The insider’s guide to mobile Web marketing in the UK 2014
The most comprehensive guide to one of the world’s most interesting mobile markets, with all the stats on mobile Web, mobile commerce, 4G, smartphone and tablet use, top mobile destinations, and mobile readiness of top brands.
In the UK cell phones are called mobiles. And Brits use them everywhere: on the high street, on the Tube (subway), even down the pub and at football (soccer) matches. Smartphone penetration is over 50 percent, and 57 percent of people regularly use their mobile to access the Internet.
• This guide was published in September 2014.
• The guide was written by Andy Favell, mobiThinking editor, with major contributions from Mike Reynolds, from the Internet Advertising Bureau (IAB) mobile team and Paul Berney, MD of mobile-marketing educator, mCordis and formally EMEA MD of the Mobile Marketing association. Please email any comments on this guide to editor(at)mobiThinking.com.
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Q1. How mobile is the British population?
The UK population is one of the most mobile-friendly in Europe. The British have been keen adopters of both smartphones and tablets and more than half of adults regularly access the Internet using their mobile devices. Companies that have invested in optimizing their Websites and apps to sell to mobile devices have found Brits keen adopters of mobile m-commerce. After a slow start, UK mobile network operators [MNOs] are starting to make progress with their upgrade to fourth-generation (4G) networks (more on this in Q2: Characteristics of UK market), which is hoped will enable faster and more reliable data connections while out and about. The latest annual survey by the UK regulator Ofcom  revealed the following insights into mobile use in Britain:
• Mobile device penetration: 93 percent of UK adults use or own a mobile phone; while 61 percent say they have a smartphone (up from 51 percent in 2013). 44 percent of UK households reported having at tablet computer (up from 24 percent in 2013). NB: This is “households” as opposed to proportion of adults. 
• Mobile Web use: 57 percent of people use their mobile to access the Internet.  For more details see Q5: Mobile Web and Q6: M-commerce.
• Mobile subscriptions: There were 83.1 million active mobile subscriptions in 2013, which was a small decline on the previous year (explained in Q2) , but with a population of 64.1 million  that is still considerably more than one per person.
• Mobile versus fixed line: As use of mobile phones has increased, use of fixed lines has decreased. Mobile subscriptions now outnumber fixed lines three to one. Some households have dispensed with the fixed line altogether – 16 percent of adults report living in a mobile-only home. This is also reflected in call volumes: UK mobile users make 134 billion minutes of mobile calls each year and rising, while fixed-line calls are 92 billion minutes and falling. 
• Tech-savviness: Despite being keen adopters and users of mobile phones, smartphones and tablet computers, knowledge of newer devices and technologies remains low… despite all the hype. Almost half of respondents to Ofcom’s survey had never heard of smart glasses (46 percent), smart watches (40 percent) or driverless cars (44 percent), and 29 percent had never heard of 3D printers. Very few people had actually used any of these products – the highest level of claimed use was 2 percent for 3D printers. 
Q2. What are the characteristics of British mobile market?
After the 2010 merger of Orange and T-Mobile (now called EE), there are four main mobile operators in the UK, offering 3G coverage across the majority of the UK and limited, but improving, 4G coverage. The number of mobile subscriptions in the UK contracted slightly in 2013, showing the maturity of the UK market. Of the 83.1 million active mobile subscriptions, two thirds include data and more than half are post-pay contracts. Smartphone penetration is among the highest in the world, but perhaps not as high as surveys suggest. Android dominates smartphone sales. Mobile tablets have also sold well in the UK, but sales growth is slowing.
• Mobile subscriptions: There were a total of 83.1 million active mobile subscriptions in the UK in 2013.  These are shared between four major operators. The largest MNO, in terms of subscribers, is EE (37 percent market share), followed by 02, owned by Telefónica, (28.6 percent), Vodafone (23.5 percent) and 3 UK (9.6 percent).  See table below for more details.
• Post-pay v pre-pay: More than half (56.5 percent) of UK mobile connections are post-pay; where, for a contract period of 1.5 to 2 years, the user pays a fixed monthly fee for an allowance of bundled calls, messages and data, and, usually, repayments for a handset. Pre-pay contracts, where the customer buys credit in advance on an ad hoc basis, are gradually declining in popularity. The upfront cost of smartphones has influenced the shift to post-pay, which allows repayment by installments.  The majority of new post-pay mobile contracts cost less than £20 (US $32.15) a month, and last for a minimum contract period of 24 months. 
|UK mobile operators: subscribers, post-paid contracts, 4G subscribers|
|EE||Telefónica 02||Vodafone||3 UK||UK total|
|Subscribers||30.8 million||23.8 million||19.5 million||8.0 million (active)||83.1 million|
|4G||4.2 million||1 million||0.9 million||N/A||6.1 million|
|Sources||EE (June 2014)||Telefonica (June 2014);
o2 (April 2014)
|Vodafone (July 2014)||3 UK (July 2014)||Ofcom (August 2014)|
• Mobile subscription stagnation: 2013 was the first year when there was a decrease (of 0.3 million or 0.4 percent ) in mobile subscriptions in the UK. There are several explanations for this: a) handsets with browsers, particularly smartphones, partially negates the need to carry both a telephone and a Web-access device, such as laptop/tablet; b) where contracts allow, tethering enables the smartphone to be used to give the laptop/tablet Internet access, replacing the dongle; c) tablets are often only used at home or over public WiFi, so a SIM isn’t required; d) the high cost of smartphones is a disincentive to carry two mobile phones; e) instead of issuing company phones, some companies allow employees to use consumer devices for work; f) decline in consumer demand for SIMs has not been matched by a rise in demand for SIMs for machines such as smart gas/electricity meters, vending machines etc. This is known as machine-to-machine (M2M); more on this in Q9: Drivers and inhibiters of growth.
• Mobile data subscriptions: Of the 83.1 million mobile subscriptions, 55 million are mobile data subscriptions (up 6.5 million from 2012). The majority of these, 44.5 million, are data-friendly handsets and (to a lesser extent) tablets, while the rest were dedicated mobile data SIMs (e.g. in dongles) and M2M connections.  These are mostly 3G subscriptions. Despite being the smallest of four MNOs, 3 UK claims to carry over 45 percent of the UK’s mobile data. 
• 3G coverage: Development of 3G (data-friendly) networks in the UK was slow. When 3G licenses were issued in 2000, to the four highest bidders, the UK failed to set the stringent targets and timescales for national coverage that drove rapid roll-outs of 3G in countries such as Sweden. In 2010, the government tried to address poor 3G coverage by insisting networks cover 90 percent of the population (note: that is premises where people live, not geographical coverage) by June 2013 – arguably this target should have been much higher. One of the license holders, Vodafone, even failed to hit this target. When the 4G licenses were awarded, Ofcom stated that 4G coverage should extend to indoor areas in which at least 98 percent of the UK population lives, by 2017 at the latest – but this obligation only applies to one of five 4G license holders, Telefonica O2. 
• 4G subscribers: About 6 million or 8 percent of subscribers are on 4G contracts. EE has the most with 2.9 million subscriptions at the end of March 2014.  Ofcom’s figures do not include 4G subs from 3 UK, which, unlike its rivals, upgraded all 3G customers to 4G contracts, allowing them to use 4G where services and devices allow, at no extra cost.  4G penetration and coverage compares unfavorably with USA and other nations. More on this in Q3: UK in international context.
• 4G coverage: The UK only launched its first LTE – commonly referred to as “4G” – network in Q4 2012 (three years after Sweden, two years after USA, Japan and Germany ), so coverage is more limited than other countries. Ofcom puts a positive spin on this, saying that 73 percent of UK premises have “outdoor 4G coverage from at least one mobile network” , which doesn’t mean much in the real world where most Brits only subscribe to one of the four MNOs and want coverage inside buildings as well as outside. Elsewhere in the world, single operators provide more 4G coverage than all UK operators put together: Sweden’s Tele2 had 99 percent, Portugal PT had 90 percent and Vodafone Spain had 85 percent of their respective domestic populations covered by 4G by July 2013, while Verizon and AT&T in the US were each expected to cover 85 percent of the US population (i.e. 260 million people), by the end of 2013.
• Smartphone penetration and types: Surveys suggest 93 percent of UK adults use or own a mobile phone, while 61 percent have a smartphone. Use of smartphones is much more common among the younger demographic groups than older ones – smartphone ownership among 16- to 24-year-olds is 16 times more likely than over 65s.  But the national smartphone to feature phone ratio is probably closer to 50 percent – which is what Telefonica O2 reports is smartphone penetration among its subscribers. 
• Android domination: Following the global trend, Android dominates UK smartphones sales; but Apple devices sell considerably better in the UK than elsewhere in the EU5 (France, Germany, Italy and Spain), though not as well as in the US. For the three months ending March 2014, the percentage of smartphone sales in the UK by OS were: Android 56.2 percent; Apple 32.1; Windows 9.1; BlackBerry 2.3 percent; Others 0.2. 
• Tablets: There could be 26.4 million tablet users in the UK by the end of 2014, which is more than any other country in the EU5 (Germany, France, Italy, Spain), and could rise to 38.5 million in 2018.  NB: This is “users” as opposed to number of devices. Tablets are particularly popular with middle-aged people. 
Sources:  Ofcom Communications Market 2014 (August 2014).  EE (June 2014); Telefonica (June 2014); O2 (April 2014); Vodafone (July 2014); 3 UK (July 2014); Ofcom (August 2014).  GfK via Ofcom (August 2014).  3 UK (July 2014).  4G Americas (2014).  Telefonica (June 2014).  Kantar Worldpanel ComTech (April 2014).  eMarketer, May 2014).  Ofcom statement, November 2013).
Q3. What distinguishes mobile in Britain from a) the rest of Europe? b) Other leading mobile markets worldwide?
Compared with peers, the UK has high smartphone penetration and a large number of mobile broadband subscribers. The UK is a leader in mobile Web use, m-commerce, mobile ads and mobile measurement. But the UK is a bit of a laggard when it comes to 4G, with more limited coverage and lower number of 4G subscribers than many developed nations.
• Smartphone penetration higher than US, France, Germany, Italy: eMarketer estimates that two-thirds of the UK mobile population or 53.7 percent of the total population are smartphone users, while in the US, 65 percent of mobile phone users, or 51.4 percent of the total population, are smartphone users.  ComScore calculates that 64 percent of mobile users in the UK use smartphones, which is slightly less than Spain at 66 percent, but considerably higher than France (53 percent), Italy (53 percent) and Germany (51 percent). 
• Mobile pageviews among highest in Europe: Mobile has the highest proportion of Web page views in the UK of any European nation, except Russia. UK PC pageviews 79.4 percent; mobile pageviews 13.2 percent; tablet pageviews 6.5 percent. 
• Strong m-commerce: Mobile’s proportion of e-commerce is growing faster in the UK than the US. In 2014, mobile will account for an estimated 24 percent of retail e-commerce sales in 2014, rising to 35 percent in 2017. This compares with 19 percent in 2014 and 26 percent in 2017 in the US. 
• More measurability: Back in 2009, GSMA, the telecoms association, in co-operation with ComScore and the UK mobile operators, launched GSMA Mobile Media Metrics (MMM), a pioneering research tool that used aggregated data collected from the UK operators to provide insights into how consumers used mobile media. While operator data does not include mobile use via WiFi, which is a considerable part, this is a vast improvement on survey data, which is relied upon by mobile marketers in other countries to make investment decisions.
• A world-leading mobile ad market: The UK is one of the world’s top mobile ad markets, with advertisers devoting 27.9 percent of their 2014 digital budget to mobile (up from 16.4 percent in 2013). Around the world only the US (33.8 percent) and South Korea (34.5 percent) spend more. But eMarketer predicts that the UK will overtake both by 2018.  For full details on the UK ad market, see Q7: Mobile marketing activities.
• High mobile broadband subscriptions: With 84 percent of mobile users having mobile broadband subscriptions, UK is a leader in Europe. Only Finland, Sweden, Denmark and Estonia have higher mobile broadband penetration. 
• Post-pay contracts above global average: At 56.5 percent, the proportion of mobile subscribers on post-pay contracts  in the UK is much higher than the global average, though similar to other mature Western Europe markets. The global average is 77 percent prepaid, 23 percent contract. UK operators entice customers onto long-term contracts with attractive subsidies for high-end smartphones and inclusive data packages. While post-pay customers generally deliver higher average revenue per user (ARPU), pre-pay customers aren’t necessarily all bad, as shown by the US where, of late, operators have seen the lion’s share of subscription growth coming from pre-pay/no contract. 
• Behind peers with 4G roll-out: Global 4G network roll-outs began in 2009 (in Sweden), but 4G roll-outs didn’t start in the UK until 2012. According to European Commission (EC) data – see graph below – 4G coverage the UK is in 11th place, with around 63 percent population coverage. This is a long way behind Sweden, Portugal and Netherlands, all with over 90 percent coverage; and Finland, Estonia, Germany and Luxemburg, all with over 80 percent coverage. The UK has no 4G rural coverage, light years behind Sweden (over 90 percent), Estonia (over 80 percent) and Germany (60 percent coverage). 
• Behind peers with 4G subscriptions: About 6 million or 8 percent of UK mobile subscribers are on 4G contracts.  This compares unfavorably with the US where there are around 100 million 4G subscriptions, in mid 2014, which is 28 percent of mobile subscribers  or South Korea, where more than half of subscribers were on 4G, as of Q4 2013. 
Figure 1: EC data shows UK behind peers with 4G roll-out.
Sources:  eMarketer (April 2014).  ComScore UK Digital Future in Focus (February 2013).  eMarketer (December 2014).  HIS/VVA via European Union Broadband Scoreboard 2014 (May 2014).  Ofcom Communications Market 2014 (August 2014);  GSMA (Jan, 2014).  GSMA (Jan, 2014).  eMarketer (July 2014).  GSMA Intelligence (May 2013).
Q4. How do British people use their mobile devices?
Brits love their mobiles, but still spent more time using PC/laptops or watching TV. However, younger people spend considerably more time using mobile devices than older generations. Messaging, both traditional text and alternative messaging services, are popular (young people spend as much time messaging as watching TV), but mobile call volumes continue to rise also. Time spend on the mobile Web continues to eat into time spent on the PC Web; and mobile shopping is experiencing rapid growth.
• Time spent on smartphones: The smartphone is the third most popular media and communications device, by time spent in the UK. On average citizens spend 244 minutes per day watching TV, and 159 minutes per day with a laptop or PC and 82 minutes on their smartphone. Less popular media/devices were: radio analogue (37 minutes); DAB (31 minutes); print (28 minutes); tablet (26 minutes); landline (19 minutes); stereo (13 minutes); games console (10 minutes): standard mobile (6 minutes); and e-reader (3 minutes). 
• Most mobile-friendly: 16-24 year-olds spend a quarter of all communications and media time on a mobile phone, and 77 percent of the time they spend on social media is on a mobile phone. 
• Cost of mobile: On average UK households spend £81.17 ($130.81) a month on communications and media each month; in 2013, the majority of that expenditure is mobile at £45.65 ($73.57). 
• Popular mobile activities:  Browsing the Web – 52 percent of users; emailing – 45 percent; downloading apps – 35 percent; and instant messaging – 34 percent (see graph below). 
• Mobile calling: In 2013, on average, people made 2 hours and 56 minutes of calls each month. 
• Brits love mobile messaging: Traditional mobile messaging services (SMS and MMS) are still popular and used by 83 percent of users, but the volume of messaging is declining. On average, people sent 169 text messages per month in 2013, down from 226 last year.  Text is now competing with alternative Web-based mobile messaging services, but remains the only service that works on all mobile phones. The most popular messaging applications by numbers of messages sent by UK subscribers are: BlackBerry Messenger (BBM) (average of 110 messages sent every week – MPW), followed by SMS (75 MPW), WhatsApp (74 MPW), iMessage (64 MPW) and Facebook Messenger (64 MPW). 
• Mobile Web usage: Time spent surfing the Web with mobile devices is rising (up 2.5 percent) while time spent surfing using a laptop/PC is declining (down 14.7 percent). But with a monthly average of 5 hours 48 minutes in March 2014, mobile surfing is miles behind desktop surfing at 31 hours 24 minutes, according to ComScore’s data. But ComScore’s data is collected from operators, so does not include mobile surfing via WiFi connection or mobile apps; nor is mobile consumption of video or listening to streamed music included – so mobile Web use could actually be considerably higher.  For popular destinations, See Q4: Mobile Web.
• Mobile shopaholics: Mobile accounted for 52 percent of visits to e-retail Websites in Q2, 2014 (up from 48 percent in previous quarter); and 36 percent of UK e-retail sales in Q2, 2014 (up from 34 percent); according to a survey of IMRG (Interactive Media in Retail Group) members. Growth has been rapid – back in 2010, mobile accounted for less than 3 percent of visits to e-commerce sites.  For most popular/best mobile retailers, see Q5: M-commerce.
• Privacy issues: There is widespread ignorance about how smart devices collect data about users. Only 47 percent of UK Internet users surveyed, knew that smart devices (handsets, tablets, TVs, fitness bands etc) collected information about their personal activities. When alerted to the issue by the conductors of the survey, 84 percent of respondents were concerned and 87 percent said they would want to control the amount of data being collected before purchasing a smart device. People are unhappy with this personal data being shared, with only 7 percent of people comfortable with data being shared with advertisers – that’s less than the proportion comfortable with data being shared with the government or their boss (13 percent). 
Figure 1: Most popular mobile activities for British citizens.
Sources:  Ofcom Communications Market 2014 (August 2014).  Acision annual survey (June 2013), survey of 1000 smartphone users by Vanson Bourne.  ComScore GSMA Media Metrics (MMM) via OFCOM (August 2014).  IMRG Capgemini Quarterly Benchmarking Report (Sept 2014) study of 40 UK online retailers.  TRUSTe Internet of Things Privacy Index - GB Edition (May 2014), survey 2,005 UK adults by Ipsos MORI.
Q5. How established is the mobile Web in Britain and what are the most popular sites?
Depending on estimates, 57 percent (Ofcom ) to 61.9 percent (ComScore ) of British people use their mobile to access the Internet. ComScore’s data shows that nearly as many people accessed mobile content via a browser or apps (39.7 million) as did so via a PC (45.1 million). UK mothers of young children are particularly likely to go online with a mobile device (50 percent surveyed did so regularly), more so than other demographic group and more than their peers around the world (ahead of Chinese, Australian and French mothers).  According to research by RootMetrics,  the best performing networks for mobile data are EE and 3 UK. For more details on MNO performance, see Q10: Mobile operators’ role.
The most popular mobile destinations:
a) Top sites (June 2014): 1) Google (24.8 million unique monthly audience); 2) Yahoo (23.5 million); 3) Facebook (20.2 million); 4) BBC (18.5 million); 5) Microsoft (16.4 million); 6) Amazon (16.1 million); 7) Wikimedia (14.9 million); 8) MODE Media, formerly Glam Media (12.8 million); 9) eBay (11.7 million); and 10) Apple (11.5 million). 
b) Social networking site/apps (March 2014): 1) Facebook (21.1 million unique monthly audience); 2) Twitter (8.4 million); 3) Google+ (3.1 million); 4) LinkedIn (2.9 million); 5) MySpace (0.6 million) and 6) Friends Reunited (0.2 million). 
c) Mobile video service (March 2014): 1) YouTube (7.7 million unique monthly audience); 2) Vimeo (0.5 million); and 3) Liveleak (0.07 million). YouTube has seen mobile visits increase 204 percent in less than two years. 
d) Mobile news service (March 2014): 20 percent of mobile Internet users access news daily using their mobile handset, 17 percent do so at least once a week. The most popular on mobile handsets was 1) BBC (14.5 million unique monthly audience); 2) Sky (4.2 million); 3) Mail Online (3.4 million); and 4) The Guardian (2 million). The most popular on tablets 1) Daily Mail (4.2 million); 2) The Guardian (3 million) and 3) The Telegraph (2.9 million).  For more on the BBC, see Q13: Most innovative with mobile.
e) Mobile coupon service (May 2014): 1) Groupon (3.7 million unique monthly audience); 2) RetailMeNot (2.3 million); 3) Wowcher.co.uk (2.3 million); 4) HotUKDeals (0.7 million); and 5) Vouchercloud.com (0.5 million). 
f) Mobile travel service (March 2014): 1) Priceline.com (1.5 million unique mobile visitors); that’s 17 percent of all travel visitors; 2) First Choice Holidays (1.0 million); 3) Travelocity (0.9 million; 4) Secretescapes.com (0.9 million); and 5) Thomascook.com (0.7 million). 
Sources:  Ofcom Communications Market 2014 (August 2014).  ComScore, June 2014).  TGI Kantar Media (April 2014).  ComScore (June 2014).  ComScore (May 2014).  ComScore (March 2014);  RootMetrics (August 2014).
Q6. How established is m-commerce in Britain and what are the most popular m-commerce sites? Do any make good revenues?
UK consumers have become keen mobile shoppers, with more than half of visits to the e-commerce sites of IMRG members now coming from mobile devices.  But more people use mobile phones to research purchases, rather than to make the actual purchases. The conversion rate (from m-visitor to m-purchaser) is expected to improve as more retailers optimize their sites for m-commerce. Sites that are slow to load and do not adapt to the device screen-size are the biggest put-offs. Shopping via mobile browsers is more popular than mobile apps. The better the device and the faster the mobile connection, the more likely people are to purchase. This is perhaps why the majority of mobile sales in Britain are made from home via a WiFi connection, than out and about on a less dependable mobile network connection.
• Mobile overtakes PC in retail: 52 percent e-retail visits in Q2, 2014 (up from 48 percent in previous quarter). Mobile accounted for 36 percent of UK e-retail sales in Q2, 2014 (up from 34 percent), estimated at £8.7 billion for the quarter. Growth has been rapid – back in 2010, m-retail was less than 3 percent. More people buy with tablets at 29.5 percent of e-commerce sales, than smartphones at 6.5 percent, but retailers report that smartphone sales are rising rapidly – at catalogue/online retailer, Shop Direct, smartphone sales have now overtaken tablet sales. Mobile is particularly big business for clothing and apparel merchants, enjoying an average of 40 percent of e-commerce sales coming from mobile devices, while Shop Direct and footwear specialist Schuh have seen mobile surpass 50 percent. 
• Purchases by smartphone and tablet users: 55 percent of users made a mobile Web purchase at least once a month in 2013 using a smartphone (up from 51 percent in 2012). Fewer, 44 percent, purchased monthly via a mobile app (up from 40 percent in 2012). 
• Mobile share of e-travel: Nine out of 10 smartphone owners, who responded to a survey said they used their mobile device to research a holiday, but only 28 percent booked flights. Research by Weve concluded that mobile optimization of travel sites is critical, as 50 percent of people who do not use their mobile for booking holidays blame difficulty reading/navigating sites with a mobile device. 
• Proportion of retailers with a mobile-optimized site: 74 percent of multichannel (high-street/online) retailers and 53 percent of pure play (online-only and catalogue) retailers have a mobile-optimized Website. 
• Retailers’ m-commerce expectations: 11 percent of retailers said they expect over 50 percent of online sales to be made with a smartphone or tablet device by the end of 2014. 
• 4G users: 54 percent of 4G users surveyed had shopped online compared with 32 percent of non-4G smartphone owners. 19 percent of consumers own a 4G-enabled smartphone device, of those, 62 percent have used 4G to access the Internet. 
• Mobile shoppers average spend: UK £80 (US $132) per transaction, representing a 5 percent rise year on year. And m-retail conversion rates have improved 33 percent in the first half of 2014, which IMRG/Capgemini, puts down to improvements in mobile optimization and personalization. 
• Most common type of purchase: 1) Music (26 percent of survey respondents purchased in last six months); 2) books (22 percent); 3) travel e.g. train tickets, flights and hotels (21 percent); 4) digital products e.g. apps, ebooks, digital music); 5) apparel (19 percent); 6) movies (15 percent). 
• The most common place for m-shopping: 1) At home (smartphone 62 percent; tablet 80 percent); 2) on transport (smartphone 31 percent; tablet 7 percent); 3) in bed (smartphone 31 percent; tablet 38 percent); 4) at office (smartphone 24 percent; tablet 13 percent); 5) on the high street (smartphone 18 percent; 8 percent). 
• Top frustration for UK mobile shoppers: 1) The site is slow to load (41 percent); 2) site does not adapt to the device (38 percent); 3) need to navigate both horizontally and vertically (28 percent); 4) poorly displayed images (20 percent); 5) difficulty logging in (15 percent); 6) links are too small/don’t work (14 percent). 
• Most popular m-retail sites: 1) Amazon Sites (17.6 million unique mobile audience); 2) eBay (12.6 million); 3) Samsung Group (6.2 million); 4) Home Retail Group, including Argos and Homebase (5.9 million); and 5) Tesco Stores (5.2 million). 
Sources:  IMRG Capgemini Quarterly Benchmarking Report (September 2014), survey of 40 leading UK e-commerce sites  EPiServer annual report (June 2014).  Weve travel research (February 2014).  Sources: IMRG: M-Commerce – paradigm shift or subtle change or course? (June 2014).  IMRG e-Retail Survey (April 2014) survey of 50 senior e-commerce professionals.  Source: IMRG/eDigitalResearch. (April 2014) survey of 2,000 UK online shoppers.  IMRG/Capgemini (August 2014).  EPiServer (June 2014).  EPiServer (June 2014).  ComScore (April 2014).
Best performing UK retailers with mobile Websites and apps:
The following research by ICM/Marketing Week and EPiServer highlights which UK retailers are most popular with mobile shoppers in terms of visits and performance of their mobile sites and apps. Note how customers are most likely to visit a retailer’s mobile site, rather than app for every retailer except eBay.
Best performing UK retailers with mobile Web and apps
Most popular UK m-retailers: mobile Web v apps
Best mobile presence for UK m-retailers
Visit on mobile
Visit mobile Web
Visit mobile app
The Train Line
Sources: © ICM/Marketing Week (May 2014)
Sources: © EPiServer (June 2014)
via: © mobiThinking
Q7. What are the key mobile marketing activities for companies?
UK companies engage in the full array of mobile marketing activities, investing in mobile Web and mobile app development, mobile advertising and text campaigns, and building databases for loyalty/customer relationship management (m-CRM). See below for the proportions of companies engaging in each by sector. The only area where we have estimates of expenditure is mobile advertising, which is booming according to both the IAB and eMarketer.
• Staggering growth of mobile advertising: In 2013, UK advertisers spent £1.03 billion ($1.66 billion), up 93.3 percent from 2012. This makes mobile 16 percent of total digital spend. 
• How mobile advertising breaks down: The majority of mobile ads in 2013 was mobile search (57 percent); followed by mobile display (42 percent); SMS/other (1.3 percent); classifieds (0.3 percent). The fastest growing type of mobile adverting, in 2013, was display (up 180 percent), powered by rapid growth in mobile video ads; followed by search (up 62 percent); and SMS/other up 59 percent. 
• Forecasts are for continued strong growth: UK advertisers will devote 27.9 percent of the 2014 digital budget to mobile, up from 16.4 percent in 2013. Only the US (33.8 percent) and South Korea (34.5 percent) will spend more. But UK is growing faster than anywhere else. Mobile ads are expected to be 40.6 percent of digital spend in 2015, 51.6 percent in 2016 (overtaking PC ads), 62.2 percent in 2017 and 70.4 percent in 2018, when the UK will lead the world.
• Advertisers spend more on mobile than: 1) Radio, magazines or billboards (overtaken by mobile spending in 2013); 2) newspapers (2014); and 3) in 2016, mobile ads will overtake TV and online/PC advertising. 
• Mobile’s share of search: Mobile search now accounts for 38 percent of all paid search clicks, in Q2 2014. Click-through rates are attractive at 1.9 percent, but demand is pushing up the price, cost per click is now €0.47 ($0.77), which is higher than Germany or France. 
• Mobile advertising reach: Mobile advertising now has the potential to reach more than half of all UK adults (as more than 50 percent use the mobile Web). Ironically SMS advertising always had the ability to reach more than half of the population since 2000, but SMS still only makes up 1.3 percent of mobile ad spend. 
• Mobile app advertising: as investment in the development of mobile apps has increased so has the requirement to promote them through advertising, often through in-app advertising. It is notoriously difficult to create awareness of, and drive downloads of, mobile apps, as they can’t be found through organic mobile Web search. It is unclear what proportion of UK mobile ads is companies promoting underperforming mobile apps, as opposed to the advertising of actual products and services.
Sources:  IAB/PWC Adspend Study (April 2014).  eMarketer (July 2014).  Source: eMarketer (March 2014).  Source: Kenshoo (August 2014).  Ofcom Communications Market 2014 (August 2014).
Q8. Which industries/companies are investing most heavily in mobile Web/services/marketing in Britain and how are they spending their money? Which industries/companies should be doing more with mobile?
Arguably all sectors are under-spending on mobile, considering the penetration of mobile devices in the UK and the willingness of consumers to use them to browse and purchase. The reasons for underinvestment include: a) lack of knowledge and skills; b) perceived high cost and complexity of mobile development; and c) lack of supporting data and metrics. But things are improving quickly as companies realize the ROI and competitive advantage that is delivered by strategic development in mobile.
• UK banks have been slower to embrace mobile banking than their competitors abroad. Only 4.2 percent of HSBC’s customers (UK’s largest bank) used mobile banking in 2013, far fewer than Bank of America with 28.8 percent or 40.2 percent at China Construction Bank, for example.
• The IAB has produced audits assessing the mobile readiness of the top 50 UK advertisers in the retail ; travel; finance ; FMCG  sectors, considering mobile optimized sites, apps, and mobile optimized search.
|Mobile readiness of the top 50 UK advertisers by sector|
|Sector||Website optimized for mobile||Mobile app||Search ads optimized for mobile||Top performing brands:||Date of research|
|Retailers||74%||62%||48%||IKEA, M&S, Debenhams||June 2013|
|Travel operators||48%||52%||42%||Trivago, Hotels.com, Thomas Cook||Oct 2013|
|Finance businesses||68%||52%||54%||AXA, Hiscox, LVE, Simply Health, Bupa, NatWest, Direct Line, Aviva||March 2014|
|FMCG companies||56%||34%||36%||Olay, Clinique, Carling, Gillette, Cadbury||May 2014|
|Sources: © IAB (June 2013); IAB (Oct 2013); IAB (March 2014); IAB(May 2014).||via: © mobiThinking|
Sources:  Annual reports; mobiThinking(June 2013);  IAB Mobile retail audit(June 2013).  IAB Mobile travel audit(October 2013).  IAB Mobile finance audit(March 2014).  IAB Mobile FMCG audit(May 2014).
Q9. What is driving growth? What's holding it up?
Mobile growth is being driven by consumer adoption of Web-enabled phones, particularly smartphones, accompanied by more affordable all-inclusive contracts. Consumers have shown a readiness to surf and purchase using their mobile devices, and companies that have invested in optimizing their sites for mobile devices, are benefiting from their custom. The EU's move to clamp down on excessive roaming fees means mobile users have become less frightened of using their devices for calls and data while travelling in European countries. Advertisers have shown considerable interest in marketing to this vast mobile audience, which in turn helps Websites and apps with no other business model to recoup some of their investment.
• The UK market is quite price competitive: Operators offer attractive plans for customers willing to commit to 18-24 month contracts. These commonly include generous data allowances and subsidies for the latest smartphones, which all drives increased use of mobile Web. The majority of new post-pay mobile contracts are for 24 months and cost less than £20 (US $32.15) per month. 
• Mobile optimized Websites: Many UK companies have woken up to the necessity of engaging the UK’s mobile population, but as even among the largest there are still plenty with no mobile-friendly sites. As seen in Q8: Investment in mobile, a quarter of the top 50 advertisers in retail and finance and a half of top 50 advertisers in travel and FMCG do not yet have a mobile-friendly Website, according to IAB research.
• Sub-optimal 3G coverage: 14 years after the 3G licenses were awarded a lot of the UK still does not have 3G coverage by all four networks. According to Ofcom’s data (October 2013) , 21 percent of UK premises are not covered by all four operator’s 3G networks, and 1 percent of premises are not served with 3G by any operator at all. As well illustrated by Ofcom’s maps, pictured right, not much of the country, particularly in rural areas, has geographical coverage from all four operators. In total 78 percent of land area is not covered by all four operator’s 3G networks, and 22.9 percent of land area is not served with 3G by any operator at all. There is currently no obligation in the UK to allow customers to roam (freely) onto other networks where network coverage is poor.
The state of 3G coverage helps to explain why the majority of UK mobile purchases (smartphone: 62 percent; tablet 80 percent) – see Q6: M-commerce, take place at home, where users are likely to have a WiFi connection. It also helps explain the growth in demand (up 47 percent in 2013) for Femtocells, which boost indoor mobile coverage, where operator coverage is poor. 
The provision of ubiquitous data networks is also essential to the growth of M2M (machine-to-machine) telephony as, for example, electricity or gas companies will be reluctant to roll-out billions of smart meters if they can’t count on them being able to communicate with head office due to unreliable mobile networks. It is no coincidence that Sweden, with some of Europe’s best mobile coverage, also has the most advanced M2M market. In Sweden, M2M constituted 24.8 percent of SIM cards in 2012, compared with 5.6 percent in the UK. 
• Limited 4G coverage As explained in Q3: UK in international context, the UK was slow to launch 4G networks, with faster Web access, so 4G coverage is more limited than in many Western countries, such as US, Sweden, Portugal and Spain. The UK operators claim that their 4G networks currently cover (outdoor only) the following proportion of UK premises: EE – 73 percent; Telefonica O2 – 41 percent; Vodafone – 36 percent; no figures are available for Three.  But matters should improve: Vodafone, 3 and O2 aim to cover 98 percent of UK population with 4G by the end of 2015 and EE aims to do this by end of 2014. However, only one operator, 02, is actually legally committed, under its license agreement to cover 98 percent of UK population (by 2017).
Availability of 4G is important to growth of mobile Web, as research shows that 4G subscribers surf and shop more using their mobile devices. Telefonica reports  that 4G adopters use nearly twice as much data as 3G customers; and a recent IMRG survey  found that 54 percent of 4G users surveyed had shopped online compared with 32 percent of non-4G smartphone owners.
Sources:  GfK via Ofcom (August 2014).  IAB mobile audits 2013 (June 2013).  UK infrastructure report 2013 (October 2013).  Ofcom statement (November 2013).  EU Communications Committee (October 2012).  Telefonica financial report 1H 2014. (April 2014).  IMRG/eDigitalResearch. (April 2014).
Q10. What role do mobile operators play in the mobile ecosystem?
The main role of the mobile operators is to provide the UK with dependable mobile telephony and data services at an affordable price, together with the subsidizing of mobile devices, particularly expensive smartphones. Historically operators have also played a major role in provision of mobile Websites, mobile advertising and SMS marketing. But mobile operators have seen more and more mobile traffic moving away from their Web portals, called “on-deck”, to independent “off-deck” sites, and thus a decline in mobile advertising. Their revenues from both calls and text are being challenged by Internet-based calling and messaging services, called “over-the-top” OTT services, because they use operators’ data networks and their customers’ data allowances, without contributing to the roll-out of the costly 3G/4G infrastructure that powers it. They have seen their “ownership” of the customer and associated data, come under challenge from device manufacturers, such as Apple, Internet advertising giants, such as Google and social networks, such as Facebook, even banks. UK operators have individually tried setting up opt-in messaging services, mobile ad networks, and app stores in a bid to find new revenue streams above and beyond calls and data; with only limited success. The new reality has led them to the conclusion that they are better partnering, even with each other – as demonstrated by the joint-venture Weve.
• Cross-network opt-in mobile marketing: In February 2013, the three largest operators joined forces to create Weve, which is an opt-in SMS- and MMS-based mobile marketing and coupon service; a mobile wallet; and, launched in June 2014, a mobile display advertising network. Underlying all of this is access to a very large opted-in database estimated at 13 million and to contextual data held by Weve.
• Cross-network opt-in mobile marketing: In February 2013, the three largest operators joined forces to create Weve, which is an opt-in SMS- and MMS-based mobile marketing and coupon service; a mobile wallet; and, launched in June 2014, a mobile display advertising network. Underlying all of this is access to a very large opted-in database of estimated at 13 million and to contextual data held by Weve.
• Most reliable operators: There are four main mobile network operators (MNOs) in the UK, in order of size these are EE, Telefónica 02, Vodafone and 3 UK. See Q2: characteristics of UK market, above, for full details of subscribers etc. The best performing mobile network operator for calls, text, mobile Web, speed and reliability, as of Q1, 2014 is EE, closely followed by 3 UK, according to RootMetrics.
UK mobile operator performance Q1 2014: RootMetrics
Sources: © RootMetrics (August 2014)
via: © mobiThinking
Q11. What role does the British government play in the mobile ecosystem? (What is the regulatory environment like? Do government organizations use mobile themselves to deliver services?
The British government largely takes a hands-off role where mobile is concerned, leaving matters to the various regulatory authorities, though it will spur regulators to action when required (see below). Under the previous Labour Government there was a dedicated mobile team in the Central Office of Information (COI), but this has now been disbanded. There is no coordinated move to mobile-enable government services, but lots of government data and statistics are made freely available through Data.gov.uk, so that mobile developers can include it in their mobile sites and apps. The UK mobile world is also governed by legislation of the European Parliament; of particular note is the gradual removal of mobile roaming fees and a proposal to change the Data Protection Regulations to place stricter controls on the way companies collect and use personal data.
• Banning roaming fees in Europe: From July 2014, the cost of going online with a mobile (for EU citizens), while roaming in a different European country, was halved to €0.20 ($0.26) per megabyte. Then, from December 15, 2015, making a call, sending an email or text, or accessing the Web from a mobile phone will cost the same abroad as at home. Visitors from outside the EU should also see savings. This is good news for travelers and for the businesses that want to serve them via the mobile Web, though MNOs fear it will impact their profits.
• European Data Protection Regulation: The European Commission is proposing changes to it’s Data Protection Regulation, which would impose strict controls on the way companies collect and use personal data about consumers, which would effect mobile marketing/advertising, if it came into force.  Several marketing/advertising trade associations are working together through the umbrella of the Advertising Association to recommend changes to this directive.
• Ofcom: Ofcom is the UK communications regulator with a remit to regulate mobile telecoms, along with fixed telecoms, TV, radio and postal services. It is Ofcom’s job to ensure that British citizens receive the best from their mobile services and are protected from scams and sharp practices, and that competition is maintained. Ofcom handled the auctions and administration of 3G and 4G licenses to mobile operators and is responsible for overseeing the progress of the roll-outs. Ofcom produces a wealth of information about the state of the mobile market, including the useful Communications Market report (much cited here). It is surprising how much Ofcom relies on reported data, where you might expect it to demand monthly data directly from mobile operators, the sort that regulators in other countries publish monthly. Ofcom isn’t the toughest of regulators. Back in 2010 concerned about Britain’s progress in mobile and fixed broadband, the UK government pushed Ofcom to compel operators to increase 3G coverage to 90 percent and to chart Britain’s broadband progress against other European nations. When Vodafone missed the 90 percent deadline in June 2013, Ofcom decided to take no action. In spring 2014, Ofcom published a European Broadband Scorecard, which painted a very complementary, though arguably not entirely accurate, picture of the UK’s broadband progress compared with European rivals – see mobiThinking’s analysis for more information.
• PhonepayPlus: PhonepayPlus regulates premium rate (or phone-paid) services in the UK. These are the premium rate goods and services that are charged by adding the cost to the purchaser’s phone bill. Mobile text shortcode numbers used to enter text competitions, giving to charity as well as downloading mobile games, and in-app purchases are all considered premium rate and within the remit of PhonepayPlus. Any businesses involved in providing premium rate services to consumers must be registered with PhonepayPlus and abide by its Code of Practice. Recently PhonepayPlus has seen a surge in complaints about in-app purchases made by children. A recent survey by Netmums  found that as many as 21 percent of parents have been surprised by large phone bills caused by in-app purchases made by their children.
• Committee of Advertising Practice / Advertising Standards Authority: CAP/ASA sets and enforces the UK Advertising Codes, which not only apply to mobile advertising, but also to mobile marketing. All mobile marketers should read the Guidance on the rules for mobile marketing,  which includes SMS, text messaging and email campaigns.
• The Information Commissioner’s Office: ICO protects the data privacy of individuals, as such it will take action against companies that send unsolicited communications to people. In August 2014, for example, the ICO raided a company in Wales, which allegedly sent six million spam text messages, seizing computer equipment.  The ICO may also take action against mobile apps that fail to follow best practice guidelines when collecting personal information. Research suggests that as many as 85 percent of apps fail to disclose how they collect and use personal information. 
Sources:  EU via mobiThinking (March 2014).  EU via mobiThinking (March 2014).  Advertising Association.  Netmums (August 2014).  UK Advertising Codes; Guidance on the rules for mobile marketing includes SMS, text messaging and email campaigns;  ICO (August 2014);  ICO (September 2014).
Q12. What associations/industry initiatives are helping to push forward mobile best practice, standards etc or industry-specific initiatives such as m-health, m-banking, m-learning etc?
• GSMA has as number of different initiatives in m-learning, m-health, m-automotive and others, with a number of useful resources, including the recent M-learning policy handbook (July 2014).
• MMA has best-practice guidelines for mobile marketing and advertising formats, all available here, although US orientated, these are also largely applicable to the UK.
• IAB UK offers best practice and standards for the mobile industry, including: Mobile Web measurement guidelines; Mobile phone creative guidelines; and Mobile application advertising measurement guidelines.
Q13. Which brands/publishers are the most innovative with mobile? What are the big success stories?
• BBC: One of the biggest mobile success stories in the UK is the BBC. It attracts a monthly mobile Web audience of 18.5 million, according to ComScore  (June 2014), making it the fourth most popular mobile site in the UK and with 14.5 million mobile visitors to BBC News, the UK’s number 1 news site. Arguably the most innovative part of the offering is iPlayer, however, which allows people to catch-up with BBC TV programs on mobile, tablet, PC or smart TV, via a responsive mobile-friendly Web site or mobile app, all of which were upgraded in 2014.  At the turn of the year mobile requests to iPlayer, overtook PC and laptop requests, by June 2014 mobile’s share of the monthly 231 million program requests was 41 percent v 33 percent from PCs, with TVs and games consoles at 16 percent. 
Video demo: FT Web app
Q14. Who are the key players in mobile Web/marketing in Britain, in terms of:
a) Mobile agencies or creative agencies:
Addictive; Fetch; M&C Saatchi Mobile; Nimbletank (see below); Somo; Yodel Mobile.
b) Mobile content providers: Data.gov.uk.
c) Mobile advertising networks: 4th Screen Advertising; Admoda; InMobi; Millennial Media.
d) Mobile search engines: Google; Yahoo.
e) Mobile network operators: EE; 3 UK; Telefonica O2; Vodafone.
f) Other providers of essential mobile services: Weve.
g) Associations: IAB UK; MMA; MEF; IMRG; DMA.
h) Must attend mobile events: MMA London Forum; Mobile Engage; Mobile Apps World; Mobile Media Summit. For upcoming events, with details of reader discount and promotions, see the mobiThinking events.
Video case study: Nimbletank Mobile Site.
Nimbletank, a newcomer to the UK mobile scene, picked up a number of awards in 2013, including a Silver Lion at Cannes for its mobile site, which showcased what you could do with HTML5.
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