white paper: how mobile performance marketing can drive m...

White Paper:

How mobile performance marketing can drive m-commerce sales

As 2014 drew to a close one thing became clear in the retail world, consumers have shifted how they purchase and are now seeking online alternatives to brick and mortar stores. Mobile commerce, or m-commerce, saw its largest growth in 2014 with an 80% increase among the top m-commerce companies as identified by Internet Retailers’ Mobile 500 report.i Overall, m-commerce is expected to account for 40 percent of all global online transactions by the end of 2015.ii

As m-commerce becomes a core strategy for all online retailers, online media buyers are taking note and beginning to include mobile as a key traffic source for online sales. This white paper will focus on the following key areas to help publishers focus their mobile efforts on m-commerce.

Indexi.

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Trends for Mobile Commerce

Traffic Methods for Mobile Commerce

Targeting Tips for Mobile Commerce

White Paper | Mobile Commerce 2015

Top mobile retailers saw an average of 16% of their online sales in 2014 generated on mobile devices, and this number is expected to more than double by 2018 as more users begin using their mobile devices as their primary access to the internet.iii In 2014 it was reported that 80% of online users now own a smartphone, and this number is expected to rise in 2015 and reach parity with those who own a laptop or PC.iv

Among one of the more prominent online retailers showing exponential gains in m-commerce is Amazon, which has projected mobile sales of $16.8 billion in 2014. As 21% of consumers purchasing from Amazon do so on their smartphone or tablets, the company is shifting to ensure mobile is its top priority. What this means for publishers is online retailers will now make responsive and mobile optimized design sites for all of their ecommerce portals, ensuring mobile traffic can be monetized effectively on these sites. These new m-commerce offers convert the same way as traditional e-commerce offers with a completed sale, but now affiliates have the choice of running traffic to m-commerce sites or apps for conversions, along with traditional web sales.


Trends for Mobile Commerce

Mobile PaymentsOne of the reasons m-commerce is beginning to become a more prominent way for users to shop is the ease in which you can make payments on your mobile device. The most basic forms of mobile payments occur through swiping through an NFC reader, a tap system, or using stored credit card/carrier information to check out with a virtual wallet. By the end of 2017, Forrester Research predicts U.S mobile users will spend $90 billion via mobile payments, and 50% of smartphone users say they will use mobile wallets for daily transactions by 2016.v

As 23% of cart abandonment on mobile is attributed to poor check-out paths, these mobile payments will greatly help to eliminate this barrier altogether.vi Of all mobile payments, mobile wallets appear to be the most innovative for the m-commerce industry with the most prominent example being Apply Pay. This new mobile wallet solution offers the security many users have been looking for and the ease of not needing to enter a credit card at the time of purchase on a mobile site or app.

Tablet U.S. retail sales will triple by 2018

Smartphone U.S. retail sales will double by 2018

130BIL

70BIL

435BIL

173BIL

2018

2018

2014

2014

Source: http://www.springbot.com/2014/07/6-mobile-trends-impacting-ecommerce-stores

Apps vs. Mobile Web Sites As the m-commerce market matures most retailers are focusing their efforts not only on optimized websites but also on their mobile apps. Whether publishers should focus on mobile optimized web pages over retail apps appears to largely depend on the company in question. On average, users spend 86% of smartphone internet time on apps, but 63% of consumers prefer mobile websites when making purchases. Of the 264 retailers in the Mobile 500 report with apps, on average 30% of their sales will occur on mobile apps instead of mobile web pages. However, some advertisers such as Groupon will see 70% of its sales come through their app.vii

For publishers getting paid on a rev-share or cost-per-sale basis it appears more profitable to focus on mobile optimized web pages than apps by looking at sales data.


It is important to note that although responsive design websites will work on all devices, slow load times cause increased drop off rates of users. The average user expects a mobile site to load within four seconds, and many responsive design web pages take much longer than this. When picking an m-commerce offer to run, it is important to test out load times first and foremost to make sure slow load times are not a hindrance to your campaign.

Although more mobile apps appear to be launching each year, Google reported 74% of online shoppers in the US use mobile search to visit mobile sites for their online purchases, and not online apps. Currently 40% of consumers say they have a shopping app installed on their mobile device, but 60% of those installed apps remain completely idle.viii

Year-over-year Mobile Growth Rates (2014)

Source: http://share.brandingbrand.com/Branding-Brand_Mobile-Commerce-Index_July-2014.pdf

EmailEmail open rates on mobile devices continue to grow, now accounting for 48% of all emails opened making it a top traffic source for online retailers.ix In 2013 email was the second highest source of m-commerce revenue, with 26.7% of retail purchases made on smartphones compared to only 20.9% of sales on desktops and 23.1% on tablets.x

Although email does have a higher conversion rate than social or search traffic, order values do appear to be lower in comparison.xi The majority of this traffic appears to be generated from direct to consumer emails as well, so although a high converting media type, email is also a competitive method of driving traffic.xii

SearchMobile search traffic continues to be a leading source for m-commerce conversions for many retailers, as users are often seeking out a specific item to purchase before landing on a mobile optimized site. More than 40% of mobile traffic to m-commerce sites came through a search query, making it the most common starting point on the path to a purchase outside of direct to site traffic. This traffic also has the lowest bounce rate when compared to social and direct-to-site traffic, despite having a slightly lower purchase value.xiv


Traffic Methods for Mobile Commerce

SocialAlthough Social traffic continues to fall behind as a main driver of m-commerce sales, order values have steadily risen to be at the top of all traffic sources with the average order value being $107.55. Instagram appears to have the highest order value of all social platforms at $123 in 2014, more than double the year before.xiii

As social traffic has the highest order values, but the lowest conversion rates, it is important to create the most targeted ads to get the most out of your spend. Facebook, Twitter, Pinterest, and Instagram are all creating more streamlined ways to purchase on their networks, including shopping while in-stream and integrated buy buttons which will greatly help conversion rates.

Average page views from search traffic sits at 4.44, and with the third highest conversion rate after direct visits and email, search continues to be a prominent source of m-commerce leads.xv When breaking down the share of revenue, paid search has a much higher percentage on tablets, at 24.8%, than smartphones, at 13.35%.xvi

More than 40% of mobile traffic to m-commerce sites came through

a search query, making it the most common starting point

Display AdsTraditional mobile banner display is still a large source of traffic for m-commerce sites due to its relatively low cost. Display ads appear to have the lowest order value compared to other traffic sources, but as the traffic can be relatively inexpensive this is not a gating factor to using mobile display to drive traffic. Of the available ad units to choose from, the majority of spend (69%) went to 320×50 mobile banner ads, compared to just 10% for 728×90 tablet banners.xvii Click-through rates are often quite low on mobile banner ads, but they are consistently higher on mobile devices than on desktops, proving they are a great choice for traffic to m-commerce offers.

Traffic/Revenue Mix

ProgrammaticOf all display ads programmatic or RTB platforms appear to be the most beneficial to publishers for m-commerce. The amount of available inventory available on exchanges through RTB platforms is immense, and allows for a variety of traffic buying strategies. Some offers will respond better to high volumes of low cost inventory, while others will respond better to highly targeted traffic using third party data layered on top of your own historical data. For the latter strategy, any type of data that helps target audiences who have clicked on or purchased from e-commerce or m-commerce offers in the past is all but guaranteed to boost conversion rates and revenue.


Source: http://marketingland.com/report-smartphone-m-commerce-revenue-grew-141-percent-q3-106134

Region Specific TargetingIn regards to m-commerce sales, North America continues to be one of the more advanced markets, with the US claiming a 15% share on total online sales. South America is also seeing considerable m-commerce growth with Brazil, the region’s largest market, and Argentina leading the way.xviii

In Europe the United Kingdom has the most m-commerce spending with 18% of total online sales in the country coming from mobile devices.xix Second to the UK is Germany, with 17% of all online sales occurring on mobile devices. Russia is also a major m-commerce market, not only representing reasonably priced traffic but where one third of mobile internet users are purchasing products on their devices.

Overall, however, the Asian market dominates when it comes to mobile transactions, with 46% of consumers in the region using their mobile device to buy goods and services, more than any other region.

This is largely due to the fact that the region is the largest smartphone market and the majority of consumers do not have access to traditional banking services, so purchasing via a mobile device is an easier user experience.xx

In some countries m-commerce is still emerging as more consumers start to demand the ability to purchase goods and services from their mobile devices. For the 2014 holiday season, Adobe forecasted the United Kingdom, Ireland, and Norway would dominate when looking at the mobile share of online sales by country. An interesting trend and a clear focus for mobile media buyers for 2015.

Among Pulse Mobile m-commerce offers we found the top GEOs were Singapore, Korea, Hong Kong and Taiwan. We have seen conversion rates between 0.5% - 0.9%, and EPCs between $0.05 and $0.15 across these four GEOs.

Targeting Tips for Mobile Commerce


Expected mobile share of online sales by country

Source: http://www.cmo.com/content/dam/CMO_Other/ADI/ADI_2014_Holiday_Prediction/2014_Holiday_Shopping_Prediction.pdf

Vertical TargetsIn general there is no one m-commerce vertical that towers over any other when comparing the share of total revenues that occur on mobile devices. One of the fastest growing verticals is Apparel, with a 104% growth rate year-over-year and 15% of total mobile sales.

Mobile Performance by Sector


The highest converting industry on mobile devices in 2014 was the apparel and catalog industry

The most prominent difference amongst verticals is not overall revenues but conversion rates, as the intent to purchase appears to depend on the industry greatly. The highest converting industry on mobile devices in 2014 was the apparel and catalog industry, with revenues remaining much more consistent across the board.

One category of m-commerce not traditionally tracked in retail e-commerce sales is the travel vertical, which is one of the largest m-commerce verticals with 40% of leisure travelers saying they will use mobile search to find hotels.xxi As well, mobile conversion rates for the travel and hospitality industry is 1-5%, which is above-average when compared to desktop traffic.xxii Source: http://www.marketlive.com/in-the-news/press/103014.html

Device TargetingAmong one of the many targeting considerations publishers must make is whether or not to employ specific device targeting for m-commerce offers. When it comes to users searching the internet, 80% choose their smartphones compared to 47% who choose their tablet.xxiii When looking at the share of visits to online retailers, over 24% will use their smartphone and only 9% will use their tablets. Despite this, tablets have an order value on par with desktop use, far higher than smartphones, and a conversion rate higher than smartphones at 2.8%.xxiv

Looking at specific device targeting for smartphones, Apple’s share of online orders continues to decline however the iPhone is still the most used smartphone with 53% of online orders, down from 75% in 2012. Second to Apple is Samsung, with 30% of all conversions occurring on a Samsung device, an increase seen after the introduction of the Galaxy S4. For tablets, Apple has an extremely dominant hold on the m-commerce market with almost 80% of all transactions occurring on an iPad. Second to Apple is once again Samsung, with 12.4% of tablet orders in 2014.xxv

Average e-Commerce Conversion Rate (%) Jan 2013 – Mar 2014

The data suggests both tablets and smartphones have their place in the market and should both be included in any m-commerce targeting. Mobile shoppers are quicker at making a purchase than when on a desktop, regardless of device, but smartphones take the lead with an average of 21.3 page views before purchase.xxvi

It also appears that 80% of tablet shoppers will shop on Wi-Fi networks and 67% of smartphone shoppers will as well.xxvii This is due to the fact that more people are shopping from their mobile devices on the weekends in the comfort of their homes, as opposed to during the week at work where a desktop computer is more readily available.

67% 80%


Source: Custora, 2014

This White Paper positions m-commerce as the most exciting mobile traffic vertical for publishers to focus on in 2015.

Unlike high-volatility verticals like mobile gaming, where campaigns rapidly come and go, m-commerce campaigns have long-term stability. Because m-commerce campaigns represent consumer purchases of recurring items like apparel, electronics, accessories, hotels and flights – publishers have the luxury of optimizing over long periods of time. Demand for these products is long term, so publisher profits can be, too.

A particular opportunity for publishers is to monetize international traffic through m-commerce. Over the last 15 years 800 million people have joined the middle class worldwide, driving demand for the full-spectrum of consumer goods. In the next 10 years another 1.3 billion consumers are expected to join the middle class in terms of purchasing power.

Much of that purchasing power will be expressed on a mobile phone or a tablet. Inexpensive international mobile traffic is ideal to monetize this consumer demand. In particular, traffic in developing countries like Indonesia, Brazil, Mexico and India is a strong opportunity.

With m-commerce sales predicted to reach $298 billion in 2015, it is clear the market cannot be ignored by mobile media buyers and publishers. 686 million consumers will turn to their mobile devices when looking to make a purchase online this year, and by 2018 that number is expected to be over the 1 billion mark.xxviii If you’re not monetizing this opportunity and want to learn more about the specific m-commerce offers available on the Pulse Mobile platform, please reach out via the contact information below.


Summary

Want to know more about Pulse Mobile and how to take advantage of the M-Commerce boom? With offices in Victoria, London, Hong Kong and Los Angeles, Pulse Mobile is GlobalWide Media’s full service mobile marketing business specializing in mobile commerce marketing, and we can help you get started.

Contact us today to learn more: [email protected]


Author InformationTessa Goodwin Senior Mobile Network Manager

Stephen Calder Mobile Operations Manager

January 2015

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Citations(Internet Retailer, 2014)

(PYMNTS, 2015)

(Internet Retailer, 2014)

(Mander, 2015)

(Forbes, 2013)

(Forbes, 2013)

(Internet Retailer, 2014)

(Visual Website Optimizer, 2014)

(Gesenhues, 2014)

(Custora, 2014)

(Gesenhues, 2014)

(Marketing Charts, 2014)



(Monetate, 2014)

(Custora, 2014)

(Fraser, 2014)

(ystats.com, 2014)

(Statista, 2015)

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xviii

xix

(Trend Watching, 2014)

(Ady, 2014)

(Lee, 2013)

(Bosomworth, 2015)

(Custora, 2014)

(Custora, 2014)

(Monetate, 2014)

(Siwicki, 2014)

(Siwicki, 2014)

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