Enterprises Dominate Mobile Ad Spending

More than a third of interactive marketers have implemented or plan to pilot mobile search and display advertising in the next year, according to Forrester Research analyst Melissa Parrish. And just about everyone believes such spending will grow.

For that reason, Forrester Research expects that interactive marketer spending on mobile search and display will grow at a 28 percent compound annual growth rate over the next five years.

Forrester expects that mobile Internet usage will increase at a compound annual rate of 12.7 percent, with 117 million people — 36 percent of the US population — searching and browsing while using their mobile devices by 2015, Parrish says.

Mobile marketing opportunities will grow as more people use the mobile Internet, of course. At the end of 2007, only 10 percent of U.S. adult subscribers used the mobile Internet. In 2010, mobile Internet usage is up to 27 percent of mobile subscribers, representing 64 million consumers in the
United States market.

Mobile Internet users also are learning to use their mobiles to make purchases. And they aren’t just looking for the nearest coffee house; they’re buying airline tickets, researching cars, and receiving coupons for products like coffee or detergent.

Forrester forecasts that mobile search and display dollars will grow to $2.8 billion by 2015, at a
28 percent CAGR.

But critical mass still is lacking. Though mobile Internet usage is increasing rapidly, marketers still can’t get enough eyeballs on content to justify spending big bucks in the space, says Parrish.

Currently, 78 percent of the US population access the Internet at least monthly while only 21 percent access the mobile Internet. By 2015, mobile Internet usage is expected to reach 43 percent of total desktop Internet usage, making the mobile medium a much more viable channel.

Inability to track performance against spend. More than half of interactive marketers feel they have no capability to measure the ROI or brand impact of their mobile marketing campaigns.

Interactive marketers prefer performance-based campaigns and are willing to pay more for these metrics. Vendors like Google and Bing offer cost-per-click pricing for click-to-call and click-to-get-directions type activities, but mobile display is still largely based on potential impressions, an unsatisfactory metric to most marketers.

Additionally, the holy grail of mobile is location-based marketing, but it’s still unclear how the connection between location-marketing efforts and in-store purchases will occur. Vendors must develop the tools for marketers to track performance and then help marketers understand the value and how to use these new tools.

·Spending by small and mid-sized business is not having too much impact, says Parrish. Forrester’s data suggests that fully 95 percent of mobile advertising dollars currently come from companies with more than $100 million in revenue.

Though the value of mobile advertising is highly relevant to small and mid-sized businesses, which benefit greatly from local and location-specific advertising, smaller budgets and less marketing
expertise will make the percentage of overall spend from SMBs consistently less than eight percent of total mobile spend.

Concerns over privacy, specifically location and carrier information, could provoke a backlash among consumers, leading to some caution as well. Consumers consider mobile phones personal devices to a greater extent than PCs and, for that reason, might continue to expect greater privacy in a mobile context, Parrish suggests.