Juniper: Should you care about mobile advertising?

Why mobile advertising is important and brands should take notice.

Charlotte Miller

   Charlotte Miller

There are significant benefits to the mobile channel. For one, mobile is more personal than other forms of advertising because the mobile phone is one of the most personal devices that many consumers own. Other devices such as PCs, laptops and even tablets are often shared with others. Browsing, texting and calling on a mobile phone is typically only done by the owner so when the advertiser sees that clickthroughs have come from a certain handset, they can be confident that all clickthroughs from that handset have also come from a specific individual--not the case with clickthroughs via a desktop PC.

Mobile also offers advertisers significant reach; in almost all cases, penetration rates in developed countries have passed 100 percent. Smartphone penetration in developed countries is also high; by the end of 2011, 58 percent of North American mobile phones were smartphones. Alongside this reach, advertisers also see far higher response rates on mobile than for comparable campaigns on the desktop.

Like advertising on PCs, advertisers use a wealth of information to target adverts to those most likely to respond. The mobile device offers more than the PC with advertisers not only being able to focus on consumers in their target demographic but who are also close to a location where they can purchase the item. This is obviously a valuable targeting option, as it allows advertisers to send transactional advertising to consumers who are in a position to buy goods from a physical location at that time.

So what else does mobile offer the advertiser?

Well, smartphones and tablets offer the opportunity to deliver ever richer ads to consumers. Rich media ads are typically more engaging than banner ads, and engagement drives higher clickthrough rates. Rich media ads also allow developers to take advantage of the device's functionality such as its GPS or accelerometer. In addition, HTML5 can offer an advertiser the chance to bring an app-like experience to the user without making him or her leave the app.

Advertisers can even use apps for advertising. Indeed, advertisers have also been quick to utilize the app stores. Some brands have used games to promote specific products; others have created mobile social networks on paid-for apps. Branded apps can be highly successful when they provide some value to consumers. The Nike+ social network has over 6 million subscribers, and each user is shown brand advertising for Nike every time he or she uses the app to log training sessions or set personal goals.

Source: Juniper Research

Apps themselves can also offer valuable inventory for advertisers. With many developers now choosing in-app advertising due to the growing push towards free and low-priced apps, this available inventory is set to grow considerably. In-app ads are a powerful way of reaching consumers and as the usage of apps increases, increasingly essential. However, creating immersive and entertaining experiences to attract the attention of the consumer is critical for marketers wanting to take advantage of the massive increase in app usage--the advertiser needs to create an experience that will offer the consumer something of equal or greater value than what is offered by the app.

An increasing number of brands already have clear mobile strategies. Mobile advertising spends have grown dramatically over the past few years as those brands have found that mobile ads are effective. We are also purchasing an ever increasing amount of goods via mobile. For example, eBay sold $5 billion of goods via mobile in 2011. To put this in perspective, in 2011, 7 percent of eBay's total gross merchandise volume was on mobile and its apps had been downloaded more than 70 million times. With the m-commerce opportunity so promising it is clear why mobile spending has increased rapidly.

The advantages of mobile advertising mean that spend will triple by 2017, driven by significant growth in in-app advertising spend. Spend on in-app advertising itself will increase from $2.4 billion in 2012 to over $7 billion in 2015.

However, there is a sting in the mobile advertising tail--there are far more brands that haven't embraced mobile than have. Even where brands have a mobile advertising strategy, they may not have a mobile-optimized website. You have to ask: why advertise on mobile if consumers can't use the same device the ad was delivered on to find out more information about or even purchase the product?

It is clear that mobile advertising cannot be considered in isolation or even purely as part of an advertising strategy: brands must have a mobile strategy that looks at the whole picture. With mobile ad spend increasing rapidly and a growing number of brands seeing substantial benefits, can brands without a mobile strategy afford to be left behind?

Charlotte Miller is a Research Analyst with Juniper Research and the author of the recently published report Mobile Advertising: Messaging, In-App and Mobile Internet Strategies 2012-2017. Her areas of focus include mobile content and applications.