The North American industry spending the most on being able to respond to the digital mobile consumer is probably no surprise: the airline sector. The airlines we surveyed reported they would spend an average $57 million on technologies and services to deal with consumers who use mobile devices. No. 2 was government agencies – federal, state and local. Their average spending this year was estimated to be $43 million, followed by high tech companies (hardware and software), at an average $31 million per company. (See Exhibit III-12.)
On the bottom end were consumer products manufacturers (food, beverages and durable goods), which said they would spend $2 million this year, and industrial manufacturers ($3.2 million).
Exhibit III-12: Q16/North America: Average Spending Per Company in 2012 on
Technologies and Services for Responding to Digital Mobile Consumers ($ millions)
The airline companies we polled predicted spending a similar amount in three years ($63 million), which would lead all sectors. But high-tech companies predicted they would double their annual spending in this area, to $62 million. (See Exhibit III-13.)
Banks/financial services/insurance companies will also spend more than average ($33 million in 2015 vs. $24 million this year). The experiences of insurance companies such as Progressive help explain why. This year, the company launched an initiative to use mobile image capture technology (of vehicle ID numbers) to reduce the time it takes to provide auto insurance quotes to consumers’ mobile devices. The technology has helped the company reduce the time from 60 minutes in 2011 to less than 6 minutes today. In a separate initiative, called Snapshot, the company provides willing consumers with an electronic device that plugs into their car’s diagnostic port and tracks their driving (miles driven, number of times they hit the brakes, etc.). By tracking consumers’ vehicle usage, Progressive can provide some consumers with a lower rate (i.e., drivers who appear to be better risks than the company originally thought). The company told securities analysts that when it offers Snapshot across its U.S. markets, it would increase lifetime premium per annum by more than $100 million.11
Other industries that plan to spend more heavily include telecommunications ($30 million in 2015 vs. $25 million this year) and pharmaceuticals ($36 million in 2015 vs. $22 million in 2012).
Consumer products, industrial manufacturing, media-related and transportation companies predict much lower-than-average spending in 2015 – all spending less than $14 million per company. Industries with somewhat lower than average spending in 2015 are retail ($20 million), health care services ($19 million) and automotive manufacturing ($18 million).
Exhibit III-13: Q16a/North America: Projected Spending in 2015 Per Company on Technology and Services for Responding to Digital Mobile Consumer ($ millions)
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11 Progressive executives provided these details in a shareholder/analyst call on June 14, 2012, the transcript of which can be found here.
Findings: North America