Out-of-home advertising and in-store systems, including mobile payments, will see major digital transformations in 2016. Consumers should welcome most of these innovations. But they’ll be less keen on using smart home technology. Meanwhile, the use of ad blockers will grow.
Apple Pay Will Tighten Its Grip on Mobile Payments
Mobile payments marry the speed and ease of contactless transactions with the convenience and ubiquity of mobile phones. And the UK is a leading market, to some extent. According to the “Mobile Payments Index” from payments technology firm Adyen, 46.9% of UK online transactions on the Adyen platform took place on mobile in Q3 2015, compared with just over 30% of online transactions globally.
At the same time, though, the UK’s mobile payment scene has been marked by a daunting array of players, approaches and incompatible technical standards that hamper progress overall. Step forward Apple Pay—an app that harnesses near field communication (NFC) technology to deliver various mobile payment functions, including payments within other apps. It supersedes and extends an earlier offering, Apple Wallet (formerly Apple Passbook). Consumers with newer Apple devices such as the iPhone 6, iPhone 6 Plus and Apple Watch can use Apple Pay.
New Digital Options Will Drive Out-of-Home Ad Spending—and Response
Industry observers agree that digital technology is transforming the look, feel, reach and return on investment of out-of-home (OOH) advertising and marketing. Forecasts cited in Screen Media Daily suggest that in the UK, exposure to digital out-of-home (DOOH) ads will surpass nondigital exposure by 2017.
eMarketer estimates that advertisers in the UK will spend about £1.08 billion ($1.78 billion) on paid OOH displays in 2016, and expenditure will pass £1.1 billion ($1.81 billion) in 2017. These forecasts do not separate digital from other OOH spending, but there’s no doubt that DOOH is on the rise and growing much faster than nondigital OOH outlays.
Ad Blockers and Media Owners: The Battle Will Escalate
Most internet users—in the UK as elsewhere—have never really liked online ads but have put up with them out of necessity, or in order to enjoy free content. However, the popularization of ad-blocking software is changing this status quo. Now, web users who feel strongly enough about screening out ads can do so, at least partly.
So far, ad blocking isn’t very widespread in the UK, but it’s growing. According to polling by YouGov for the Internet Advertising Bureau UK (IAB UK), the proportion of adult internet users in Great Britain who said they use ad-blocking software rose from 15% to 18% between June and October 2015. It was nearly twice as high (35%) among "digital natives"— respondents ages 18 to 24.
The Internet of Things: Don’t Hold Your Breath
Undoubtedly, the IoT is on its way. In June 2015, the International Data Corporation (IDC) forecast that global sales of IoT items—excluding desktop/laptops, smartphones and tablets—would reach $1.70 trillion in 2020. Global information company IHS estimated that the worldwide market for smart-connected home appliances would swell to 223 million units in 2020, up from just 1 million units in 2014. Similarly, by Juniper Research projected that the number of IoT connected devices would leap 285% between 2015 and 2020 to reach 38.5 billion.
Nonetheless, progress is slow. According to the by Office of Communications (Ofcom), internet-enabled devices in most UK households as of Q1 2015 were those that have been available for years, including laptop and desktop computers, smartphones and tablets, game consoles and TV/video set-top boxes. Only one in five respondents ages 16 or older had a smart TV in their home, and just 3% had a smart watch.
Microlocation Services Begin to Enhance the In-Store Experience
Beacon technology—a Bluetooth-based system which enables retailers to notify nearby mobile device users with a preinstalled app of store locations, discounts and promotions—has been trialed in the UK over the past couple of years, but still isn’t commonplace. Many weren’t happy to be targeted in this way, finding it intrusive and slightly sinister. App downloads were also a hurdle; consumers had to be interested enough to install an app to receive retailers’ push messages.
But some do find the prospect of location-based communications from retailers appealing. In a November 2015 study by BlisMedia, 39% of UK internet users surveyed said that location could increase the likelihood of their clicking on a mobile ad. And Salesforce reported that 32% of UK high street shoppers expected the shops they visit to know what online research they’d done on those retailers’ websites so they could receive better service.