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56pc of ebusinesses spend less than $500K on mobile annually: Forrester

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Mobile is replacing PCs for Internet access

The majority of ebusiness professionals are spending less than $500,000 annually on mobile services, showing that they are not building for a mobile-first future as quickly as they should be, according to a new report from Forrester Research.

The State of Mobile Technology Adoption report found that fragmentation continues to be an issue for ebusinesses, with the need to create experiences for multiple operating systems keeping mobile costs high. However, $500,000 is barely enough for a simple application and mobile optimized Web site, which means that few are funding the bigger, longer-term opportunities associated with more sophisticated services.

“Brands can generally get away with spending less on mobile services because they aren't the core application for a company and they don't need to support commerce or have deep back-end integration,” said Julie Ask, vice president at Forrester Research, Cambridge, MA.

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“For ebusiness professionals, this report will help them benchmark where they are in terms of deploying mobile services by platform, skill sets they have internally and spend,” she said.

Contextual mobile experiences
Ebusinesses, or those who make online shopping work, need to invest in building Web services and infrastructure to support the real-time data needs of mobile as future mobile services are expected to be task-based and highly contextual, per Forrester.

While ebusinesses are increasingly focused on ensuring that infrastructure, analytics and user interface can meet expectations for mobile services, too few are funding these efforts at the right levels for success.

Forrester's survey of ebusiness professionals found that 56 percent have less than $500,000 to spend annually on mobile while 70 percent have less than $1 million.

Only 17 percent are spending between $1 million and $5 million.

At the same time, 39 percent said their mobile efforts are being funded at a level necessary for success.

The price tag on a typical ecommerce native app can run between $500,000 and $1 million, with business required to spend this amount annually to keep pace with hardware, OS and other software updates.

Tablet strategy
The report also found that 56 percent of ebusinesses have a mobile optimized Web site and 91 percent expect to have one by the end of the year. Additionally, 26 percent have an HTML5 Web site.

Additionally, 97 percent expect to have native applications by the end of this year, with 97 percent expecting to have an iOS app and 94 percent an Android app.

However, few ebusinesses have a distinct tablet strategy. Only 29 percent currently use tablet apps while 48 percent are planning to have one. When it comes to tablet-optimized Web sites, only 20 percent currently have one and 49 percent are planning one.

Additionally, 15 percent have an HTML5 site optimized for tablets and 44 percent are planning to have one.

Time to accelerate
Given limited budgets, ebusinesses are likely to work with vendors on their mobile Web sites and apps, with 23 percent having outsourced the work to an agency, 22 percent having outsourced to a vendor, 16 percent having licensed a platform, 14 percent having outsourced to an interactive agency and 13 percent having licensed an app that was already built.

Despite these numbers, few businesses have a strategic approach for working with mobile vendors.

The report also found that ebusinesses are rightly focused primarily on smartphones, as they represent a quickly growing segment of mobile phone owners and ones that are more likely to bank, pay bills and make purchases via their phones.

However, with consumer expectations evolving quickly and quality experiences on smartphones a major factor in driving consumer usage, businesses are not moving quickly enough.

With fragmentation issues likely to continue, technologies such as HTML5 and development approaches such as responsive design can mitigate mobile development costs.

Going forward, Forrester recommends that businesses pursue more resources to fund mobile services as they are expected to influence a significant amount of sales. Businesses should also consider hybrid apps as an inexpensive alternative to native apps.

It is also important for businesses to monitor mobile technologies to see what consumers are adopting.

“Brands should pay attention though to what their direct ebusiness counterparts are doing and the mobile strategists at their retail/distribution partners,” Ms. Ask said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Research, ebusinesses, mobile investment, Forrester Research, Julie Ask, mobile marketing, mobile

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Comments on "56pc of ebusinesses spend less than $500K on mobile annually: Forrester "

  1. Andrew Marc says:

    October 4, 2012 at 5:48pm

    Hi Chantal,

    Trying to get local businesses (online & off) here in Hawaii on the mobile fast track is like pulling teeth!

    We do very simple mobile marketing campaigns that are very cost effective... yet it's a dear-in-the-headlights reaction all day long.

    So many great ways to generate new customers - soon as the wake up to it.