Our dear friend Jouko Ahvenainen of Xtract was on U Talk Marketing discussing a couple of studies in mobile advertising, and attempting to explain the discrepancies. (Jouko is co-author with our Alan Moore with their book Social Media Marketing, a must-read book for 2009)
HOW MANY BILLIONS?
Deloitte in its Media Predictions / TMT Trends report 2009 said that mobile advertising was worth 1.0 billion dollars in 2008 (and predicted growth to 2.0 B in 2009)
Strategy Analytics reported also that 2008 mobile ad spending (by brands) was 1.0 billion in 2008 and Strategy Analytics felt that it would grow to 2.4 billion dollars this year.
eMarketer reported in February 2009 in the Netsize Guide that mobile advertising spending globally was 4.2 billion dollars in 2008.
Juniper measured mobile advertising at about 2 billion dollars in 2009 in June 2009
Gartner in 2008 measured mobile advertising to be worth 2.7 B dollars
Meanwhile Japanese mobile advertising alone is worth about 1 billion dollars in 2008 (Seed Planning 2008). Dentsu alone reported 620 M dollars of mobile advertising just in Japan in 2007. South Korea trends most mobile internet data at about 45% of the levels of Japan and has a very similar mobile ad market and eco-system and history as Japan, so Japan and South Korea alone are about 50% bigger than the total global numbers found by Deloitte and Strategy Analytics. And then we get countries like India where 80% of mobile phone users receive advertising and Spain where 75% do. Even in the UK 51% receive ads on their phones.
Yes the real number is certainly far more than 1 billion dollars for 2008. My company TomiAhonen Consulting measured the global advertising market for mobile at 3.2 billion dollars for last year, as reported in the Tomi Ahonen Almanac.
But this is pretty meaningless squabbling on the size. The worldwide total advertising market is worth over a quarter of a Trillion dollars and whether mobile advertising is 1 billion (Deloitte) or 4.2 billion (eMarketer), it is still of the magnitude of far less than 2 percent, and possibly under one percent of the total worldwide ad spending. It really doesn't matter at this level, is it "actually" one or two or three or four billions (and yes, makes me a bit humble to write that billions don't matter..)
The relative scale is significant. Fixed internet based advertising is ten times larger than mobile advertising. Radio advertising is of that size as well. Print and TV ads are far larger still. So please do not bother to focus on how many billions it is or is not. What we need to look at are certain trends, and certain comparative findings.
TRENDS, ALL OTHERS ARE DOWN
The first important observation is what is the prevailing trend in the economy, how it impacts. We know the global ecnomy is in trouble. We've heard the dire reports of broadcast and print advertising facing severe declines. Did you notice, that also internet advertising fell in the first quarter of 2009? Yes, all other advertising is declining, even that previously "hottest" ad category, internet advertising.
Now, if mobile also fell, it would be typical of all other ad media platforms. But what is happening? Every major analyst who has reported in 2009 about the status of mobile advertising, has said that mobile advertising is growing this year (like Deloitte and Stategy Analytics here mentioned in the above). Bucking the trend. This is very significant. The overall trend is down, yet mobile advertising is growing. Wow, that has to be very powerful indeed to counter the global trend.
So one way to measure the advertising platform is by how much money is spent on it. Another way to measure it, is by its reach. How many people does your advertising on the mass media reach? 480 million is the daily ciculation of newspapers inlcuding paid and free dailies. 1.1 billion is the installed base of all PCs, laptops and netbooks. 1.4 billion is the total number of internet users. 1.5 billion is the total number of TV sets in use around the world, but not all of those have advertising.
How about mobile? 4 billion mobile phone subscribers worldwide, have 3.4 billion actual mobile phones in use, by 3.1 billion unique owners of at least one mobile phone and subscription. Clearly not all of those will receive ads, but 1.55 billion people had received ads on their phones last year. Yes, more people received advertising on a phone last year, than the total number of TV sets or PCs; and more than read a newspaper or wnt onto the internet.
We do need to remember that on mobile phones we do not receive dozens of ads per advertising break like on TV or hundreds of banner ads on an hour or two of web surfing, not to mention the thousands more in newpapers, magazines, billboards etc that we see daily. Mobile is the 7th mass media channel, the newest and youngest mass media, as different from the internet as TV is different from radio. Mobile is considered very personal and we are not willing to put up with heavy bombardment of ads. But ads can be very effective in this environment. In particular if mobile ad campaigns are built using engagemnt marketing methods. Lets look more at the numbers.
So lets consider why. On the internet the past 16 years we ahve seen the growth and evolution of interactive advertising. The measure they use is CTR (Click Through Rates). Wikipedia tells us that an average CTR is under one percent and if you achieve 2 percent on an internet ad campaign, it is "very successful". So you have to send 50 ads, to get one to click on it, and you have success. And most ad campaigns need over 100 ads served, to achieve one to click through.
On mobile we have a better measure, "response rates". This is a better statistic, as it measures an active interest by the advertising audience to engage with the advertisement or brand. Not just to click to the site and consider possibly to be interested. And we have some very interesting response rates from several countries across thousands of completed ad campaigns. In Japan goo Research reported that response rates were at 44%. In the UK, Blyk reported after 2,000 ad campaigns that it sustained average response rates of 25%, while Croatian Tomato Plus reported response rates of 30%. Separate other recent mobile ad campaigns range from response rates of 39% in the USA by car-customizing company West Coast Customs, to 44% in South Korea with a Gillette Campaign.
An even more powerful endorsement comes from Germany, where BMW achieved not a response rate, but a "conversion rate" ie direct actual money paid by that customer who received the ad, on an MMS picture messaging campaign, that achieved yes, a 30% conversion rate. For every ten picture messaging ads sent by MBW, 3 recepients walked into an authorized BMW dealership and made a purchase. This is POWER.
So as the first mobile ad was launched in Finland 9 years ago, and today mobile advertising is no longer a "novelty" gimmick, if we achieve response rates between 25% - 44% across six countries on three continents, we are starting to have quite meaningful "rule of thumb" that about 3 out of 10 who receive mobile ads, will also respond to them. Almost one in three. That is average for mobile. Remember that a "very successful" internet campaign has to shotgun out 50 ads to grab one "click-through" which is not even yet automatically an engaged prospect.
Understand what this means first, in terms of the volume of ads. We can SHRINK the total of ads sent out, by a factor of at least 10, compared to the internet or TV or any other legacy ad media channel. And then, bear in mind the statistics, that bucking the trend, mobile advertising is growing revenues this year, possibly doubling in total value. This while mobile ad campaigns will be far less in total volume of ads.
Secondly that diminished volume means less clutter. Less noise. We can, and indeed we must, provide targeted ads that are permission-based and very strongly personalized. That means that even "generic" campaigns can seem far more relevant than mass-market ad campaigns on TV or the web.
And most importantly, on mobile when using engagement marketing methods and with a little bit of better design, the resulting campaigns are dramatically more powerful than any seen before, on any media. Like the BMW campaign (it created a virtual image of "your" car using your colour and model and the tyres and wheel rims you had bought. Even though a standardized mass-niche campaign, it seemed totally personal - that is MY car) - you can achieve enormous success. BMW was reported to sell 45 million dollars of new winter tyres and new wheel rims on a campaign with a total cost of 120,000 dollars. After such a return, who goes back to TV ad campaigns?
Now, the above is ample reason enough for any astute CMO to shift advertising budgets to mobile. If literally thousands of achieved mobile ad campaigns only do the "worst" of those stats, at 25% response rates, then it is still more than ten times better than a "very successful" campaign online, and achieves in the process far greater level of true engagement than click-throughs. So lets get the kicker.
We have the first study of second click rates on mobile ads. This is amazing stuff. Amethon studied mobile ad campaigns and was reported somewhat "negatively" that "only" one in three mobile ad campaign achieved a second click rate. What does that mean. It means that overall for all mobile ad campaigns, the average response rate is 3 out of 10. And now, the second, truly and fully "engaged" level of involvement by the audience is one third, ie 1 out of 10. Wow. On mobile, we achieve on average, two engaged clicks, which is still five times better than any "very successful" internet campaign!
This is night-and-day, isn't it? You have to bombard 50 people to get one click for an excellent campaign on the web and more likely you have to devastate the audience with over 100 ads sent to find one willing to click on your banner.
On mobile, an average campaign you only need to send less than 4 ads to get one response, and with every 10 ads sent, you get a customer willing to make two clicks by the average campaign !
BUT IT GETS BETTER
This is measuring only the early "basic" types of mobile ad methods, like SMS ads, MMS picture messaging ads and WAP banner ads. This is barely the beginning. We have far more exciting and promising formats now being introduced to the market, on mobile. Such as advergaming, 2D barcodes, augmented reality and idle screen advertising. As I reported on my parallel blog 7thMassmedia - I heard from my friend C Enrique Ortiz who said Telefonica is finding 82% response rates on advertising on their idle screen.
Update July 4: Since I originally posted this blog story, we discussed it with my friend Johannes Heinze on Twitter and Johannes pointed out that regular banner ads on mobile (and SMS spam) don't get these levels of response rates. So let me be clear, "generic" banner ads and spam SMS is as poor as any other interruptive ad concepts form the last century, whether on TV, radio, internet or mobile. Yes, they may achieve some response levels and click-through rates, but that is really just copying bad formats for the newest mass medium. Advertisers do need to learn, that mobile allows a far more powerful advertising method, "engagement marketing" and only by using that method, do you achieve resonse rates of 30%. Generic interruptive ads, even on mobile, will not perform at that level. I hope that was clear. (Thanks Johanes!)
The important point is that this is now the golden age of mobile advertising, when great innovations are being made and magnificent new ad concepts are being invented. We are facing a change to mobile advertising like the internet world saw with Google adwords. This is the big opportunity for advertising now in 2009. If you're in advertising, get into the mobile side of the business, here is where all the real creativity is happening.
And yes, if anyone wants to take a quick read of 50 case studies of excellence in moble advertising, then please read my eBook Tomi Ahonen Pearls Vol 1: Mobile Advertising. See the book website, there are free pags for you including many free case studies to see.