Brand building on mobile devices: measuring the value of consumer engagement

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1 Brand building on mobile devices: measuring the value of consumer engagement A Fiksu study comparing the costs of mobile app advertising to traditional digital marketing

2 Executive summary: Fiksu's research organization, Fiksu Performance Labs, recently conducted some analysis to help marketers understand the impact that mobile app advertising can have compared to more traditional channels. Using over 2.4 billion data points from major brands promoting their apps through Fiksu, the Labs studied the relative CPMs of several popular advertising channels, as well as the CPCs of desktop search and mobile app display advertising for major brands. We also created a new metric to account for the ongoing engagement that results from mobile apps: the CPE m, or mobile cost per engagement. Our analysis shows that: Mobile CPM rates are the second lowest among all advertising mediums broadcast, print, and digital behind only social networks Mobile display advertising CPCs are up to 90 percent less expensive than desktop pay- per- click (PPC) campaigns The average CPE m is one- eighth to one- tenth of the cost of a desktop click Introduction In 2012, mobile marketers spent over $1 billion on mobile advertising. 1 Unfortunately for the companies spending it, the real impact of most of these dollars was undefined or poorly understood. And as the shift to mobile continues, the stakes could not be higher: Shipments of smart, connected devices grew 29% in 2012, to over 1B units. 2 Mobile apps and ad revenue combined for over $19B in Apple shipped almost 20 times as many mobile devices as desktop Macs in Q Against this backdrop, with the enormous sums of money at stake, the question for marketers becomes how mobile stacks up to more familiar advertising channels for establishing engagements between brands and consumers. Brands are waking up to the fact that mobile apps provide an incredible canvas for marketing because the connection they build is fundamentally different than other 1 Mobile Marketer, "US mobile ad spend to exceed $1B by year- end: Forrester" 2 IDC, "Mobility Reigns as the Smart Connected Device Market Rises 29.1% in 2012 Driven By Tablet and Smartphone Growth, According to IDC" 3 Mary Meeker, "2012 KPCB Internet Trends Year- End Update" 4 Gigaom, "Apple posts biggest quarter yet: $54B in revenue, 47.8M iphones sold" 2

3 types of marketing. Mobile offers a marketing opportunity that's pervasive, highly targetable, and closest to purchase and consumption - at a significantly lower cost than anything before. For this report, we analyzed the cost effectiveness of mobile display advertising, compared to traditional advertising channels, as well as pay- per- click search advertising. The proprietary results presented in this study are based on Fiksu s analysis of more than 2.4 billion data points on mobile ad performance and app user actions across a sample of major brand companies representing several industries. (See Methodology on page 6 for more details.) Why a new metric? When analyzed through the traditional CPM (cost per thousand advertising impressions) filter, mobile is very cost- effective. But CPM doesn't provide context for creating the type of meaningful engagement today's brand marketers are seeking, and it shouldn't be the sole basis for decision- making. New research from Fiksu Performance Labs has resulted in a compelling new metric for success: mobile cost per engagement (CPE m ). For the purposes of this study, CPE m is defined as the cost of an app launch, an in- app purchase, or a registration. It does not include other instances of re- engagement that apps create, such as push notifications or simple exposure due to an app's persistent presence on a user's device, that provide additional value to brands at no extra cost. This metric offers a powerful new means for brand builders to gauge advertising effectiveness across channels. The CPE m provides a significantly deeper understanding of the benefits of marketing using mobile apps. In contrast to the static and fleeting images of outdoor ads, or traditional broadcast outlets, mobile app advertising provides marketers with the opportunity to engage with consumers for extended periods of time. CPE m takes into account the extended relationship that mobile apps create as consumers launch and relaunch their apps, spend time in sessions, make in- app purchases, and register with the brand. Findings 1. Mobile CPM rates are the second lowest among all advertising mediums broadcast, print, and digital behind only social media. As shown below, mobile CPM rates on average were the second lowest among major media options just $1.46. And while social media offers less expensive CPM, mobile consistently outperforms social in all measures of lifetime value. 3

4 But as described above, CPM as a standalone metric for value doesn t tell the whole story. 2. Mobile display cost per click is up to 90 percent cheaper than pay- per- click (PPC) campaigns on the desktop. In our analysis, the average global CPC for desktop keyword search ads for the brands we studied was $0.70, while desktop display ads averaged $0.92. Global CPCs on mobile campaigns for these brands were $0.09, including incentivized, non- incentivized, and RTB traffic sources, a reduction of 87% over keyword campaigns and 90% over desktop display campaigns. 3. Cost per mobile engagement (CPE m ) is 90% less than desktop PPC clicks The average CPE m (cost of an app launch, in- app purchase, or registration) for the major brands studied was $0.09, one- tenth of the cost of the $0.92 engagements via desktop display clicks and one- eighth the cost of the $0.70 engagements through keyword search ads. Also of note, the global brands in this study experienced an average cost per app launch of around $

5 Conclusions Mobile apps present brands with a highly cost- effective branding opportunity and the value is measureable and attributable beyond just an ad impression or a click- through. This research shows that mobile app advertising can be an extremely inexpensive and efficient way to boost awareness and engagement rates at costs per engagement that are ten times lower than desktop CPC advertising. As the unparalleled growth of mobile continues to redefine how consumers interact with brands, marketers must understand how mobile advertising options fit into their larger portfolio of advertising tactics. Only then can they succeed in winning the hearts and minds of mobile customers and building their brands in this new medium. Methodology To calculate the CPM, cost per launch, CPE m, and CPC metrics reported in this study, Fiksu analyzed more than 2.4 billion app marketing data points (ad impressions, app launches, in- app purchases, and registrations) over the last 12 months from mobile campaigns of global app brands running on the Fiksu Mobile App Marketing Platform, including incentivized, non- incentivized, RTB, and publisher direct traffic sources. CPC metrics for the paid keyword search campaigns cited were calculated using Google AdWords Keywords Tools and relevant keywords for the same app brands, and are also representative of global data. CPC for mobile is calculated as an average of the actual CPCs for campaigns run by these brands. CPMs for other types of media were gathered from publically available sources, including: networks- sink- online- ad- pricing/144884/ ad- prices/ effective- is- your- advertising- campaign/ lots- more- ads- on- internet- only- radio- sites/ Video- Ads- Good- Thing/2013/03/16/id/

6 Phone: Website: US Headquarters EMEA APAC Fiksu, Inc. 31 St. James Avenue Suite 1150 Boston, MA Phone: Fiksu, Inc. First Floor 130 City Road London, EC1V2NW Phone: Fiksu, Inc. 61 Robinson Road #13-01 Robinson Centre Singapore Phone: Copyright 2013 Fiksu. All rights reserved. Fiksu and Fluent News are registered trademarks and the Fiksu logo is a trademark of Fiksu, Inc. All other trademarks mentioned herein are the property of their respective holders.

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