A consensus of industry executives say 2007 is a crucial year for mobile advertising, but will it be a permanent budget line item by 2008?
This might not be the year when mobile advertising becomes a significant line item in the overall ad spend, but a consensus of industry executives sees 2007 as crucial to the channel's growth.
The mobile advertising sector is expected to realize 100 percent growth in 2007, after an 80 percent uptake last year. In terms of scale, that means spending may only reach $720 million by year's end, and 2006 spending was about $360 million, according to a Jack Myers Media Business Report forecast. Even if mobile exceeds its forecasted doubling, the sector will account for less than 1 percent of the total ad spend.
"For an emerging category, the growth is robust," said Jack Myers, publisher of Jack Meyers Media Business Report. "I see 2007 as another transitional year, and a rapid acceleration of spending in 2008 and 2009."
Spending in the category is still seen as experimental by some, but it's becoming a natural component of multi-channel campaigns. Angela Steele, mobile marketing strategist at Starcom USA, said she expects about 80 percent of the agency's clients to be active in mobile. "There are certainly those still dipping their toe and experimenting," she said. "A number are starting to see mobile as a channel and setting aside dollars as experimental."
Starcom's strategy is to work mobile into a campaign from the start, and not retrofit it later. "The drum we beat with all of our clients and planning teams is that mobile can't live in a silo; it needs to be part of the broader deal," said Steele. "We encourage [planning for it] at the stage of ideation and not execution."
While a full-size agency with the ability to integrate mobile in-house avoids the silo pitfall, boutique mobile agencies exist. One such agency, Kikucall, works with agencies including OMD, Chiat Day, R/GA, and Rae Macenzie Group. The mobile-focused agency has also worked with brands such as Johnson & Johnson, Absolut Vodka, Amstel Light, HBO, Motorola, and Alltel.
"As an agency we're still selling campaign by campaign," Kikucall CEO Brian Hecht told ClickZ. "We do have recurring clients. We think we have a fantastic repeat rate, and [creative] that started as tests are rolling out as campaigns."
For a mobile agency like Kikucall, being involved early in the planning process is as important as with Starcom's integrated team. "There is a high correlation to how involved we are in the planning program and success," said Brian Hecht, CEO of Kikucall. The way we can serve our clients better and help grow the mobile channel is by being part of the process as early as possible."
Success can drive both experienced brands and newcomers to mobile to put money toward the channel. Meyers compares the situation to advertiser adoption of cable channels. "I think the opportunity is for companies to come in now and help define the marketplace and establish an early foothold the way that Budweiser did with ESPN in the early days of cable, and Bristol-Myers did with Lifetime in the early days of cable."
Some of the larger brands are proving themselves in mobile and validating the medium in the process. 2005 and 2006 saw a larger number of campaigns deployed than any previous, according to Laura Marriott, executive director of the Mobile Marketing Association and a ClickZ columnist. "For the brands who have been leading in the space, Procter & Gamble and Coke, mobile is now a line item in their budget," she said "They are actively incorporating it in their spend."
As brands continue to test wireless marketing, they're educated in the medium and are able to fine-tune their campaigns. "[Mobile buys are] beyond experimentation, but it's not yet a permanent part of the media spend," said Hecht. "It's a fairly big project -- bigger than an experiment, but not quite a permanent part of the play."
Meanwhile, media companies are coming onboard, creating additional ways for brands to play in the space. Media sites increase inventory and sponsorship opportunities. CBS formally launched a mobile division earlier this month, with both subscription and ad-supported properties. "I think 2007 is clearly the year of serious experimentation, not just a mini-trial," said CBS Mobile EVP Cyriac Roeding. "Brands are serious about understanding the space a lot more, and I think by the end of the year they will make a decision of what kinds of budgets [they need in] 2008."
The channel is crucial for reaching the younger demographic, according to Roeding, who called 2007 "an interesting and important year."
CBS partnered with mobile firm Volantis to service its mobile properties. Volantis' VP of marketing, John Beale, is no less bullish on the year's importance for growing the channel. "Mobile advertising is going to be a huge catalyst for the growth of mobile," Beale said.
As companies move to the mobile platform to advertise, inventory is increasingly available; and marketer spending is following it. "We've seen over the course of the last year a tremendous increase in campaign budgets," said Jeff Janer, CMO of Third Screen Media. "Last year, in January, a $25,000 to $35,000 buy for a four-week period would characterize experimental." He said ad budgets are now in the $150,000 range for the same four-to-six week campaign buy.
"More inventory available means you're able to buy ad impressions, especially at a premium level," Janer said. Third Screen Media has seen blue chip advertisers like Burger King, Exxon Mobile, and Ford Motors come back for second and third campaigns. "I think in some cases we're beyond the experimental stage, and this is all off-deck. In 2007, it's our thought that all major carriers will start serving ads on-deck."
The next hurdle could be measurement. "I think it's still dipping their toes in, establishing their presence, and testing," said Meyers. "But they still need the data, the metrics, the audience information, effectiveness measures. The business models still need to be developed more than they are today, and I see a lot of that happening in 2007."
Some steps have happened toward measurement. Earlier this month, Third Screen Media announced a partnership with Telephia to provide consumer media consumption data, and Bango enhanced its advertising offerings, including better reporting of data.
One thing's sure: As companies continue to push deeper into the channel, 2007 will be a formative year for mobile marketing. "I think in 2007 there is money budgeted for mobile, but it's a tentative budget," said Hecht. "By 2008 I believe it will be a permanent part of the budget, just like any other channel."
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