communication. I m hoping that it would be seamless transitions between desktop, tablet and mobile devices and that we could track and react proactively to needs. Mobile will be fully integrated into all design processes as well as organic and paid search marketing decisions. The use of bots will reduce friction and provide a more seamless buying experience so organisations will have to evolve to take advantage of this technology. Mobile will be the main focus and technology will support this. Allowing a completely cohesive cross-device journey, including reporting capabilities for the advertiser as well as dynamic real-time pages/messages tailored to that customer. Mobile will no longer be seen as an if or maybe platform. It will be integral to any customer experience plan. Mobile will be viewed less as a separate entity because systems, data and teams will have become more integrated (in terms of cross-device) in response to a need to address the customer journey in its entirety. Mobile will the key driver for our clients customer acquisition and retention. A mobile-first approach will be more prevalent. Organisations will realise that they need to look holistically at all their channels (both online and offline) and how they can work together to offer customers better experiences. With developments in measurement and more links between online and offline channels (with mobile playing an important role here), they will be able to calculate ROI and provide a truly mobile and user-centric experience. It will become more clear which unique opportunities are afforded by mobile, and how leveraging them can give good customer insights and new ways of creating value and engagement. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 18

19 In response to an open-ended question ( Looking forward five years, what differences do you think will there be in the way you approach mobile and the technologies you use? ), a large number of respondents confirmed that their strategies would be largely mobile-first, with many expecting customer interactions via mobile to account for around 70% of all digital traffic. One respondent believed their traffic would be 100% mobile, while another said companies would move from a mobile-first standpoint to mobile only. The majority of survey respondents agree that mobile will become the dominant digital point of contact. Interestingly, few believed smartwatches would have much impact on either desktop or mobile. Mobile s growth will continue to challenge companies without a well-defined and resourced mobile strategy. Companies that are already reaping rewards through having a forward-looking mobile strategy will continue to do so. Those that don t are typically struggling to identify mobilespecific customer needs, under-investing in the channel or simply trying to shoehorn the desktop experience into the mobile environment. Many respondents highlight that, while it s important to understand the channel behaviours of customers, the fact that mobile is going to dominate the digital channel is not their foremost interest. A bigger priority is to keep an eye on the larger picture of an optimised multichannel. Even today, the customer expects convenient and seamless brand interactions across every channel and device. This was highlighted in the Econsultancy / Adobe Digital Trends 2016 report, which showed that a significant proportion of companies agreed that optimising the customer journey across multiple touchpoints and ensuring consistency of message was very important (70% and 63% respectively). 2 While mobile may dominate and executives naturally divert investment to support the volume of traffic, there s a risk of failing to support other, less dominant but no less important components of multichannel marketing Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

20 4 of The role and challenge apps Figure 11: In the context of your own organisation, please indicate the extent to which you agree or disagree with the following statements. Mobile app and desktop experiences are completely different 23% 43% 19% 12% 3% Achieving stand-out in app stores is a huge challenge for us 17% 36% 38% 6% 3% Business objectives are the same for app(s) and mobile-optimised site(s) 15% 36% 2 21% Time spent per session is higher for mobile apps than for the mobile web 12% 3 38% 1 2% Conversion rates are higher for mobile apps than for the mobile web 11% 28% 45% 13% 3% We achieve greater employee efficiency when they use mobile apps 31% 50% 7% 2% We can measure success and ROI of mobile apps as well as we can for our website 33% 41% 12% We can optimise our mobile apps as easily as we can optimise our website 8% 28% 37% 20% 7% 0% 20% 40% 60% 80% 100% Strongly agree Agree Neutral Disagree Strongly disagree Respondents: 1,448 As the share of mobile traffic continues to grow, the debate around the merits of mobile apps versus mobile-optimised websites shows no signs of abating. When asked how organisations will approach mobile in five years, one agency respondent argued that apps will be of less interest as better web experience pervades. A plethora of studies have shown that average app retention rates are often in the single digits, with only a minority of consumers returning to an app at regular intervals. However, there s evidence that mobile browsing and use of mobile apps are growing at similar rates, with apps exhibiting sustained growth. Numerous industry analysts also agree on a healthy balance of mobile apps and mobile web over time. Over a third of those surveyed (35%) have employed apps as part of their mobile activities, with nearly half (56%) of those claiming that time spent per session is higher for mobile apps and the mobile web (Figure 11). Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 20

21 Six in ten companies use native apps In terms of types of app, native apps remain most popular, with six in ten companies (62%, down from 71% in 2015) saying they use them (Figure 12). Adoption of hybrid and cross-platform apps has slightly increased since last year, by and 16% respectively. There are slight differences between regions, with hybrid apps seeing greater adoption levels in North America (5 compared to 38% in Europe and 49% in APAC) and crossplatform apps being more popular in APAC (41% compared 31% in Europe and 35% in North America). Figure 12: Which types of apps have you developed? 80% 70% 71% 60% 62% 50% 40% 30% 41% 45% 32% 37% 20% 0% Native (built using platform vendor Hybrid (built using web technologies Cross-platform (built using thirdparty SDKs, including apps with a mix of native and web views) and a native wrapper) SDKs and cross-compiled to native) Respondents 2016: 514 Respondents 2015: Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

22 When exploring the unique characteristics of mobile apps and their role in marketing, consider: All mobile is not created equal The reality is that the situation is not so clear-cut as some industry insiders might lead you to believe it s not an either/or scenario, but it s about finding a balance between mobile apps and mobile-optimised websites that is the best fit for your brand and target audience. Mature organisations have already grasped the importance of positioning when it comes to mobile apps: they understand that apps shouldn t be a replica of the website, but an extension of the customer experience, developed for specific use cases. There s evidence that marketers are increasingly creating experiences that are unique to the small screen, with around twothirds (66%, up from 6 in 2015) describing the mobile app and desktop experiences as completely different (Figure 11). In the words of a survey respondent, organisations need to accurately highlight the difference between apps and mobile websites in their marketing strategy. Be prepared for the long run A long-term development mindset and regular updates are key success factors when it comes to achieving success in the competitive app arena. Over half (53%, up from 39% in 2015) of responding organisations update their apps at least monthly, with 26% doing so weekly or daily (Figure 13). It s worth noting that the proportion of those claiming that they update their apps daily has almost tripled since 2015, from to 11% this year, while the proportion of those updating apps every few months has declined by 2. Nearly seven in ten (68%) organisations with defined mobile strategies update their apps at least monthly, compared to less than half (47%) of their peers. Look beyond the app store Because of the way in which apps are distributed, over half (53%) cite difficulty in standing out in app stores (Figure 11). All organisations across the maturity spectrum face this challenge those with defined mobile strategies are even more likely to cite this as a significant challenge (55% compared to 51% of their peers). However, it s far from an insurmountable task; with app discovery often occurring outside of the app store, awareness can be driven via other channels, such as search or social. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 22

23 Figure 13: How frequently do you update your app(s) or app content? Daily 11% Weekly 11% 15% Monthly 2 27% Every few months 32% 42% Annually Hardly ever 5% 7% 7% Never 2% 3% 0% 5% 15% 20% 25% 30% 35% 40% 45% Respondents 2016: 511 Respondents 2015: 516 There are several factors responsible for creating hurdles when it comes to periodic updates, with technology often being the common denominator. As Figure 14 shows, tech development delays have emerged as the most significant barrier to updating apps, with over half (52%) of company respondents saying that s the case. These are followed by lack of internal staff / resources (38%) and reliance on external agency / partner (35%). Further analysis of the data revealed that a lack of internal knowledge poses more problems for North American organisations, as they re more than twice as likely as their European counterparts to cite this is a barrier (38% vs. 16%). This is not to say that North American organisations are behind the curve, but the contrary: as companies become more sophisticated with mobile (29% of those based in North America have well-defined mobile strategies), the complexities and hurdles involved become more pronounced. Agencies are 57% more likely to say that a lack of internal knowledge is a barrier. They are also 43% more likely to say that a lack of budget prevents their clients from updating their apps. 23 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

24 Objectives that aren t tailored to the particularities of a channel are often the chink in the measurement armour Figure 14: What are the main barriers to updating your (or your clients ) apps? Tech development delays Lack of internal staff / resources Reliance on external agency / partner App store approval times Lack of budget Lack of internal knowledge Compliance or regulatory approval App platform vendor doesn t support Can t obtain internal buy-in Other 8% 7% 7% 3% 17% 17% 22% 23% 37% 38% 40% 35% 38% 31% 30% 43% 36% 52% 0% 20% 30% 40% 50% 60% Agency respondents : 483 Agency respondents: 911 Measuring success is not just about metrics For over half (51%) of those surveyed, business objectives are the same for apps and mobile-optimised sites (Figure 11). This becomes particularly important in the context of measuring success: objectives that aren t tailored to the particularities of a channel are often the chink in the measurement armour. Progress can only be accurately measured if defined objectives are mapped to relevant metrics. This is acutely important in mobile and it may explain measurement issues: only two in five (43%) are able to measure success and ROI of mobile apps as well as they can for their website (Figure 11). Part of this measurement gap can also be assigned to a lack of measurement sophistication. As shown in Figure 15, seven in ten (71%) companies look at total downloads but less than half use more nuanced, and arguably more important, metrics. Some metrics, such as recurrent usage and time spent, are often overlooked because of their perceived simplicity, a lack of understanding or the right tools, but they tend to uncover valuable patterns of behaviour that can inspire further refinement and optimisation. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 24

25 Figure 15: What metrics do you (or your clients) use for measuring the success of mobile applications? Number of downloads Recurrent usage Time spent Revenue / leads generated Conversion rate Improved employee efficiency Custom metrics (e.g. social shares) Reduced costs External metrics (e.g. reduced cost in customer service due to fewer phone calls) Reduced time to market None of the above 18% 16% 17% 18% 15% 17% 13% 9% 11% 12% 7% 8% 46% 32% 45% 41% 38% 38% 37% 36% 59% 71% 0% 20% 40% 60% 80% Agency respondents : 519 Agency respondents: 968 Seek real user feedback When you re thinking about implementing cutting-edge features, testing and user feedback are essential, but some organisations still take the easier route of investing blindly. Although the process may be daunting conducting several rounds of user testing and focus groups just to establish the app interface, followed by regular testing to determine future interface enhancements or content innovations it can yield valuable insights. more advanced functions, such as location, timing and behaviour. Organisations with well-defined mobile strategies are significantly more sophisticated with measurement than their peers: they re twice as likely to conduct A/B testing on in-app messages or push notifications and around 60% more likely to use advanced functions in their apps (+57%) and conduct A/B testing on app features and content (+59%). While three in five organisations take advantage of user feedback when updating their apps, only half do so based on user behaviour or data. Less than a third (32%) are conducting A/B testing on features and content and only a quarter are exploring 25 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

26 While the path to mobile maturity is convoluted and the complexities of app design and distribution only compound the problem, you should carefully consider how you can use mobile to add value to the customer experience and create opportunity for your business. Figure 16: Which of the following apply to your (or your clients ) testing and optimisation of mobile applications? We / they regularly update apps based on user feedback 52% 60% We / they regularly update apps based on user behaviour / data 50% 46% We / they carry out mobile app and mobile website usability tests 42% 49% We / they have conducted A/B testing on mobile app features and content We / they are using / exploring advanced functions such as geo-location, timed actions and behavioural triggers in our / their mobile applications We / they have conducted A/B testing on in-app messages or push notifications 32% 27% 25% 21% 17% 12% 0% 20% 30% 40% 50% 60% 70% Agency respondents : 449 Agency respondents: 427 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 26

27 The barriers to mobile 5success Figure 17: What is the main barrier to success when it comes to effectively optimising your (or your clients ) mobile web presence? Lack of resources (including budget and staff) 36% 42% Lack of knowledge or understanding within the organisation 22% 27% Difficulty understanding needs of consumer Difficulty measuring ROI and building business case Software limitations Difficulty providing contextual and real-time messaging to mobile users Other 12% 9% 11% 8% 6% 5% 6% 2% 0% 5% 15% 20% 25% 30% 35% 40% 45% Agency respondents Some of the primary barriers preventing companies from effectively optimising their mobile web and mobile app presence are a lack of mobile expertise, limited budget and difficulty measuring ROI (Figure 17 and Figure 18). Lack of resources (including budget and staff) A frequent topic in recent Digital Intelligence Briefings has been the strategic focus on optimising customer experience, which can t be discussed without referring to : 1,345 Agency respondents: 901 personalisation. 3 The role of smartphones in everyday life offers an opportunity for meaningful, personalised interactions on a large scale. To understand both the importance of smartphones in consumers lives and the strategic imperative to optimise both web and app experiences, it s worth considering the increasing importance of mobile commerce, which has rapidly grown in value in recent years. In some markets, the value of mobile commerce compared to desktop exceeded 50% for the first time in late Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

28 This figure is huge, especially considering that in 2010, mobile devices accounted for less than 1% of online retail sales. 5 Given that this figure has grown so rapidly, it s perhaps unsurprising that a lack of resources (including budget and staff) has emerged as the most significant barrier to optimising both the mobile web and the mobile app presence 42% (Figure 17) and 40% (Figure 18) respectively. The split between sales made via smartphones and tablets varies across regions. In the UK, US and Europe, the delta is generally less than 5% in either direction. In the UK for example, the majority of mobile sales are coming from tablets, while in the US smartphones edge out tablets. 6 In other markets such as Japan and South Korea, the difference is more pronounced, with smartphone ecommerce transactions accounting for over 40% of all ecommerce transactions. Tablets on the other hand represent less than 5% of all ecommerce transactions. 7 In markets such as the US and Europe, shoppers are increasingly using their smartphones in situations where they would previously have used tablet and desktop devices. There are several factors contributing to this: With each new smartphone iteration by the main manufacturers, the new devices are generally more capable and powerful than the generation preceding them. This means that more everyday activities can be completed using a smartphone. For example, anyone with a current model smartphone or tablet has the capacity to handle both personal and work tasks without needing anything else. 8 The shift away from desktop is also being accelerated by improved networking speeds and larger smartphone screen sizes 9, meaning that consumers can have more pleasurable shopping experiences. Google s mobile-friendly update in April 2015 forced many organisations to optimise their websites to be mobile friendly as Google now explicitly ranks mobile-friendly sites above their nonoptimised competition 10. It s clear then that there s an opportunity cost for not developing and integrating a clearly articulated mobile strategy. While resourcing and budgeting issues remain, 60% of respondents have indicated that they re planning to increase investment in mobile this year (Figure 4). 5 Ibid Ibid Ibid Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 28

29 Figure 18: What is the main barrier to success when it comes to effectively optimising your (or your clients ) mobile app presence? Lack of resources (including budget and staff) 40% 36% Lack of knowledge or understanding within the organisation 23% 27% Difficulty understanding needs of consumer Software limitations Difficulty measuring ROI and building business case 9% 12% 8% 8% 8% 11% Difficulty providing contextual and real-time messaging to mobile users Inability to access web content for mobile app use Other 3% 2% 2% 6% 1% 0% 5% 15% 20% 25% 30% 35% 40% 45% Agency respondents : 1,322 Agency respondents: 874 Lack of knowledge or understanding within the organisation If businesses acknowledge that lack of resources and budget are the biggest barriers in optimising mobile web and app experiences, it follows that there s a need to educate key stakeholders about the importance of building mobile web and app experiences. acknowledge the importance of mobile and make plans to address mobile issues, agency professionals may be far more aware of the issues they face simply because their clients look to them for guidance and so they are forced to acknowledge these issues before their client-side counterparts. While just over a fifth (see Figure 17 and Figure 18) of company respondents cite a lack of knowledge as being a barrier to mobile success, 27% of agencies identify this as a barrier (Figure 17 and Figure 18). One hypothesis for this divergence may simply be that agencies are more acutely aware of this barrier than companies themselves. While companies can 29 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

30 Understanding the needs of consumers Interestingly, organisations with defined mobile strategies (Figure 1) are twice as likely as their peers to say that difficulty understanding needs of consumers prevents them from effectively optimising their mobile web presence (16% vs. 8%). They are also more than twice as likely to highlight difficulty providing contextual and real-time messaging to mobile users and software limitations as key barriers. This suggests a greater awareness of the challenges around optimising mobile success than their peers with less defined strategies. Those with less defined strategies may simply have not yet evaluated their ability to deliver on these competencies. Overcoming barriers to mobile success The increasing importance of mobile will continue to challenge both companies and agencies lacking an adequately funded and resourced mobile strategy. This goes beyond simply trying to squeeze desktop experiences into the mobile environment. In the near-term, organisations, including agencies, may consider teaming up with experts for support while setting out to develop their own expertise in-house. Instead of becoming reliant on third parties for developing roadmaps and managing updates, organisations can work with expert consultants to cultivate in-house competence. Also, the right partner may be able to assist with overcoming further internal concerns about budgeting and resourcing. Mobile app strategies should prioritise personalisation, just as desktop and mobile web plans do. In fact, mobile apps can offer more unique opportunities to personalise based on data not available to desktop and mobile web. Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 30

31 What single thing would most help you address your pain points around mobile optimisation? Survey respondents Data on the ROI of mobile optimisation to convince leadership to invest resources into the development of a mobile strategy. A way to win over the board into understanding the importance of optimising our communications for mobile and get buy-in from our IT team. We need an organisational focus on our mobile strategy which is severely lacking. Our online presence needs an update in general so a combined effort might make the transition easier. The ability to generate rapid insights into the customers needs based not only on what they say they do, but what they actually do. Defining KPIs and putting in place measurable benchmarks would be useful in driving adoption and the business push for mobile optimisation. Understanding the size of the prize as an organisation and how not having a mobileoptimised site and mobile apps is the reason why we are still so reliant on desktop for sales. Real understanding and proactivity from the business teams rather than the experts or agencies trying to push the topic. Understanding how effectively our mobile app can cater to the end user so that our dayto-day operations are all addressed efficiently and overall productivity is improved. Greater understanding within the organisation of how consumers interact with FMCG brands on mobile and therefore the importance to us. Meaning more available budget! 31 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with

32 6Gaining a mobile edge Back in Section 2, it was revealed that 52% of companies have a mobile strategy, and another 25% are working on one. Figure 19 shows that this mobile strategy is not central for most companies. Fewer than half agree that mobile is central to their business and how they engage with customers, and most have not yet dedicated budgets and teams to mobile. Those that do have a defined mobile strategy are nearly three times more likely to have a centralised mobile team responsible for defining strategy (51% vs. 19%), though those that don t have this team still vastly outnumber those that do. Experimentation and innovation are vital to remaining competitive in a fast-moving industry, and it s encouraging that 36% have budget allocated specifically for experimenting with mobile over the next 12 months. Figure 19: Thinking about your organisation, please indicate the extent to which you agree or disagree with the following statements. We are a mobile-first organisation 8% 19% 25% 33% 15% We have budget specifically allocated to experimenting with mobile over the next 12 months 7% 29% 28% 21% 15% Our mobile activities are central to our overall business and how we engage with customers 7% 29% 26% 25% 13% We have a centralised mobile team (e.g. centre of excellence) that is responsible for defining an integrated strategy for reaching and engaging consumers across mobile experiences 6% 19% 2 30% 21% We are ahead of our competitors when it comes to our mobile strategy 5% 20% 3 26% 15% Every team or department has a mobile-specific KPI to measure its effectiveness in achieving the company s mobile strategy 5% 17% 2 32% 22% 0% 20% 40% 60% 80% 100% Strongly agree Agree Neutral Disagree Strongly disagree Respondents: 713 Digital Intelligence Briefing: Taking Advantage of the Mobile Opportunity In association with 32