Smartphone APP Advertising

Effectiveness Research

Background

2

The size of mobile users has increased dramatically. In 2012, the number of Chinese mobile users has reached 1.11 Billion, and

55% of them are smartphone users. APP as an extreme important element of smartphones, has penetrated into everywhere of people’s

life, including dining, clothing, living, etc. It becomes a significant part of people’s daily life and work, bringing them fun, convenience and

variable discount information. Advertisers generally believe the value of APP traffic is greater than that of WAP now.

In addition, just as other online ads and video advertisements, it is more effective adopting APP ads in early stages; therefore APP

advertisement is now at the window of opportunity for advertisement style innovation.

However, now the industry has encountered with some perceptional challenges with mobile ads (referred to APP ads).

Effectiveness

Users Measurement

Perception

•Advertisers not familiar with the effectiveness of mobile ads

•The role of mobile ads in the whole advertising system

•No appropriate measurement tools to test mobile ads effect in scientific way •No authorized research analyzes mobile ads effects

•Misunderstandings in advertisers’

perception to users’ attitude

•Negative effects from small screens

•Users’ opposition to mobile ads

Media Value of

Smartphone

Consumer

Behavior of APP

Advertising

Value of APP

Objectives – Discover the Value of APP ads on smartphone

3

The objectives of this research is to analyze the value of smartphone as a new

way of media and its characteristics, mainly including three aspects:

Phase I – China Media Contact Research

Content: As an emerging media contact point, smartphone’s demographic coverage

and its user profile

Method: Computer Assisting Telephone Interview (CATI)

Sample Size: 22000 in total from 169 cities covering from Tier 1 to Tier 5 cities

Sample Description: Age from 14-60

Phase II – Mobile User Research

Content: Analyze user’s media habit and attitude for various forms of mobile ads and

other media advertising forms

Method: CLT in Beijing, Shanghai, Guangzhou and Chengdu

Sample Size: 600 in total

Phase III – Mobile Ads Eye Tracking and Recall Test

Content: Using eye tracker to objectively examine the visibility of mobile ads

Method: Mobile device eye tracking test/laboratory control memory

Sample Size: 160 in total

Research Introduction

4

Smartphone has changed people’s media habit and media contact way

5

Media Value of

Smartphone

Consumer

Behavior of APP

Advertising

Value of APP

5

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Print Radio TV Internet Mobile

6%

14%

42%

26%

12% 11%

5%

29%

33%

22%

% M

ed

ia t

ime s

pen

t sh

are

US China

Media time spent between US and Chinese consumers in 2012

Time spent on smartphone in China is higher than in the US

6

Users in China spend about 22% of media time spent on their smartphones,

10% higher than those in the US.

79%

88%

81%

69%

57%

45%

30%

13%

Age 14-19

Age 20-24

Age 25-29

Age 30-34

Age 35-39

Age 40-44

Age 45-49

Age 50-60

86%

79%

82%

86%

88%

88%

90%

93%

87%

91%

91%

87%

83%

75%

65%

47%

Source: National Pan-Media Survey / Sample size: 22000 Question: Which of the following media did you use in the past week?

Smartphone is a significant part contributing to multi-screen life

7

Mobile PC TV

The consumption rate of smartphones is higher than that of TV in the group of age 20 – 24.

Penetration rate of various screen in the past week

71% of users online using their smartphone more than 4 times a day, which is higher than the frequency of PC.

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: How often did you use for online in the past week?

Average 4 times a day

Average 2.5 times

a day

71%

18%

11%

More than 4 times a day

2-3 times a day

Less than 1 times a day

The frequency of smartphone is higher than that of PC

8

0%

10%

20%

30%

40%

50%

60%

00:0

0-0

1:0

0

01:0

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09:0

0-1

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0

10:0

0-1

1:0

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11:0

0-1

2:0

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12:0

0-1

3:0

0

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0-1

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14:0

0-1

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0

15:0

0-1

6:0

0

16:0

0-1

7:0

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0-1

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0-2

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21:0

0-2

2:0

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0-2

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23:0

0-0

0:0

0

Comparison of different media contact time

Smartphone

Online

PC Online

TV

Usi

ng

pro

po

rtio

n

Time

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: When did you surf the internet by using in a day in the past week?

Smartphone increases media contact time, revealing its time flexibility

9

66%

65%

57%

49%

37

24%

24%

20%

9%

5%

On the bus / subway

On the bed at home

In Office / at school

On the couch at home

By a desk at home

Café / Restaurant

Dining table at home

In bathroom

In a car

On the train / plane

Occasions of Smartphone's Access to The Internet

Source: Smartphone user survey / Sample size: 600 Question: Where do you use smartphone in the past month?

Smartphone highly rises media contact locations, indicating its mobility

10

People use smartphone more frequent on public transport, working/studying

places, living room and restaurants.

PC and TV are more used only at home.

PC TV

Mobile

Entertainment

Leisure

Social

Information

Business/Study

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: Which is your most commonly used equipment in the past month when you doing the following activities?

Watching Online Video

Playing Games

Listening to music

Camera / viewing photos

Online Shopping

Reading APP magazin

Browsing News

Reading E-books

Social Network/Blog/MicroBlog

Chatting / network communications

Working/upload/download files

Studying/online education

Sending & Receiving E-mail

Back up contacts

See stock market information

View/ reserve/ use food information

View/ reserve/ use traffic information

View/ reserve/ use life information

Searching for information

Maps and Navigation

Smartphone

PC

People use smartphones to satisfy various needs

11

People tend to use smartphone for social networking, entertainment and information searching

Smartphone PC TV Magzine Radio Newspaper

Media time spent variation

Decrease Don't knowNo change Increase

In the past 6 months, time people spent on smartphone has increased

dramatically, while the growth rate is negative for TV, radio, newspaper and

magazine.

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: Compared with the past 6 months, What happened to the time you spend on ?

The time users spend with smartphone on internet browsing has increased, and much higher than PC

12

13

APP is an effective tool of marketing:

Strong Precision marketing and Interactive

Cooperation Marketing

Media Value of

Smartphone

Consumer

Behavior of APP

Advertising

Value of APP

13

Level of watching TV among users who access internet by using APP

Source: National telephone Survey / Sample size: 22000 Question: How long do you watch TV per week on the average? Which way do you access internet using smartphone?

Light TV viewers: Average watching TV less than 15 hours per week; Medium TV viewers: Average watching TV 16-30 hours per week; High TV viewers: Average watching TV more than 31 hours per week;

Light TV viewers 66%

Medium TV viewers 24%

High TV viewers 10%

APP can help reach light TV viewers

APP can cover 66% of light TV viewers and 24% medium TV viewers.

14

Monthly Household Income Age

54%

21%

20%

5%

Bring me more entertainment

Bring me more convenience

Can get various information

Shorten distance among each others

0%

20%

40%

60%

80%

100%

49% 60%

50% 53% 58%

24% 17%

26% 23% 16%

23% 16% 19% 21% 19%

4% 6% 4% 3% 7%

Less than age 30

Above age 30

Less than 6000 yuan

6000-10000 yuan

Above 10000 yuan

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: How the smartphone APP influence your life?

APP brings people joyful experience, indicating good foundation of communication

15

54% of users agree that APP can bring them convenience, especially among age

above 30 and house income above 10,000 RMB.

Besides convenience, users also experienced the entertainment and various

information APPs can bring, indicating good foundation of communication of APP ads.

86%

69%

46%

58%

35%

23%

50%

36%

15%

46%

45%

41%

29%

29%

21%

19%

11%

Social/chat

Music

Video

Games

Photo/Videography

Entertainment

News

Books/Reading

Newspapers/magazines

Navigation

System tools

Life

Food

Shopping

Education

Travel

Sports

Entertainment

Leisure

Social

Information

Tool

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: Which is your most frequently used APP in the past one week?

10%

10%

22%

28%

48%

82%

91%

Most frequently used APP type

Most frequently used APPs are social/instant message ones

16

Social/instant message, music, game, news and tool kind of APPs are more often

used.

Users use APP over twice on average, giving mobile ads the foundation of multi-time reaching their users

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: How often did you use these APPs?

1.1

1.4 1.4 1.6 1.7

1.8 1.9 1.9 1.9 2.0 2.1 2.1 2.2 2.2 2.4 2.4 2.5 2.6 2.6 2.6

3.6

Tra

vel

Foo

d

Navig

atio

n

Sh

op

pin

g

Med

ical ca

re/H

ealth

Finan

ce

Bu

siness

Ed

uca

tion

Life

Sp

orts

Efficie

ncy

Vid

eo

Ph

oto

/Vid

eo

gra

ph

y

Syste

m to

ols

New

s

Mu

sic

New

spap

ers/m

ag

azin

es

Bo

oks/R

ead

ing

Gam

es

En

terta

inm

en

t

So

cial/ch

at

Frequency of using APP per day

17

Average 2 times

Users more often use social, entertainment, game and book kind of APPs.

The download of different APPs has interconnections, contributing to more opportunities for precision marketing

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: How often did you use these APPs in the past one week? 18

APP Type Factor1 Factor2 Factor3 Factor4

Life Social Reading Tools Entertainment

Education 0.494

Travel 0.498

Efficiency 0.483

Medical care/Health 0.432

Entertainment 0.492

Food 0.429 0.401

Social/Chat 0.451

Photography/video-graphic 0.522

Books/Reading 0.464

System tools 0.425

Music 0.488

Video 0.614

Games 0.517

Shopping 0.423

Factor analysis categorized APPs with high usage relationship together according to hidden

interconnections between APPs. Advertisers can switch within different APPs under the same

category to reach similar users; for instance, advertisers hoping to reach shopping APP users

can accomplish by advertise on music and game APPs.

Note: A factor type is represented by each color field.

Users use multi-screens at the same time shows the value of cross screen marketing for smartphones

At the same time of using smartphone,

they also

Watching TV 44%

Talking with someone else

Doing nothing else

12%

Playing PC 34%

Reading /newspaper /magazine 24%

Playing Tablet 17%

0%

10%

20%

30%

40%

50%

60%

17:0

0-1

8:0

0

18:0

0-1

9:0

0

19:0

0-2

0:0

0

20:0

0-2

1:0

0

21:0

0-2

2:0

0

22:0

0-2

3:0

0

23:0

0-0

0:0

0

Access to internet by smartphoneAccess to internet by PCTV

Usi

ng

p

rop

ort

ion

Period of time

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: Which of the following activities will you do while using smartphone APP? 19

While people are using APPs, they can also do things like communicating with others,

watching TV and playing computers. With only 12% of people doing nothing when using APPs,

it hints the value of cross screen marketing for smartphones, especially from 7PM – 9PM.

62%

21

Mobile Ads are more noticed than PC Banner Ads by users

Media Value of

Smartphone

Consumer

Behavior of APP

Advertising

Value of APP

21

Scientifically and systematically evaluate the value of mobile adds by eye tracker

受众沟通 价值

Visible – Ads go into the edge of consumer’s central vision area Scan – Ads go into consumer’s central vision area Notice – Ads go into consumer’s central vision and stay for processing

22

Eye Tracking Test

Visibility, scan、attention: eye tracking index Watching time: longer watching time may lead to more chance of processing and memorizing Eye tracking heat map: Clearly shows the contents users pay attention to.

The research includes 9 brands(Intel, Pizza Hut, Yili, Samsung, KFC, Ford, Ikea,

Peugeot and Este Launder), 3 styles(Full Screen Interstitial, Full Screen Started、

Banner) of mobile ads and compare the result to that of PC ads.

The average of Visibility, scan、attention for

mobile ads are significantly higher than PC

banner ads. The percentage of attention is

over 40%, twice of that for PC banner ads.

APP ads has an average of watching time for

almost 1 second, 5 times over that for PC

banner ads. Visible

Scan

Notice

Fixation Duration

0.15s

PC Banner Ads

52%

29%

19%

0.89s

Smartphone APP Ads

81%

70%

44%

vs.

Fixation Heat Map Low Fixation High

Banner Example

*Smartphone APP ads include: 开屏、插屏 and banner ads

Mobile ads are more noticed than PC banner ads

23

B

•Brand logo on left side A In mobile ads, brand logo should be put on left side so that users can remember the brand information even only glance once at the ads..

•Multiple frame creation with brand logo in every frame

MB discovers APP ads are more effective if their creation follow the rules below

25

√

√

About Brand Logo

D

•Using of bright colors C Using at least one bright color, but not over two of them Using bright colors to deliver core information can gain attention

26

√

About CreativeColor

•Clear and brief text content

About Text Content

Make your smile sparkle √

MB discovers APP ads are more effective if their creation follow the rules below

E

27

•About text content

Test content should not be over 50% of total ad space Don’t use white background with black text for content creation, since it may confuse people from page content

About Ad Information

Information is hard to be recognized under black background.

MB discovers APP ads are more effective if their creation follow the rules below

Source: Smartphone APP Advertising CLT Research / Sample size: 600 Question: Which aspects of smartphone APP ads is more acceptant compared with PC ads?

Age

Acceptant aspects of APP ads compared with PC ads

Age 25-34

Better quality

clear More interactive

Age 35-44 Less than age 24

Color is full

Overall number is not large Content is closely related to me

Overall page is clean

High input lefel

Creative

1.0

0.0

0.5

-0.5

-1.0

1.0 0.0 0.5 -0.5

People think APP ads are clean and engaging. In comparison, people under 35-44 think mobile

ads are more interactive and have better quality than PC; people under 24 believe APP ads are

creative and clear.

28

People under different ages like different aspects of APP ads, brands can focus on relevant mobile ads creation

Conclusion I: Smartphone has changed people’s media habit and media contact way

4.7 HOURS

Daily time using smartphone to browse internet is 4.7 hours (while using PC is 4.8 hours), but the frequency is higher and occasion is wider than other media

• Time spent on smartphone in China is higher than in the

US, and smartphone is a significant part contributing to

multi-screen life

• Smartphone is fully time and space coverage close media,

allowing multiple reaching to users; smartphone is used

more under different time and locations to browse internet.

• Time of internet browsing with smartphone is significantly

fragmented: time using smartphone to browse internet is 4.7

hours (while using PC is 4.8 hours), but the frequency is higher

and occasion is wider than other media

• People rely more on smartphones than PCs: People tend to

use smartphone for social, entertainment and information

searching.

• Time spent on smartphone has increased, 70% of users say

they have used smartphone more than in the past 6 months;

while traditional media are used less (57% users think they

watch less TV; 55% users believe they read less magazines)

29

54%

21%

20%

5%

• APP can help reach light TV viewers

• APP can bring people convenience, especially among age above 30 and high income people: mobile ads have good foundation of communication.

• Social/instant message APPs are more often used, indicating social properties of smartphone; it can change the old marketing strategies that ads are pushed to users; people use multiple screens reveals the value of interaction marketing for smartphones.

• Users use APP over twice everyday, giving mobile ads the foundation of multiple reaching their users

• Frequently used different APPs have interconnections, contributing more ways for precision marketing: brands can reach users under same category through other highly related APPs

Bring me more entertainment

Bring me more convenience

Can get various information

Good foundation of communication

Conclusion II: APP is an effective tool of marketing

30

Visible

Scan

Notice

Fixation Duration

0.89s

Smartphone APP Advertising

81%

70%

44%

Conclusion III: APP Ads are more noticed than PC Banner Ads by users

31

• APP ads have higher displaying value, and attract more attention than PC banner ads

• People under different ages like different aspects of APP ads, brands can focus on relevant APP ads creation: In comparison, people between 35-44 think APP ads are more interactive and have better quality than PC; people between 25-34 think they are clean and engaging; people under 24 believe APP ads are creative and clear.

• MB discovers APP ads are more effective if their creation follow the rules below

– Brand logo on left side; Multiple frame creation with brand logo in every frame; thus users can remember the brand information more easily

– For creative color, using at least one bright color, but not over two of them; using bright colors to deliver core information can get attention; don’t use white background with black text for content creation, since it may confuse people from page content

– Text content should not be over 50% of total ad space