To use the word ‘explosive’ to describe the growth of the mobile advertising market would not be a hyberbole. According to Morgan Stanley, the number of smartphone shipments in the U.S. will reach 93 million units this year – exceeding the number of feature phone shipments. IDC predicts that approximately 183 billion mobile apps will be downloaded by 2015. Mobile ad spending is also quickly becoming a “must have” for marketers, with eMarketer predicting that mobile ad spending will reach 1 billion dollars by the end of the year.
But as one can clearly see, the rate of growth of mobile advertising is not in keeping up with the consumer adoption rate of smartphones. To get a better understanding of why mobile adoption growth is outpacing mobile ad spending, in June 2011, The Relevancy Group conducted a survey that asked marketers about the pain points they face and their priorities when it comes to mobile advertising. The survey results reveal the obstacles the mobile marketing industry must address in order to grow even faster.
While mobile ad spend is increasing, it’s doing so modestly. A majority of marketers (68%) allocated only 1-20% of their spending to mobile marketing. Below are the top issues that mobile marketers face:
I. Low ROI. According to the survey, 43% of marketers who aren’t planning to increase their mobile ad spending this year cite low ROI from mobile ad campaigns as the biggest deterrent. However, the survey also found that 93% of marketers said they would increase mobile ad spending if they realized a higher return on their investment. The message is clear: show marketers the ROI and they will be willing to up their mobile spending significantly.
II. Clicks still don’t work in a mobile world. According to The Relevancy Group survey, 14% of marketers say that the high number of accidental clicks is a major stumbling block when it comes to increasing mobile ad spending. The Relevancy Group survey found that 56% of Fortune 500 marketers are dissatisfied or don’t use click-based advertising. These findings mirror the results of a December 2010 Harris Interactive survey, which found that half of smartphone users in the U.S. said they click on mobile ads by accident more often than they do on purpose.
III. Marketers prefer signups. If not clicks, then what? The Relevancy Group survey finds that 41% of marketers said that the most effective mobile ad campaigns are those where they pay for signups—email addresses and social networking handles of people who raised their hands and said, “Tell me more!” to a marketer. This is not surprising. In a user economy, marketers want to tap into the mobile opportunity to grow their email and social communities.
To address the three pain points mentioned above, mobile advertising models need to deemphasize the click. As Steve Jobs said at last year’s iOS conference, “People don’t click on mobile app ads because it yanks them outside the app.” Mobile advertising models that work are the ones that keep people within the app. We’ve already seen the industry address these issue with approaches like Apple’s engagement based iADs and mobile signup ads that allow users to opt in to ads without leaving an app.
In addition, click-based models are directly at odds with marketer priorities. Also according to the Relevancy Group survey, 54% of marketers want to increase email subscribers via mobile marketing, while 53% want to build a social community (53%). Mobile advertising models that address the needs of a user centered world will help accelerate the growth of mobile marketing.
Finally, marketers want ROI from mobile advertising. Mobile advertising solutions need to help marketers get the most out of their mobile marketing dollars by enabling them to pay for actual signups – be it email addresses, Facebook fans or Twitter followers. Depending on your point of view, impressions and click-based models might or might not have worked in the online world. One thing’s for certain. They don’t work in a mobile world.
