Industry observers watching Google and Facebook are constantly evaluating the ad rates and activity for online advertising in general and increasingly are looking at the impact or lack thereof of mobile advertising, including its impact on traditional online ad and click rates. After all, this is how they get paid for offering us a “free” service.
In fact, anecdotally, the surge in Facebook’s stock price recently was in no small measure attributable to the fact that people are starting to click on ads on their smartphones and tablets. However, it’s one thing to click on ads, but from a business perspective, what advertisers want to know is:
- Are people increasing their online shopping?
- As mobile devices become the communications capability of preference are they using those devices as convenient platforms for shopping as well?
As the latest IBM Retail Index shows, the answer to both questions is yes.
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Highlighting convenience of clicking and touching
IBM’s Retail Index found that, while summer set in the U.S. and the temperature rose, so did consumer online spending in the second quarter. Led by big gains in health and beauty products and home goods, mobile continued to dominate with mobile’s percent of sales reaching 19.4 percent, up 28 percent compared to 2Q 2012 for U.S. Retail overall. In comparison, in-store sales rose 4.6 percent in 2Q according to the U.S. Department of Commerce’s Census Bureau report.
Here are a few numbers to contemplate from the IBM Online Retail Index:
- Online shopping growth outpaced in-store by more than three times -- 15 percent to 4.6 percent.
- Mobile sales near 20 percent, a 28 percent increase over 2Q 2012.
- Health and beauty sales increased more than 55 percent over 2Q 2012.
- Summer clearance drove home goods up by more than 56 percent year-over-year (YoY).
IBM provided some granularity and explanation for the increases which include:
Housing Recovery Fuels Home Goods Online Spending: New home sales are fueling more home remodeling projects, with online home goods sales up 56 percent YoY. Plus, average order value online reached $413.23, a 26 percent increase over 2Q 2012, with the iPad generating more traffic than any other mobile device.
End of Season Discounts Fuel Apparel and Health and Beauty Shopping, as Retailers Prepare for Back-to-School: As retailers clear out their summer stock consumers are reaping the benefits of deeper discounts and have been quick to click. Online apparel sales grew 21 percent , Health and Beauty saw gains of 55 percent YoY, although average order value was down almost 5 percent from 2Q 2012 which IBM attributes to steeper discounting than last year.
Retailer investment in mobile technology fuels online spending:As online retailers look to take a MobileFirst approach to customer shopping, the number of consumers using a mobile device to make a purchase reached almost 20 percent in the second quarter – up nearly 30 percent compared to the same period last year. Consumers are using their mobile devices to research products at home and in the store – the number of consumers using a mobile device to visit a retailer’s site reached nearly 27 percent, up more than 35 percent year over year.
In what may speak volumes about user profiles -- or could change as the iPad gets more competition -- IBM also found that Apple dominates the mobile device experience. In fact, the iPad generates almost 11 percent of retail traffic – a 60 percent increase over Q2 2012, and, interestingly, the iPhone is a close second.
The IBM numbers track with those from other studies looking at consumer spending. They also point to the impact of what is called the two-screen experience (I see something on TV and investigate on my mobile device while continuing to watch the TV), and the need for merchants to use mobile to invest in enhancing the in-store experience by leveraging mobile.
Admittedly, the information gathered is about the U.S., whose economy is slowly recovering and thus it may be difficult to draw too many concrete conclusions from the data given as to what is going on in the rest of the world. However, rising consumer confidence in general seems to be matched with rising consumer confidence in using electronic devices -- PCs and laptops as always but, increasingly, personal devices -- not just for research but transactions. And that is a trend that is unlikely to be altered and could accelerate was mobile payments become more commonplace.
The question that remains open is whether the steamroller that is Android can put a dent in Apple’s supremacy for generating online mobile transactions. It would be a gross under-statement to say there is a lot riding on this, and it would not be surprising to see dramatic shifts in the Index on this front even in the next quarter. Apple and Google certainly have a lot to think about as a result of these findings along obviously with their ecosystem partners. Our fingers seem to be just warming up.
Edited by Rich Steeves