Why Do Brands Have Such Small Mobile Advertising Budgets? [Study]

It seems that pretty much everyone is using a mobile device or two at all times, yet mobile advertising only accounts for about 5 percent of the average brand’s budget.

In a recent report, “Master Mobile Measurement to Unleash True Cross-Channel Advertising“, Forrester research found that most brands shy away from investing too much in mobile because they’re not confident they can measure the success of their campaigns.

Commissioned by 4INFO and Acxiom, Forrester surveyed 100 digital marketing managers, directors, vice presidents and C-level executives, nearly half of whom work for large companies with advertising budgets more than $50 million.

Nearly everyone said their mobile ad spend budget increased from last year, but not by much. Though 62 percent of marketers surveyed feel confident about measuring the return on investment (ROI) attributed to mobile ad campaigns, only 18 percent reported feeling “very confident” about their ability to do so. Without hard numbers, many marketers don’t feel comfortable investing heavily in mobile.


“This is counter-intuitive since consumers now spend over half of their leisure time on mobile devices,” says Gal Oppenheimer, senior product manager of built.io, a mobile back-end and application development platform for software company raw engineering. “Mobile advertising is clearly important, but it needs to get easier to track brand awareness and consumer spending.”

One thing that makes tracking difficult is the lack of cookies on mobile devices. Without them, marketers are dependent on cloudier things such as website hits, social interactions and click-throughs. The ease of accidental clicking can cause the latter, which 36 percent of respondents use, even though it is unreliable. Half as many use in-store sales lift, despite it being a key metric in justifying ad spend.

“We’re probably trying to compare too directly to the metrics established for desktop web,” says Paul Bremer, chief revenue officer at Rhythm NewMedia, a platform that connects brand advertisers with mobile audiences.

Bremer thinks mobile and desktop are inherently incomparable because they’re such drastically different mediums.

“You’ve got two kinds of parallel environments: you’ve got apps and you’ve got mobile web,” he says, adding that tablets bring another layer of complexity to the mix.

Forrester found that if marketers could track more reliably, 86 percent would allocate more of their budgets to mobile and 93 percent would run more cross-channel campaigns, something only 13 percent said they felt confident measuring.

Mobile advertising, something Oppenheimer and Bremer both compared to web advertising 15 years ago, is still a relatively new medium. In time, marketers will get more accustomed to its nuances, at least according to eMarketer’s predictions. Mobile ad spend was $17.96 billion last year, a number the market research firm expected would grow 75 percent to $31.45 billion by the end of 2014 and $94.9 billion by 2018.

Bremer believes the Interactive Advertising Bureau and Mobile Marketing Association coming together and determining standards will help marketers feel more confident with mobile. Meanwhile, Oppenheimer thinks everyone will continue to get comfortable with mobile naturally, particularly as the tech-savvy younger generation starts working and earning money.

“As these age groups grow over time and older age groups become more mobile-savvy, it will become more desirable to reach consumers through mobile ads,” Oppenheimer says. “I predict that 10 years from now, mobile ad spend will outgrow web ad spend for these same reasons.”

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