Major Brands’ Mobile Budgets Still Less Than 5 Percent, MMA Says
The association contends that third party measurement firms aren't showing mobile's clear ROI and is presenting its SMoX study as the clear proof of mobile ad effectiveness.
Even as smartphone penetration rises past 50 percent, a significant gap persists in brands’ mobile ad budgeting and consumers’ amount of time spent on their portable screens, Mobile Marketing Association President Greg Stuart said.
“We estimate, among all the major brands, mobile spend is between 3- and 5 percent this year,” Stuart said. “It’s pretty far off when our guidance shows that brands should actually be spending 15- to 20 percent of their budgets on mobile, considering that smartphone penetration is around 50 percent. Reach drives a lot of the spending brands do. As smartphones move to 85- to 90 percent in the not too distant future, brands will need to be spending upwards of 30 percent in order to stay competitive and reach the consumers they want to attract.”
Audience Measurement Dereliction?
Speaking after the MMA’s Demystifying Location Data Accuracy event last week, Stuart took aim at “the major audience measurement companies” — largely considered to be comScore and Nielsen, though he didn’t specify — for not providing enough data showing the connection between mobile ad spending and the return on investment from such efforts.
“It’s ridiculous that none of the major research companies are able to quantify ROI related to ad spending for what is the most dramatic change in consumer behavior that we’ve seen in a generation,” Stuart said in a phone interview.
He rejected the notion that mobile advertising has only just emerged from what marketers had considered “the experimental stage” even two years ago.
“Mobile phones are 30-plus-years-old, so the technology is not ‘new,’” he said. “Yes, smartphones are still less than 10-years-old, but they have 50 percent penetration. But I would suggest that any consumer device that is the first thing a being reached for in the morning and the last thing used at night — with 60 percent of people carrying it during the day — the research companies would have some sense of responsibilities to their clients to measure that. It appears that they don’t feel a sense of responsibility to offer that.”
Walmart’s Dollar-For-Dollar ROI
Stuart then turned to some stats from the MMA’s ongoing $2 million cross-platform research project, dubbed “Smart Mobile Cross Marketing Effectiveness” (aka SMoX), for evidence of the value of mobile advertising and the use of location technology to target the right consumers in proximity to local stores and brand items.
“You start with a dollar of ad spending and you ask, ‘What’s going to be the most effective, efficient placement for that dollar?’” Stuart said. “You spend a separate dollar across all channels from TV on down to mobile. The study showed conclusively that when Walmart takes 15 percent of its budget and puts it into mobile — they get 14 percent in incremental sales.”
And as past SMoX reports have shown, Walmart’s “Back to School” mobile ads impacted more consumers per dollar spent than both broadcast and cable TV, driving a 14 percent of higher lift in overall shopping intent — despite only 7 percent of the spend. It also drove “verified foot traffic, “with location ads producing a significant lift vs. control.
The message: at the very least, mobile ad dollars are wholly accountable and they translate into real-world sales, though Stuart noted that search marketing is not included in the SMoX study, since it tends to serve a slightly different function than brand awareness and direct response in the traditional sense of those methods. And as retailers including Walmart, Macy’s, Nordstrom’s, and JCPenney have warned, in-store sales appear to be slowing down. While there is more to retail success than just advertising, a greater shift to mobile spending could make a difference.
“Our objective has been to measure channels in a very clear and consistent way so the marketers say, ‘Well, if I invest a dollar here, in mobile, what’s the return on that? If I invest a dollar here, on TV, what’s the return on that?’” Stuart said. “Shifting to mobile can change the results your campaign. And not many people are taking advantage of that because it’s not being measured [properly]. The revolution is not being measured. “[That said], we did measure location in there and what we found is that location was, when done right, significant in driving store traffic.”
The MMA “would be happy” to support a technical integration of its SMoX methods with the mobile platforms, Stuart said, adding, “In fact, I’ll take one step further: we would be happy to license SMoX methodology [to the audience measurement providers] so they could provide this service.”