Evolving smartphone audience preferences November 2017 Article Seasonal trend Tech and Telecom A saturated U.S. smartphone market As the U.S. smartphone market reaches its saturation point,1 the Bing Network’s search data reflects a shift in shopping behaviors for smartphone devices. Apple and Samsung have the lion’s share of the U.S. market and are essentially trading off share between one another quarter over quarter.2 Because the market is nearly saturated, relying on innovation as a differentiator may not be enough to sway customers.1 Edward Baig at USA Today refers to the recent slump as an “innovation hiatus.”3 The ability to adapt to new strategies is paramount to a marketer’s success. Open sharing control Share using Facebook Share using Twitter Share using LinkedIn Share using Email Download insight Shoppers are holding on to their smartphones With innovation stalled, recent models have failed to excite audiences like they used to, according to Dan Hays, partner at PriceWaterhouseCoopers.4 “There hasn’t been a great reason to upgrade,” Hays said in USA Today.4 “Bigger screens, more memory and higher resolution cameras have largely failed to engage masses in spending thousands to replace phones.”4 Even lower priced mid-range phones are delivering enough advanced features to satisfy most consumer daily needs.2 Recent surveys by Barclays indicated that 45% of individuals did not plan to trade in their device this year.5 In mid-October, it was announced that in its first month on the market, the iPhone 8 was being outsold by the iPhone 7.6 According to data from Consumer Intelligence Research Partners, Q1 sales reports reflect the iPhone 8 is selling more like an iPhone ‘S’ model.7 The implications for search advertisers Bing Network search trends reflect this shift in consumer behavior when shopping for new smartphone devices: General interest of the latest iPhone is flat compared with last year’s model: This year’s iPhone 8 and iPhone X post-announcement search volume was relatively flat compared to last year’s iPhone 7 post-announcement volume.8 Open sharing control Share using Facebook Share using Twitter Share using LinkedIn Share using Email Download insight Searches for previous models increase during the launch of the newest model: The graph below represents this year’s iPhone 8 launch and how traffic for the iPhone 7, iPhone 6s and iPhone 6 also increased in the post-iPhone 8 announcement period.9 Overall, searches for the three previous generations of iPhones increased by 12% after the announcement.8 Open sharing control Share using Facebook Share using Twitter Share using LinkedIn Share using Email Download insight Searchers are seeking smartphone deals in greater numbers: Shoppers display price-conscious behavior: From 2015 to 2016, searches related to “iPhone sale” terms rose by 30%.10 Those same queries rose by almost 70% in 2017.10 Open sharing control Share using Facebook Share using Twitter Share using LinkedIn Share using Email Download insight Tips to target smartphone shoppers Closely monitor keyword performance to ensure coverage across new releases and older devices by taking advantage of Bing Ads Keyword Planner. Making the sale will be more difficult than before, given the increase in competitive strategies and shifts in consumer behavior. Brands should consider strategically expanding budget to emphasize older mobile devices because search volume increases for older models when new models are announced. Ensure that Bing Shopping Campaigns are fully implemented with a diverse product feed that includes all makes, models and price points. Use remarketing tactics to better position the brand for consideration as prospects near the end of the purchase journey. For example, include messaging around upgrade or trade-in programs to incentivize and retain existing customers. Respond to deal seekers during the holiday season by showcasing price-conscious product offerings or ad copy promoting payment installment programs. This approach is used by cell phone carriers to make certain makes and models more accessible. These methods remind prospects of easy payment offerings that can alleviate the burden of premium pricing. Closing 2017 is a big year because it is widely viewed as an inflection point for handset manufacturers. As Apple enters its 10th year selling iPhones and Samsung rebounds from the Galaxy Note 7, there is an opportunity for other brands to step up and compete in the space. With a nearly saturated market experiencing diminished innovation growth and a trend where consumers are looking to previous models for lower prices, marketers need to respond differently. Chris Yu Insights Manager Article Seasonal trend Tech and Telecom Sources Whitney, Lance. “Smartphone market's glory days are ending,” CNET, February 23, 2016, (https://www.cnet.com/news/smartphone-markets-glory-days-are-over-says-analyst). comScore MobiLens report, U.S., August 2016 to June 2017. Baid, Edward C. “Here's what will make smartphones exciting again,” USA Today, March 10, 2017, (https://www.usatoday.com/story/tech/columnist/baig/2017/03/10/can-smartphones-get-exciting-again-look-voice-5g-wireless-charging/98947756). Swartz, Jon. “Samsung Note 8, then iPhone 8, could remedy stagnant phone sales,” USA Today, August 23, 2017, (https://www.usatoday.com/story/tech/2017/08/23/samsung-galaxy-note-8-apple-iphone-8-could-remedy-stagnant-phone-sales/577267001). Haselton, Tod. “Nobody wants to buy a $1,000 iPhone, Barclays says,” CNBC.com, August 11, 2017, (https://www.cnbc.com/2017/08/11/nobody-wants-to-buy-a-1000-iphone-barclays-says.html). Vega, Nicola. “The iPhone 7 is selling faster than the iPhone 8,” New York Post, October 16, 2017, (http://nypost.com/2017/10/16/the-iphone-7-is-selling-faster-than-the-iphone-8). “iPhone 8 is Selling Like an 'S' Model [Report]," iClarified, October 23, 2017, (http://www.iclarified.com/63044/iphone-8-is-selling-like-an-s-model-report). Bing internal data, U.S., September 7, 2016 - September 21, 2016 compared with September 12, 2016 - September 26, 2016. Bing internal data, U.S., August 8, 2017 - October 16, 2017. Microsoft internal data, U.S., January - September 10, 2015, January - September 10, 2016, and January - September 10, 2017.