Kinetic Futures voorspelt: technologische innovaties in Out of Home media Q4 2014

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1 Kinetic Futures voorspelt: technologische innovaties in Out of Home media Q4 2014

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3 Inleiding De ontwikkelingen op het gebied van technologie gaan razendsnel. Soms is het lastig om bij te houden welke nieuwe technieken en toepassingen er allemaal gelanceerd worden en in welke markten deze al succesvol worden toegepast. Nog veel moeilijker is het om in te schatten welke technologische ontwikkelingen specifiek van invloed kunnen gaan zijn op het mediumtype Out of Home. In deze uitgave zijn vier papers opgenomen van Kinetic Futures, de denktank van Kinetic. In de eerste paper worden innovatieve technologische ontwikkelingen besproken die mogelijk grote verandering teweeg kunnen brengen in het media- en specifiek in het Out of Home landschap. Aan bod komen onder andere fenomenen zoals phablets, white spaces en underground connectivity. In het tweede artikel, Indoor Mobile Positioning and Location-Based Services, wordt specifiek gekeken naar de technologische ontwikkelingen op het gebied van mobiele devices. Met behulp van mobile positioning kan vastgesteld worden waar de consument zich bevindt. Sterk daaraan gekoppeld is de ontwikkeling van location-based services, die handig gebruik maken van deze informatie. In het 3e artikel wordt specifiek ingezoomd op het gebruik van mobiele data ten behoeve van het verbeteren van het Out of Home-kanaal. Tot slot kijken we in het 4e artikel naar een belangrijk thema dat momenteel sterk in de belangstelling staat: Programmatic Trading in Out of Home. Op de volgende pagina s vindt u een korte samenvatting per artikel, zodat u binnen een kwartier in grote lijnen op de hoogte bent van een aantal belangrijke ontwikkelingen en de mogelijke betekenis daarvan op de Out of Home branche. Voor de liefhebber zijn vanaf pagina 8 de volledige papers opgenomen, voor meer detail en diepgang. 3

4 Samenvatting artikel 1 Technological Innovations We zien voortdurend allerlei technologische ontwikkelingen voorbij komen, maar vaak is het lastig om te bepalen welke nieuwe ontwikkelingen een hype zijn en welke werkelijke innovaties zijn die ook het Out of Home landschap kunnen en zullen veranderen. We hopen dat dit artikel helderheid en context geeft, en insights biedt in nieuwe technologieën die onze sector mogelijk zullen beïnvloeden. De impact van technologisch ontwikkeling op Out of Home media kan in vijf categorieën worden ingedeeld: 1. Conveyance (overdracht): de veranderende, nieuwe technologieën die gebruikt worden om boodschappen over te dragen, bepalen wanneer, waar en hoe mensen buitenshuis informatie ontvangen. In het artikel kijken we naar twee nieuwe ontwikkelingen: Phablets (p. 10) Personal Area Networks (p. 10) 2. Distribution: nieuwe vormen van distributie ontstaan waarmee beelden, video of geluiden van adverteerders naar Out of Home displays worden gebracht. We zoomen in op: White Space (p. 11) Connectivity Underground (p. 12) 3. Observation: er komen steeds meer technologieën die ons in staat stellen passanteninformatie te verzamelen en te analyseren, zoals verkeerssensoren en gezichtsherkenning. In het artikel worden verschillende tools besproken: Privacy Phone (p. 12) Blackphone (p. 13) Safeplug (p. 13) 4. Agency: agency heeft te maken met de mogelijkheden die consumenten hebben om te interacteren met boodschappen van adverteerders, bijvoorbeeld door middel van interactieve technologieën zoals touchscreens. In het artikel wordt ingegaan op: Arduino (p. 13) (open-source hard- en software platform t.b.v. interactieve objecten en omgevingen; creatieve interface om richer and more engaging media te ontwikkelen). 5. Environment (omgeving): nieuwe technologieën bepalen de omgeving en daarmee de context (het frame) voor Out of Home media. Gekeken wordt naar: Micro-Apartments (p. 14) Peak Car (p. 15) (veranderingen in rijgedrag, de afname van auto-eigenaarschap en gebruik) Aan het eind van het artikel worden de besproken innovatieve technologieën tegen elkaar afgezet op de verwachte impact die ze gaan hebben, en op welke termijn (aantal jaren) deze wordt verwacht. Op korte termijn (0-5 jaar) wordt veel verwacht van Phablets en van Secure Communications. Op de korte termijn zal vooral Connectivity Underground invloed hebben. Op de middellange termijn zullen PANs, Arduino en ook White Space en Micro-Apartments impact gaan hebben. Het meeste echter wordt verwacht van Peak Car dat duurt weliswaar nog circa 15 jaar, maar de invloed daarvan ook op Out of Home zal substantieel zijn. 4

5 Samenvatting artikel 2 Indoor Mobile Positioning and Location-Based Services Kennis van de locatie van de consument is belangrijk voor communicatie die gebruik maakt van mobiele devices, maar door technische beperkingen is dit vaak complex in bijvoorbeeld winkels en winkelcentra. GPS, WiFi en andere signalen worden verstoord en verzwakt in gebouwen, waardoor ze minder goed werken in indoor outdoor-omgevingen. Recent zijn er echter een aantal nieuwe, veelbelovende technologische ontwikkelingen in beeld gekomen die location-based services kunnen doen groeien. Deze nieuwe services bieden nieuwe kansen om consumenten te begrijpen en met hen te communiceren. Hoewel nog relatief weinig gebruik wordt gemaakt van zogenaamde geosocial services - location-based platforms zoals Foursquare of het Chinese Jiepang blijkt uit een Amerikaans onderzoek dat 74% van de volwassen smartphone bezitters hun smartphone gebruikt om informatie te vinden die te maken heeft met de locatie waarop zij zich op dat moment bevinden. In het artikel wordt stilgestaan bij een aantal Mobile Positioning Methodologies en worden van elke methodiek de vooren nadelen en de mogelijke toepassingen besproken: komende jaren een groeiend gebruik van deze toepassingen verwacht. En hoewel consumenten in sommige gevallen hun zorgen hebben geuit over schending van privacy denk aan het voorbeeld dat we gaven tijdens de Masterclass over het Amerikaanse Target dat op basis van de aankopen van een tiener wist te voorspellen dat ze zwanger was kunnen de voordelen voor adverteerders én voor consumenten groot zijn. Ondanks de vele uitdagingen op het gebied van mobile positioning en de location-based services die daaraan gekoppeld kunnen worden, is dit een ontwikkeling waarvan op termijn een belangrijke groei wordt verwacht. BLE Beacons GPS Light-Based Positioning Magnetic Anomaly Positioning Mobile Signal Positioning Natural-Feature Recognition WiFi Fingerprinting WiFi Triangulation Zie tabel op p. 20 voor een overzicht. Nu grote retailers in Amerika beginnen te experimenteren met dergelijke indoor location-based services, wordt in de 5

6 Samenvatting artikel 3 De toekomst van media-research in eigen hand Publieksdata zijn belangrijk, daar is iedereen het over eens. In dit artikel wordt aangekaart dat de reden waarom marketeers zo enthousiast zijn over digitale kanalen, is dat die publieksdata leveren die direct afkomstig zijn uit het kanaal zelf, zoals click-rates. De meeste andere media, zoals Out of Home, hebben echter aanvullend onderzoek nodig. Wij verzamelen informatie over verkeersstromen en patronen en visuele aandacht en met complexe modellen proberen we daarmee bruikbare data beschikbaar te stellen. Marketeers vinden echter regelmatig dat zulke data niet één op een vergeleken kunnen worden met data uit andere kanalen. Met de komst van mobiele devices echter hebben we een nieuwe bron van informatie in handen, die ons direct inzicht kan geven in het gedrag van consumenten buitenshuis. De vraag die behandeld wordt, is of dergelijke gegevens een verandering kunnen bewerkstelligen in de manier waarop we consumenten buitenshuis kunnen analyseren. Het gebruik van mobiele data in OOH-mediaresearch kan op een aantal manieren bijdragen aan de ontwikkeling van de sector: data te duiden, hebben we specialisten nodig. Maar mét die data kunnen we adverteerders helpen efficiënter en effectiever te communiceren met publiek in beweging, wat bijdraagt aan een verdere ontwikkeling en groei van het Out of Home-kanaal. Grotere betrouwbaarheid van data en een betere accountability van het kanaal Dagelijkse uitgifte publieksdata (denk bijvoorbeeld aan TV, waarbij elke ochtend de kijkcijfers binnenkomen en campagnes kunnen worden geoptimaliseerd) Planning en aankoop verder verfijnen Ook wordt gesproken over de mogelijkheid voor exploitanten om hun objecten te prijzen afhankelijk van de samenstelling van hun publiek op verschillende tijdstippen. Om dat te kunnen, moeten we over betere publieksdata beschikken. Een verschuiving richting data-intensievere praktijken wordt voorzien. Om de waarde van dergelijke data en mobiele 6

7 Samenvatting artikel 4 Programmatic Trading en Out of Home Een andere technologische ontwikkeling waarover we al veel hebben gehoord, is Programmatic Trading. De indrukwekkende groei in online advertising is niet alleen een gevolg van veranderingen in mediaconsumptie en meetbaarheid, maar ook van de automatisering van trading, zo wordt in dit artikel gesteld. Ook Out of Home weegt de mogelijkheden en risico s inmiddels tegen elkaar af. De online advertising sector biedt een goede indicatie van wat er in Out of Home mag worden verwacht. Programmatic Trading in Out of Home zou kunnen leiden tot een verandering van de rekeneenheden die momenteel worden gebruikt. Elk paneel is een 1-op-n medium, de inventory wordt meestal verdeeld over netwerken die voor één of twee weken kunnen worden ingeschakeld. Met programmatic zou een grotere willekeur in de samenstelling van netwerken kunnen ontstaan en kan ook flexibeler omgegaan worden met af te nemen periodes. Door media in netwerken op te nemen, verspelen exploitanten de mogelijkheid om een enkel paneel te verkopen aan de adverteerder die de grootste waarde hecht aan het bereik van dat paneel. Door inventory die nu gebundeld is, te splitsen, kan de waarde van objecten voor zowel exploitanten als adverteerders worden vergroot. Programmatic trading zou de efficiency van OOH-trading ongetwijfeld verbeteren, en daarbij een reeks veranderingen op gang brengen in de manier waarop Out of Home media worden ontwikkeld, beoordeeld, gepland en gebruikt. 7

8 Inhoudsopgave Kinetic Futures papers 1. Technological Innovations 2. Indoor Mobile Positioning and Location-Based Services 3. De toekomst van media-research in eigen hand 4. Programmatic trading en Out of Home 8

9 Kinetic Futures is a think tank that produces foresight on the evolution of marketing practice, the advertising business, mobile ecosystems, and urban development and transportation over the course of the next decade. Kinetic Futures is incubated by Kinetic Worldwide, a global lifestyle and environment media agency held by WPP company tenthavenue. Technological Innovations Keeping abreast of the technological advances shaping the out-ofhome sector can be a daunting proposition. Due to a lack of context and an abundance of hype, it is often difficult to assess whether new technologies are truly disruptive innovations or merely represented as such by publicists and journalists. We hope that this quarterly report will provide both context and clarity, giving readers insight into new technologies that are likely to shape the sector. In this release, we consider developments in a variety of domains, ranging from wireless connectivity to physical computing. We highlight the evolving impact of mobile devices on media consumption outside of the home, discussing the emergence of new form factors along with advances in wireless network capacity and coverage. We also look at the effect of low-cost protoyping platforms on innovation in interaction design. Finally, we turn to the consequences of urbanization on transportation, housing and lifestyles. The impacts of technological innovation on out-of-home media can be grouped in five main categories: 1. Conveyance The technologies implicated in the delivery of messages to audiences, from liquid-crystal displays to fluorescent backlighting and vinyl printing, define when, where and how people receive information in out-ofhome environments. 2. Distribution The transfer of communicational assets whether images, video or sound from advertisers to out-of-home display surfaces involves a number of processes, including trafficking, scheduling and posting. 3. Observation The out-of-home media ecosystem utilizes an array of technologies, from roadway traffic sensors to facial-detection systems, in order to gather, analyze, and distribute audience data substantiating the communicational value of inventory. 4. Agency Agency refers to the capacity of audiences to influence an advertiser s communications, whether through interactive technologies such as touchscreens, or through technologies that target advertising based on audience characteristics, such as anonymous video analytics. 5. Environment The built environment, which provides the primary contextual frame for out-of-home media and messages, is shaped by technologies in an array of fields, from structural engineering to transportation. 9

10 Conveyance Designing mobile devices involves inevitable compromises between performance and versatility. Devices with limited feature sets can be optimized to perform specific tasks, but they demand that their users purchase and carry multiple specialized devices. More versatile devices, in contrast, provide greater convenience and affordability at the expense of performance. These competing approaches to device design are reflected in two concurrent trends: the growing popularity of so-called phablets (smartphone and tablet hybrids) and wearable computing devices. The use of these devices could have important implications for the sector as they reshape media consumption outside of the home. Phablets Phablets are usually defined as mobile computing devices with screens measuring 12.5 cm or more diagonally; a size that situates them between conventional smartphones and tablets. Phablets were first popularized, and remain most successful, in East Asia. According to Kantar Media, between November 2013 and January 2014 phablets accounted for nearly one third of all smartphones sold in China; in South Korea, analysts report phablets make up two thirds of all smartphone sales. Demand is also strong in emerging markets including Brazil, Indonesia, and Eastern Europe. Research suggests that many phablet owners use them as their primary internet access device and are unlikely to own tablets. This may account in part for their especially robust appeal in emerging markets, where consumers are more price-sensitive and less likely to own multiple mobile devices. The cost of purchasing a data plan for a second device is an additional deterent. Impact Conveyance PANs Phablets Time (years) Note: The charts in this report plot innovations according to the magnitude of their potential impact upon industry stakeholders (vertical axis) and the time until a majority of these impacts is likely to be felt (horizontal axis). Though phablet sales are growing in the US and Europe, they have been slower to catch on in these areas, which some analysts attribute to their higher tablet penetration rate. Many consumers in these markets are relatively affluent and able to afford multiple devices (e.g. a tablet or laptop for rich-media consump- Phablets offer a more immersive and richer media experience than do conventional smartphones. tion and a smartphone optimized for connectivity on the move). Individuals seem less likely to accept the compromises of a phablet if they have the option of owning multiple devices. However, phablets appeal to consumers who wish to simplify their device use, those who are price-sensitive, as well as those who intend to use a phablet in conjunction with a Bluetooth headset or smartwatch, either of which makes the use of an oversized phablet less cumbersome. Due to their larger screen size, phablets offer a more immersive rich media experience than do conventionally sized smartphones. Therefore, they may further heighten the degree to which mobile media competes with ambient media for the attention of smartphone owners in high dwell time environments like waiting rooms, train platforms, and food courts. Though they may never have penetration in the United States and Europe to equal that in Asia, phablets global popularity may also influence device makers to promote smartphones with larger screens than those seen on current models, but smaller than those found in phablets. Evidence for this view is provided by a study conducted by Kantar on mobile device preferences of European smartphone buyers. Kantar s research found that 42% of the phablet owners switched to a smaller device at the end of their contract but usually one that was only slightly smaller (between 11 and 12 cm). Personal Area Networks If phablets represent a triumph of hybrid design, wearable computing devices are one of specialization. Wearable computing devices use wireless standards like Bluetooth Low Energy to communicate with one another, and with smartphones, in personal area networks (PANs). These PANs enable wearable computing devices to be small enough in size to be comfortably worn, as they can depend on their user s smartphone for processing power and internet connectivity. Furthermore, by enabling inter-device communication PANs make it possible for responsibilities to be distributed across devices, providing a better overall user experience. 10

11 For example, a sensor-equipped fitness tracking wristband can monitor its user s activity and sleep, with that data being analyzed, charted, and shared on the user s smartphone. A smartwatch can provide notifications of phone calls and s, and its user can write out responses on her smartphone or tablet, while a headsup display like Google Glass can record video or provide turn-by-turn navigation assistance. Each device in this ecosystem performs a limited array of functions, but to an optimal level. Google, Huawei, HTC, LG, Microsoft, Motorola, Qualcomm, Samsung, and Sony all currently market wearable computing devices or have announced plans to do so, and Apple is widely rumored to be working on a health-focused wearable for debut in the latter half of While these devices are unlikely to become platforms for display advertising, due to their small screen size, their impact on mobile media could be significant. By enabling their users to perform mobile tasks like searches on platforms that are presently ad-free, and will Wearable devices can help users better manage their attention in out-ofhome contexts. always have limited space for advertising, wearables may reduce mobile advertising impressions and deal a blow to mobile media s value. Heads-up displays might also reduce the friction involved in mobile activation using visual search or QR codes. The designers of wearable computing devices tout their ability to help their users triage the flow of information their phones expose them to, thus better managing their attention. Heads-up displays, which permit their users to keep their gazes elevated while they re engaging with the device, may enable their users to pay greater attention to their immediate surroundings and the ambient media present there. Distribution As streaming video and other rich content puts increasing strain on mobile networks, wireless carriers are searching for new ways to expand network capacity. A number of technologies including heterogeneous networks or hetnets are being considered as possible solutions. White Space Mobile network operators and internet service providers are now looking to exploit so-called white spaces narrow bands of unused spectrum created by regulators to prevent interference between terrestrial television stations. With the adoption of digital broadcasting in many markets, the need for these buffers has diminished, and government licensing bodies are exploring ways to reallocate this excess spectrum. To ensure that these new uses do not interfere with an array of existing broadcasters, however, regulators must identify and monitor the white spaces available in each location. Projects evaluating the feasibility of using white spaces for mobile and wireless broadband networks are underway across the globe. Europe s first major white-space trial is currently being conducted in the UK by a consortium of 20 technology firms, including Google and Microsoft, assembled by communications regulator Ofcom. Because the portion of the radio spectrum devoted to television is at relatively low frequency, signals travels longer distances than the higher frequency spectrum conventionally used for mobile network signals. This has generated particular interest in the use of whitespace spectrum to connect rural areas in both the developed and developing world. Microsoft is currently leading pilot Impact Distribution Connectivity Underground White Space Time (years) programs in Kenya, South Africa, and Tanzania that are testing the use of white spaces to deliver wireless broadband to schools, health clinics, and government offices. The technology firm is reported to be in talks with the governments of ten other African countries about initiating similar trials. Meanwhile ICASA, South Africa s communications regulator, is reported to be considering new regulations allowing the use of white space spectrum by wireless broadband providers, following the successful completion of a six-month test of the technology organized by Google. By enabling residents of rural areas and other places underserved by mobile networks to connect to the internet, the use of white spaces could open up new markets for these services and provide populations with expanded opportunities for education, commerce, and connection with the rest of the world. 11

12 In regions where wireless and mobile connectivity is already widespread, the reallocation of white-space spectrum could allow networks to perform better and meet the rising demands of their users. Increased network capacity could enable data-intensive activities like streaming video to digital billboards to become more commonplace, and could increase the reliability of the networks upon which digital signage depends for content updates. However, increased network capacity would also deepen the degree to which mobile device users can consume rich media content on their smartphones and White spaces could bring telephone and internet connectivity to new populations. tablets, potentially reducing the attention they afford to ambient media in high dwell time environments. Connectivity Underground As personal mobile devices become an ever-more integral part of people s lives, wireless connectivity is expanding in a range of out-of-home environments. The expansion of wireless access in transportation environments such as airplanes (see Technological Innovations 2013 Q4) and metro systems allows people to remain connected even while on the move, increasing the degree to which mobile acts as both a competitor and a complement to out-of-home media. Major metropolises around the world are working to bring both WiFi and mobile voice and data coverage to their underground stations. Mobile voice and data connectivity is currently more prevalent than WiFi. Most major American cities and East Asian capitals, and some western European ones including Paris, Berlin, and Moscow, offer 3G or 4G LTE coverage in all or a portion of their metro stations. Seoul s metro system is currently the world s most connected, with 4G LTE and WiFi available in stations and moving metro cars. New York, Paris, and Singapore currently have initiatives in progress to expand or upgrade mobile coverage, while Bangalore, Guangzhou, Helsinki, London, Kyoto, Moscow, New York, Paris, Shenzhen, and Tokyo have recently introduced WiFi in metro stations, or have projects in progress to do so. Beijing, Berlin, Hong Kong, Taipei, and Singapore have offered WiFi to metro passengers for several years. While some cities offer WiFi in their metro systems as a free public service, in other cities the metro WiFi network is only available to subscribers, or those who purchase a pass for short-term use. Though expanded WiFi and mobile service coverage in metro systems will increase personal mobile devices competition with out-of-home media for passengers attention, it will also create new opportunities for mobile activation of out-of-home media in high dwell-time environments like stations and platforms. Research will be required to understand its impact on audience behaviors in these environments. Network coverage throughout metro systems could also enable the wireless distribution of content to digital displays in stations and on platforms. Observation Last year s revelation of widespread electronic surveillance by the American government has brought renewed attention to issues of data privacy and security, and it has increased scrutiny of how others actors, including marketers, collect and use personal data. In response to growing concerns, several companies have released products that bring sophisticated privacy tools to the consumer market. While some security experts question whether consumers have the knowledge to use these products effectively, their availability signals that marketers are likely to face greater resistance and barriers to their use of consumer data in the future. Secure Communications Smartphones with built-in encryption and other security features have been manufactured for governments by firms such as Boeing and Motorola for some time. While these phones are not available to ordinary consumers, two new smartphones offer similar functionality These products are indicative of mounting resistance to the collection and use of personal data. for privacy-conscious users. Privacy Phone (sometimes referred to as the Snowden Phone by its creators after the American government contractor who leaked details of the NSAs surveillance activities) is based on the Samsung Galaxy S II and is offered by FreedomPop, an American mobile services firm. Blackphone is a collaborative undertaking by Geeksphone, a Spanish hardware start-up, and Silent Circle, an encryption software company. Privacy Phone is equipped with software that encrypts calls and text messages, and routes web and application data through a virtual private network (VPN). Blackphone, which runs a customized Android operating system called PrivateOS, offers a greater range of security features commensurate with its higher price. These include encrypted data back-up, a dashboard for managing 12

13 Impact Observation Secure Communications Time (years) ty. While Tor software has been free to download and use for a decade, its use has never become widespread and the service is unfamiliar to most. Safeplug aims to make it accessible to mainstream consumers who might lack the technological sophistication to utilize Tor on their own. By disassociating users IP addresses from their web activity, Safeplug would challenge marketers ability to target web advertising and build audience profiles. The device also comes with pre-installed ad-blocking software, which users can enable in order to block display advertisements. Relaying data over the Tor network slows download speeds, lessening Safeplug s appeal to individuals for whom security is secondary to performance. Like Privacy Phone and Blackphone, however, its introduction is indicative of mounting challenges to the use of personal data to sell media and target advertising. Agency As their component technologies have evolved, computers have become ever smaller and cheaper. Having moved from research laboratories into the workplace, the home, and people s hands, computers are now being embedded in a diverse range of environments, including many outside of the home imbuing both objects and ambient media with the ability to sense and respond to input from people and conditions in their surroundings. When these objects are connected to one another so that information can be shared, they form what is often described as an internet of things. The falling cost and shrinking size of hardware is also allowing people to experiment with these technologies outside of conventional academic and commercial contexts. This democratization of computing, embodied in the rise of the so-called application permissions in granular detail, and three Silent Circle subscriptions which can be distributed to contacts to enable bilaterally secure communications. Promotional materials for both phones highlight their ability to prevent marketers from tracking the phones users and monetizing their data. While Blackphone and Privacy Phone are likely to appeal only to consumers for whom privacy is a primary concern, their success could encourage major network operators and device makers to offer additional security features and products. This could threaten the targetability of some mobile advertising and make the collection of behavioral data by application developers more difficult. As mobile network operators (MNOs) would still have access to the locations from which phones data requests originate, however, MNO data would remain useful for developing anonymous mobility models which could be used for out-of-home audience measurement. Safeplug, a new offering from cloud-storage firm Pogoplug, is a router accessory that transmits data over the anonymous Tor relay network. This prevents the user s IP address from being associated with his or her online activitinkerer or maker subcultures, is spurring innovation in the design and manufacture of devices. Arduino In a previous release of this report we highlighted two digital-signage players built using Raspberry Pi, an inexpensive ARM processor-based mini-computer originally designed for student programmers and hobbyists. Arduino is an opensource hardware and software platform, developed with a similar intent, for use in the prototyping of interactive objects and environments. Arduino boards can process input from an array of sensors and control actuators like motors or lights in response. The boards can be purchased at relatively low cost or assembled using freely available designs. Projects built with the Arduino architecture range from the utilitarian (a remote fire-suppression system) to the whimsical (music-playing Lego figurines). While projects like these are not, in and of themselves, disruptive or ready for mass production, they are indicative of a creative ferment out of which transformational ideas and technologies are These prototypes are indicative of a creative ferment out of which transformational ideas are likely to emerge. likely to emerge. They point to the further proliferation of interactive and responsive objects and media in the world around us. As the cost of deploying such technologies falls, out-of-home marketers are also likely to execute a greater number of interactive campaigns. 13

14 Impact Agency While some forward-looking brands might consider utilizing Arduino for responsive or interactive out-of-home campaigns, far more important are the new ideas and interfaces to which the present experimentation could give rise. The out-of-home channel is likely to become far richer and far more engaging as media surfaces become more dynamic and responsive to audiences. Environment Today more than half of the world s population dwells in a city, and urbanization continues to accelerate across the globe. The growth of cities has exacerbated a number of significant challenges that include the scarcity of affordable housing and increasing traffic congestion. Governments, businesses and consumers are responding to these issues in ways that promise to change how people live in and move through cities. Micro-Apartments Time (years) Arduino High real-estate costs in densely populated cities like Hong Kong, New York, and Tokyo have led to the proliferation of micro-apartments created through ille- gal subdivision of existing residential units. Journalists exposés of the often appalling state of these homes have provoked an array of initiatives to design and construct micro-apartments that offer better living conditions.. In New York, construction has begun on a residential building intended as a test case for micro-apartments. The development is the culmination of a contest, organized by the city government, for the design of a square meter apartment. The building s developers have been given special exemption from the city s existing zoning laws on apartment size and building density, suggesting that these laws might be relaxed should the development prove successful. Similar projects are underway in several other American cities, including Boston, Sacramento, and San Francisco, where 375 micro-apartments are being built to evaluate the impact of a proposal to change city zoning laws to allow apartments as small as 20 square meters. Changes in zoning laws would not only acknowledge the long term trend towards increased urban density, but also reinforce and accelerate it In China, where the largest government-sponsored urbanization initiative in history is currently underway, both developers and government officials are looking to micro-apartments to house the constant tide of people moving to cities. China s largest residential real-estate developer, Vanke, has created a model apartment of just 15 square meters for possible development. At the same time, municipalities including Beijing and Shanghai have recently strengthened penalties for property owners who illegally subdivide single-family apartments and rent them to groups of tenants, known as mouse tribe for the cramped quarters in which they reside. By creating planned micro-apartments, developers like Vanke hope to raise living standards for workers and better align their products with the needs of urban residents. Impact Environment Micro-Apartments Time (years) Peak Car The popularization of micro-apartments is likely to encourage people to spend more time out of the home, given the limited space they provide for entertaining or engaging in leisure activities. Public spaces like cinemas, parks, and shopping malls may take on increased importance as spaces for socialization and see higher foot traffic and longer dwell times as a result. Individuals who reduce the portion of their income spent on rent by choosing smaller apartments may also find themselves with more income to spend on out-of-home leisure activities and other purchases. Furthermore, micro-apartments allow for increased urban density, creating higher demand for public transit and incentivizing municipalities to promote alternatives to driving. This could impact the value of out-of-home media sites, with roadside media formats seeing a drop in value and pedestrian and rail formats experiencing a corresponding increase. 14

15 Peak Car Marketers have used roadside bulletins to reach audiences on the move for as long as cars have been on the road. Today, a significant portion of out-of-home spending is devoted to these formats. In some markets, such as the US, well over half of sector revenues are generated by roadside media. As such, changes in driving behavior are of critical importance to the out-of-home industry. While automobiles remain the primary mode of transport for many individuals in developed markets, the ownership and use of personal vehicles has been declining throughout this part of the world. In an array of countries, including Australia, France, Italy, Japan, New Zealand, Spain, the United Kingdom, and the United States, the distance travelled per vehicle has been flat or declining for the last decade and a half. Referencing the popular theory that global oil production has peaked, the notion of peak car has gained currency as a term to describe the moment in time at which automobile ownership and use level off and then enter terminal decline. The changing demographic profile of drivers in many countries suggests that these trends are likely to persist or ever strengthen. While older people are continuing to drive, many young people are acquiring driving licenses and vehicles later in life. Others are choosing to do without cars altogether. In 2010, for example, 7 out of 10 American 19-year-olds had a driver s license, down from almost 9 out of 10 in In Germany, one of the world s most car-fixated countries, almost a third of young households do not own a vehicle. Similar delays in the acquisition of licenses and cars have also been observed in Canada, France, Norway, South Korea, Sweden, and the UK. Compounding these effects, research suggests that people who acquire licenses later in life drive less even after they are licensed. Developing economies such as China, Indonesia, and Vietnam continue to display voracious appetites for automobiles (China surpassed the US as the world s largest auto market in 2009), but this growth shows signs of slowing. Urban areas in this part of the world are far denser than those in Europe and North America and the existing infrastructure is woefully inadequate to handle the growing volume of vehicles. Many municipal governments have responded to worsening traffic and The changing demographic profile of drivers suggests that this decline is likely to persist or even accelerate. air pollution by restricting vehicle ownership and investing in alternative modes of transportation, including trains and bus rapid transit systems. These emergent trends can be attributed to a variety of factors. The rapid urbanization of many regions has put more people in cities that are easily navigated by foot or public transit. Greater numbers of municipalities are accordingly investing in mass transit systems of all kinds, reflecting both a desire for enhanced transportation efficiency and for reduced pollution. Furthermore, the internet has enabled people to reduce the number of car trips they take by affording them opportunities to shop and socialize on virtual platforms, rather than in the offline world. The proliferation of bicycle shares (see Technological Innovations 2013 Q3) and the improvement of cycling infrastructure in many cities have also provided people with an appealing alternative to driving. Finally, car-share services such as BMW DriveNow, City Car Club, Stadtmobil, and ZipCar, have also provided affluent consumers an alternative to car ownership. In the short term, the changes in driving demographics are unlikely to have a dramatic effect on the use of roadside media. Its efficacy as a means to reach young people may erode, but a broader decline in its relative value will emerge only over time. As this occurs, transit and pedestrian formats may increase in value as cities become denser and people utilize other forms of transportation. This shift may encourage investment in formats and communication styles which are suitable for these environments. Please turn to the next page for a chart comparing innovations across impact categories. 15

16 Innovations 2014 Q4 Conveyance A Phablets B PANs G Distribution C White Space D Connectivity D C Underground Observation Impact B F H E Secure Communications A E Agency F Arduino Environment G Peak Car H Micro-Apartments Time (years) The chart above plots the innovations discussed in this report according to the relative magnitude of their potential impacts upon industry stakeholders and the time, in years, until these innovations are likely to have such effects. 16

17 Five innovations summarized Short summary of the facts and USP s of five of the innovations mentioned. Phablets Increases network capacity Could create faster, more reliable wireless networks for content delivery An expensive open-source hardware and software platform for prototyping interactive objects Encourages experimentation Indicative of falling cost of interactive technologies Innovations could lead to more engaging media in Out of Home environments Better able to attract and sustain audience attention Smartphone/tablet hybrids Screens >12,5 cm (diagonal) Compromises between portability and functionality Indicative of trend towards larger screens on mobile devices Especially popular in East Asia and emerging markets More immersive than conventional smartphones Increase degree to which smartphones compete with ambient media for audiences attention White spaces Reallocation of unused buffer spectrum from broadcast television to wireless telephone/data Trials in progress in the UK and several African nations Expands coverage Spectrum is at low frequencies; signals travels farther Useful for providing service to rural areas Secure communications New products offer encryption and other security features to consumers Smartphones that encrypt users data (e.g. Blackphone, Privacy Phone) Routers that anonymize users web behavior (e.g. Safeplug) Inspired by concerns provoked by revelations of American government surveillance Signal mounting challenges to use of personal data to sell media and target ads Arduino Peak car Developed markets Automobile use and ownership flat or declining for last fifteen years Decline is likely to persist; young people are acquiring licences and vehicles later in life, driving less Developing world Rapid urbanization, poor infrastructure expected to limit long-term growth of car use and ownership Presages long-term decline in relative value of roadside media Increasing value of transit and pedestrian-oriented media 17

18 Kinetic Futures is a think tank that produces foresight on the evolution of marketing practice, the advertising business, mobile ecosystems, and urban development and transportation over the course of the next decade. Kinetic Futures is incubated by Kinetic Worldwide, a global lifestyle and environment media agency held by WPP company tenthavenue. Indoor Mobile Positioning and Location-Based Services While location-awareness is an important dimension of many mobile services, technological limitations have hindered efforts to offer this capability in the stores, shopping malls, and other indoor environments where people spend much of their time. The GPS, Wi-Fi, and cellular signals upon which many location-aware applications rely are distorted and weakened by building structures and so perform poorly in indoor environments. However, a number of developments including improvements in positioning techniques and growth in smartphone adoption are now driving the proliferation of location-based services indoors. These services offer marketers new opportunities to understand and communicate with consumers in a variety of important contexts. In particular, these and other developments in mobile computing promise to improve the ability of marketers to reach consumers during the final, critical steps in the increasingly complex path to purchase. The present enthusiasm for indoor location is the product of concurrent shifts in business practice and consumer behavior. While many retailers and venue operators still view mobile services as a threat to their businesses, they are also increasingly appreciative of the value of mobile devices as an in-store communications channel. As retailers seek to better align their online and offline offerings, they are developing omnichannel retail models in which mobile, location-based services play a critical role. Furthermore, the increasing penetration of smartphones is making the medium more important and attractive to marketers, and there is a growing confidence among service providers that the medium can be effectively monetized through advertising and other forms of marketing. Location is also becoming embedded in a growing number of mobile applications. While explicitly location-based platforms such as Foursquare or Jiepang have not achieved mainstream adoption, location awareness is becoming an implicit feature of a wide range of other services. The relatively small user bases of such geosocial services should not be used to dismiss the importance of location to mobile device use: while a study conducted by the Pew Research Center in 2013 found that only 12% of adult American smartphone owners used a geosocial service, it also found that 74% of the same demographic used their smartphone to find information related to their current location. Indoor Mobile Positioning Indoor location-based services generally require far greater precision in positioning than applications intended for use outdoors, such as car navigation and pedestrian wayfinding. In the latter environments, locating a user to within a few dozen meters may be sufficient to to accurately establish his or her context. 18

19 In many indoor environments, however, similar margins of error are unacceptable, as they can mistakenly locate a user on the wrong floor of a building or the wrong store in a shopping mall. Wi-Fi Triangulation: One common approach to indoor mobile positioning relies upon the signals of the Wi-Fi routers that have become increasingly prevalent in urban settings. These signals are known to degrade in predictable ways as they propagate outward from their source, and so it is possible to triangulate the location of a mobile device by measuring the relative signal strengths of three or more nearby routers. Unfortunately, buildings disrupt and distort these signals in unpredictable ways, rendering the approach relatively inaccurate indoors. Providers report the ability to locate a user within approximately 10 meters, but real-world performance has been shown to be far poorer. Even under optimal conditions, however, the approach is insufficiently accurate for many common applications, including in-store navigation. Bluetooth Low-Energy: Due to the aforementioned shortcomings of Wi-Fi triangulation, a number of alternative approaches have been developed. Among these is the use of Bluetooth Low-Energy (BLE) transceivers as locational markers. Mobile devices equipped with Bluetooth (version 4.0 and higher) can detect the signals emitted by these beacons and triangulate their position in the manner described above. If widely deployed in an environment, they can locate a device to within a meter or two. Unlike Wi-Fi routers, these beacons are inexpensive, require no hard-wiring, and can operate for extended durations on battery power. Bluetooth beacons can also be used to deliver content directly to a nearby mobile device, functioning as a standalone solution for enterprises. Retailers have expressed particular interest in BLE technology as a means to distribute location-specific coupons and product information to shoppers. Paypal, Qualcomm, and Apple are all currently working with BLE beacons. Significantly, companies that have previously devoted their attentions to other beacon technologies such as Sonic Notify, which offers a proximity-based marketing product using ultrasonic beacons have embraced BLE and incorporated it into their existing products. Magnetic Anomaly Positioning: Other approaches allow for accurate positioning without the need for environmental instrumentation, such as the installation of Bluetooth beacons or Wi-Fi routers. One such approach locates a mobile device by comparing the readings of its compass to a map of the unique magnetic anomalies created by the structure of a building. Though the technique is reported to be accurate to within 3 meters 90% of the time and does not require instrumentation of a venue, it demands a significant investment in mapping a building s magnetic fields. This method of indoor positioning is currently being advanced by Finnish start-up Indoor Atlas. Wi-Fi Fingerprinting: Wi-Fi fingerprinting similarly depends upon mapping the distortions caused by building structures. With this approach, the received signal strength of multiple Wi-Fi access points are mapped to create a unique radio fingerprint for each location in a venue. This map can be used to locate smartphones significantly more precisely than conventional Wi-Fi positioning. This method also has the advantage of utilizing infrastructure currently installed in many indoor environments. However, accuracy varies depending upon the number of Wi-Fi access points in the environment, and many environments do not have enough access points to enable accuracy as precise as some competing approaches to indoor positioning. Light-Based Positioning: It is also possible to achieve accurate indoor positioning using input from the cameras of mobile devices. One such approach involves the installation of specialized LED lights. These lights pulse in a coded pattern that, while undetectable to the human eye, can be detected and deciphered by a smartphone. While accuracy is dependent on the number of such beacons installed, providers report the ability to locate a device within a meter in a typical retail environment. It can be used in conjunction with Wi-Fi or cellular networks to push location-relevant content to smartphones. Power consumption must be carefully managed, however, as a camera can quickly drain the battery of a device if used continuously. The technology is being developed and sold by American start-up ByteLight. Natural-Feature Recognition: Another approach to vision-based positioning uses the existing visual features of an environment to locate a device, much as people locate themselves within a room as they looking about. This approach requires no instrumentation of the environment but is computationally intensive and requires extensive photographic documentation of a venue. (Please refer to Briefing: Mobile Augmented Reality for more on this technique). While a variety of companies have investigated these technologies, the use of natural-feature recognition for positioning remains experimental. 19

20 Mobile Positioning Methodologies In the table below, we outline the requirements, advantages, and applications of approaches to both indoor and outdoor mobile positioning. Method Advantages Drawbacks Applications BLE Beacons Low-power; Relatively inexpensive Not all smartphones have BLE; Requires installation of beacons in venue Proximity-based delivery of digital content to mobile devices GPS Can be used with some feature phones; Global coverage of outdoor environments Indoor functionality handicapped Outdoor positioning Light-Based Positioning High accuracy; Leverages existing infrastructure Requires upgrades to existing infrastructure; Smartphone battery-draining Proximity-based delivery of digital content to mobile devices; Indoor navigation Magnetic Anomaly Positioning No infrastructure requirements Requires both initial mapping of environment s magnetic fields and updates after major structural changes Indoor navigation; Geofencing Mobile Signal Positioning Can be used with feature phones as well as smartphones; no infrastructure or mapping requirements Limited functionality indoors; Relatively low accuracy Outdoor positioning Natural-Feature Recognition Highly accurate; No infrastructure requirements Requires detailed photographic documentation of environment; Smartphone battery-draining Shelf-level positioning with packaged goods; Indoor navigation WiFi Fingerprinting Leverages existing infrastructure Requires both initial mapping of environment s WiFi signals and updates after major infrastructure changes Indoor navigation; Geofencing WiFi Triangulation Leverages existing infrastructure; Does not require initial mapping Relatively low accuracy Indoor navigation; Geofencing 20