August 29, 2012
Asks the Multi-Billion Dollar Question - how should a marketer rebalance their mix based on Mobile’s impact on consumers and media habits?
New York, NY (August 29, 2012) During a closed-door, invitation only meeting at the MMA CEO and CMO Summit, the MMA unveiled its new initiative, “MXS” which challenges marketers and agencies to look deeper at how they are allocating billions of ad dollars in their marketing mix in light of the radically changing mobile centric consumer media landscape. MXS – which stands for Mobile’s X% Solution - is believed to be the first empirically based study of the rebalancing and optimization of a marketing mix to help marketers achieve a higher return on their marketing dollar investment.
Marketing Evolution, a leader in marketing ROI measurement conducted the scientific and complex analysis. MXS bypasses the equation used by some that share of time (should) equal share of budget and instead looks at an ROI analysis of mobile based on actual market cost, and current mobile effectiveness impact, as well as U.S. smartphone penetration and phone usage data (reach and frequency). This mobile analysis was then merged with data from dozens of cross media studies of other media against specifically defined campaign goals by product category and thereby allows for an algebraic analysis of mobile’s role in an overall marketing mix.
The study concludes that the optimized level of spend on mobile advertising for U.S. marketers in 2012 should be seven percent, on average, vs. the current budget allocation of less than one percent. Further, the analysis indicates that over the next 4 years, mobile’s share of the media mix is calculated to increase to at least 10 percent on average based on increased adoption of smartphones alone.
“Media consumption habits are shifting towards mobile and it is our responsibility, as global marketers, to engage with consumers in the most meaningful way,” said B. Bonin Bough, Vice President of Global Media and Consumer Engagement at Kraft Foods. “At Kraft Foods, we’re committed to making a difference in mobile innovation, so I’m very pleased that the MMA is leading the industry with this valuable data.”
More detailed data suggests that the range marketers should spend on Mobile varies based on the marketing goal and industry category. For example with high involvement brands and/or lower purchase funnel objectives, marketers should consider a higher than average 9% allocation with an increased projection to 13% over the next few years based on smartphone growth.
However, as with all new media, improvements in targeting, creative excellence, better ad units, tighter industry standards, innovation in technology and other factors will all contribute to increased spend and the further development of mobile beyond these levels.
The full white paper is available here: http://www.mmaglobal.com/research/MXS
“The mobile industry has been plagued from what I call a “cold start syndrome,” said Greg Stuart, CEO, MMA Global. “Finally, we are able to give marketers a level of empirical data that takes out the guesswork and offers a baseline for further discussions on what a rebalanced marketing mix should look like to achieve a stronger ROI on every dollar they spend. The next step in this process will be to validate these findings with the recently announced MMA SMoX.me program where we will conduct cross media research with key leading marketers globally to provide additional critical ROI data for them and the industry.”
While MXS was not developed to calculate total Mobile industry spend, the MMA expects comparisons will be made so one could conclude that overall “Mobile Marketing” (measured marketing spend) could be an approximately $26 billion market in the U.S. and higher globally.
“MXS is intended to kick-start a meaningful, but scientific-oriented dialog about the obvious disconnect between spend on mobile advertising and current patterns of marketing ROI and media consumption to help marketers reach the right answers for their businesses,” said Rex Briggs, CEO, Marketing Evolution. “Regardless of variances in campaigns, it’s clear that marketers, on average, are spending significantly less than they should on Mobile and are losing out on sales and profits by settling for a sub-optimal media mix.”
This project was conducted by Marketing Evolution with input from a consortium of major agencies, marketers and media companies over the last three months, as detailed in the white paper.
About Marketing Evolution:
Marketing Evolution originated cross-media research a decade ago in an effort to determine the share of the mix digital advertising should receive. Since then, Marketing Evolution has served CMOs of leading companies to measure the effectiveness of their marketing campaigns and to help optimize their marketing and media mixes.
Marketing Evolution specializes in integrating marketer’s ROI data into SIRF models for budget planning, and conducting original research to quantify marketing ROI. Marketing Evolution has been at the forefront of measuring digital display, search, and social media, as well as traditional media such as television, magazine, radio, and so on. Marketing Evolution’s methodology has been praised as the “gold standard” by an independent review by the ARF and called “best practice” by ESOMAR’s independent panel of academics and research industry experts that reviewed over 10,000 papers over the past decade. Marketing Evolution’s cross media method was one of only 30 best practices in all of marketing research to receive the prestigious honor and inclusion in the Best Practices book published by Wiley & Sons.
About the Mobile Marketing Association (MMA)
The MMA is the premier global non-profit trade association established to lead the growth of mobile marketing and its associated technologies. The MMA is an action-oriented organization designed to clear obstacles to market development, establish mobile media guidelines and best practices for sustainable growth and preserving privacy, and evangelize the use of the mobile channel. MMA includes more than 700 member companies, representing nearly 50 countries across the mobile marketing industry including hardware providers, marketers, software developers and more. MMA global headquarters are located in the U.S., with regional chapters in North America, Europe, Latin America and Asia Pacific. For more information, please visit www.mmaglobal.com.
FOR MORE INFORMATION:
Brown Lloyd James for the Mobile Marketing Association
Landline: 212-486-7070 Mobile: 646-275-4450
MXS was developed to assist advertisers about their marketing spend and was not developed to calculate resulting total Mobile industry spend. Knowing the comparison will be made, the calculation is a perspective on the below industry analysis: If one applies the average optimized level of 7 percent to just the major media spend of $171billion in the U.S. for 2012 (according to eMarketer), it would suggest that Mobile display spend would currently be $11.2 billion annually currently, about the same as display/sponsorship spend reported in internet media in 2011. Similarly because the 7 percent does not include all mobile marketing options, such as search, SMS, CRM, couponing, etc., if applied the 7 percent to total 2012 measured marketing spend in the U.S., which includes direct mail, events activities and more totaling $368 billion (according to Zenith Optimedia), then overall Mobile Marketing spend could be nearly $26 billion.