Mobile marketing: the 7% solution

Most brands spend about 1% of their marketing budgets on mobile marketing, according to the Mobile Marketing Association (MMA). But that’s not enough, MMA suggests. The association recommends 7%.

Whether that percentage is ideal was up for debate Monday morning at Advertising Week. A panel of mobile marketing experts discussed the pros and cons of spending 7% of a company’s marketing budgets on mobile.

Brands need to refine their creative content on mobile devices and agree on industry production and measurement standards, and objectives before they devote 7% of their budgets to mobile marketing, the panels recommended.

“Whether you get to 7% or not depends on the content. If you have a strong story and a strong product, you can afford to be bullish on mobile,” said Lou Paskalis, American Express’s VP of global media content development and mobile marketing, during the discussion.

Marketers spent only $1.5 billion on mobile marketing in 2011, according to eMarketer, but the research company expects that investment to increase to $12 billion by 2016, when smartphone penetration in the United States is predicted to hit 60%.

Earlier this year the MMA reported results of an ROI analysis suggesting that the optimized level for mobile advertising is 7% of a brand’s marketing mix, on average. It suggested spending levels of 9% for categories with high involvement in mobile, such as automobiles and financial services, and 5% for lower-involvement sectors including entertainment and packaged goods.

Panelists at the Advertising Week conference drove home the message that brands need to take into account the personal nature of mobile devices and their differences from home computers and tablets in developing creative. With mobile, they said, it imperative to time your deliveryand offer actionable content.

“People are on their devices 150 times a day. Not every occasion is right for an ad,” noted Brian Bos, SVP of WPP’s Team Detroit digital marketing agency.

And when the occasion is right, it needs to deliver, according to Paskalis. “Mobile ads have to offer either utility or entertainment or a blend of both. It’s always on that sliding scale,” he said. “There is a usage expectation among consumers: ‘If I do this, I get that.’”

Timing can be everything in mobile, noted Eric Hadley, SVP of The Weather Channel. “What will drive expansion is when ads become more contextual,” he observed. “The ad you provide to someone should be different if he’s walking down Times Square or sitting in JFK airport. There has to be frequency capping and experience raising.”

All panelists agreed that marketers and their agencies need to come together on industry standards before mobile marketing can ascend to the next level—and not just technical standards but standards for objectives and measurement.

“It’s hard to get marketers to agree on what the objectives are, but it is going to be crucial in order for mobile ads to be scalable,” said panel moderator Lars Albright, CEO of SessionM.

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