September 5, 2012
Study: Mobile Ad Spending Way Too Low
According to a study commissioned by MMA (Mobile Marketing Association), the optimal level of spend on mobile advertising for U.S. marketers should be, on average, seven percent. The findings represented a leap from the less than one percent that is currently being allocated today.
Further, the analysis conducted by Marketing Evolution, a specialist in marketing ROI measurement, predicts it should increase to at least 10 percent over the next four years, based on increased adoption of smartphones alone.
Marketing Evolution’s analysis bypasses the simple "share of time (should) equal share of budget" equation that is often offered in lieu of ROI optimization. Instead, it looks at an ROI analysis of mobile based on actual market cost and current mobile effectiveness impact, as well as U.S. smartphone penetration and phone usage data (reach and frequency). The mobile analysis, termed MXS (Mobile’s X% Solution), was then merged with data from dozens of cross media studies of other media against specifically defined campaign goals by product category, providing an algebraic analysis of mobile’s role in an overall marketing mix.
More detailed data suggests the mobile spend varies based on the marketing goal and industry category, the report finds. For example, with high involvement brands (such as automotive and financial services) and with those seeking to influence purchase intent, marketers should consider a higher than average nine percent allocation, extending to 13 percent over the next few years based on smartphone growth.
"The mobile industry has been plagued from what I call a ‘cold start syndrome’," said Greg Stuart, CEO, MMA Global, in a statement. "Finally, we are able to give marketers a level of empirical data that takes out the guesswork and offers a baseline for further discussions on what a rebalanced marketing mix should look like to achieve a stronger ROI on every dollar they spend."
He adds that MMA plans to validate the findings by conducting cross media research with key leading marketers globally.
"Media consumption habits are shifting towards mobile and it is our responsibility, as global marketers, to engage with consumers in the most meaningful way," said B. Bonin Bough, VP of global media and consumer engagement at Kraft Foods, in the statement.
BrainTrust
Recent Discussions
Discussion Questions
Should mobile spend be evaluated differently than other advertising media? Do factors such as cost as well as reach and frequency validate a much higher investment in mobile advertising?
Poll
Surprise! The MMA believes that mobile ad spending is too low. Mobile needs to be evaluated on its effectiveness, just as any other medium. It also needs to be evaluated vis-a-vis consumers’ willingness to receive ads in their apps and push advertising onto their phones.
It takes time for any new form of media to be tested by advertisers. Mobile is no different. Marketers should test mobile advertising and promotions to ascertain the best use of the medium, the most effective cost and the ROI for each brand.
It’s interesting — I have been working this week on RSR’s latest marketing benchmark, and one of the data points that jumped out was that mobile marketing still tends to reside separately from other types of marketing. Retailers have started consolidating most other forms of digital communication under the corporate marketing umbrella, but mobile tends to be owned either by the eCommerce team or a separate digital marketing team. It could be that mobile advertising suffers from being out in the cold organizationally.
Either way, it’s clear that retailers are looking for new ways to reach an increasingly fragmented audience, so I have no doubt that mobile advertising too will find its proper place in the marketing toolbox, whatever that place may be.
As RetailWire’s resident Luddite, I wholeheartedly agree with Max. For about 20 years now, I’ve been hearing of one or another of the “new media” overtaking the world and condescendingly putting “old” print/radio/TV out of business. I do in fact see a slow evolution, and I confess I am being dragged, kicking and screaming. But there are times when I think “new media” is “the media of tomorrow, and always will be.”
We’re still mired in the ‘reach and frequency’ math! Even though we have spent hours sharing our views on how we as marketers need to engage our audience with relevant and personalized communication, we continue to treat advertising as a simple exposure game — how many eyeballs can we get in front of to push our message? We should be taking the time to understand how and why our audience wants to receive or at least be receptive to our message. As smartphones become more ubiquitous so does the understanding that shoppers can ‘tune us out’. Those ‘phones’ place the control into the hands of consumers. Marketers need to design and create better storytelling for their brands. Great storytelling will trump mere impressions every time!
Mobile advertising is a high demand and potentially high reward medium. Advertisers who are actualized to 1:1 communication with opted-in customers “get it.” Those who do not have an infrastructure to support it and/or haven’t sourced an expert outsource vendor to help with execution, data management, and compliance are behind the curve. No surprise that adoption has been slow because in many cases, advertisers haven’t staffed appropriately to plan and execute optimally.
The observations about certain categories are more appropriate for mobile communication to valued customers is an obvious point to make. When planning for 2013, if you haven’t evaluated how or if your investment in mobile should increase, let alone get started to test/learn — it is time to do so. Big word of caution — make certain you support double opt-in to be compliant with MMA guidelines. In addition, build an interface on your website for preference center to allow your opted in customers to inform you as to through what medium and how often along with content/interest preferences. Naturally, have in place a campaign management and data management capability to execute against what you collect, as well as how observed behavior changes over time.
The reason some companies have mobile planning and execution in the e-commerce or separate digital team is because there is expertise coupled with use/belief in the medium with those staff members. It is up to the CEO and CMO to evaluate how well or not so well this “ownership” is working, and if it isn’t integrated, then re-align, and quickly. For some, owning mobile and using it to drive e-commerce behavior, but leaving the physical store behind is foolish. Leverage this highly engaged, personalized media form to the greatest extent possible — percent of spend is irrelevant. Nice try though to influence planning!
It’s my pleasure to concur 110 percent with my good friends Max and Warren. The fact that we need to discuss the “value” of studies funded by vested interest groups speaks volumes about the paucity of actual innovative and meaningful retail research.
And a tip of the hat to Adrian. Shouldn’t new media demand new metrics and measures?
Incarnations ago when many of us were in the print publishing business, we used to prattle on about “three to one pass along effects,” essentially tripling reach. Never did find those other two readers.
I guess the point is one needs to be very skeptical about self-promotional research.
The ideal goal for average spend on mobile advertising should be zero. Brands should invest more into channel marketing, as well as providing direct apps and other services to the customer’s personal mobile device.
One question — how much advertising do YOU want to see on your mobile phone?
Targeting the right consumers for the appointed products on mobile phones is still hit or miss. Is that part of the formula for determining ROI? If the logic of this study is correct, every type of advertising requires its own evaluation mechanism. In reality, it is important to evaluate the effectiveness of any promotion based on the goal of the promotion.
Will a study by a mobile association saying that more money should be spent on mobile advertising really prompt advertisers to spend more of their money there? I think not.
Warren, as a fellow Luddite, I’m curious about the juxtaposition of 80′ flatscreen TVs and 30′ computer monitors (getting bigger all the time) with itty-bitty smartphone screens. Viewing the same content on both? How’s that working out? Perhaps it’s a partial explanation for the popularity of tablets, due to their screens which are larger than smartphone screens. How long until we are placing phone calls and texting on our tablets? And then we can also stream movies, TV shows, and sports events to our tablet screens which are smaller than the first TV screen my parents bought in 1955. How exciting is that!?
As a marketeer, I’m reminded of the “fireplace story:” A person approaches a fireplace and says, “If you give me heat, I’ll give you wood.” Naturally, the fuel comes before the fire, not the other way around.
Adrian Weidmann postulated, “Great storytelling will trump mere impressions every time.” Would it be fair, then, to equate retail content and offerings to the “fuel” or “story,” and marketing (including mobile ads) to the “fire” or “telling?” To me, as an ad agency veteran, great storytelling is more about merchant content and offerings than the advertising. Think Trader Joe’s — great content with corny ads. And Motel 6.
So, if reach, frequency, and impressions truly take a backseat to storytelling, how good a story can you tell using mobile media?
Looks like another self-serving study. Advertising does not change just because it is on a mobile device. You start with your target market. For example, seniors have smart phones, but use very few features. The target market must be using features other than phone, contact and messaging. Advertising must be linked with web searches and applications. So now the link must be target market and application to drive advertising spending. To propose a percentage spending simply makes no sense.
The MMA study is pointed in the right direction. Marketers have known for 50 years that they needed an integrated media plan, as well as a proper media allocation approach to their marketing plan. They have been challenged by limiting their thinking to the same old GRP and circulation stories of the last century. Even as they move to the 21st century, too many marketers are seeking only the “eyeball” consideration.
By placing the consumer at the center of the equation — the individual we want to buy our product or service — marketers can drive more effective plans. There are over 30 different media forms that are impacting behavior and attitudes that lead to a purchase. Traditional media, new media, digital media, and in-store media all can play a role.
Find out: 1) Which media influence purchases, 2) How consumers consume and engage in media, 3) Effective CPM of media forms selected. With that information, marketers are better equipped to make the best decision on media allocation. No one medium can point to its “rightful” share of the media budget for all categories, as each category of purchase — groceries, automotive, apparel, electronics, financial, etc., as well as audience segment — is influenced in different proportions.
Ask the consumer. They know how they are influenced.
Ha, ha, ha, ha! Like most of the rest here — whether charter-member Luddite or just honorary — I couldn’t take this seriously once the self-serving nature of the “study” became apparent; which might be too bad, because it might have value anyway…or not.
Overarching recommendations for percentages of budget allocation are always a poor way to begin planning.
Anyone approaching any advertising method needs to consider (a) what they need to say; (b) which medium(s) allow them to say it most effectively; and (c) which mediums deliver that message at the best cost.
Mobile messages are extraordinarily limited in space and mental commitment. If your messages can thrive within those limits and target people using mobile devices, you might be wise to spend 20% or 30%. Or, you might be wise to spend all your money on a traditional mix. It just depends on your situation.
The Mobile Marketing Association has provided a solid communication that may prove to be of little interest to the movers and shakers in retail. What these executives are in need of is a set of advertising demographics capable of disclosing the location of their customers within the internet at any given time. They would also pay to find out where and how to supply the information their customers need on mobile devices. They understand the costs of investing against ROI quite well. What is holding them back is the lack of familiar tools available for use in calculating an investment in IT marketing.
… and I continue the chuckling… LOL Yes, the study has some inherent prejudice. Yes, all cultures are still very much in the evolutionary stages of struggling between print and electronic media… of all sizes, iPad, iPad Mini (a smartphone, that is!), PC screen, or big screen TV. Who cares? Advertisers must have tangible ROI models for all media channels and take the gut feel out of marketing and advertising.
Well, the Luddites seem to have it in this forum. Of course, mere rules of thumb based on reach, frequency or rating points are insufficient to quantify the marketing value of mobile messages (or any advertising, for that matter).
We haven’t a clue yet how to determine a reliable ROI for mobile messages, but we do know the screen real estate is tiny and the message duration is very brief. Even a well-told, well-contextualized story will capture very small mindshare given that set of parameters.
For me, the key question for advertisers is how much weight does a mobile message carry? If it’s effectively zero, as some suspect, then it doesn’t matter if you send out a hundred or a billion — no mass is no mass.
Yet I feel in my gut that the value of mobile advertising is not zero. Tiny little banners may move the needle a little. Targeted offers may be well-received by some consumers at certain moments. There’s some money in this game, but I wouldn’t put a number on it yet. How’s that for damning with faint praise?
Consumer media habits are changing faster than corporate marketing spend habits. Mobile is redefining the relationship between consumer and retailer/brand. Ad spending will eventually catch up along the lines recommended in the white paper, based on a ROI model than traditional time share model. On the other side of the coin, how much ad intrusion are consumers ready to accept?
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Surprise! The MMA believes that mobile ad spending is too low. Mobile needs to be evaluated on its effectiveness, just as any other medium. It also needs to be evaluated vis-a-vis consumers’ willingness to receive ads in their apps and push advertising onto their phones.
It takes time for any new form of media to be tested by advertisers. Mobile is no different. Marketers should test mobile advertising and promotions to ascertain the best use of the medium, the most effective cost and the ROI for each brand.
It’s interesting — I have been working this week on RSR’s latest marketing benchmark, and one of the data points that jumped out was that mobile marketing still tends to reside separately from other types of marketing. Retailers have started consolidating most other forms of digital communication under the corporate marketing umbrella, but mobile tends to be owned either by the eCommerce team or a separate digital marketing team. It could be that mobile advertising suffers from being out in the cold organizationally.
Either way, it’s clear that retailers are looking for new ways to reach an increasingly fragmented audience, so I have no doubt that mobile advertising too will find its proper place in the marketing toolbox, whatever that place may be.
As RetailWire’s resident Luddite, I wholeheartedly agree with Max. For about 20 years now, I’ve been hearing of one or another of the “new media” overtaking the world and condescendingly putting “old” print/radio/TV out of business. I do in fact see a slow evolution, and I confess I am being dragged, kicking and screaming. But there are times when I think “new media” is “the media of tomorrow, and always will be.”
We’re still mired in the ‘reach and frequency’ math! Even though we have spent hours sharing our views on how we as marketers need to engage our audience with relevant and personalized communication, we continue to treat advertising as a simple exposure game — how many eyeballs can we get in front of to push our message? We should be taking the time to understand how and why our audience wants to receive or at least be receptive to our message. As smartphones become more ubiquitous so does the understanding that shoppers can ‘tune us out’. Those ‘phones’ place the control into the hands of consumers. Marketers need to design and create better storytelling for their brands. Great storytelling will trump mere impressions every time!
Mobile advertising is a high demand and potentially high reward medium. Advertisers who are actualized to 1:1 communication with opted-in customers “get it.” Those who do not have an infrastructure to support it and/or haven’t sourced an expert outsource vendor to help with execution, data management, and compliance are behind the curve. No surprise that adoption has been slow because in many cases, advertisers haven’t staffed appropriately to plan and execute optimally.
The observations about certain categories are more appropriate for mobile communication to valued customers is an obvious point to make. When planning for 2013, if you haven’t evaluated how or if your investment in mobile should increase, let alone get started to test/learn — it is time to do so. Big word of caution — make certain you support double opt-in to be compliant with MMA guidelines. In addition, build an interface on your website for preference center to allow your opted in customers to inform you as to through what medium and how often along with content/interest preferences. Naturally, have in place a campaign management and data management capability to execute against what you collect, as well as how observed behavior changes over time.
The reason some companies have mobile planning and execution in the e-commerce or separate digital team is because there is expertise coupled with use/belief in the medium with those staff members. It is up to the CEO and CMO to evaluate how well or not so well this “ownership” is working, and if it isn’t integrated, then re-align, and quickly. For some, owning mobile and using it to drive e-commerce behavior, but leaving the physical store behind is foolish. Leverage this highly engaged, personalized media form to the greatest extent possible — percent of spend is irrelevant. Nice try though to influence planning!
It’s my pleasure to concur 110 percent with my good friends Max and Warren. The fact that we need to discuss the “value” of studies funded by vested interest groups speaks volumes about the paucity of actual innovative and meaningful retail research.
And a tip of the hat to Adrian. Shouldn’t new media demand new metrics and measures?
Incarnations ago when many of us were in the print publishing business, we used to prattle on about “three to one pass along effects,” essentially tripling reach. Never did find those other two readers.
I guess the point is one needs to be very skeptical about self-promotional research.
The ideal goal for average spend on mobile advertising should be zero. Brands should invest more into channel marketing, as well as providing direct apps and other services to the customer’s personal mobile device.
One question — how much advertising do YOU want to see on your mobile phone?
Targeting the right consumers for the appointed products on mobile phones is still hit or miss. Is that part of the formula for determining ROI? If the logic of this study is correct, every type of advertising requires its own evaluation mechanism. In reality, it is important to evaluate the effectiveness of any promotion based on the goal of the promotion.
Will a study by a mobile association saying that more money should be spent on mobile advertising really prompt advertisers to spend more of their money there? I think not.
Warren, as a fellow Luddite, I’m curious about the juxtaposition of 80′ flatscreen TVs and 30′ computer monitors (getting bigger all the time) with itty-bitty smartphone screens. Viewing the same content on both? How’s that working out? Perhaps it’s a partial explanation for the popularity of tablets, due to their screens which are larger than smartphone screens. How long until we are placing phone calls and texting on our tablets? And then we can also stream movies, TV shows, and sports events to our tablet screens which are smaller than the first TV screen my parents bought in 1955. How exciting is that!?
As a marketeer, I’m reminded of the “fireplace story:” A person approaches a fireplace and says, “If you give me heat, I’ll give you wood.” Naturally, the fuel comes before the fire, not the other way around.
Adrian Weidmann postulated, “Great storytelling will trump mere impressions every time.” Would it be fair, then, to equate retail content and offerings to the “fuel” or “story,” and marketing (including mobile ads) to the “fire” or “telling?” To me, as an ad agency veteran, great storytelling is more about merchant content and offerings than the advertising. Think Trader Joe’s — great content with corny ads. And Motel 6.
So, if reach, frequency, and impressions truly take a backseat to storytelling, how good a story can you tell using mobile media?
Looks like another self-serving study. Advertising does not change just because it is on a mobile device. You start with your target market. For example, seniors have smart phones, but use very few features. The target market must be using features other than phone, contact and messaging. Advertising must be linked with web searches and applications. So now the link must be target market and application to drive advertising spending. To propose a percentage spending simply makes no sense.
The MMA study is pointed in the right direction. Marketers have known for 50 years that they needed an integrated media plan, as well as a proper media allocation approach to their marketing plan. They have been challenged by limiting their thinking to the same old GRP and circulation stories of the last century. Even as they move to the 21st century, too many marketers are seeking only the “eyeball” consideration.
By placing the consumer at the center of the equation — the individual we want to buy our product or service — marketers can drive more effective plans. There are over 30 different media forms that are impacting behavior and attitudes that lead to a purchase. Traditional media, new media, digital media, and in-store media all can play a role.
Find out: 1) Which media influence purchases, 2) How consumers consume and engage in media, 3) Effective CPM of media forms selected. With that information, marketers are better equipped to make the best decision on media allocation. No one medium can point to its “rightful” share of the media budget for all categories, as each category of purchase — groceries, automotive, apparel, electronics, financial, etc., as well as audience segment — is influenced in different proportions.
Ask the consumer. They know how they are influenced.
Ha, ha, ha, ha! Like most of the rest here — whether charter-member Luddite or just honorary — I couldn’t take this seriously once the self-serving nature of the “study” became apparent; which might be too bad, because it might have value anyway…or not.
Overarching recommendations for percentages of budget allocation are always a poor way to begin planning.
Anyone approaching any advertising method needs to consider (a) what they need to say; (b) which medium(s) allow them to say it most effectively; and (c) which mediums deliver that message at the best cost.
Mobile messages are extraordinarily limited in space and mental commitment. If your messages can thrive within those limits and target people using mobile devices, you might be wise to spend 20% or 30%. Or, you might be wise to spend all your money on a traditional mix. It just depends on your situation.
The Mobile Marketing Association has provided a solid communication that may prove to be of little interest to the movers and shakers in retail. What these executives are in need of is a set of advertising demographics capable of disclosing the location of their customers within the internet at any given time. They would also pay to find out where and how to supply the information their customers need on mobile devices. They understand the costs of investing against ROI quite well. What is holding them back is the lack of familiar tools available for use in calculating an investment in IT marketing.
… and I continue the chuckling… LOL Yes, the study has some inherent prejudice. Yes, all cultures are still very much in the evolutionary stages of struggling between print and electronic media… of all sizes, iPad, iPad Mini (a smartphone, that is!), PC screen, or big screen TV. Who cares? Advertisers must have tangible ROI models for all media channels and take the gut feel out of marketing and advertising.
Well, the Luddites seem to have it in this forum. Of course, mere rules of thumb based on reach, frequency or rating points are insufficient to quantify the marketing value of mobile messages (or any advertising, for that matter).
We haven’t a clue yet how to determine a reliable ROI for mobile messages, but we do know the screen real estate is tiny and the message duration is very brief. Even a well-told, well-contextualized story will capture very small mindshare given that set of parameters.
For me, the key question for advertisers is how much weight does a mobile message carry? If it’s effectively zero, as some suspect, then it doesn’t matter if you send out a hundred or a billion — no mass is no mass.
Yet I feel in my gut that the value of mobile advertising is not zero. Tiny little banners may move the needle a little. Targeted offers may be well-received by some consumers at certain moments. There’s some money in this game, but I wouldn’t put a number on it yet. How’s that for damning with faint praise?
Consumer media habits are changing faster than corporate marketing spend habits. Mobile is redefining the relationship between consumer and retailer/brand. Ad spending will eventually catch up along the lines recommended in the white paper, based on a ROI model than traditional time share model. On the other side of the coin, how much ad intrusion are consumers ready to accept?