Could Mobile Ad Spend Overtake Budget Allocated For TV? » mobilegroove

The group of those who are bullish on mobile and its place in the marketing mix grows every week. And these executives aren’t betting on a gut feeling. They have been convinced by real results. Initiatives have moved product, raised brand awareness and engagement,  and given marketers more confidence in mobile marketing and advertising. As a result, more money is moving into the mobile channel.

Meet Paul Gelb of Razorfish, who redefines what it means to be bullish. (Disclosure: Razorfish is a Hipcricket client).

In an interview with Adweek, Paul, the agency’s mobile practice lead, was quoted as making the mother of all mobile predictions.  “I think mobile ad spend will overtake television,” he stated.

To put that into perspective, you need to know that a cool $131 billion was spent on television advertising in the U.S. alone last year. By comparison, JP Morgan predicts that mobile ad spend will reach about $1 billion in the U.S. in 2011.

The reasons for Paul’s optimism? He bases it on what he sees and knows about the industry. As he told Adweek (and has outlined in presentations), mobile is the first truly mass media.

Mobile beats TV on reach. Paul points out that there are over three times more mobile users than there are TV viewers. And mobile is the brand communication channel. Put another way, mobile is the most adopted technology and media channel in history with high engagement rates and 24-hour access to users.

What’s more, Paul believes that the rapid adoption of mobile is setting the stage for a dramatic shift in the advertising spend. “If you’d predicted then that smart phones could outsell PCs and that people would spend an hour a day on their phones, no one would have believed you,” he said.

And even if some remain disbelievers, the number of brands convinced of the power of mobile is on the rise. Driven by increased client budgets Razorfish’s mobile practice has grown to 45. “We can’t staff as quickly as we want,” Paul said.

How I See It: In the 12 years that I spent working in advertising and PR firms, I did not see agencies increase headcount if they didn’t have the client work to back it up. The agency model is to win business, then staff against it. I’m not privy to Razorfish’s mobile revenue, but I do know they are very active and certainly wouldn’t staff up wildly in the hopes of winning business.  As for Paul’s prediction, he certainly has good reason to believe mobile will be huge. I also know that mobile’s going to be big, but forecasting too far out is problematic for me.

* * *

More news that tells us brands are upbeat about mobile and putting their money into it. The International Advertising Bureau (IAB) — an organization that brings together more than 500 leading media and technology companies responsible for selling 86 percent of online advertising in the U.S. — released a study this week. The press release catches our attention with the provocative headline: Study Finds Nearly Three-Quarters of Top Marketing Executives Look to Increase Their Mobile Spend Over Next Two Years.

The study, based on a survey of 300 top-level brand marketing executives currently using mobile in their media mix, was commissioned by the IAB Mobile Marketing Center of Excellence and conducted by Ovum.

Among the findings:

• 63 percent of respondents stated that their companies’ mobile advertising spend over the past two years has increased
• 29 percent report an increase of over 50 percent
• 72 percent of these decision-makers say they are looking to increase their mobile advertising budget over the next 24 months
• 35 percent of respondents expect to increase spend by over 50 percent

Additionally, half (51 percent) of the brand marketers surveyed already treat mobile platforms as an integral element of their overall advertising strategy. The other half of the survey’s respondents are likewise intrigued by the benefits of mobile advertising, and are currently investigating how to best leverage mobile platforms within their marketing plans. Finally, more than a third (35 percent) of respondents stated they are “experimenting” with mobile, while another 14 percent are tapping into mobile on an ad hoc basis.

But its not all growth and excitement. Respondents were also queried about challenges. It turns out there are several hurdles that influence the decision to make larger mobile ad buys:

• Device fragmentation (cited by 72 percent of respondents as a challenge of medium or high importance)
• Privacy issues (70 percent)
• Lack of standardized metrics (69 percent)

How I See It: Are there really 28 percent of marketers who don’t expect to increase their mobile spend in the next two years? They obviously aren’t in Paul Gelb’s camp or on anybody’s bullish list. I was also surprised that only 35 percent of respondents expect to increase spend by more than 50 percent. Either way, the results underline the importance of education about mobile. Obviously more need to be convinced of mobile’s increased and central role in the marketing mix. A big step in this direction will come as we in the industry develop and discuss more ROI-driven mobile programs that make a real difference in a brand’s bottom line.

Peggy adds: Wonderful coincidence Jeff! I was also intrigued by Paul Gelb’s interview in Adweek and immediately connected for a more in-depth interview on MobileGroove. And speaking of interviews, the high point of my week was an audio interview with Ogilvy U.K. vice chairman Rory Sutherland. He pointed out that ad spend may not be the proper metric by which to judge the advance of mobile. Some campaigns (such as text messaging) don’t require huge spend — even though their impact is massive. We also discussed why mobile is already where the action is (and must be). Think context. Timely and ‘placely’ beat TV (and all other channels) every time…more in the two part podcast beginning later this month.

About Jeff:

A career author and sought-after speaker, Jeff Hasen builds, strengthens and protects brands. Companies benefiting from his talents have landed on Wired’s list of most innovative entities on Earth and been named pioneers and the early leader in the burgeoning mobile marketing category. Jeff co-created the certification program for the Mobile Marketing Association (MMA). He is one of only two individuals certified by the MMA to train professionals and students on mobile marketing definitions, techniques and benefits. At Hipcricket, he conceived and led the execution of an accelerated rebranding effort in advance of the mobile marketing software and services company being named “the early leader in the mobile marketing space in the U.S.” by Frost and Sullivan. Hipcricket also won consecutive annual pioneer awards from CTIA — The Wireless Association. Follow Jeff on Twitter (@jeffhasen).

This entry was posted on Friday, July 22nd, 2011 at 3:22 pm and is filed under Featured, Mobile Marketing, Mobile Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.