Buyers are Shfiting Behavior: Will They Keep Those Behaviors After the Recession Ends?

Recessions are important not only because people spend less money, but because they sometimes change their buying behaviors, and the behaviors persist even after the immediate recession driver has past.

In the telecom space, there already is some indication this is happening in mobility services, where more users are shifting to prepaid plans, comparted to postpaid. There is evidence of a slowdown in uptake of new handsets overall, though perhaps not of smart phones in the North American market, at least.

But everyone should be prepared for other shifts, if recent sentiment is any indication.

Some 75 percent of U.S. consumers, for example, say they are making big changes in their supermarket shopping, GfK Custom Research North America says. Among the changes, more than 30 percent say they are buying more store brands. In 2006, 22 percent of respondents said they were buying more store brands.

Nearly 23 percent say they will be purchasing more private label goods next yera.

Nearly 55 percent of respondents in the GfK study say they buy private label “frequently,” up

substantially from the 41 percent who said they bought private label frequently in 2006.

About 75 percent of shoppers surveyed now say store brands are as good as national brands.

While traditional supermarkets are still the most popular place for grocery shopping, 59 percent of respondents say they now shop at someplace other than a traditional supermarket.

In 2006, 70 percent of consumers said they preferred supermarkets for their main shopping.

What people do, not what they say they will do, will prove decisive. People might not continue to behave the way they now are, they might permanently shift their behavior or they might simply express new behaviors more than they did prior to the recession.

So far there is no strong evidence that behavior in other entertainment or communications areas is changing significantly. It does not appear there has been a pronounced change in use of multi-channel video services, or some change in IP telephony adoption rates, or evidence of customers downgrading broadband services to dial-up, for example.

But it would be unusual if some permanent shifts in behavior did not occur elsewhere in the communications business, even if such changes primarily are of the market share shift variety.

A Few Tough Years for Online Advertising Ahead in EMEA, Microsoft Says

Microsoft sees a few tough years for online advertising, at least in the European, Middle East and Africa markets, with a recovery not happening until 2012 "at the earliest," says John Mangelaars, Microsoft regional VP, consumer and online International division, EMEA.

"From a Microsoft view, we don't believe budgets will go up any time soon, and I'm talking the next three years," he says.

"Not a lot of people are making money from online at the moment," he says.

http://www.clickz.com/3634074

Will ARRA Broadband Stimulus Actually Spur Much Broadband Use?

The U.S. federal government spends about $7.3 billion a year, every year, to foster broadband and telecommunications deployment. But "additional federal investments in broadband deployment...do not necessarily guarantee increased adoption," says the Government Accountability Office.

The GAO says "representatives from four organizations that provide broadband told us that between 80 percent and 90 percent of the residences in their service areas had access to broadband, but fewer than 60 percent subscribed."

For some providers, the subscribership rate was less than 40 percent.

Separately, the Pew Internet and American Life Project found that 75 percent of Americans use the Internet. About 57 percent use the Internet at home through broadband, nine percent use the Internet at home through dial-up connections and eight percent use the Internet from work or the library.

The Pew report also found that some Americans, particularly elderly or low-income persons, choose not to use the Internet, even when broadband technology is available.

A separate study by U.K. regulator Ofcoms found similar results. Even if given free PCs and broadband, 43 percent of adults who currently do not have Internet access would not use it.

http://www.gao.gov/new.items/d09494.pdf

BT Wants to Charge YouTube, Hulu, Others for Access

BT has publicly said it hopes to charge content owners for delivery of their programs over its broadband access network.

The issue has been circling around the industry for several years, and perhaps the major reasons it has not yet occurred is end user resistance, the fear that some competitors will gain share at the expense of ISPs who do charge content providers for access or other competitive responses by content owners. But the problem is very real.

A text message might consume just 140 bytes. A three-minute voice call might consume 1,800 bytes, an order of magnitude (10 times) more bandwidth than a text message.

A three-minute PC video clip might represent 33,750 bytes, another order of magnitude increase (100 times more than a text message).

A two-hour standard definition movie might represent 3.6 million bytes, an increase of five orders of magnitude (10,000 times more bandwidth than a text message).

And that's the problem. Video imposes loads far beyond anything networks have been expected to handle so far. Engineering a network for text or voice is one thing. Engineering it to handle video is something else again.

"We can't give the content providers a completely free ride and continue to give customers the service they want at the price they expect," says John Petter, BT Retail managing director.

Broadband providers such as Tiscali have been complaining for two years about the burden placed on their network by bandwidth-hungry video services.

BT says the trade-off could be quality of service guarantees for content providers.

To be sure, the issue of how to match the cost and revenue associated with broadband access is bedeviling. Consumption is growing while revenue per gigabyte is falling. Sooner or later the demand and revenue curves will converge, at which point the business model is destroyed.

Without changes in user behavior or pricing, the only question is how it takes before the converge point is reached.

European regulators also have been much more active than their North American counterparts in the area of compelling Internet service providers to assist in curbing content piracy. So it might not be surprising that BT is among the first European ISPs to publicly suggest matching video consumption with access fees.

The logic there is analogous to proposals some have made about pricing email to curb spam. Even slight charges "per message" are enough to destroy spam economics. Perhaps the same would prove true for charges to view content, one might suggest.

http://www.ft.com/cms/s/0/1c979154-5621-11de-ab7e-00144feabdc0.html?ftcamp=rss&nclick_check=1

Prepaid Wireless Interest Explodes at Virgin Mobile, TracFone, MetroPCS, Cricket, BoostMobile and Net10

Online visitors to six leading prepaid wireless sites grew 37 percent in the first quarter, compared to the first quarter of 2008, says comScore. The nearly eight million visitors represent more than four percent of the total U.S. Internet audience.

The six prepaid wireless sites include VirginMobileUSA.com, TracFone.com (América Móvil), MetroPCS.com, MyCricket.com (Leap Wireless), BoostMobile.com and Net10.com (América Móvil). 

Growth in the category was driven primarily by MyCricket.com, whose traffic was up 107 percent) and Boostmobile.com (up 105 percent), both of which more than doubled their traffic.

MetroPCS.com and Net10.com also experienced strong gains, growing 63 percent and 37 percent, respectively.

Although the marketing messages of most prepaid wireless providers target the youth market, prepaid wireless site visitation data suggest considerable interest in the plans among 35 to 64 year olds. In fact, the majority of visitors to Net10.com (60.3 percent) and TracFone.com (58.7 percent) were from this older age segment. 

Even for sites where the majority of visitors were under 35 years of age, such as Boostmobile.com and MetroPCS.com, visitors between 35 and 64 years old still comprised at least 40 percent of visitors to the site. 

While it is likely that some of this older skew can be attributed to parents purchasing phones on behalf of their children, the data nevertheless underscore the appeal of prepaid wireless beyond the youth market, comScore speculates.

Another key marketing inference can be made, though: sometimes having a clear "niche" message can rebound to a brand's overall sales. The perhaps-classic example is what Pepsi discovered several decades ago. Suffering in its market share battle with Coca Cola, Pepsi decided to rebrand as a cola for the younger generation.

You might think this "niche" strategy would lead to a limitation of market share. It didn't. Pepsi pulled even with Coca Cola. The implication is that a strong "niche" brand can pull other user segments along. 

That likely is the explanation here, as "youth" brands pull other demographics along on the strength of the value pitch.

In order to understand the marketing factors driving traffic to prepaid wireless sites, comScore also conducted an analysis of search referral activity. The results showed that while both paid and organic search are driving increased referral activity, organic search is substantially outpacing paid search referrals on the whole. 

This dynamic suggests that the underlying consumer demand for prepaid wireless services is not just being driven by paid search marketing expenditures.

A few of the sites performed particularly well in obtaining growth from organic search referrals compared to paid search referrals. 

Organic clicks to BoostMobile.com grew 310 percent, while paid clicks grew 119 percent; organic clicks to MyCricket.com grew 123 percent compared to 63 percent growth in paid clicks; and organic clicks to MetroPCS.com grew 148 percent compared to 17 percent growth in paid clicks.

http://www.comscore.com/Press_Events/Press_Releases/2009/6/Prepaid_Wireless_Services_Attract_Increased_Online_Interest_During_Economic_Downturn

Mobile Handset Market Bifurcates: Smart Phones and Low Cost Phones are Key

Annual sales of low-cost mobile handsets aimed primarily at consumers in emerging markets, with with possible implications for the prepaid segment, will grow 22 percent between 2009 and 2014, to over 700 million units, say researchers at Juniper Research.

In some ways the handset market is bifurcating, with interest focused both at the high end smart phone segment and the low end segment.

Efforts by industry players to lower the total cost of ownership for devices and services to below $5 are already reaping benefits in markets such as Bangladesh, Pakistan and India, Juniper Research says.

Meanwhile, players such as Nokia are developing invaluable content-driven services that will encourage first-time mobile users to keep on using their devices and improving their standards of living.

“With around 80 percent of new mobile users set to come from emerging markets over the next six years, it is essential that operators and vendors work together to dilute the price barriers associated with mobile technology and to provide ongoing support through the development of specific social and personal services, such as Nokia’s Life Tools suite," says Andrew Kitson, Juniper Research analyst.

The Africa and Middle East region will account for the largest annual shipment volume by 2014, with its 166 million low-cost handsets representing 24 percent of all sales that year and up by 54 percent between 2009 and 2014.

With smart phones projected to account for 27 percent of mobile device shipments in 2014 (up from 13 percent in 2008), the market is effectively polarising into two groupings: entry-level and high-end devices.

At some point, the broad trend should result in new options for lower-price smart phones, and that could open up new mobile broadband segments, including both postpaid and prepaid.

http://www.juniperresearch.com/shop/viewpressrelease.php?pr=143

134 Million Mobile Internet Users in 2013

There will be 134 million mobile Internet users in 2013, eMarketer now projects. Despite the global slowdown in new mobile phone sales, smart phone shipments will grow by 3.4 percent in 2009, International Data Corporation researchers project.

In fact, smart phone sales will grow three times faster than will sales of feature phones in 2010, IDC projects.

By 2013, Informa predicts smartphones will make up 38 percent of all handset sales worldwide, more than double their share in 2009.

“It is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Noah Elkin, eMarketer senior analyst.

http://www.emarketer.com/Article.aspx?R=1007124

Shift from "Push Marketing" to "Pull Marketing" is Well Underway

It would be hard to name just one single reason traditional media are in trouble. In fact, there are several forces at work. Users are shifting attention to newer formats: getting news online rather than from newspapers, for example.

Then there is the shift of revenue: with classifieds now cannibalized by online sources, newspaper economics no longer are viable, as display ads and subscriptions always fall short of what is needed to product the product if classified revenue is pressured.

There are more subtle forces at work as well. "Push" marketing, which tends to drive display advertising, is not working as well as it used to. Other formats offer hope of better results, and most of those are Internet mediated.

Information richness now is the order of the day, so there simply are other ways to learn things, again typically mediated by Internet and mobile mechanisms. That means less "need" for traditional media.

Also, many if not most companies have discovered that the traditional media role has blurred. Companies can themselves become content creators, aggregating their own audiences. To a large extent, it now is true that "anybody can become a content creator."

That means less money will be spent on traditional advertising, and more on creation of content, which is the foundation for "pull" marketing. Instead of pushing messages at people who may be unwilling to receive them, companies are inviting users to participate by creating interesting content in various ways.

All of those forces now are at work.

Even Free PCs and Broadband Wouldn't Get People to Use It, Ofcom Finds

Some 43 percent of adults who currently do not have Internet access would remain disconnected even if they were given a free PC and broadband connection, U.K. regulator Ofcom says.

That's an important finding as it reinforces an important fact about broadband adoption: in some cases "access" might be an issue. But it is not the only issue, and might not even be the most-important issue.

If people don't want broadband, building more access facilities will not do anything to increase uptake.

The confusion is widespread. Many seem to assume there is a "broadband problem" in the United States because lots of people do not buy it. That's a bit like assuming there is a "Lexus" problem because more people do not buy them.

Product demand, not product supply, rapidly is becoming the main barrier to further gains in broadband use.

About 30 percent of U.K. residents do not use the Internet, Ofcom's survey found. About 20 percent of people without Internet access say they will start buying some form of Internet access within the next six months.

Some 42 percent of adults said that they had "no interest" or "no need" for the Internet. About 61 percent of such non-users are older or retired, and 61 percent say they never have used a computer.

For 30 percent of those currently offline the main reasons given for that choice was financial or lack of skills.

Some have proposed that subsidizing PCs and dropping prices, plus building more networks or adding more connections, would solve the "broadband" problem.

Ofcom says that may not be true.

When asked what would change their minds about going online, only nine percent said cheaper deals would be an incentive. Free training was identified by 11 percent as a behavior changer.

But the majority (58 percent) simply said they were "not interested" in having broadband or "don't know" what would entice them to buy it.

http://news.bbc.co.uk/1/hi/technology/8091398.stm

Cable Operators Should Worry About Hulu, Not YouTube

Hulu is a bigger threat to cable operators than YouTube is, argues Bernstein Research analyst Jeffrey Lindsay, who has been surveying hundreds of consumers about their internet TV viewing habits.

The reason is that most consumers typically indicate some willingness to pay for professional content, but few say they would pay for user-generated content. And that's where Hulu emerges as a strategic threat to other distribution formats, compared to YouTube, which remains a haven for the sorts of video people say they don't want to pay for. 

Hulu has rights to most of professional TV content, is getting viewer traction and most importantly has an advertising format brands understand.

The problem with YouTube is that much of the video is not the sort of fare most advertisers want their brands associated with. 

The majority of respondents polled by Lindsay said they would be willing to pay for professional content, for prices ranging from $1 for a TV show to $5 for a movie. 

But most would not pay for user-generated content. 

The Internet video seems well established, though. Some 74 percent of respondents said they watch internet TV on their computer monitors rather than connecting their PCs to the TV. 

Internet TV viewing might for that reason be viewed as ancillary to traditional TV viewing, rather than competitive. But users also watch shorter clips than on their TV, a 30-minute TV show or less in most cases.

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/09/AR2009060900941.html

Video Will Be 90% of Consumer IP Traffic in 2013

By 2013, annual global IP traffic--driven principally by video--will grow more than 500 percent from current levels, Cisco now estimates. ideo. In 2013, the Internet will be nearly four times larger than it is in 2009. By year-end 2013, the equivalent of 10 billion DVDs will cross the Internet each month.

Cisco forecasts that 90 percent of consumer IP traffic, a majority of total IP traffic, will be video in 2013.

In 2013, Internet video will be nearly 700 times the U.S. Internet backbone in 2000.

Also, video communications traffic growth is accelerating. Though still a small fraction of overall Internet traffic, video over instant messaging and video calling are experiencing high growth. As a result, video communications traffic will increase tenfold from 2008 to 2013, Cisco says.

Real-time video is growing in importance. By 2013, Internet TV will be over four percent of consumer Internet traffic, and ambient video will be eight percent of consumer Internet traffic.

Live TV also has gained substantial ground in the past few years. Globally, P2P TV is now slightly over seven percent of overall P2P traffic at over 200 petabytes per month.

Video-on-demand traffic will double every two years through 2013, with consumer IPTV and CATV traffic growing at a 53 percent CAGR between 2008 and 2013, compared to a CAGR of 40 percent for consumer Internet traffic.

Cisco also predicts that mobile data traffic will also be overtaken by video, reaching 64 percent of total mobile IP traffic by 2013.

Cisco expects mobile video to grow from 33 petabytes a month in 2008 to 2,184 petabytes (or 2 exabytes) a month in 2013, which represents a 131 percent compound annual growth rate.

Peer-to-peer is growing in volume, but declining as a percentage of overall IP traffic, Cisco says. P2P file-sharing networks are now carrying 3.3 exabytes per month and will continue to grow at a moderate pace with a compound average growth rate of 18 percent from 2008 to 2013.

Other means of file sharing, such as one-click file hosting, will grow rapidly at a CAGR of 58 percent and will reach 3.2 exabytes per month in 2013.

Despite this growth, P2P as a percentage of consumer Internet traffic will drop to 20 percent of consumer Internet traffic by 2013, down from 50 percent at the end of 2008.

Google: One Billion Video Streams a Day?

Google reportedly has confirmed that it serves up one billion video streams a day, far more than most had guessed. That is four to six times higher than the best industry estimates! 

Until now, Comscore, for example, has estimated that Google streams 225 million videos a day, or about seven billion a month. Nielsen has estimated Google's video streams at 5.5 billion a month. 

Based on an assumption that Google represents about 40 percent of global video streams, that implies global usage of about 80 billion streams a month, again, far higher than most had supposed. 

What remains a challenge is the business model. To some extent, user interest in online video does drive demand for bigger ISP access pipes. 

But highly customizable, targeted episodic content underwritten by advertisers, which was supposed to be the model, remains just a hope. Hulu is essentially legacy linear TV with online distribution and fewer ads. Great for viewers, not good for content owners or distributors. 

Some criticize brands or agencies for being too lazy to learn how to use online video, but there is a simple explanation for why more doesn't get done in some digital media realms: it sometimes isn't a rational use of one's time to do so. 

About 11 percent of advertising budgets are allocated for all forms of online media, according to eMarketer. So in many cases, a time-pressed marketer would be hard pressed to justify spending quite a lot of time on 11 percent of the spend when a smaller amount of time can be spent optimizing nearly 90 percent of the spend. 

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/09/AR2009060900324.html

$13 Billion Mobile Apps to be Sold in 2013

Mobile Internet access will see significant gains over the next five years, with the number of mobile Internet users reaching 134 million in 2013, says  eMarketer. By 2013, Informa predicts smartphones will make up 38% of all handset sales worldwide, more than double their share in 2009.

And means growth is use of mobile applications. Analysts at Piper Jaffray estimate that combined spending on consumer and business mobile applications will top $13 billion worldwide by 2012, a nearly fivefold increase over 2009.

Since advertising and marketing efforts likewise ultimately follow people to where they are and what they are doing, “it is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Noah Elkin, eMarketer senior analyst.

http://www.emarketer.com/Article.aspx?R=1007124

Has Twitter Growth Suddenly Flattened?

There's something unusual going on with Twitter traffic, it appears. Unique Visitors to twitter.com increased to 19.4 Million in April, surpassing the New York Times for the first time.

Oprah’s first tweet on April 17, 2009 delivered the highest Daily Reach ever to the site, with nearly two percent of all Americans online visiting Twitter.

But there also is data suggesting Twitter traffic has flattened, growing just 1.47 percent (up to 19,728,619 monthly visitors) in May 2009, according to Compete.com.

One possible explanation is that the pool of people with an immediate resonance with Twitter already have joined. Monthly visits to Twitter have increased by 6.99 percent, up to 134,536,240. That might be explained by heavier use among current users, since new user growth apparently has flattened.

10% of Tweeters Produce 90% of Tweets

The top 10 percent of prolific Twitter users account for over 90 percent of tweets, say researchers at Harvard Business School. So what does that mean? Maybe less than you would think.

Some will argue it shows Twitter actually isn't actually as popular as it seems. And at least one other study shows a very-high churn rate of new Tweeters.

"Currently, more than 60 percent of U.S. Twitter users fail to return the following month, or in other words, Twitter’s audience retention rate, or the percentage of a given month’s users who come back the following month, is currently about 40 percent," says David Martin, Nielsen Wireless VP.

Unless that churn rate changes, Twitter ultimately will reach only about 10 percent of Internet users, Nielsen Wireless predicts. A company, service or application cannot churn 60 percent a month and expect any different conclusion.

Twitter's big problem seems to be that so many people do not find it useful. The fact that 90 percent of Tweets come from 10 percent of users is in fact not surprising or unusual.

Others will suggest that the highly-skewed tweeting pattern means Twitter activity is more like a one-way, one-to-many publishing service more than a two-way, peer-to-peer communication network. But something similar to this is true of blog posting as well. A small percentage of people supply most of the posts.

A typical social networking site might have the top 10 percent of users account for 30 percent of all activity as well.

At Wikipedia, the top 15 percent of the most prolific editors account for 90

percent of Wikipedia's edits.

The point is that it is user churn, not the disparate distribution of tweets, that are of significance.

The Pareto principle, colloquially referred to as the "80-20 rule" or the "long tail,"

occurs widely in both human and natural domains.

Among Twitter users, the median number of lifetime tweets per user is one. This translates into over half of Twitter users tweeting less than once every 74 days. That would not be unusual if tweets follow the Pareto rule, and they seem to.

http://blogs.harvardbusiness.org/cs/2009/06/new_twitter_research_men_follo.h

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