By Chantal Tode
November 9, 2012
Growth rate slows for mobile ad budgets
With Samsung’s Galaxy SIII outselling the iPhone in the third quarter, this raises the question for marketers of which smartphone offers greater potential as an advertising vehicle?
The iPhone has traditionally been a first choice for marketers because it offers a strong user experience and the kind of well-heeled customer base that marketers covet. However, the Galaxy SIII offers many of the same qualities of the iPhone – and even some that is does not – suggesting it may be time for marketers to consider strategies for reaching these users.
“More marketers are absolutely going to be targeting SIII users,” said Dan Roche, vice president of marketing at TalkPoint, New York.
“We will probably see more marketing that isn’t iPhone focused, but the majority of smartphone users are still iPhone users,” he said. “These stats are sales-based, and the fact is, there are years’ worth of iPhone users out there that haven’t upgraded from the iPhone 4 and above.
“That being said, I think advertisers are going to better target smartphone users in a more generic sense. There will be more apps for both Android and iPhone and less exclusive deals with iTunes and the App Store.”
The Samsung Galaxy SIII was the best-selling smartphone in the third quarter, with Samsung having shipped 18 million compared with the 16.2 million units of the iPhone 4S that Apple shipped, according to a new report from Strategy Analytics. This gives the Galaxy SIII an 11 percent share of all smartphones shipped globally during the third quarter.
The success of the Galaxy SIII is attributed to its large touchscreen display, extensive distribution and generous operator subsidies.
The numbers suggest that some consumers held off purchasing a new iPhone in anticipation of the new iPhone 5, which came out at the end of the quarter. Strategy Analytics predicts the Galaxy SIII’s position as the top smartphone will be short-lived now that the iPhone 5 is in the market.
The iPhone 5
Samsung’s success with the Galaxy SIII gives marketers several reasons to consider marketing to its customer base.
For one, the large number of Samsung Galaxy SIII’s being sold could make it easier for marketers to address the fragmentation issue on Android and give them a way to reach a wide swath of Android users with just one device.
“The huge number of fragmented Android devices is a challenge and issue for advertisers in general,” said Howie Schwartz, CEO of Human Demand. “It is difficult to plan and manage Android campaigns across so many long-tail devices.
“Having key devices like the SIII with momentum and large market share simplifies campaign setup as advertisers can focus on fewer Android devices,” he said.
Mr. Schwartz reports there has been growing interest among marketers in targeting specific devices on Android. For example, Kindle Fire has been a device that some marketers have targeted specifically.
“We anticipate advertiser demand around specific Android device at the peak of Q4 and through 2013 specific device targeting interest will grow,” Mr. Schwartz said.
Locked-in customer base
Both the iPhone and the Samsung Galaxy SIII offer larger screens, which means there is more real estate for marketers and ads are more visible, increasing the chances for high click-through rates.
Samsung has also developed a brand affinity similar to what Apple has achieved.
“The installed base of Samsung Galaxy SIII is growing and will be fairly locked-in for future iterations similar to iPhone family and hence marketers should try to design apps, ads and campaigns targeting this attractive consumer segment in coming months,” said Neil Shah, senior analyst for the global wireless practice at Strategy Analytics, Newton, MA.
While both present marketers with a chance to make ads more interactive and touch friendly, only the Galaxy SIII has embedded NFC capabilities.
Maps-related marketing and apps may also be better suited for the Galaxy SIII or other Android devices, since iOS 6 has replaced Google Maps with Apple Maps, a service that so far is not meeting customer expectations
“There are certainly opportunities in NFC, which is one of those things that is still in the early phases of development,” said Noah Elkin, principal analyst at eMarketer, New York . “Any payment or marketing apps that are related to or require NFC, this is something you could do through the Galaxy.
“Certainly anything related to maps, at this stage, Android and Google have the upper hand,” he said.
The numbers also suggest that marketers may want to consider developing apps for iPhone and Android simultaneously instead of the iPhone-first approach that many take.
“Clearly Samsung and Apple are developing in serious competitors, if not arch rivals, in the mobile and portable device space,” Mr. Elkin said.
“Even though the Android universe, to which Samsung is a key contributor, is larger than the iOS universe, particularly on the smartphone side, there is still the perception that you develop first for iPhone and then for Android secondarily,” he said.
“Marketers should, at this stage, not be thinking of it as an either or but it is really both and. As long reach remains an important attribute, you need to think beyond one platform and one device.”
While Galaxy SIII’s features are one reason for its success, some have also pointed to an ad campaign being run by Samsung that depicts iPhone users as not on the cutting edge of technology.
While Samsung has an opportunity to build itself as a marketing platform, it will still need to prove that it can deliver a return on investment for marketers.
“I think that advertising on the Galaxy SIII presents an exciting opportunity,” TalkPoint’s Mr. Roche said. “Normally going up against Apple would be rather daunting, but I think right now Samsung has an opportunity.
“This is the first realistic competition to the iPhone. The feedback and reviews of the phone have been stellar, and Samsung has clearly already acknowledged their target in their current advertising that mocks the fanboy side of the iPhone while pointing out the features the SIII boasts over the iPhone,” he said.
Chantal Tode is associate editor on Mobile Marketer, New York