Apple Pay Has Finally Arrived! Great – But Here Are 7 Reasons It Won’t Be A Slam-Dunk Success

applepay

From my Forbes blog:

Judging from most of the coverage of  Apple Pay, the mobile wallet that launches Monday, you’d think Apple has already revolutionized the $4 trillion U.S. payments market before anyone has even used it in the wild.

It does look pretty slick, at least based on Apple’s own demonstration at the Sept. 9 event where it also debuted two iPhone 6 models and the Apple Watch. All that’s required to buy a burger and fries at McDonald’s or a tank of gas at Chevron, Apple CEO Tim Cook promised, is to hold an iPhone near a wireless reader at the checkout counter and press a thumb on the home button to activate Apple’s Touch ID fingerprint sensor. In under 10 seconds, you’re out the door.

That would be a stark contrast to today, when using a mobile wallet from Google, PayPal, and others requires unlocking a phone, typing in a number, checking into a store, and various other steps–including waiting to see if it even works and trying another time or two when it doesn’t. Many merchants don’t even have checkout people who can tell you how it works. In several attempts in the past week or so, I went two for four: Google Wallet worked at Peet’s and Walgreen’s, though only after a couple of attempts, PayPal didn’t work at a local cafe where it was supposed to, and CVS didn’t work with either one. Even the clerk there didn’t know how the reader at the checkout counter worked.

But based on research into rival wallets and interviews with merchants, payment tech firms, and payments experts, it’s apparent that Apple Pay is far from a guaranteed success–at least if you judge success on what Apple CEO Tim Cook promised last month: “Apple Pay will forever change the way all of us buy things.” Here’s why there’s good reason to view Apple Pay with skepticism:

* You can’t use Apple Pay unless you buy an iPhone 6 or 6 Plus. Apple uses a method to send data from a phone to a checkout reader called Near Field Communication, which is used in some 220,000 retail locations already for other wallets and new credit cards that use a chip to store information. Previous iPhone models didn’t have NFC, so you can’t use them (except for iPhone 5 models along with an Apple Watch, but not until next year). So not only is Apple Pay limited to iPhone users, it’s limited only to iPhone 6 buyers, who number at least 10 million so far and perhaps double that by the end of December.

That may well be enough to jumpstart Apple Pay usage and finally make the long-awaited mobile wallet a reality–for iPhone users. But no store will want to turn away users of Android or other phones who see the iPhone owner in front of them in line whisk through with a tap. “Merchants won’t want the PR hit of discriminating against Android users,” says Richard Crone, CEO of payments advisory firm Crone Consulting, who notes that there have been 50 million downloads of branded merchant apps and 90 million active banking app installs. “This will cause them to get religion quick around their own mobile wallet.”

* Cash and credit cards just aren’t that hard to use. Everyone takes cash, and most places of any size accept credit cards. Credit cards also survive getting wet or hot or sat on much better than phones. As payments expert Bill Maurer, dean of the School of Social Sciences at the University of California at Irvine, said in my Apple Pay story, “All of these mobile wallets are looking for a problem to solve.” …

Read on for more challenges facing Apple Pay.

Why Are TV Makers Pushing Cadillacs When We Really Want Ferraris?

US-IT-CES-ELECTRONICS

Samsung shows off huge new TV (Photo: AFP/Getty Images via @daylife)

Are TV makers going the way of Detroit in the 1960s? In what many, including those who didn’t bother to attend, are calling a boring Consumer Electronics Show, the star attractions seem to be leviathans such as Samsung’s and Sony’s new 84-inch TV sets. Even they apparently is not amazing enough, because Samsung is promising a 110-inch model later this year.

Size isn’t the only way they’re big, either. Those 84-inchers, which one Sony executive had the audacity to call “Ferraris,” costs $25,000, more than I will ever pay for a car, let alone a TV. And they have more pixels than my never-acute eyesight can ever process–even if there were content created for them, which there isn’t.

Seriously, guys, I’m not buying another TV for a very long time. The screen I’ve got is as big as I can fit in my living room, and that’s not going to change. Even if I did have a bigger living room, a big-ass 84-inch TV would feel faintly embarrassing, like tractor tires on a little pickup.

What’s more, not a single Smart TV feature, no matter how cool, is going to sway me to pony upwards of a thousand dollars for a new set to replace a perfectly fine screen. I’ve got TiVo, I’ve got Apple TV, I’ve got Roku, I’ve got Google TV, and probably there’s some other add-on device I can’t even remember. All of them offer more features and apps than I will ever use.

All of this makes me think of those road hogs of the late 1950s and early 1960s that Detroit insisted on manufacturing shortly before those cheap little imports ate their lunch. The fact is that more and more TV watching is occurring on much smaller screens, especially tablets. The sofa spuds of today don’t drive Cadillacs. We want Ferraris, or even Priuses. …

Read the rest of the post at The New Persuaders.

13 Questions For 2013 In The World Of Online Advertising

questionsCross-posted at my Forbes.com blog The New Persuaders:

For the past few years, I’ve offered predictions here and on The New Persuaders for what’s likely to come in the next year. This year, I’m going to shake it up and throw out a few questions instead. I think I know the answers to some of them, but if many won’t be answered definitively by year-end, they remain top of mind for me and probably for many others in online media and advertising.

So in this, the first full week of the new year, here are some questions to which I hope to start finding answers:

* Will image advertising finally take off online? I have to believe that as people spend more and more time online instead of reading print publications and watching TV, brand marketers will want and need to reach them there with ads that are aimed at creating consideration for later purchases, not just eliciting an immediate sale like Google’s search ads and too many banner ads. We’re already starting to see signs of such advertising with the early success of Facebook’s Sponsored StoriesTwitter’s Promoted Tweets, and YouTube’s TrueView ads–not to mention the explosion of tablets, which provide a lean-back experience more compatible with image advertising. This won’t be a sudden change, since brand marketers and agencies don’t move quickly, but you can’t tell me there aren’t going to be increasingly compelling ways for brands to influence people online.

* Can advertisers and publishers make ads more personal without scaring people? That’s the $64 billion question, and it likely won’t get answered in full this year. It’s easy for headline-hungry politicians to make a big deal out of Facebook’s latest privacy gaffe or the Wall Street Journal’s or the New York Times’ latest scare story about an ad that followed somebody all over the Web. That’s especially so since Facebook really does push the privacy envelope too far at times, and too many advertisers idiotically chase one more sales conversion at the cost of scaring off hundreds of others or inviting onerous legislation. But making ads more useful to each individual person is not only crucial to online commerce, it’s potentially better for most consumers as well–seriously, I don’t need to see another ad for a fitness center or a new credit card, but that ad for Camper van Beethoven’s new CD had me in a split-second. The answer lies in these two words, everyone: transparency and choice.

* Will mobile advertising work? Well, some of it already does, to hear Google and Facebook tell it. And while those already devalued digital dimes so far turn to pennies when it comes to ads on smartphones and tablets, this still feels more like growing pains than a crisis in online advertising. Sure, the screens are small and people don’t like to be interrupted in their mobile cocoons. So a different kind of advertising is probably needed–clearly, banners don’t cut it on a four-inch screen. But the value to advertisers of knowing your location and maybe the apps you’re using, coupled with knowledge of what your friends like–all with permission, of course–is huge. That permission may be really tough to earn. But if advertisers can offer tangible value, perhaps in the form of useful services related to what you’re doing or looking for or shopping for–and isn’t that the ultimate native ad?–people may loosen their hold on that information.

I have a lot more questions, but I’ve got to stop before too much of 2013 is gone.

Check out more questions at the full post.

The Mythical iTV: Steve Jobs’ Marketing Magic Is Still Alive And Well At Apple

From my Forbes.com blog The New Persuaders:

Image representing Steve Jobs as depicted in C...

Image via CrunchBase

Another day, another rumor that an Apple television may be coming.

Another recycled rumor, in fact. The Wall Street Journal reported this morning that China’s Foxconn, a major Apple supplier, is helping Apple test some prototypes for a large-screen television set. That follows similar (OK, identical) rumors a couple of days ago, last August, last May, and last December saying that Apple was enlisting Chinese suppliers to create an Apple TV set.

No surprise here, given that Apple CEO Tim Cook managed to stoke the fires of speculation last week by saying the company has “intense interest” in television. Of course, Cook himself said the very same thing last May, too.

So don’t hold your breath for an Apple TV that goes beyond the current Apple TV hockey puck. Even longtime Apple television forecaster Gene Munster at Piper Jaffray now says it won’t come before next November. And even then, it’s debatable how important a product it will be, since it’s widely assumed that Apple can’t add much to the current TV experience without deals to get access to live TV shows, or at least win the right to revamp the TV user interface to encompass the full range of pay-TV and Internet content available today. And those deals are nowhere in sight just yet.

But the new flurries of interest in the mythical machine point up something that should reassure Apple investors, at least: Apple cofounder Steve Jobs’ famous marketing magic is still at work at the company more than a year after his death.

Some investors have been worried about whether Cook, by all accounts an ace operations guy but not a showman like Jobs (as no one else really is, honestly), can keep Apple’s brand as blindingly shiny as it has been for so many years now. It’s time to give Cook credit for faithfully following Jobs’ playbook: Let fans wax on about how desirable a new Apple product will be, building demand to a fever pitch so that whatever comes out is guaranteed to get unparalleled attention. Indeed, a recent survey says they’re already willing to pay considerably more for an Apple TV–whatever it turns out to be.

No, Cook doesn’t yet deserve to be considered a master marketer like Jobs. But he’s off to a pretty good start.

Apple CEO Tim Cook Is Blowing Smoke When He Dismisses Rival 7-Inch Tablets

Apple Introduces iPad Mini... and some new com...

Apple’s iPad mini

From my Forbes.com blog The New Persuaders:

As a company that way more often than not comes out with superior products, Apple rarely appears defensive. Today was an exception.

On Apple’s fourth-quarter earnings call, CEO Tim Cook took repeated potshots at small tablets of the kind that–yes–Apple itself just debuted. The iPad mini is clearly aimed at blunting the appeal of seven-inch tablets such as Google’s Nexus 7 and Amazon.com’s Kindle Fire.

While I think Cook is probably right that the iPad will continue to dominate tablets, and even that it continues to make the best ones, his overenthusiastic criticism of seven-inch tablets struck me as surprisingly defensive. Saying Apple didn’t set out to build a “small, cheap tablet,” he called the competitors “compromised” products. “We would never make a seven-inch tablet,” he sniffed.

Why not? Because they’re too small, he said. The iPad mini is almost an inch larger, which means a 30% larger screen and 50% larger viewing area. I’ll grant that that is noticeable, and appealing.

But c’mon. These are all tablets you can hold in one hand, and acting as if the iPad mini is something utterly unique–“in a whole different league,” as he put it–comes off more than a bit desperate. Apple is clearly playing catch-up here, and trying to position the iPad mini as nothing like the Nexus 7 or Kindle Fire only serves to make us realize that Apple actually does feel threatened by these devices that beat it to what has turned out to be a real market. …

Read the complete post at The New Persuaders.

Facebook’s Mobile App Install Ads Get Moving

From my Forbes.com blog The New Persuaders:

Exhortations to install apps are likely a significant chunk of Facebook’s advertising revenues, and now they’re poised to become an even bigger factor in the social network’s future. Today, two months after offering app install ads for mobile devices to a select group of app developers and their marketing partners, Facebook opened up the ads to anyone.

These ads appear right in people’s mobile news feeds, providing prime placement for games and other apps in Apple’s App Store for iPhones and iPads and Google’s Play store for Android devices. Not surprisingly, Facebook says in a blog post that mobile app install ads are already working:

In early results, beta partners like Kabam, Fab, TinyCo and Big Fish were able to reach a more relevant audience and efficiently drive installs. For example, TinyCo saw 50% higher CTRs and significantly higher conversion rates compared to their current mobile channels, as well as a significant increase in player engagement.

A select subset of Preferred Marketing Developers (PMDs) has been testing mobile app install ads and saw similarly positive results. For example, Nanigans’ clients efficiently achieved 8-10x the reach compared to other mobile ad buys. Ad Parlor saw consistent CTR’s from news feed of 1-2% from engaged users looking for iPhone and Android games that their friends were playing.

No doubt those numbers will come down as the novelty factor in any new ad or feature wears off. Still, even a fraction of those results would still be valuable to advertisers.

That’s assuming–and this is a fair assumption given Facebook’s wariness about ad overload–that the company doesn’t go over the top and overload people’s mobile news feeds with the ads. Avoiding overload is especially important for these ads because unlike many of Facebook’s marquee ads, they don’t have a social component, meaning they appear strictly in response to developers paying for them, not because a friend liked an app.

Too many of these ads that don’t have the appeal of a friend’s connection, and the dreaded banner blindness is likely to set in.

There also more coming to improve these ads, according to Facebook engineer Vijaye Raji:

In coming months, we’ll continue to make updates that improve the user experience and the performance of mobile app install ads. For example, you may be able to customize your ad unit based on your audience, ensure that your ads are only shown to people who have not installed your app on iOS or Android devices, and allow people to start installing your app without leaving Facebook.

How Steve Jobs’ Laughable Early Apple Ads Evolved Into Today’s Marketing Marvels

From my Forbes.com blog The New Persuaders:

To look at Apple’s classic advertisements, from the stark, bold “Think Different” campaign to the playful “Get a Mac” series to those minimalist silhouetted iPod ads, you’d never guess that early Apple ads were so–not to put too fine a point on it–awful.

On the one-year anniversary of Apple cofounder Steve Jobs’ untimely death, we scrounged up a baker’s dozen of early Apple ads in the accompanying photo gallery for your amusement and edification. They’re print ads in particular, since it was pretty early days to be advertising computers on television. Still, most them wouldn’t be recognizable as Apple ads if not for the name and early logos.

They weren’t especially worse than other computer ads at the time. Maybe they were even marginally better. But they were anything but special, let alone cool.

What’s interesting is not just that Apple’s early ads look so depressingly conventional. It’s that a few of them revealed flashes of Jobs’ future marvels of marketing. Once Jobs got past the initial “speeds and feeds” marketing imperative during a time when Apple was really just one, albeit prominent, competitor in a sea of pre-Windows, pre-Mac personal computer makers, he began to develop an eye for brand marketing that few companies in technology or any other industry have since surpassed.

Take a close look at these early ads, and you can see that Apple’s evolution to the pinnacle of brand marketing happened not in a straight line, but in a sort of punctuated equilibrium that parallels the gradual maturing of computing itself. At first, PCs were for hobbyists interested in performance and features, and the ads reflected that. But as the machines began to sell into the millions, Apple’s ads began to emphasize how they were “the computer for the rest of us,” as the first Macintosh ads called them.

That first one for the Apple-1 in 1976, rivetingly entitled “A Balance of Features,” was appallingly amateurish. The ad, released only a few months after Jobs and Steve Wozniak showed the prototype at the Homebrew Computer Club in SiliconValley and incorporated their company, was stuffed full of technical features in a way that’s unimaginable today. For instance, the ad touted the ability to attach a keyboard and monitor to allow “the efficient entry and examination of programs in hexidecimal notation.” Who knew?

There was even a misspelling in the first line, a sign that Jobs’ famous perfectionism hadn’t quite kicked in yet. …

Read the complete post, including a photo gallery of the ads, at The New Persuaders.