Racheal Lee
Sep 13, 2012

Marketers should spend 7 per cent of budget on mobile: US study

GLOBAL - The optimised level of spend on mobile advertising is 7 per cent of the marketing budget, according to a study of ROI (return on investment) in the United States by Marketing Evolution and the Mobile Marketing Association.

Marketers should spend 7 per cent of budget on mobile: US study

According to the Marketing Evolution white paper, "MXS: Mobile’s X% Solution", the budget recommendation also goes to a higher level of up to 9 per cent for higher involvement brands. The range varies in the model based on the industry vertical, marketing objective, profile of the target audience and the marketer’s budget.

Currently, marketers allocate less than 1 per cent of their marketing budget to mobile advertising. The white paper also stated that mobile’s share of the media mix is projected to increase to more than 10 per cent over the next four years, based on growth in adoption of smartphones only.

“It is safe to say, however, that the growth does not stop there,” the study authors added. “As with all new media, more effective targeting, creative excellence, better ad units, tighter industry standards, innovation in technology and other factors will all contribute to increased spend and the further establishment of mobile in a marketer’s mix.”

As the trend toward mobile devices is too big for advertisers to ignore, Greg Stuart, global CEO at the Mobile Marketing Association, noted that marketers are looking for the optimal way to apply mobile in their marketing campaigns.

“From digital to social media and subsequently mobile, marketers are figuring out how to apply these principles,” he told Campaign Asia-Pacific. “Mobile can help to integrate the marketing plan with tools such as QR, AR and NFC. It connects every channel, from print to outdoor."

Stuart added that Asians are not very receptive toward mobile ads, but added that SMS has great potential in Asia for direct response or CRM. “Mobile has switched from a messaging tool to an engagement tool,” he said.

A collaboration between the Mobile Marketing Association and Marketing Evolution, the study claims to be an empirical look at the rebalancing and optimisation of a marketing mix to help marketers achieve higher ROI. The media allocation for mobile was based on a combination of key data insights, namely advertising effectiveness studies, cost for mobile media and reach and frequency data.

Advertising effectiveness studies were provided by InsightExpress to show mobile’s impact as a branding mechanism, which included more than 40 studies from 2007 to 2012 for platforms such as text, video, banners and rich media.

Reach and frequency data exposed the optimal saturation point and were provided by Arbitron Mobile. Cost for mobile media was gathered through interviews with buyers at multiple companies. Marketers such as Johnson & Johnson, Coca-Cola, adidas, Procter & Gamble and Colgate were involved in the study.

Quoting eMarketer estimates, the study said marketers will spend US$2.6 billion on mobile advertising in the US this year, and US$6.5 billion globally.

Some 14 per cent of the global population is using a smartphone this year, compared to 37 per cent in the US. These numbers will increase to 59 per cent in the US and 30 per cent worldwide by 2016.

"We already see companies shifting their business models to take advantage of mobile, with many offering innovative new content and experiences to encourage audiences to engage," the authors added.

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