Ho-hum, another day, another chart showing Android's growing dominance. Nielsen says Android was the most popular OS on smartphones in the first half of the year and Apple and RIM were in a "statistical dead heat for second place." This data only includes one month when the iPhone 4 was on the market. Perhaps the iPhone 4 will goose sales. This is also U.S. only, which means the iPhone isn't available to ~60% of the market. While this looks good for Android, if Apple does strike a deal with Verizon and T-Mobile, it could be a completely different story.

According to August data from The Nielsen Company, Android has passed the iPhone and BlackBerry to become the popular operating system for people who bought a smartphone in the past six months. Over the past six months, 32 percent of new smartphone owners chose an phone with an Android operating system, while 25 percent chose the iPhone OS and 26 percent chose RIM’s Blackberry smartphones. The data, which covers a period that includes a full-month of iPhone 4 availability, also shows that Blackberry still holds largest share of the smartphone market with 31 percent of the market. Twenty-eight percent of smartphone owners have Apple iPhones, compared to 19 percent who have Android devices. While consumers may have a peaked interest in Android phone, Apple’s iPhone marketshare remained steady from Nielsen’s June findings. While Apple’s marketshare is still up by a significant amount (ten percentage points) over Android phones, it’s impressive that Android is surpassing the iPhone in terms of new interest and recent adoption.

The iPhone has been slowly losing its dominance in the minds of marketers as Google’s Android operating system gained share over the past year or so. While the complication of creating apps for multiple operation systems has been an issue for marketers for some time, but as Android becomes a major player in the app world marketers may also have to start thinking about the way those apps are monetized and how that fits in with the norms of different user groups.

There is evidence across several studies that Android users are less willing to pay for apps than their iPhone-loving counterparts. AdMob found in February that while 50% of iPhone owners worldwide purchased at least one paid app each month, just 21% of Android users did the same. Credit Suisse reports that Android is the only smartphone operating system where users have downloaded a majority of free apps. Just 43% of apps downloaded by Android users in the US were paid, compared with 75% of apps downloaded by owners of Apple devices.

According to a May 2010 report from Distimo, an analytics tool for mobile developers, those percentages track closely with how many apps overall are offered for free—or for a fee—in each app store. Again, the Android Market is the only store with a majority of free apps.

The rise of an operating system whose owners rely on free apps could mean a user base that is more open than average to receiving the advertising support necessary to support those apps. In-app advertising and app sponsorships tend to be especially effective forms of mobile marketing, and are also found less annoying or intrusive by mobile users. An expanding base of Android users may mean not only a larger audience of smartphone owners, but also a growing share of that audience receptive to marketing messages that support their app habit.

Posted By: Nicole Perrin

The decision basically bets that advertisers will put up with the continued fragmentation of ad sizes and requirements

The Interactive Advertising Bureau has decided the ad market for mobile applications is too new for standards. The decision basically bets that advertisers will put up with the continued fragmentation of ad sizes and requirements in return for the ability to experiment in a still nascent medium. "Any effort to promote simplification of ad formats must make it easier or cheaper to produce creative for the medium, without stifling creativity of those designing content or advertising for that medium," the IAB wrote in a report released today. "At this stage, the in-app ad landscape is too new and dynamic to be ready for creative standards." The IAB based its decision to take a pass on standardization on a marketplace study that gathered feedback from app platforms and publishers. It found a fractured market that is inching in the direction of consistency.
 
Standard display sizes are emerging. For example, the 300-by-50 pixel display ad is accepted at a majority of the 14 publishers surveyed. There are also many publishers offering wider ads that display better on iPhone screens. Yet, other areas are more unsettled. Expandable formats vary, the IAB noted. File weight limits differ wildly from publisher to publisher, ranging from 5 KB to 15 KB in the IAB survey. Newer opportunities like the iPad increase the variables. The IAB found a mix of standard sizes from the Web with common mobile sizes -- and even a couple publishers offering super-sized ads that take advantage of the Apple tablet's larger screen.
The process becomes even more complex when taking into account various devices, and the IAB found one publisher offering formats targeted to specific BlackBerry models. The IAB traditionally has served as the Internet industry's clearinghouse for standards and guidelines. It's a role that could come into question as digital advertising moves from the desktop into wireless, TV and other areas. The mobile industry, for instance, already has standards set by the Mobile Marketing Association. The MMA said it modeled the guidelines on what the IAB devised for Web display advertising. (The MMA endorsed four graphical sizes and one text unit at the 6:1 and 4:1 aspect ratios.) An IAB rep said the two organizations would work together and "were we to issue official guidelines around formats, we would involve them in every step of the process." For now, the IAB is encouraging basic best practices, including building mobile-specific landing pages for campaigns, keeping creative file sizes low, and building specifically for different devices. The final best practice should ensure the mobile ad market remain fractured for some time to come.

 

Mobile search could grow from 9 percent of all queries this year to 20 percent by 2012, estimates RBC analyst Ross Sandler in a new report issued today. There is still a huge gap between mobile’s share of overall search queries and its share of search advertising. Sandler estimates that mobile will still represent less than 2 percent of search ad budgets this year, compared to the 9 percent overall share. But he thinks that gap can narrow and that mobile search advertising can be a $2 billion to $3 billion market in 2012. His assumptions seem a bit aggressive on the ad revenue side. There might always be a gap between mobile search share and mobile search ad spending because of the relative effectiveness of search ads on PCs versus on mobile phones. But Sandler does a deep dive into mobile search advertising and comes up with some compelling reasons why that gap should at the very least begin to narrow just as mobile search starts to take off thanks to the growth of large touchscreen devices such as the iPhone, iPad, Android, and Blackberry.

One big advantage the new generation of smartphones have over PCs in terms of search advertising is that the screen real estate devoted to search ads is much bigger. A single search ad on a PC takes up about 4 percent of the screen real estate, whereas a single search ad on a smartphone takes up about 20 percent of the screen. The relatively larger size of the ads results in higher click-through rates on mobile (as much as 3 to 5 times as much).  On the iPhone, one search ad takes up 22 percent of the screen, and if two search ads are served up it takes up nearly half (48 percent).  For Android, those numbers are 18 percent and 38 percent for one and two search ads, respectively.

Sandler tested the same keywords across different devices (an iPhone, Android Nexus One, Blackberry, and aPC), and found that the average, for both the iPhone and the Nexus One, was 1.1 paid search results per query, compared to 9.2 search ads per query on a PC.  Searches on Blackberries showed hardly any paid results.

Another key driver for mobile search revenues should be the growth of local ads.  Sandler found that the ratio of localized or geo-targeted ads to non-local ads is still low and expects that to grow as advertisers learn how to geo-target their search ads.  Geo-targeted ads should also perform better, leading to higher mobile search ad revenues.

So how many people actually conduct searches on their smartphones? According to comScore, half of all smartphone owners conduct at least one search per month, 20 percent search once a week, and 11 percent search almost daily (which is about the same as the percentage of people who search on feature phones every month).

This year, Sandler estimates there will be 374 million people with smartphones, increasing to 766 million in 2012.  Consequently, the number of smartphone searches will grow from 157 billion to 586 billion (up from 35 billion two years ago).  The comparable number of searches on PCs this year will be 1.3 trillion, growing to 1.6 trillion in 2012.  Any way you look at it, mobile searches will become a significant portion of total searches within two years.  But how much will those searches be worth?  That is still a guessing game at this point.

In recently gathered data from comScore, we see that Google and Apple are neck and neck — with Google showing the slightest of leads — in the percentage of users who access social media applications from their mobile devices. Ever since the advent of the smartphone and native mobile applications, using and enjoying social sites from a mobile device has been increasingly common and increasingly important to users. We look forward eagerly to new and better ways to access our Twitter and Facebook accounts while on the go.

comScore’s stats show that 64.9% of Android OS smartphone users are accessing social networking sites from their mobile devices. This number dwindles slightly to 64.3% for iPhone users — a nearly negligible difference.

These two leaders are trailed by RIM, whose BlackBerry users are as likely to access social services as not. Palm, Symbian, and finally, Windows Mobile phones round out the data set; each of these user groups showed numbers between 36 and 40%.

Overall, 52% of smartphone owners are using their devices to access their social media accounts, while only 11% of feature phone users are doing so. Without doubt, the smartphone set will continue to increase their use of social sites on their phones as networks, apps and the services themselves improve and adapt for mobile use.

What do you think gives Google () and Apple their edge in the world of mobile social access and communication? Is it the apps? The data plans and networks? The devices themselves? Let us know your conjectures in the comments.

Here's an interesting set of charts from Nielsen analyzing the most popular apps on each smartphone platform. As you can see, app usage is pretty uniform across the board. Smartphone users love Facebook, Maps, Pandora and the Weather Channel. There's only one really glaring exception across the platforms. Apple's iPod and iTunes are huge on the iPhone. On BlackBerry and Android, music players aren't very hot. This explains Google's purchase of Simplify Media to build a better music player and music experience for Android.

The last six months of jockeying between Google and Apple have put a spotlight on mobile advertising. The news has been such that one could be forgiven for thinking that these two companies have the only platforms needed to reach consumers on mobile devices. Both are certainly making significant investments to be consumers' platforms of choice. They have spent over $1 billion acquiring mobile advertising companies, and released new devices to create new product categories and distribution channels (e.g., Nexus One, iPad). Not surprisingly, such moves have attracted in-depth Federal Trade Commission investigations along the way. While the convergent timing may be coincidental, it is emblematic of a broader struggle over the future of advertising.

But if, as Gartner, Pew and Morgan Stanley predict, more users access the Web through mobile devices than PCs in as soon as three years, then marketers will need solutions beyond these platforms to maximize reach and engagement with their target audiences -- audiences that use, and will continue to use, different technologies and networks. And ultimately, because advertisers care more about reach and engagement than the particular device or OS, they'll need to embrace open solutions that work seamlessly across any mobile device running any operating system.

Both Apple and Google are working to shape the mobile Web in their own image. Apple's mobile platforms enforce a "walled garden" of content and applications, controlled and distributed exclusively by Apple. In such an app-centric environment, Apple seeks to reshape the mobile Web as it sees fit. Adobe, for example, has already abandoned Flash efforts for the iPhone and iPad after recent restrictions imposed by Apple. And Apple's iAd advertising strategy seems focused on rich media delivery for premium brands.

In an opposite strategy, Google's Android platform for phones and tablets -- including its network-agnostic Nexus One -- seeks to break mobile's long history of failed walled gardens with an environment as open as the PC, friendly to all Web and client applications. Adobe Flash, to continue the previous illustration, will be supported by upcoming versions of Android. Google's advertising strategy, given auction marketplaces like Adwords and Admob, seems long-tail focused. But, according to comScore last quarter, Apple represented only 4 percent of the U.S. devices at the end of last year. Android held less than 1 percent. Nielsen reports that U.S. mobile Web reach is now 72 million, a critical mass. Clearly, to communicate with that audience, mobile advertising campaigns need to go beyond Apple to handsets from Motorola, Nokia, Samsung, RIM (BlackBerry) and LG, all of which have a larger installed base than Apple.

The promise of mobile is a more effective digital advertising delivery system given the personal nature of the medium. As it further delivers on its promise -- using consumer intelligence to target people -- the audience starts to narrow, particularly if one is targeting a specific mobile device. Therefore, campaigns need to reach across multiple platforms to aggregate large enough groups of users. Mobile Web publishers, application developers and advertisers want advertising solutions that work across all handsets and operators. Fragmentation -- specifically different standards, technology platforms, and capabilities from handset manufacturers and operators -- has been another large barrier to mobile advertising adoption in markets around the world.

Android alone, for example, suffers from fragmentation with four versions since its first product shipped in October 2008. These different operating systems have different capabilities (e.g., multitouch), requiring application developers to choose whether to adapt or not support. Many long-tail publishers will use Apple's iAd service by default because it is embedded in the application development kit. Google is likely to embed such services with Android, followed similarly by other phone platform companies (e.g., RIM, Microsoft, Palm). Further, many mobile operators have already announced application storefront offerings that include embedded ad network services. With more users moving to mobile devices every day, marketing messages and advertiser spending are sure to follow. Marketers need to embrace open solutions that work across operating systems.

-By Jorey Ramer

There's only 2 million iPads in the market, but the iPad's share of the global browser market is already bigger than Android, BlackBerry, and the iPod touch, according to this chart cited in a recent Morgan Stanley research report. Morgan Stanley analyst Katy Huberty says iPad usage is closer to a PC than a smartphone, which is not really surprising, since it's designed for web browsing. However, we were still surprised that iPad browser share is already ahead of the popular Android and BlackBerry platforms.