Mobile Handset Features Strongly Affect User Engagement

As you might expect, less-developed handset features make ease of mobile Web navigation a key issue for feature phone owners, while smart phone owners are less concerned. That said, speed of page loading is the top issue for both smart phone and feature phone users.

On the heels of a study that suggests less ad engagement with mobile advertising by smart phone users, another study suggests nearly-identical levels of engagement with Internet activities. The studies do not contradict each other, but merely suggest that high levels of engagement with mobile content do not necessarily lead to high levels of engagement with mobile ads.

A study by Chitika, a Massachusetts-based online advertising network, suggests mobile users are approximately half as likely to click on an advertisement as non-mobile users. The findings are based on a sample of 92 million impressions.

The new InsightExpress study found that 68 percent of smartphone users reported feeling positively engaged while using the mobile Internet, second only to the 70 percent of users who were positively engaged while on a computer.

Only 47 percent of feature phone users reported positive mobile site engagement, as you might expect, given the more-limited capabilities of feature phones, compared to smart phones.

These results indicate that smartphone users are as engaged with mobile Internet content as those who are browsing the Internet on their computer. The Chitika results suggest that, for any number of reasons, mobile advertising is not yet optimized.

When mobile Internet users were asked to identify the top three elements that most influence their decision to return to a mobile Internet site, they said the top three issues were the speed at which the site loads, the ease of navigation on the site and the quality of the content on the site itself.

Service providers largely control the first variable, site designers and handset manufacturers the second variable and content providers the third.

Among mobile Internet users, several small but telling differences were revealed when comparing smart phone owners to feature phone owners. While both groups prioritized the speed at which a mobile site loads, smart phone users looked next at the quality of the content, ranking ease of navigation as less important.

In contrast, feature phone users found ease of navigation almost as essential as their number one concern, how fast the mobile site loads.

These differences can be explained by the limited navigation capabilities available with feature phones, making simple interfaces an absolute necessity. Smart phones, with their advanced browsers and inputs, allow for more complex page navigation.

Mobile Web site features that had the least impact on a users decision to make a return visit were the absence of advertising, the ability to personalize, and the number of links, videos or images on the site.

70% of Marketers Shifting Spend to Online Media, Survey Finds

Leading companies have stepped up their emphasis and focus on marketing accountability practices, according to a new survey by the Association of National Advertisers and Marketing Management Analytics.

About 75 percent of respondents reported a decrease in their marketing budget in 2009 while 67 percent said they were expected to drive more sales with the same or lower budget.

Fully 92 percent of respondents said they are taking steps to improve marketing effectiveness without spending more in 2009. That is leading to a shift of spending away from legacy channels and towards digital media, as 70 percent of respondents indicated they are doing so.

Respondents say their firms also are shifting advertising investment from brand-building initiatives to promotional marketing. About 53 percent of respondents indicated their firms are doing so.

Firms also are shifting their spending to lower-cost media. This means use of local instead of national TV ad buys, or 15-second instead of 30-second ad buys. About 38 percent of respondents said they were taking such measures.

Another direct result is greater emphasis on accountability and more collaboration across marketing, finance and research teams.

Some 32 percent of respondents said their teams included representation from marketing, finance and research, up from 22 percent in 2008.

About 17 percent of respondents said they use "what if" scenarios, up from eight percent in 2008.

Some 43 percent of respondents also said they use customer lifetime value models as an accountability technique, up from 27 percent in the prior year's study.

Avaya Buys Nortel Enterprise Solutions

Avaya is acquiring Nortel Enterprise Solutions for $900 million in proceeds to Nortel and an additional pool of $15 million reserved for an employee retention program.

The deal vaults Avaya clearly into the number one position in the enterprise telephony market, with a combined market share of 25 percent. Cisco, after battling Avaya for years for enterprise telephony leadership, now finds itself number two with 16 percent in market share, and facing a significantly more challenging competitor with the combined Avaya-Nortel, says the Yankee Group.

To the extent that the "unified communications" market overlaps directly with the "business phone system" market, the deal also affects market shares for unified communications solutions as well.

Global Bandwidth Demand Grows 79% in 2009

Few things in life are as dependable as annual increases in Internet traffic globally.

2009 has been no exception, in that regard. So far this year, global bandwidth consumption is up 79 percent, higher than the annual increases of about 60 percent in most prior recent years, according to TeleGeography.

News Business Hit by More than Internet Disruption

Most observers would agree that the Internet is changing the news business much as television news and then cable news changed it in past years. "Audiences now consume news in new ways," says the 2009 "State of the News Media" report by the Pew Project for Excellence in Journalism.

That isn't unusual. Many other businesses, including retailing, communications, music, video, marketing, advertising and ultimately even education face fundamental revenue challenges from the Internet and IP services.

The point is that the Internet and IP create new functional substitutes for older ways of doing things. "They hunt and gather what they want when they want it, use search to comb among destinations and share what they find through a growing network of social media." the study says. And though revenue decline is most measurable evidence of decline, it might not be the only indicator of note.

The public’s assessment of the accuracy of news stories is now at its lowest level in more than two decades of Pew Research surveys, and Americans’ views of media bias and independence now match previous lows, says the Pew Research Center for the People & the Press

Just 29 percent of Americans say that news organizations generally get the facts straight, while 63 percent say that news stories are often inaccurate. In the initial survey in this series about the news media’s performance in 1985, 55 percent said news stories were accurate while 34 percent said they were inaccurate. That percentage had fallen sharply by the late 1990s and has remained low over the last decade.

Similarly, only about a quarter (26 percent) now say that news organizations are careful that their reporting is not politically biased, compared with 60 percent who say news organizations are politically biased. And the percentages saying that news organizations are independent of powerful people and organizations (20 percent) or are willing to admit their mistakes (21 percent) now also match all-time lows.

"Much of the growth in negative attitudes toward the news media over the last two years is driven by increasingly unfavorable evaluations by Democrats," the poll suggests. On several measures, Democratic criticism of the news media has grown by double-digits since 2007. Today, most Democrats (59 percent) say that the reports of news organizations are often inaccurate; just 43 percent said this two years ago.

Democrats are also now more likely than they were in 2007 to identify favoritism in the media: Two-thirds (67 percent) say the press tends to favor one side rather than to treat all sides fairly, up from 54 percent. And while just a third of Democrats (33 percent) say news organizations are “too critical of America,” that reflects a 10-point increase since 2007.

Readership, and hence revenue are dropping for obvious reasons: people get their news other ways. But perhaps newspaper readership also is down for less tangible reasons.

Potential Impact of "Wireless Only" Packaging

It's too early to say whether Sprint Nextel's new "Any Mobile, Anytime" program will revolutionize mobile market packaging and pricing the way AT&T's "Digital One Rate" did in abolishing the distinction between local and long distance calling in the broader mobile business.

It's too early to say whether a rumored or possible merger between T-Mobile USA and Sprint Nextel will occur, creating a strong third carrier to challenge AT&T and Verizon Wireless.

Likewise, it is too early to know whether a strong "wireless-only" carrier can compete effectively against integrated carriers with wireline and wireless assets.

But there are glimmers. Sprint Nextel's new "call any U.S. mobile, in the United States, for one flat fee essentially merchandises voice services to secure new data plan revenues. The new plan attempts to capitalize on the growing population of mobile numbers, the growing number of users who only use mobiles and who also value Web services and mobile access to those services.

The new plan also provides a direct incentive for mobile users to call other mobile numbers as opposed to landline numbers that might reach the same called party.

For some segment of the buying public, the new plan might also nudge some customers away from prepaid wireless, especially those who like the idea of a fixed monthly payment and also want access to many of the latest handsets, something prepaid plans do not offer.

Under the new plan, the potential incremental cost of a Sprint Nextel postpaid calling plan and an unlimited prepaid plan is about $20 a month.

The problem for most potential buyers is that most users probably do not have a good understanding of what percentage, and what number, of monthly calls actually terminate on wireless numbers. That understanding is helpful as the $70 data plan Sprint Nextel offers comes with 450 landline minutes. If half of any given user's calls are terminated on mobiles, that is equivalent to a standard calling bucket of about 900 minutes.

Taken as a whole, Sprint Nextel's marketing initiatives will tend to push consumers in the "wireless only" direction. A potential merger with T-Mobile would create a huge new company with a vested interest in pushing such initiatives even further.

Will T-Mobile and Sprint Nextel Disrupt U.S. Mobile Market?

It long has been clear that both T-Mobile USA and Sprint Nextel would have to do something substantial to dramatically change their lagging market share in the U.S. mobility market.

Verizon Wireless is the current leader with about 32 percent market share, while AT&T has about 29 percent, according to wireless analyst Chetan Sharma. Sprint Nextel has about 18 percent share, down from about 25 percent a couple of years ago, while T-Mobile USA has about 12 percent share.

A T-Mobile USA merger with Sprint Nextel would create a single company with perhaps 30 percent share, creating a wireless market with three "evenly-matched" contestants. The big difference is that AT&T and Verizon would continue to operate wireline assets, while a new company would operate as a wireless pure play.

So now there are reports that Deutsche Telekom, T-Mobile USA's parent, will launch some sort of effort to merge with Sprint Nextel or otherwise structurally change its market position.