Mobile advertising is advancing rapidly and many of the issues that slowed progress in early years have been addressed, for example constraints imposed by network and mobile phone limitations have radically improved through developments in, respectively, mobile broadband and smartphones, according to a survey.

Published: 19 Jul 2011

Mobile advertising is advancing rapidly and many of the issues that slowed progress in early years have been addressed, for example constraints imposed by network and mobile phone limitations have radically improved through developments in, respectively, mobile broadband and smartphones, according to a survey.

A new survey by the Interactive Advertising Bureau (IAB) has indicated that the mobile advertising issues of highest concern to marketers are consumer privacy (40 percent) device operating system fragmentation (39 percent) and lack of standardised metrics (31 percent). The study featuring marketers (at 300 US companies), currently using mobile in their media mix was commissioned by the IAB Mobile Marketing Center of Excellence and conducted by Ovum.

The “Marketer Perspectives on Mobile Advertising” survey revealed that marketers are in general happy with results achieved by mobile advertising across a range of key objectives – the majority of respondents were reasonably satisfied with mobile advertising’s ability to deliver on increased engagement (59 percent), increased brand awareness (58 percent), customer relationship marketing (57 percent and driving sales (54 percent).

Benefits

Mobile as an advertising channel has many appealing elements and what stands out from this survey is that this is understood and appreciated by marketers, with immediacy (57 percent), cost effectiveness (54 percent), increased engagement (52 percent) and reach (49 percent) flagged as top priority benefits by respondents. Mobile undoubtedly offers huge reach for advertising and in North America alone Ovum estimates there will be 335.44 million connections by the end of 2011 rising to 391.84 million by the end of 2016.

Another attractive aspect of mobile advertising is the potential for high engagement and personalisation. Every mobile device is linked to an individual and is always on hand, meaning that connected devices are accessible through all the hours of the media day and have great immediacy. Mobile is a communication channel and as such is highly interactive and is effective in adding interactivity to other media that are not interactive in themselves.

Mobile also presents opportunities for better alignment of the advertising message with its intended audience.

Marketers in our survey have clearly embraced mobile advertising with 31 percent of respondents saying it is part of their digital advertising strategy and fully integrated with other media, while 20 percent have it as core albeit not automatically integrated with other media. Fourteen per cent of respondents use mobile on a more ad hoc basis while 35 percent are at an earlier phase were they are still experimenting with mobile advertising, although as our survey revealed this can be on a large scale and involve significant investment.

In fact the budgets being allocated to mobile advertising are in a very healthy state with 28 percent of respondents saying their companies currently spend $50-$150,000 per annum on mobile advertising with 7 percent allocating in excess of $300,000 per annum. Fifty-five percent of respondents are at the lower end of the budget spectrum spending under $50,000 a year on mobile advertising.

Key Messages

Mobile advertising spend set to increase

Mobile advertising budgets are currently robust, as noted above, and are set to increase over the next two years, with 35 percent of respondents expecting current spend to increase by over 50 percent during this time. Thirty-seven per cent of respondents predict their mobile advertising budget will increase by under 50 percent while 27 percent expect it to remain unchanged. The notion that it would decrease barely drew a response.

Budget allocation and mobile advertising strategy

The cross referencing in our sample of their mobile advertising strategies and mobile advertising budget allocation produced intriguing results. The largest share of companies that are still at an experimental stage, 40 percent, are investing less than $50,000 per annum in mobile advertising. And yet another significant portion of the experimental players are investing at the highest end of our budget bracket of over $300,000 per annum. This is perhaps surprising and we assume the latter group of experimenters includes some of the larger companies in terms of revenue size.

Increasing brand awareness a top objective for mobile advertising

Ninety-three percent of respondents said that increasing brand awareness was their most important objective for mobile advertising to date, followed by support for specific engagements (86 percent) and increasing engagement (86 percent) in second joint place, with driving sales (83 percent in third place).

Mobile advertising strategy varies by industry

Media and entertainment companies are noticeably ahead of the curve when it comes to adopting the most advanced mobile advertising strategies with 42 percent of respondents in this vertical have mobile as core and fully integrated with other advertising media. This is not surprising as many media and entertainment companies are at the forefront of using digital media for their own services with all of the large players in the US being early adopters of mobile.

And by geographic focus

A company’s geographic focus appears to influence its mobile advertising strategy. The survey revealed that companies with a national focus across the whole of the US have adopted the more advanced mobile advertising strategies, with 63 percent of the nationals having mobile fully integrated with other media campaigns. Conversely, locally focused companies are at the more cautious end of the strategy spectrum and are either still experimenting or adopting an ad hoc approach to mobile advertising.

A rich range of inventory is being used for mobile advertising

The companies in our survey use all types of mobile inventory, which is impressive, but the most popular types by a long way were branded mobile websites (83 percent) followed by mobile display advertising (77 percent). This is not surprising as both are among the most mature types of mobile inventory. This was followed by branded applications (59 percent) and SMS (53 percent), again both mature types of inventory. Mobile search, video, MMS and in-application advertising are all used at the same levels (44 percent) with bar-codes/coupons trailing slightly behind (42 percent).

Smartphones are the top priority mobile device for mobile marketers

When we asked the companies in our survey to prioritise the different types of mobile device they currently used for mobile ad campaigns, smartphones were deemed by far the most important. Sixty percent of respondents flagged smartphones as high priority and 23 percent as medium high priority. Usage of smartphones is expected to increase over the next two years.

With increasing interest in tablets

Marketers are also drawn to tablet devices, with 31 percent of respondents flagging these as high priority devices and an equal 31 percent saying they were of medium high priority. Usage of tablets is likewise expected to increase over the next two years.

But lower end devices are still in the picture

The survey revealed that feature phones are still considered important devices for mobile advertising, with 22 percent of respondents saying these as high priority devices and an equal 24 percent saying they were of medium high priority. Marketers expect feature phone usage to increase over the next two years rather than flatten out.

Good levels of satisfaction with agency partners

Forty-seven percent of the survey sample currently partner with a media buying agency for mobile advertising, while 38 percent use a creative agency for mobile advertising. For those companies that do partner with media buying agencies, 54 percent of respondents said they were reasonably satisfied with the ability of their media buying agency to support their mobile advertising objective while 24 percent were completely satisfied. What is even more striking is that those companies that do use creative agencies for mobile advertising are very happy with the results, with 45 percent of respondents saying they are reasonably satisfied while an impressive 40 percent are completely satisfied.