Teething Problems: Hurdles for Mobile Marketing

Last updated: 20 March 2014

mobile appLast time out we took a look at the adoption of mobile as a marketing platform, highlighting many positive trends which point to it being a major growth area over the years ahead. But (…and there is always a but…) the mainstream emergence of mobile advertising will not be without a few bumps in the road. Here are a few which mobile marketers will have to consider…

–       For consumers… feelings are mixed. Display banners are only available on smartphones – and even then they are rarely seen, and therefore not clicked. Apps, however, are interactive, and therefore a perfect opportunity for advertainment. But they’re still only available on smartphones – and worldwide penetration is still below 7%.

As for messaging, fear of spamming is a major concern. Some think it´s too intrusive (they value their privacy) or don’t understand why they received a particular advert (see how relevant relevance is?). Also, many don’t know who is behind the message, and if they are going to be charged for replying. (Marketers, this is a clear message: Just as humankind should not burn out our full stock of natural resources, so you should not burn out consumers with spam! Otherwise this will happen:

They’ll hurt you the only way they know how: by not clicking on the ads and by being afraid of advertising innovations!)

–       For marketers and advertisers… global annual spend on mobile advertising is now $6bn – less than 1% of a $700bn worldwide ad market (Source: Tomi Ahonen Almanac, 2010). Take-up of Mobile Advertising (display) is slower than that of Direct Mobile Marketing (messaging), but why?

Firstly, because of industry fragmentation; different vendors, different OSs and different operators. This affects the experience for consumers, meaning the marketer is never sure if the appbanneretc he put so much effort into will be displayed properly on all handsets. Fragmentation also affects the business model, because marketers must negotiate separately with all operators to secure the necessary reach, and these negotiations take time.

Secondly, a lack of standard metrics makes it difficult for marketers to evaluate risks and secure ROI.

Thirdly, marketers must comply with direct marketing regulations which, in most countries, require previous consent from end-users for push messages. This consent, known as “opt-in”, is key – but it takes a long time to build opt-in databases.

For these reasons, media buyers still struggle to understand mobile campaigns, and to justify the ROI, so simply do not include them in their plans.

–  For operators… the pressure to increase profits is huge. In recent years, to avoid losing market share, networks launched flat-rate data plans, lowering margins and getting into pricing battles with competitors. Now they need to find a way to increase customer stickiness, to gain market share and to improve ARPU. They cannot afford to take wrong decisions, and therefore don’t want to take the risk of being the first ones to invest in mobile marketing  – even though they are uniquely positioned, as the central point of the ecosystem, to remove blockers and generate new revenue flows. After all, they could provide the missing bricks by making use of their massive inventory and user-database. It seems to be just a matter of market education, but how long will it take?

So, whilst mobile marketing revenues have increased sixfold (to $6bn) in the last 5 years, there is still a long way to go to capture the other 99% of the market. But how can it be done?

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