Wall St. Speaks Out on Mobile Marketing: Still Early Innings for Brands - Pivotal Research

For well over a decade many pundits and practitioners within the advertising industry would claim that quotnext year is the year of mobile advertisingquot Over the past two years a case could be made that the year for mobile advertising finally arrived As an increasing share of advertisements running on Facebook Twitter and Google are executed on mobile devices it is technically true that mobile advertising is growing rapidly as each of these companies capture a growing share of digital media budgets But it seems that relatively little of the spending going to these media owners does so because their customers actually have a marketing strategy that is dependent upon a consumer owning a mobile device or a consumer39s interaction with a brand outside of the home For the most part the advertiser is simply looking for the biggest andor most efficient seller of media who then optimizes spending against their inventory and the advertiser39s goals running ads on whatever device the inventory happens to appear on That39s probably not what mobile advertising39s earliest evangelists had in mind for the mediumMobile media has become much more important than it ever was in the past In a relatively short period of time mobile devices have come to account for a substantial amp8211 and according to various data sources a significant majority amp8211 of digital media consumption In turn apps capture a substantial majority of content accessed within mobile devices 88 of minutes of use per comScore data from October of last year which means that at this point in time a majority of digital media consumption is also occurring within appsFew consumers in mature media markets are mobileonly This means that virtually everyone reached on a mobile device can also be reached via the desktop while the opposite is less true which means that we can appreciate a rationale behind budgeting for digital media on a desktopfirst basis However advertisers are almost certainly underspending on mobile media and mobile marketing relative to the potential the marketing channels can offer especially via locationbased strategies and apps For spending we can point to IAB estimates of mobile advertising spending which include the aforementioned allocations of spending across devices and note that it amounted to only around a quarter of total digital ad spending during 2014 Given the aforementioned allocations this figure conveys that only a small share of digital media budgets go to mobile environments with an actual mobile strategy behind it Anecdotal commentary mirrors the data we hear from agency executives specializing in mobile advertising who note that even among the minority of marketers who work with mobile specialists might still only spend a minority of their digital budget on mobile mediaThe reasons for the desktopmobile gap are wideranging Spending by digital media tends to concentrate on environments which offer a greater potential for reach ie on the desktop Best practices in mobile marketing are evolving and capitalizing on the potential of mobile requires a lot of imagination too Establishing KPIs for mobile beyond demographicbased targeting require a lot of internal politicking among brandfocused marketers At the same time as those goals are established marketers need to figure out how a consumer39s location data and a dimension of quotplacequot can be applied towards marketing strategies Identifying potential utilities that offer consumers value and provide branding opportunities via apps also require a lot of insight and even more skilled labor From our interactions with practitioners we think that larger marketers are still in the early stages of deploying meaningful resources into mobile marketing and these efforts are further aided by the development of an efficient mobile advertising ecosystem As marketers develop their mobile strategies they also need tools which have been developed specifically to help with managing paid media in mobile environments especially important for brands who need to promote their apps or to otherwise use mobile media to support mobile marketing strategies Happily for marketers mobile DMPs mobile DSPs mobile SSPs and exchanges mobile ad servers and owners of inventory are achieving meaningful scale and becoming increasingly important given the very different processes they have established when compared with their historically desktopfocused competitors On the demand side the absence of cookies requires different approaches against which to target audiences On the supply side ad tech vendors must work primarily in an appbased environment rather than a browserbased environment requiring different tactics in terms of technologies and business models As pushing app installations will be a key goal the most significant beneficiaries will probably be those who facilitate discovery via app stores and the media owners who can tie together data for targeting and distribution for ad inventory across owned and operated apps third party apps and the broader mobile web Facebook and Google both have powerful positions in this regard and Twitter is becoming increasingly important tooAcross all of digital media large brands amp8211 those who represent the bulk of TV spending and work with agency holding companies for example amp8211 represent around 30 of spending Our guess is that few of these companies have much more than a barebones mobile strategy at this time and we presume that they are substantially underrepresented in terms of app usage when compared with ecommerce focused companies and game developers Small businesses amp8211 which also probably account for 3040 of digital media spending amp8211 are also likely underrepresented in terms of possessing strategies and app usage Both the large brands and small businesses alike are therefore also probably underrepresented when it comes to spending money to promote their appsA question that investors often raise in the context of appinstallation ads on Facebook in particular where these ads have contributed meaningfully to the company39s growth is whether or not this category of advertising is potentially in the eighth inning of a nineinning game under the premise that many of the developers who drive spending may not have the most economical of business models However based on our observations of the sector even if some of today39s largest app install advertisers went away there still seems to be so much room for growth from other segments of advertisers We are inclined to believe that what will probably prove to be a very long game has barely begun and despite the mobile advertising industry39s reported successes of late the year for mobile advertising to finally and truly arrive is still yet to come REPORT INCLUDING DISCLOSURES CAN BE FOUND HERE Madison and Wall 11615pdfBrian Wieser is a Senior Analyst at Pivotal Research Group where he covers securities which are impacted by the advertising economy including Facebook Google Yahoo Interpublic Omnicom WPP Publicis Nielsen CBS Viacom and Discovery Communications Brian can be reached at brianpvtlcom Read all Brian39s MediaBizBloggers commentaries at Brian Wieser39s Pivotal ReportCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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Wall St. Speaks Out on Mobile Marketing: Still Early Innings for Brands - Pivotal Research

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