Mobile will be more disruptive than the Web: Forrester
November 20, 2012
Growth rate slows for mobile ad budgets
Based on the pace of adoption, mobile is slated to be a more disruptive consumer revolution than the Web, according to a new report from Forrester Research.
In the “How to start bridging the mobile monetization gap” report, Forrester Research found that although mobile is evolving faster than the Web, sound monetization strategies are not following. Per the report, few businesses can survive on mobile as a standalone business model, meaning that mobile more often than not takes on the role of an extension of an existent business model.
“Marketers need to combine new marketing variables such as time, consumer knowledge, and place to deliver more personalized, immediate and tailored content on mobile phones,” said Thomas Husson, Paris-based analyst at Forrester Research.
“They need to anticipate the emergence of new forms of interactions with consumers by providing immersive rich-media formats that provide personalized, contextually-relevant content that is not perceived as ads by consumers,” he said. “It requires marketers to identify the value that mobile engagement brings throughout the customer lifecycle.”
Companies including Facebook, Rovio, Twitter, Pandora and Groupon often generate headlines in the mobile industry because of their large groups of mobile users. However, these companies have not proven business models that support their mobile users.
As an example of disproportionate revenue, the report points to Facebook. The company claims that 60 percent of Facebook’s audience is on mobile devices. However, the revenue being generated from mobile only represents 15 percent of the company’s total revenue.
Similarly, Rovio has positioned itself for mobile with its famous games such as Angry Birds. When it comes to revenue though, Rovio focuses itself on becoming an entertainment brand by selling merchandise and opening theme parks.
According to the report, Rovio has more than one million app downloads. Thirty percent of the company’s revenue comes from merchandising and licensing sources.
Similarly, Pandora has a mobile audience that represents 70 percent of its users. Mobile revenue is up to $100 million in 2012, but there is a substantially stronger monetization model for desktop users. Revenue for every 1,000 hours of listened music comes out to $20 per mobile user compared to $63 for desktop user.
Groupon has more than 30 million app downloads with 25 percent of all deals purchased from a handset.
Many marketers are banking on freemium models – or free apps with in-app purchases – to monetize their initiatives. However, apps must have a substantial user base for this strategy to work.
According to research from Distimo, paid apps made up 71 percent of the app market in June 2010. Free apps with in-app purchases made up seven percent of the app market.
In June 2012, free apps with in-app paid content made up 68 percent of the market. Free apps contributed to 16 percent of the market, per Distimo’s findings.
Given the smaller screen sizes and often poorly-executed campaigns, mobile advertising will continue to be a challenge for marketers to target users. Therefore, it is crucial for brands to dabble in multiple mobile channels to test what works and does not work for their users.
Mobile Web is growing at a rapid pace globally compared to Web use.
By 2017, Forrester forecasts that mobile Internet will reach 29 percent of the Indian population. Thirty-seven percent of the Brazilian population and 64 percent of Chinese populations will have access to mobile Web by 2017.
Social media and mobile go hand-in-hand. However, in order to take true advantage of the mediums, marketers need to be thinking about how to leverage the data to get a better grasp on users, which will turn into more targeted advertising.
As examples of campaigns that use data to predict consumer behavior, the Nike+ app uses contextual information from the real world that turns into mobile commerce opportunities.
To help marketers make the most of their mobile campaigns, key performance metrics and measurement systems need to be reevaluated.
For example, instead of focusing solely on ROI, marketers should be looking at engagement time rates and how satisfied mobile users are with their experiences.
Although mobile commerce continues to grow, mobile-influenced sales also need to be looked at with how consumers use their devices as part of their purchasing journey.
“Let's face it – despite massive growth mobile advertising and commerce are still small markets in absolute value,” Mr. Husson said.
“However, the mobile revolution will inevitably transform your business in the next decade,” he said. “Monetization will play a role by extending existing business models and engaging consumers more deeply."
Lauren Johnson is associate reporter on Mobile Marketer, New York
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