STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
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1 STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
2 TABLE OF CONTENTS 4 Introduction 5 8 The Lay Of The Land Challenges And Ways Forward 12 Conclusion 2 STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
3 Pete Christothoulou CEO Marchex Mobile has more than delivered on its promise to transform consumer behavior. The center of our digital lives, the smartphone also enables us to interact with the real world : to hail a ride, get directions to a store or make a phone call. Consumers increasingly use mobile devices to make purchase decisions in the real world. In fact, offline purchases influenced by digital and mobile behavior will account for more than $1.5 trillion in consumer expenditures this year. As a result, the advertising industry is going through a disruption the likes of which it hasn t seen since the onset of Internet-enabled PCs more than 20 years ago. Industry analysts and observers project that brands will spend nearly $60 billion in the U.S. on mobile ads by 2018 and that mobile advertising will dominate the focus and attention of the CMO. While I have no doubt that mobile devices will continue to sit at the center of consumers digital lives, this report calls into question whether brands will truly invest in mobile as projected. Specifically, brands and agencies indicate that measurement and attribution are the most challenging components of mobile advertising. In addition, this survey shows that two-thirds of brands ad programs have offline outcomes such as phone calls or in-store visits. Simply stated, most advertisers and publishers have not adopted the tools and technology they require to make their investments accountable to performance. At Marchex, we focus solely on measuring the real world for the world s top brands by connecting online and mobile behavior with offline outcomes like phone calls or in-store visits. Together, we can make mobile advertising accountable. DIGIDAY 3
4 INTRODUCTION In the last half decade, mobile has allowed the telephone to cut its cord and raise its IQ. The smartphones we carry on us at all times are Swiss Army knives of communication, empowering us to keep in touch, surf the Web and make purchases from anywhere with a strong enough signal (which increasingly is everywhere). Between 2010 and 2015, time spent on mobile has grown a startling 700 percent. Mobile and tablet use together now account for 60 percent of the time spent on digital media. Interestingly, mobile s relative affordability makes it the first stable contact many people have with the Web, creating a digital gateway for previously excluded groups. At the same time, mobile has really pushed personalization to another level, said Shagun Aulakh, Senior Marketing Manager at Macy s. We can t just market to the mass consumer anymore. It s necessary to really understand the full circle of a customer s behavior and life and market to them in a way that speaks to them as individuals and give them info that s as real-time as it gets, Aulakh said. It s no surprise, then, that this fast-growing, transformatory juggernaut is attracting all the attention that marketers are lavishing on it. Mobile ad spending, for example currently standing at 19 to 28 percent of ad budgets is expected to triple in the next few years. The mobile environment isn t without its looming storm clouds. It faces serious challenges tied to scale, transparency and measurement, among other issues. If these aren t met and overcome, living up to that level of projected growth is going to be tough. But first things first: Let s dive in and see how mobile is already changing marketing. 4 STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
5 THE LAY OF THE LAND The single most important characteristic is the most obvious one: Mobile is mobile. Where you use your cellphone matters a lot to our respondents. Over 60 percent indicated that a consumer s location at home, in a store, in transit weighed heavily when determining what content or information to serve them through their mobile device. When it came to the goals that respondents hoped to achieve in their mobile advertising, close to 50 percent cited driving in-store purchases as a desired outcome. Add to that the almost 40 percent who sought to drive click-to-call, and you have 64 percent of respondents saying they use mobile marketing to support offline goals. Not that mobile isn t crucial for its online applications: 87 percent chose at least one desired online mobile marketing outcome. WHICH OF THE FOLLOWING ARE DESIRED OUTCOMES FROM YOUR MOBILE ADVERTISING? APP DOWNLOAD CLICK-TO-CALL LEAD GENERATION M-COMMERCE PURCHASE IN-STORE PURCHASE DIGIDAY 5
6 Respondents mobile format preferences are telling: They prefer mobile Web display to in-app display by a 17 percent margin. The reason: Cookies can track users across the mobile Web; not so in-app. There s also a perception issue at work here. Mobile Web happens somewhere else, on someone else s server, said Vincent DiBartolo, VP, Technology, at Big Spaceship. People expect ads on websites. But native mobile happens on my phone, in my pocket. Ads are perceived to be more intrusive and invasive in native mobile apps because you ve invited the app into your life by downloading it and the ads are seen as stowaways. Social is next in line, with advertisers response to user behavior biased toward in-feed consumption particularly through social platforms and apps. While a healthy 40 percent are dipping into mobile native ads, only 12 percent use affiliates, bringing it in at rock-bottom. Going forward, it s worth keeping an eye on how quickly native adoption surges, as the industry consensus suggests that mobile is a particularly hospitable environment for it. Mobile format preference seems at least partially dictated by how closely formats promote key desired outcomes. Mobile Web display, for instance, supports virtually all of respondents goals except app downloads. Notably, it s also the strongest promoter of in-store purchases. Social picks up display s slack, effectively driving app downloads along with supporting other outcomes. Search is the (often) forgotten workhorse here, offering strong support for goals related to click-tocall, M-commerce purchases and in-store purchases WHICH OF THE FOLLOWING FORMATS ARE USED IN YOUR MOBILE CAMPAIGNS? SEARCH DISPLAY (in-app) DISPLAY (mobile Web) SOCIAL VIDEO NATIVE AFFILIATES STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
7 WHICH OF THE FOLLOWING FORMATS IS MOST EFFECTIVE FOR ACHIEVING THOSE OUTCOMES SPECIFICALLY IN YOUR MOBILE CAMPAIGNS? APP DOWNLOAD CLICK-TO-CALL LEAD GENERATION M-COMMERCE PURCHASE IN-STORE PURCHASE SEARCH DISPLAY (in-app) DISPLAY (mobile Web) SOCIAL VIDEO NATIVE AFFILIATES But in the case of many of these formats, they re largely untested, under-utilized or both. More experimentation with diverse formats by marketers could yield some interesting, unorthodox results. As the saying goes, you ll never know until you try. DIGIDAY 7
8 CHALLENGES AND WAYS FORWARD But there s one huge challenge that mobile marketers everywhere are facing: measurement and attribution. TRANSPARENCY SCALE Mobile is still a maze of data and it is not as reliable for attribution. Mobile has a ways to go to catch up with the sophistication of Web analytics. Erin Dwyer SVP, Global E-commerce and Social Haven Beauty MEASUREMENT/ ATTRIBUTION EXPERIENCE/ FORMAT Respondents were almost twice as likely to call measurement and attribution very challenging as opposed to scale. Transparency and experience and formats ( I can t buy ads in the format I want to ) straggled over the finish line in third and fourth place, respectively. Given how acute the measurement/attribution issue is, the other problems are likely to stay on the back burner until it s resolved. It s notable that all marketing verticals agencies, publishers and brands agree on this, showing unanimous concern about the challenges inherent in attribution. NOT A CHALLENGE CHALLENGING SOMEWHAT CHALLENGING VERY CHALLENGING 8 STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
9 APP DOWNLOAD CLICK-TO-CALL LEAD GENERATION M-COMMERCE PURCHASE IN-STORE PURCHASE VERY EFFECTIVELY EFFECTIVELY SOMEWHAT EFFECTIVELY NOT TOO EFFECTIVELY NOT AT ALL EFFECTIVELY Of course, the ability to tie conversions back to mobile ad exposure varies between desired outcomes. Some are simply harder than others. Lead generation via filling out forms is the easiest to tie back to digital marketing exposures, with close to 63 percent of respondents citing it as effective. App downloads are in second place (57 percent). Click-to-call had a notably strong showing when it came to measurement and attribution, taking third place (56 percent). The far from surprising last-place finisher was in-store purchases. They were considered the most difficult transactions to tie back to digital exposures for obvious, often analog reasons. DIGIDAY 9
10 HOW ARE YOU MATCHING MOBILE AD EXPOSURE TO IN-STORE PURCHASES? MOBILE COUPONS IN-STORE BEACONS USING MOBILE PHONE AS... SMS TEXT OFFERS ATTRIBUTION VENDOR PUBLISHER REPORTING N/A But when they are able to link the ad exposures to the in-store purchases, how are marketers doing it? The largest proportion use mobile coupons, taking advantage of mobile devices in-store presence. Two tactics are tied for second place: publisher reporting and using mobile phones as in-store points of purchase. Respondents seem to barely use either in-store beacons or SMS text offers, perhaps because of the relative difficulty of integration. Still, this is another situation where a little experimentation with diverse approaches might help close the digital/real-world divide STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
11 WHICH OF THOSE METHODS ARE MOST EFFECTIVE AT MATCHING MOBILE AD EXPOSURE TO IN-STORE PURCHASES? MOBILE COUPONS IN-STORE BEACONS USING MOBILE PHONE AS... PROMOTIONS IN SHOPPING APPS SMS TEXT OFFERS ATTRIBUTION VENDORS OTHER What about phone calls? Marketers phone-call methods center on call analytics or call-tracking vendors. Marketers consider call analytics or call tracking vendors as the most effective methods for trying to connect mobile ad exposure to purchases via inbound phone calls. Marketers consider publisher reporting, which sees a good amount of industry use, the least effective method. It shouldn t be used on its own When it comes to effectiveness, marketers cite mobile coupons as the top method for matching ad exposure to purchase. But how do marketers know what s truly effective if they haven t tried all available options? Developing the right mix will be key to solving this problem. And marketers are holding out hope for a better solution. Whatever solves this need will become a key part of some brands marketing plans and marketing budgets, said DiBartolo. DIGIDAY 11
12 CONCLUSION Marketers can be laser-focused on their digital and e-commerce platforms, and they certainly should be. But they should never ignore the crucial fact that 60 percent of their sales come through offline sources (either in-store or over-the-phone sales). WHAT IS THE BREAKDOWN OF YOUR SALES AMONG THE FOLLOWING? 38% In many ways, the effect of mobile has been to allow marketers to refocus their new digital tools on the traditional, brick-and-mortar marketplaces. It s brought precision, data and dynamism to real-world channels that were often (and still can be) subject to unlimited guesswork. 41% By doing so, mobile is closing the gap between digital exposure and real-world sales, leading to noticeable advances in challenges like attribution. As a consumer s constant companion during his or her brick-and-mortar and phone-based shopping experiences, the mobile device sees a consumer s path to purchase in real time and across channels. 22% That s a potential breakthrough development, and the marketers who appreciate it and take advantage of it by embracing new tactics and technologies, not just duplicating traditional desktop tactics in mobile settings, will prosper. IN-STORE OR IN-PERSON SALES OVER THE PHONE SALES ONLINE SALES 12 STATE OF THE INDUSTRY HOW MOBILE IS CHANGING MARKETING
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