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Projected mobile ad-spend surge seen spurring hunt for opportunities

NEW YORK - A projected surge in global mobile advertising spending that is well above previous estimates will challenge marketers to look for missed opportunities, according to participants at the Mobile Marketing Association?s SM2 Innovation Summit.

On the conference?s first day, MMA released a report, ?How Big is the Mobile Marketing Opportunity,? which forecasts that mobile ad spend could reach as much as $220 billion globally and $70 billion in the United States alone, excluding mobile search. The projected figure ? four to seven times above current levels ? indicates that the amount brands should spend on mobile has been grossly underestimated and that the industry is likely to be larger than predicted.

?Advertising budgets always lag consumer adoption,? said Cameron V. Peebles, vice president, marketing for Los Angeles-based AirPush, which had a booth at the two-day event in Manhattan. 

?But inevitably, once large advertisers validate the adoption, the spend re-allocates itself. You can see that on the Web. Mobile is just a mirror of that that will likely catch up in the next few years.?

Grossly underestimated
The MMA report is based on a study that combines empirical data about the effectiveness of mobile advertising with estimates of future mobile device marketing penetration.

A call to rethink mobile budgets.

In January, despite predictions that the growth rate for mobile ad spending worldwide will slow over the next few years, research firm Gartner said it still expected the global mobile ad market to reach $18 billion in 2014, up from $13.1 billion last year, and $41.9 billion by 2017.

The mobile ad spend growth rate was seen slowing as the supply of mobile ad space outpaced demand, according to Gartner. The report was the latest research to suggest that mobile advertising was still struggling to catch up with the skyrocketing use of mobile by consumers.

?At MMA, we hope that marketers will look at this and look at what they are doing, contact us and ask if there?s a way for us to help them,? said Sheryl Daija, MMA?s chief strategy officer. ?The idea is that marketers will challenge themselves and their agencies to really look more closely at where the opportunities are for them and where they are missing opportunities. And just rethink things. 

?This gives them another nugget of information,? she said. ?This is the next evolution in understanding what the power of mobile is. We are just continuing to understand how powerful it can be for marketers.?
 
Cross-media optimization research revealed the ROI on the dollar spent in mobile, and the optimized spend of mobile in a mix. A goal was to measure at what point returns on the use of the media diminish and at what level mobile should be optimized.

?We all know mobile is being underspent,? Ms. Daija said. ?It?s common knowledge. It?s common sense. This allows us to say if, for example, a marketer is spending 2 percent on mobile, the methodology and the research will allow us to come back to that marketer and say instead of 2 percent you should have been spending 16 percent, or 12 percent.

?The great thing is in most cases they don?t need to spend any more. It?s not about increasing their budgets. It?s about reallocating their budgets.? 

MMA report on global mobile ad spending.

Up to now, the traditional practice was to value media use in terms of time spent.

?Time spent tells you only part of the picture,? Ms. Daija said. ?When you?re a marketer and you?re looking to figure out how much money you?re going to spend on a certain medium, time spent isn?t going to be enough of a barometer for you to go, OK they are spending X amount of time, therefore I should spend X amount of dollars.
 
?There?s not a direct correlation for how much time spent equals how much money you should spend,? she said. ?Media consumption on mobile is huge. It?s incredibly big. If you just think about consumer consumption on mobile, the spend is incredibly disproportionate just alone.? 

Over a year, MMA built its methodology on a group of recent studies that measured the effectiveness of a single media channel within itself and in the overall mix.

?Very, very complicated,?Ms. Daija said. ?The technology integrations are very complicated. The ability to measure all the different parts of mobile, whether it?s messaging or video or display or apps, it?s just an incredibly complicated research, so it?s never been available before.?

Shifting budgets
The upbeat forecast fit with marketers? and agencies? observations that ad spending on mobile is growing. 

?As people have been running tests as they start to see results from mobile that?s when they will start allocating more of budget over to the channel,? said Sara Kowal, vice president of product innovation with Hello World, in Pleasant Ridge, MI, which had a booth at the SM2 conference. ?People are so used to using TV and more traditional advertising and it takes a long time to shift those budgets. 

?Mobile used to be a totally separate channel and now it?s so ingrained in people?s lives,? she said. ?Whether it?s the second screen or the third screen, consumers don?t see it any differently. It doesn?t matter whether they are doing it through a phone or a table or a PC ? or whether they are walking into a store. It?s a holistic view. Brands are starting to find their way to get there as well.?

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York.