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Mobile will be more disruptive than the Web: Forrester

Samsung Galaxy SIII

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.

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“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.”

Mobile growth
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.

Free models
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.

Global change
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.

Monetization help
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."

Final Take
Lauren Johnson is associate reporter on Mobile Marketer, New York

Lauren Johnson is associate reporter on Mobile Marketer. Reach her at lauren@mobilemarketer.com.

 
Related content: Research, mobile, mobile commerce, mobile marketing, Thomas Husson, Forrester Research

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Comments on "Mobile will be more disruptive than the Web: Forrester "

  1. Grant Osborne says:

    January 15, 2013 at 2:38pm

    Completely agree with this. One of the biggest needs / challenges arising from this is for companies and marketers to understand the mobile analytics and adopt a testing framework to continually improve their mobile web offering and add value to their consumers. Very few companies I know are currently drilling into their mobile analytics, or setting up in-app analytics - and this needs to change.
  2. Rolfe Swinton says:

    November 29, 2012 at 9:40am

    The Rovio numbers must be wrong - they have far more than 1 million game downloads. Granted that is a large number - but their mobile user base is far higher than that! We see a very high percentage of users across our mobile research panel. If we extrapolate that out - this number is off by an order of magnitude.

  3. Robert Rose says:

    November 20, 2012 at 5:58pm

    I think the Forrestor is dead on in forecasting the coming acceleration and global adoption rate of mobile over the next 3-5 years.
  4. Carissa Ganelli says:

    November 20, 2012 at 9:08am

    Thank you for the excellent insights into mobile growth factors. One addition: companies fail to recognize that consumer behavior is different on mobile devices than on desktop/laptop computers. For example, while people are interested in consuming content on computers (Hulu, Wall Street Journal Online, streaming Netflix) on mobile devices people want to alleviate boredom in short snatches of time. While waiting for a bus, in a queue, or for their next appointment they will play Angry Birds. Another example is that while people are interested in researching and browsing products via computer (resulting in the need for detailed specs, comparison charts, 360 degree tours, etc.) mobile is all about task completion and immediacy: I need to get something done instantly and cross it off my list. Instead of designing mobile experiences around the new mobile customer behavior, many companies have just shrunk down their computer websites to 4 inches. Those shrunken mobile experiences have too much content which is overwhelming and too many hurdles to complete a task - it takes consumers 19 screens to make a purchase on Barnes and Noble's mobile site. Is it any wonder they have difficulties monetizing mobile?
  5. Alokedeep Singh says:

    November 20, 2012 at 5:39am

    Wishing this really comes true especially in India's case where while mobile web penetration & access is increasing, but connectivity bandwidth remains an issue