Why Mobile Advertising Is Much Smaller Than You Think



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Contrary to popular belief, mobile is an untested channel for most Fortune 500 brands. According to eMarketer, mobile advertising was set to hit $31.45 billion in 2014 and expected to grow by 34 percent this year.

As reported on Venture Beat, Forrester recently found that mobile represents only five percent of brands’ total advertising budget — and the majority are not making significant increases in their mobile investment year-over-year.

emarketer-mobile-ad-spendSo how is the mobile advertising market growing so quickly? The answer is simple. The majority of the mobile advertising market is comprised of app developers, not brands.

Driven by the success of multimillion-dollar brands like Candy Crush and Kim Kardashian Hollywood, app developers are rushing to drive downloads and cash in on the casual gaming market. These so-called “app-install” ads dominate almost every form of mobile advertising, from in-game interstitial and video ads in their competitors to Facebook’s Suggested Apps section.

This has been the biggest driver of mobile advertising growth over the past few years. As various news stories have recently pointed out, it sets the mobile advertising marketplace up for a rude awakening. The vast majority of mobile app developers are backed by venture capital, looking to grow their active users and top-line revenue in hopes of an exit. If the dynamics of the VC marketplace change, the flow of dollars could contract dramatically throughout the industry.

While the mobile advertising market may be artificially inflated today, it still represents an enormous opportunity. According to Flurry Analytics, consumers now spend more minutes staring at mobile screens than they do watching TV. For brands looking to capture consumer attention, mobile screens will become an essential part of the marketing mix. But first, brand marketers need to overcome their trepidation when it comes to mobile.

Most marketers are only “somewhat confident” about their ability to measure the impact of mobile campaigns. According to Forrester’s research, 57 percent of brands say their primary business objective for mobile advertising is brand awareness. At the same time, they frequently measure mobile success by acquisition metrics like click-throughs and website hits.

Marketers and agencies need to buy into the right metrics to evaluate awareness, and not judge mobile ads on performance measures. There are signs that this shift has already begun. Jun Group research found that the number of advertisers asking for brand studies is up 69 percent over the past two years. It is an encouraging start, and it still only represents a quarter of national advertising campaigns.

For mobile to mature into a true alternative (or complement) to television, brands must adopt the idea that the medium is a tool for brand awareness rather than an acquisition or performance channel.

The app install bubble will come to an end sooner or later, but brands always need to connect with their customers in effective and measurable ways. True growth in the mobile ad market will depend on how well agencies, tech providers, and publishers educate brands on the unique value of mobile advertising.

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