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http://cdn.blog-sap.com/innovation/files/2013/04/273283_l_srgb_s_gl.jpgThe past few years have witnessed a significant power shift toward mobile users which is only projected to increase over time.

Although the mobile industry initially offered such basic services as search and social networking, mobile users have come to expect a new level of functionality incorporating location-based services (price comparison, restaurants, etc.) and mobile payments (currently facing low adoption).

All of these mobile services collect data that promise a fantastic platform for customer value enhancement and monetization possibilities for publishers, advertisers, and technology companies.

Gartner estimates that the global transaction value of mobile payments will reach $617 Bn by 2016 from $105.9 Bn in 2011 whereas eMarketer estimates that mobile advertising spend will increase from $8.4 Bn in 2012 to $36.87 Bn in 2016.

The growth of mobile advertising will depend on how well it brings ‘relevance’ to the customer and ‘ROI’ to the advertiser by mapping customer information and buying patterns derived from purchase-related details.

Below are seven key user-related factors influencing mobile advertising and payments (the scope of this article does not include the advertising technology landscape such as Demand, Supply side platforms, RTB, etc.)

1. Search

Consumers are increasingly using mobile search to find local information such as ATMs, restaurants, gas stations, and shops. Innovative solutions such as the Google ‘Click-to-call’ feature will drive increased search usage, advertisements, and payments.

Imagine you are in a new city and need a hotel. You use your mobile to search ‘hotels’ on Google and see a ‘phone’ icon at the top of the results. You tap the icon, a call connects you to the hotel and you make a reservation. Google gets paid at the time of the call for such ‘Click-to-call’ ads.

2. Location

There are three main ‘location’ categories targeting users – Geofencing, DMA, and Audience.

‘Geofencing’ is used by advertisers to connect with people when they are within a certain location of a store, although it is experiencing mixed results due to awareness and expectations problems.

Although a large portion of a customer’s budget falls into the ‘planned’ category, impulse buying and instant solutions like the hotel example above will drive uptake of location-based advertising.

Geofencing will continue to get good uptake from  the restaurant, retail and travel industries, whereas Designated Market Area (DMA) categories will see high usage by the political, auto, telco, and financial industries,

Audience segmentation targeting will top the auto, financial and consumer goods industries with restaurants leveraging it the least.

3. Shopping (Including Payments)

For some customers mobile is a communication or productivity tool whereas for others it’s also a shopping buddy. Initially the trend was to use a mobile to do quick comparisons, and location-based searches without using it for payments. But with new technology , innovations on the horizon, adoption of mobile payments is set to pick up.

Mobile payments have not really taken off due to a lack of awareness about mobile payment functions, perceived risks, fragmented technology at the point-of-sale, and retailers who are unwilling to invest in the changing POS infrastructure.

Innovations from companies such as Mobeam empowers customers by enabling retailers to directly accept loyalty cards, coupons, barcodes and QR codes from mobile phones and accept mobile payments without the need to invest in new scanners.

Mobeam uses a light source on the phone to ‘beam’ the bar code data onto the POS scanner. Samsung S4 users can use Mobeam technology to pay at traditional 1D bar code scanners (department stores, grocery stores, etc.), 2D bar code stores where retailers have already invested in POS equipment. They can also use Mobeam to beam coupons received via email and SMS.

4. Social

There is no doubt that the growing number of users embracing ‘social networking’  have had a big impact on mobile and a number of start-ups have put Facebook on the defensive.

Popular messaging apps are creating a buzz in the social networking world:  Kik  (40Mn users) and Whatsapp, LINE (120 Mn users),  Kakao Talk (80Mn users), WeChat( 400 Mn users) let you create personal profiles, build networks of friends, and share photos, videos, and music.

Due to their heavy user engagement and interactive nature such messaging apps companies are moving towards building their platforms to support various features and enable innovations from third-party developers, whereas established social networks are moving towards incorporating messaging features. The constant expansion of platforms, messaging apps and developer community is a perfect recipe for better user engagement, tailored experience and personalized advertisements.

5. Interoperability (including Cloud)

Users are now selecting solutions that allow them to have a seamless experience across multiple devices such as desktop, laptop, tablet, and mobile. This is giving rise to cloud-based services such as Dropbox, Google drive etc.

Such services allow users to access, share, and edit from multiple devices, then push to other devices. Although people use different devices in different situations, they expect a unified experience, so receiving duplicate ads across their multiple devices will create a poor user experience. Consistency and relevances are the key to successful advertising.

6. Developer Community

Despite the size of a company, a strong developer community is critical to bring sustainable value propositions to a dynamic customer community with various operating systems and interest areas ( games, new, business, entertainment, music, etc.) .

With an increasing number of users turning into developers, it is a perfect space for raising awareness and innovation as it creates an intersection between intellect and insight (into a need), and the uptake of various apps happens if it strikes a chord with the individual needs.

Though currently in-app advertising seems to be dominating with a number of app developers paying for ads to promote their own app downloads (paid discovery) over time in-browser (mobile web) advertising will take over.

7. Data Protection & Privacy

This has always been a sensitive subject – even more so when it comes to mobile data protection and privacy because it illuminates a lot of your real-life activities and behavior.  The majority of users are unaware that some companies have strong ‘opt-out’ policies which will stop targeted ads using inferred data about a customer but they will still receive generic ads.

Privacy is a area that is affected by lack of awareness, evolving policy matters and accountability aspects just as in any high-growth industry. However, mobile and overall online privacy are difficult subjects that governments are looking into — a fact that is getting some coverage in mainstream media as well.

Mobile phones can be a great boon to consumers. Despite privacy concerns, with more awareness, better policy control and accountability, the mobile industry is set to transform business models as well as our way of life.

You can follow me @Ramesh_Ramki

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