Marketer Perceptions of Mobile Advertising Ovum Report Final

8/3/2019 Marketer Perceptions of Mobile Advertising Ovum Report Final

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1

OVUM CONSULTING

MARK ETER PERCEPTIONS OF

MOBILE ADVERTISING

An Ovum st udy for the IAB

Eden Zol ler , Pr incipa l Analyst

Mark Ol iver, Senior Consul t ant

Publicat ion dat e: Ju ly 2011



2

TABL E OF CONTENTS

Table of Contents 2

Executive Summary 5

IAB AND OVUM REVEAL THE INSIDE TRACK ON MOBILE ADVERTISING IN THE US 5

MARKETERS IN TUNE WITH BENEFITS OF MOBILE ADVERTISING 5

BUT THERE IS STILL WORK TO BE DONE 5

KEY MESSAGES 6

BACKGROUND TO THE SURVEY 8

Marketer perceptions of mobile advertising 10

THE BENEFITS OF MOBILE ADVERTISING ARE WELL UNDERSTOOD BY MARKETERS 10

INCREASING BRAND AWARENESS IS A TOP OBJECTIVE FOR MOBILE ADVERTISING 11

MOBILE ADVERTISING OBJECTIVES VARY ACROSS VERTICALS 11

SATISFACTION WITH MOBILE ADVERTISING IS REASONABLE BUT COULD BE HIGHER 12

PERCEIVED CHALLENGES 13

Mobile Advertising Strategy and Spend 16

STRATEGIC APPROACHES TO MOBILE ADVERTISING 16

MOBILE ADVERTISING SPEND 20

Mobile advertising inventory and devices 27

MOBILE INVENTORY 27

MOBILE DEVICES 27

Agency relationships 33

MEDIA BUYING AGENCIES 33

About Ovum 38

OVUM AT A GLANCE 38

DISCLAIMER 41



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TAB LE OF FIGURES

Figure 1: Company split by vertical market across the sample 9

Figure 2: Company split by revenue size across the sample 9

Figure 3: The key benefits of mobile advertising from a brand/buyer perspective 1 0

Figure 4: Key objectives of mobile advertising activity 1 1

Figure 5: Key objectives of mobile advertising activity by vertical 1 2

Figure 6: Satisfaction levels with the outcome of mobile advertising activity 1 3

Figure 7: Views on the challenges facing mobile advertising 1 4

Figure 8: Selected views on consumer privacy and mobile advertising 1 5

Figure 9: Use of different types of mobile inventory across the sample 1 6

Figure 10: Mobile advertising strategy adoption by vertical market 1 8

Figure 11: Size of business (revenues) and mobile advertising strategy 1 9

Figure 12: The relationship between geographic focus and mobile strategy 2 0

Figure 13: Mobile advertising budget allocation 2 1

Figure 14: Mobile advertising budget allocation – last two years 2 2

Figure 15: Mobile advertising budget – the next two years 2 3

Figure 16: Budget allocation by company size 2 4

Figure 17: Budget allocation and mobile advertising strategy 2 5

Figure 18: Factors that would help increase spend still further – selected views 2 6

Figure 19: Use of different types of mobile inventory across the sample 2 7

Figure 20: Use of different types of mobile devices cross the sample 2 8

Figure 21: Importance of different device types over the next two years 2 9

Figure 22: Smartphone shipments in North America 3 0

Figure 23: Smartphone and feature phone high priority ranking across verticals 3 1

Figure 24: Interest in device form factors and features 3 2

Figure 25: Use of media buying agencies for mobile advertising across verticals 3 3

Figure 26: Satisfaction levels with media buying agencies for mobile advertising 3 4

Figure 27: Use of creative agencies for mobile advertising across verticals 3 5



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Figure 28: Satisfaction creative agencies for mobile advertising 3 6

Figure 29: Use of media buying agencies for mobile advertising across verticals 3 7

Figure 30: Summary of Ovum services 3 8

Figure 31: Cross section of Ovum consulting clients 3 9

Figure 32: Ovum Consumer Practice 2011 research plan 4 0



5

EXECUTIVE SUMM ARY

IAB A ND OVUM REVEAL TH E INSIDE TRACK ON MOBIL E ADVERTISING IN TH E

US

Ovum has conduc ted a g round b r eak ing su rvey am ong m arke te rs a t 300 US compan ies to

p rov ide a un ique ins igh t i n to m ob i le adve r t i s ing f r om a buye r pe rspect i ve . The su rvey w as

conduc ted on beha l f o f t h e I AB ’s Mob i le Marke t ing Cen t re o f Excel l ence w i t h t h e a im o f he lp ing

i t s m e m b e r s a n d t h e w i d e r i n d u st r y t o u n d e r s t a n d b et t e r h o w m o b i l e a d v er t i s i n g an d

mark e t ing i s pe rce ived by the bud ge t ho lde rs fo r t hese p roduc ts and se rv i ces . The su rvey on ly

i nvo lved compan ies tha t u se mob i le adve r t i s ing and the resu l t s p resen ted in t h i s repo r t a re pos i t i ve , cha l l eng ing and o f ten su r p r i s ing .

MARK ETERS IN TUN E WITH BENEFITS OF MOBILE ADVERTISING

Mobile as an advertising channel has many appealing elements and what stands out from our survey is

that this is understood and appreciated by marketers, with immediacy (57%), cost effectiveness (54%),

increased engagement (52%) and reach (49%) flagged as top priority benefits by respondents. Mobile

undoubtedly offers huge reach for advertising and in North America alone Ovum estimates there will be

335.44 million connections by the end of 2011 rising to 391.84 million by the end of 2016.

Another attractive aspect of mobile advertising is the potential for high engagement and personalization.

Every mobile device is linked to an individual and is always on hand, meaning that connected devices are

accessible through all the hours of the media day and have great immediacy. Mobile is a communication

channel and as such is highly interactive and is effective in adding interactivity to other media that are

not interactive in themselves. Mobile also presents opportunities for better alignment of the advertising

message with its intended audience.

Marketers in our survey have clearly embraced mobile advertising with 31% of respondents saying it is

part of their digital advertising strategy and fully integrated with other media, while 20% have it as core

albeit not automatically integrated with other media. Fourteen per cent of respondents use mobile on a

more ad hoc basis while 35% are at an earlier phase were they are still experimenting with mobile

advertising, although as our survey revealed this can be on a large scale and involve significant

investment. In fact the budgets being allocated to mobile advertising are in a very healthy state with

28% of respondents saying their companies currently spend $50-$150,000 per annum on mobile

advertising with 7% allocating in excess of $300,000 per annum. Fifty-five percent of respondents are at

the lower end of the budget spectrum spending under $50,000 a year on mobile advertising.

BUT THERE IS STILL WORK T O BE DONE

Mobile advertising is advancing rapidly and many of the issues that slowed progress in early years have

been addressed, for example constraints imposed by network and mobile phone limitations have radically

improved through developments in, respectively, mobile broadband and smartphones. The survey results

confirmed that mobile advertising has made solid progress but we also wanted to find out which areas

were seen by marketers as challenging, which in turn enables us to identify where they require support



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and guidance. The mobile advertising issues of highest concern to marketers are consumer privacy

(40%) device operating system fragmentation (39%) and lack of standardised metrics (31%).

The survey revealed that marketers are in general happy with results achieved by mobile advertising

across a range of key objectives – the majority of respondents were reasonably satisfied with mobile

advertising’s ability to deliver on increased engagement (59%), increased brand awareness (58%),

customer relationship marketing (57% and driving sales (54%). This is positive but we would like to see

performance improved to the point that marketers are completely delighted with the results, an

ambitious goal but one that we are confident the industry can achieve with the IAB’s ongoing support.

K EY M ESSAGES

Mobile advertising spend set to increase

Mobile advertising budgets are currently robust, as noted above, and are set to increase over the next

two years, with 35% of respondents expecting current spend to increase by over 50% during this time.

Thirty-seven per cent of respondents predict their mobile advertising budget will increase by under 50%

while 27% expect it to remain unchanged. The notion that it would decrease barely drew a response.

Budget allocation and mobile advertising strategy

The cross referencing in our sample of their mobile advertising strategies and mobile advertising budget

allocation produced intriguing results. The largest share of companies that are still at an experimental

stage, 40%, are investing less than $50,000 per annum in mobile advertising. And yet another significant

portion of the experimental players are investing at the highest end of our budget bracket of over$300,000 per annum. This is perhaps surprising and we assume the latter group of experimenters

includes some of the larger companies in terms of revenue size.

Increasing brand aw areness a top objective for mobile advertising

Ninety-three percent of respondents said that increasing brand awareness was their most important

objective for mobile advertising to date, followed by support for specific engagements (86%) and

increasing engagement (86%) in second joint place, with driving sales (83% in third place).

Mobile advertising strategy varies by industry

Media and entertainment companies are noticeably ahead of the curve when it comes to adopting the

most advanced mobile advertising strategies with 42% of respondents in this vertical have mobile as coreand fully integrated with other advertising media. This is not surprising as many media and

entertainment companies are at the forefront of using digital media for their own services with all of the

large players in the US being early adopters of mobile.

And by geographic focus

A company’s geographic focus appears to influence its mobile advertising strategy. The survey revealed

that companies with a national focus across the whole of the US have adopted the more advanced mobile

advertising strategies, with 63% of the nationals having mobile fully integrated with other media

campaigns. Conversely, locally focused companies are at the more cautious end of the strategy spectrum

and are either still experimenting or adopting an ad hoc approach to mobile advertising.



7

A rich range of inventory is being used for mobi le advertising

The companies in our survey use all types of mobile inventory, which is impressive, but the most popular

types by a long way were branded mobile websites (83%) followed by mobile display advertising (77%).

This is not surprising as both are among the most mature types of mobile inventory. This was followed by

branded applications (59%) and SMS (53%), again both mature types of inventory. Mobile search, video,

MMS and in-application advertising are all used at the same levels (44%) with bar-codes/coupons trailing

slightly behind (42%).

Smartphones are the top priority mobile device for mobile marketers

When we asked the companies in our survey to prioritize the different types of mobile device they

currently used for mobile ad campaigns, smartphones were deemed by far the most important. Sixtypercent of respondents flagged smartphones as high priority and 23% as medium high priority. Usage of

smartphones is expected to increase over the next two years.

With increasing interest in tablets

Marketers are also drawn to tablet devices, with 31% of respondents flagging these as high priority

devices and an equal 31% saying they were of medium high priority. Usage of tablets is likewise

expected to increase over the next two years

But lower end devices are still in the picture

The survey revealed that feature phones are still considered important devices for mobile advertising,

with 22% of respondents saying these as high priority devices and an equal 24% saying they were of medium high priority. Marketers expect feature phone usage to increase over the next two years rather

than flatten out.

Good levels of satisfaction with agency partners

Forty-seven percent of the survey sample currently partner with a media buying agency for mobile

advertising, while 38% use a creative agency for mobile advertising. For those companies that do partner

with media buying agencies, 54% of respondents said they were reasonably satisfied with the ability of

their media buying agency to support their mobile advertising objective while 24% were completely

satisfied. What is even more striking is that those companies that do use creative agencies for mobile

advertising are very happy with the results, with 45% of respondents saying they are reasonably satisfied

while an impressive 40% are completely satisfied.



8

BACK GROUND TO TH E SURVEY

Survey objectives

The IAB’s Mobile Marketing Centre of Excellence (MMCoE) wanted to help its members and the wider

industry to understand how mobile advertising and marketing is perceived by the budget holders for

these products and services. The IAB MMCoE also wanted to discover what marketers spending plans are

for mobile advertising and what they think needs to be done to further improve the appeal of this

medium. In response, Ovum conducted a wide ranging but detailed survey of the mobile advertising

market as seen by the buyers, as well as a quantitative and qualitative assessment of the challenges and

opportunities that marketers believe are likely to impact on the continued growth of this channel.

Survey methodology

The survey is based on a quantitative primary research program with 300 US organizations that use

mobile advertising. The sample was organised on the on the following parameters:

• Companies selected from seven distinct verticals: travel, financial services, FMCG, retail, media

and entertainment, hospitality & restaurants and automotive. The split is shown in Figure 1, with

FMCG and travel proving the smallest group as many companies approached were not active in

mobile advertising and therefore not eligible to participate in our survey

• Across three size-of-business bands: revenue less than $100 million per annum, $100m-$500m

pa, $500m-$2,000m pa and greater than $2,000m pa. The revenue split of companies across thesample is shown in Figure 2

• With local, regional and national advertising focus

Interviews were conducted with key marketer decision makers and budget holders, for example EVP of

Marketing, SVP of Marketing and VP of Marketing.



9

Figure 1: Company split by vertical market across the sample

Source: Ovum

Figure 2: Company split by revenue size across the sample

Source: Ovum

Travel

7%

Financial

Services

17%

FMCG5%

Retail

19%

Media and

Entertainment

20%

Hospitality and

Restaurants

15%

Automotive

17%

Less Than

$100m

35%

$100m-$500m

30%

$500m-

$2,000m

14%

Greater than

$2,000m

21%



10

MARK ETER PERCEPTIONS OF MOBIL E ADVERTISING

THE BENEFITS OF MOBILE ADVERTISING ARE WELL UNDERSTOOD BY

MARKETERS

We wanted to see how marketers perceived the benefits of mobile advertising, and as shown in Figure 3,

respondents clearly understand the advantages and all key parameters score well. The most important

benefits from a brand and buyer’s perspective are immediacy closely followed by cost effectiveness,

engagement and then reach. Mobile’s ability to complement other media is seen as a much lower priority

benefit, which is consistent with the fact that many companies in our survey do not have integrated

mobile advertising with other media. However, we think this is a case of perception and immaturity of

some mobile advertising strategies rather than reality, as mobile is known to be highly complementary

channel. Mobile is adept at adding interactivity to other media that are not interactive in themselves; for

example, SMS short codes in adverts on billboards, television and newspaper invite people to

communicate with a brand and create a dialogue.

Figure 3: The key benefits of mobile advertising from a brand/ buyer perspective

Source: Ovum

5 5 62

9 7 7 713

17 17 16

10

14 1914

21

28

2624

29

30

34

37

38

38

28

52 5449

57

43

37

41

34 32

0

10

20

30

40

50

60

70

80

90

100

High Importance

Medium High Importance

Medium Low Importance

Low Importance



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INCREASING BRAND A WARENESS IS A TOP OBJ ECTIV E FOR MOBIL E

ADVERTISING

We listed key objectives for mobile advertising and asked marketers to indicate which ones are most

important for their business. All the mobile advertising objectives shown in Figure 4 scored well although

increasing brand awareness proved to be the stand-out goal. The emphasis on increasing brand

awareness is consistent with the top ranking perceived benefits of mobile – immediacy and reach.

Support for specific promotions is also a high priority and is likewise consistent with the fact that for a

significant proportion of the survey mobile is used on an ad hoc basis. Driving sales also seen as an

important objective, which is in tune with respondents citing location-based advertising as a key benefitof mobile, as highlighted in Figure 3.

Figure 4: Key objectives of mobile adver tising activity

Source: Ovum

MOBILE A DVERTISING OBJ ECTIVES VARY ACROSS VERTICALS

The objectives for mobile advertising activity show some variation across different vertical markets, as

highlighted in Figure 5. For example, for the retail industry increasing engagement with products and

services is paramount, closely followed by driving sales and increasing brand awareness, which makes

93

8683

86

77

1

0

10

20

30

40

50

60

70

80

90

100

What have been the objectives(s)

of your mobile advertising activities

to date? (% of respondents)



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sense for this sector. For the media and entertainment industry, support for specific promotions is a key

priority, which is in tune with campaigns to push a new film, TV programme or artist.

Figure 5: Key objectives of mobile adver tising activity by vertical

Source: Ovum

SATISFACTION WITH M OBILE ADVERTISING IS REASONABLE BU T COULD BE

HIGHER

When asked how satisfied marketers were with the results of their mobile advertising activities most were

reasonably satisfied, as shown in Figure 6. This is a positive start but performance needs to improve to

produce the highest levels of satisfaction as only a very small portion of the survey were completely

satisfied with the results. And although none of the respondents were completely dissatisfied a significant

number were reasonably dissatisfied, reiterating that delivering on objectives needs to get better.

6 6

7 76

1818

17

16

19

66

5

5

4

1920

19 19

1918

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2021

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15 15 1516

1617

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17 17 16

-

5

10

15

20

25

Increase brand

awareness

Increase

engagement with

product/service

Drive sales in

general

Support for specific

promotions

Customer

relationship

marketing

Travel

Financial Servic es

FMCG

Retail

Media and Entertainment

Hospitality and Restaurants

Automotive



13

Figure 6: Satisfaction levels w ith the outcome of mobile advertising activity

Source: Ovum

PERCEIVED CHAL LENGES

Privacy and device fragmentation are biggest concerns

Mobile advertising is advancing rapidly and many of the issues that slowed progress in early years have

been addressed, for example constraints imposed by network and mobile phone limitations have radically

improved through developments in, respectively, mobile broadband and smartphones. However, mobile

advertising still faces challenges that need to be addressed by all stakeholders in industry if it is to reach

its fullest potential. We presented marketers with a list of the key challenges and asked them to

prioritise their levels of concern. Respondents expressed concern across all parameters although privacy

issues, device fragmentation, lack of standardised metrics and lack of agency expertise in mobile are

seen as the biggest challenges, as shown in Figure 7. Limited opportunity for creativity is also seen as a

challenge, which is partly a reflection of the fact that many in the sample do not use creative agencies for

mobile advertising, as the discussed in the survey findings in the chapter on media buying and creative

agencies.

2 2 2 2 2

31 3236 37

32

58 5954 51

57

9 8 8 10 9

0

10

20

30

40

50

60

70

80

90

100

Increase brand

awareness

Increase

engagement

Drive sales in

general

Support for

specific

promotions

Customer

relationship

marketing

Completely SatisfiedReasonably Satisfied

Reasonably Dissatisfied

Completely Dissatisfied



14

Figure 7: Views on the challenges facing mobile adver tising

Source: Ovum

Drill down on privacy issues

We delved deeper into concerns around privacy by asking respondents an open ended question in this

area, namely “what are your thoughts about consumer privacy and mobile advertising, in particular as it

relates to targeting based on use of customer data?”

The answers were interesting, partly for what they did not say. Consumer privacy is clearly seen by the

sample as a concern for mobile advertising, but when asked to expand on the subject many only

reiterated the fact that it is an issue and that action was needed to address it, although most were unable

to say what, precisely needed to be done. Others simply said they were not able to elaborate: “don’t

know”, “no comment”, and “no idea”. There were also very few comments specifically on privacy issues

and targeting based on the use of customer data. This all shows that more education, guidance and best

practices are needed in this sensitive and confusing area.

However, some interesting observations and ideas emerged, as summarised in Figure 8, some of which

were in essence repeated several times such as:

• The need for regulation and legislation for privacy protection

• Standards and codes of conduct

• Consent from consumers when their data is being used

• Full disclosure on how that data it is being used

• Privacy protection is necessary for consumer trust, and by extension the success of mobile

advertising

96

13 137 9 12

22

4424 28

2121

38

38

29

4243

33 30

34

31

21 2117

39 40

15

0

10

20

30

40

50

60

70

80

90

100

Lack of

standardized

metrics

Lack of

standardized

formats

Lack of agency

expertise

Limited

opportunity

for cre ativity

Device OS

fragmentation

Pr ivac y issu es L ac k of

global, mass

market

inventory

High Importance

Medium High Importance

Medium Low Importance

Low Importance



15

Figure 8: Selected views on consumer privacy and mobile advertising

Source: Ovum

“The implementation of

regulations and

legislation holds the key to winning consumer

confidence”

“Ensuring efficient

disclosure and consent

mechanisms will help

promote best practices”

“Consumers should be presented

with choice about the collection

and sharing of their data at the

time and in the context in which

they are making decisions “

“Mobile advertising is a

new medium and hence

ROI is low and not

guaranteed. In this

context is it very

important to establish

trust with consumers”

“Personal

information should

be kept for no longer

than is necessary”

“Consumers should be allowed to have right of

access to the data that

companies have about

them”

“Strong privacy standards are

essential to the success of mobile

advertising, for example protecting

consumers from unwanted

communications. This will helps build

better customer relationships “



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MOBILE ADVERTISING STRATEGY AND SPEND

STRATEGIC APPROACHES TO MOBILE ADVERTISING

A move to more advanced strategies

We offered respondents a choice of four strategies that they could select that best describes their

approach to mobile advertising, with a cautious, experimental approach at one end of the spectrum

through progressively more advanced positions of which the fullest expression has mobile as an intrinsic

part of a brand’s advertising strategy and fully integrated with other media. The results are shown in

Figure 9, and what immediately stands out is that the majority of respondents have moved beyond the

experimental stage of mobile advertising, where it is still early days and companies are very much on alearning curve with mobile advertising. Thirty-one percent of respondents have mobile as a core part of

their digital advertising strategy and fully integrated with other media, while 20% have it as core albeit

not automatically integrated with other media.

Mobile advertising is clearly making excellent progress but there is nonetheless work to be done in terms

of helping companies still at an experimental stage to embrace mobile more fully, which will entail a mix

of education, evangelism and proof points.

Figure 9: Use of different types of mobil e inventory across the sample

Source: Ovum

Strategy varies by industry with media and enter tainment in the lead

Media and entertainment companies are noticeably ahead of the curve when it comes to adopting the

most advanced mobile advertising strategies, as shown in Figure 10. This is not surprising as many media

35

1420

31

Experimental

On an ad-hoc basis

Part of our advertising

strategy but used as a

standalone activity

Part of our advertising

strategy and fully integrated

with other media campaigns



17

and entertainment companies are at the forefront of using digital media for their own services with all of

the large players in the US being early adopters of mobile. The travel sector stands out as having

embraced mobile wholeheartedly with only 20% of respondents saying that their mobile strategy was still

at the experimental stage.

Several of the verticals show a polarised response in terms of strategy adoption, notably the automotive

industry, retail and also the restaurants and hospitality sector. The majority of companies in these

verticals are either still at an experimental stage or have adopted a fully fledged, integrated mobile

strategy, suggesting that once committed to mobile advertising these companies gain confidence quickly

and migrate to an advanced mobile advertising strategy.

Companies in the FMCG and financial services sectors proved the most cautious in the survey sample,

with a large portion at the experimental stage and the lowest number of respondents having adopted the

most advanced mobile advertising strategy. This is perhaps surprising on the face of it but we think it is

because FMCG has a large number of smaller companies in the mix alongside a small number of industry

giants that are experienced, active users of mobile advertising.



18

Figure 10: Mobile adver tising strategy adoption by vertical market

Source: Ovum

Size of business and mobile advertising strategy

The results revealed in a cross comparison of a company’s size in terms of revenues and its mobile

advertising strategy is not as clear cut as one might expect, as seen in Figure 11, and invites further

investigation. The most intriguing fact to emerge from our sample is that although smaller companies are

big adopters of an experimental approach they also embrace more advanced mobile advertising

strategies. It could be that small companies in this category have such high confidence in mobile that

they have prioritized it and are seeking to gain a leading edge in mobile advertising before rivals move in.

20

40 4432

25

4635

30

21 19

1110

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3017 19

3442

30 33

0

10

20

30

40

50

60

70

80

90

100

It forms part of our advertising

strategy and mobile is

integrated with other media

campaigns (eg print, TV, online)

It forms part of our advertising

strategy but we use mobile

campaigns as standalone

activity (i.e. not integrated withwith other media)

We use mobile advertising on

an ad-hoc basis

Experimental - it is early days

and we are on a learning curve

for mobile advertising



19

Figure 11: Size of business (revenues) and mobile advertising strategy

Source: Ovum

The wider the geographic focus, the more advanced the strategy

There is a correlation between a company’s geographic focus and its mobile advertising strategy, as

shown in Figure 12. The survey revealed that companies with a national focus across the whole of the UShave adopted the more advanced mobile advertising strategies, with 63% of the nationals having mobile

fully integrated with other media campaigns. Conversely, locally focused companies are at the more

cautious end of the strategy spectrum and are either still experimenting or adopting an ad hoc approach

to mobile advertising. This could be because locally focused companies are more likely to be smaller in

terms of revenues and resources and we know that companies in this category (see Figure 11) can be

cautious with many still at the experimental phase.

37 3733 33

3123

3231

13 12 12

182028

2317

0

10

20

30

40

50

60

70

80

90

100

Experimental - it

is early days and

we are on a

learning curve

for mobile

advertising

We use mobile

advertising on

an ad-hoc basis

It forms part of

our advertising

strategy but we

use mobile

campaigns as

standalone

activity (i.e. notintegrated with

with other

media)

It forms part of

our advertising

strategy and

mobile is

integrated with

other media

campaigns (egprint, TV, online)

Less Than $100m

$100m-$500m

$500m-$2,000m

Greater than $2,000m



20

Figure 12: The relationship betw een geographic focus and mobile strategy

Source: Ovum

MOBILE ADVERTISING SPEND

Budgets allocation on mobile advertising is robust

It is known that more and more companies are allocating advertising spend to digital media but what is

less known is how much, exactly, is being directed to mobile. Twenty-eight percent of respondents in our

survey said their companies currently spend $50-150,000 per annum on mobile advertising with 7%

allocating in excess of $300,000 per annum, as shown in Figure 13. Fifty-five percent of respondents are

at the lower end of the budget spectrum spending under $50,000 a year on mobile advertising. However,

this is not surprising given that for many companies in the survey mobile is still at an experimental stage

or used in a ad hoc fashion when spend will by nature be more cautious and discretionary.

37 35

18 1716 1622 19

47 49

60 63

010

20

30

40

50

60

70

80

90

100

Experimental - it is

early days and we

are on a learning

curve for mobile

advertising

We use mobile

advertising on an

ad-hoc basis

It forms part of

our advertising

strategy but we

use mobile

campaigns as

standalone activity

(i.e. not integrated

with with other

media)

It forms part of

our advertising

strategy and

mobile is

integrated with

other media

campaigns (eg

print, TV, online)

Local

Regional

National



21

Figure 13: Mobile adver tising budget allocation

Source: Ovum

Spending is expected to increase

Mobile advertising budgets have not decreased over the last two years and in fact for the majority they

have increased, and for 29% of respondents by over 50%, as shown in Figure 14. This is particularly

impressive given the challenging economic climate over the past two years.

55

28

10

7

Less than $50k

Between $50-150kBetween $150-300K

More than $300k



22

Figure 14: Mobile adver tising budget allocation – last tw o years

Source: Ovum

What is even more encouraging is that the investment in mobile advertising is set to increase over the

next two years, as shown in Figure 15, with an impressive 35% set to raise the budget by over 50%.

29

34

0 0

37

0

5

10

15

20

25

30

35

40

Increased

> 50%

Increased

< 50%

Decreased

> 50%

Decreased

< 50%

Remained

the same

How has this budget

changed over the last twoyears? (% respondents)



23

Figure 15: Mobile adver tising budget – the next two years

Source: Ovum

Budget allocation and company size

Figure 16 shows that the smaller companies in terms of revenues are allocating more modest budgets to

mobile advertising, which is logical. The pattern for larger companies is for increased spend but not

necessarily in a uniform progression as just over half of the very largest companies, 53%, and investing

in the $150,000-$300,000 bracket rather than in the very top budget tier of high over $300,000. In our

sample even some smallest companies are spending in excess of $300,000 per annum on mobile

advertising. This is surprising but consistent with the discovery in our sample that small companies can

also move quickly to adopt advanced mobile advertising strategies, as noted in Figure 11 above.

3537

0 1

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Increased

> 50%

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the same

How do you expect your

budget to change over the

next two years? (%

respondents)



24

Figure 16: Budget allocation by company size

Source: Ovum

Budget allocation and mobile advertising strategy

The cross referencing in our sample of mobile advertising strategies and mobile advertising budget

allocation produced another set of intriguing results, as shown in Figure 17. Companies with the more

advanced mobile advertising strategies do invest more in broad terms, but this is not uniform as the

largest portion of players in this advanced group, 47% actually allocate a more medium level budget in

the $150-300,000 range.

The largest share of companies that are still at an experimental stage, 40%, are investing less than

$50,000 per annum in mobile advertising, which is a result you might predict. And yet another significant

portion of the experimental players are investing at the highest end of our budget bracket of over

$300,000 per annum. This is surprising and we assume the latter group of experimenters includes some

of the larger companies in terms of revenue size.

47

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$100m-$500m

$500m-$2,000m

Greater than $2,000m



25

Figure 17: Budget allocation and mobile advertising strategy

Source: Ovum

Factors that will increase mobile advertising spend

We concluded the investigation of mobile advertising budget allocation by asking respondents an open

ended question about what would need to happen to make them increase spend still further. There were

a good mix of responses, as shown in Figure 18, but the stand out theme was that spend would increase

if mobile advertising could demonstrate a sound/better return on investment.

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Experimental - it

is early days and

we are on a

learning curve

for mobile

advertising

We use mobile

advertising on

an ad-hoc basis

It forms part of

our advertising

strategy but we

use mobile

campaigns as

standalone

activity (i.e. not

integrated with

with othermedia)

It forms part of

our advertising

strategy and

mobile is

integrated with

other media

campaigns (eg

print, TV, online)

Less than $50k

Between $50-150k

Between $150-300K

More than $300k



26

Figure 18: Factors that would help increase spend still further – selected views

Source: Ovum

“Sell it to my superiors”

“The business climate will need to start

improving”

“Create more conversion, more

purchases”

“Targeting”

“We need dedicated and experienced sales

personnel who can design

and implement campaigns”

“Better results and more

evidence that it is effective”

“Better customer

reach”

“Convince the management”

“We will wait for the returns here and if they are good

the spend shall increase”

“More success stories from the

market”

“Increased sales of smartphones so the

advertising market will

be larger”



27

MOBILE ADVERTISING INV ENTORY AND DEVICES

MOBILE INV ENTORY

A wide variety used but more established inventory still dominates

One of the attractive aspects of mobile is that it offers brands a great variety of increasingly rich

inventory to support their advertising including messaging, display advertising, branded mobile websites,

mobile search, spot adverts around mobile TV and video, branded applications or in-application

advertising, bar codes and coupons for rewards and redemption. As shown in Figure 19 the companies in

our survey have tried all the aforementioned inventory, which is impressive, but the most popular types

by a long way were branded mobile websites (83%) followed by mobile display advertising (77%). This isnot surprising as both are among the most mature types of mobile inventory. This was followed by

branded applications (59%) and SMS (53%), again both mature types of inventory. The comparatively

richer or newer types of inventory such as video, and bar codes were not used to the same extent

although we would expect this to improve as these services gain better traction with consumers. For

example, mobile TV and video is getting more popular with consumers thanks to the greatly improved

user experience offered by smartphones and tablets.

Figure 19: Use of different types of mobil e inventory across the sample

Source: Ovum

MOBILE DEVICES

Smartphones are the top priority device

A key trend over the last few years has been proliferation of and growth in the number of mobile devices

with wireless connectivity that are capable of supporting mobile advertising. This more prominent type

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% of respondents currently using

this type of mobile inventory for

mobile advertising



28

includes smartphones, feature phones, tablets, ebooks and connected games consoles. When we asked

the companies in our survey to prioritize the different types of mobile device they currently used for

mobile ad campaigns, smartphones were deemed by far the most important, as shown in Figure 20. Sixty

percent of respondents flagged smartphones as high priority and 23% as medium high priority. Not

surprisingly, respondents expect the usage of smartphones to increase in the next two years, as shown in

Figure 21.

Figure 20: Use of different types of mobile devices cross the sample

Source: Ovum

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Feature Phones Smartphones Tablets eBooks Connected games

consoles

Low Pr iority Me dium L ow Pr iority Me dium High Prior ity High Pr ior ity



29

Figure 21: Importance of diffe rent device types over the next two years

Source: Ovum

Smartphones are a game changer

The focus on smartphones is understandable given the rapid developments in capabilities and form

factors of these devices. Spearheaded by the impact of the iPhone, a succession of improvements in

screen size, display quality, internal memory, battery life, browser technologies, and codec support has

combined with the evolution of wireless broadband infrastructure to transform the user experience. At the

same time, the smartphones installed base is in North America is growing rapidly, as shown in Figure 22,

with shipments reaching 97.43 million by the end of 2011 and rising to almost 165 million by the close of

2016.

63

89

74

40

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Feature Phones Smartphones Tablets eBooks Connected games

consoles

Increased Use

Decreased Use

Unchanged



30

Figure 22: Smartphone shipments in North America

Source: Ovum

Increasing interest in tablets

Figure 20 also shows that marketers are interested tablet devices, with 31% of respondents flagging

these as high priority devices and an equal 31% saying they were of medium high priority. Usage of

tablets is likewise expected to increase over the next two years, as shown in Figure 20. The rise of tablets

following in the wake of the iPad’s success is helping to improve the mobile user experience still further.

The tablet form factor – characterized by a larger screen than a smartphone and greater portability than

most notebooks – makes it an ideal device for more creative, richer advertising formats such as video.

Moreover, there is evidence of a direct link between screen size and propensity to watch mobile video

that bodes well for tablets. When MobiTV monitored usage patterns by device when streaming live World

Cup footage during 2010, it found viewing times on 5-inch screens to be around double those on 3-inch

screens. It is reasonable to assume that this correlation would extend to 7-inch or 10-inch handheld

devices.

Marketers in our survey showed a muted response to ebooks with only 10% noting these as a high

priority device, as shown in Figure 20. We think this is because tablets support ebooks as effectively as a

dedicated ebook reader and given the rising volumes of tablets many marketers prefer to focus on this

type of device.

Feature phones are still in the frame

Another interesting result from the findings shown in Figure 20 is that feature phones are still considered

important devices for mobile advertising, 22% of respondents flagging these as high priority devices and

an equal 24% saying they were of medium high priority. This is significant as feature phones have better

reach than smartphones with a larger installed base and shipments. For a true mass market campaign

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2010 2011 2012 2013 2014 2015 2016

North American smartphone

shipments



31

feature phones cannot be ignored. Moreover, Figure 21 shows that marketers expect feature phone

usage to increase over the next two years rather than flatten out. Figure 23 shows how feature phones

compare against smartphones in terms of high priority ranking across the verticals, and in most they are

close and in the case of financial services and the automotive sector, feature phones actually rank higher

than smartphones.

Figure 23: Smartphone and feature phone high priority ranking across verticals

Source: Ovum

High demand across the full w ish list of device features

The marketers in our survey have high expectations of device form factors and features, as when asked

which were the most important they expressed interest across the full wish list, as shown in Figure 24.

Certain features did stand out, notably support for email, screen size and resolution, social networking

and optimized mobile browsing. We found this response intriguing, as aside from screen size and

resolution, the desire for certain features expressed here is not always reflected in respondents’ currentuse of mobile advertising inventory. This is interesting as it shows where marketers’ attention could be

turning going forward, for example mobile search advertising does not figure as highly as some other

inventory in terms of what is used today, but the interest in optimized browsing on devices suggests it

could be going forward. This makes a lot of sense given the improvements in mobile browsing capabilities

that are getting close to full HTML5 support. The high ranking of email support was perhaps surprising as

its use in mobile advertising is not currently as high as other types of inventory.

There is keen interest in location-based capabilities on devices but it does not score as highly as the hype

around location services might suggest, particularly those based on the concept championed by

Foursquare that combines an appealing mix of mobile location and advertising. Location based

advertising has great potential but is still nascent. It is gaining traction on a few mobile location

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Smartphone as High

Priority Device

Feature Phone as High

Priority Device



32

specialists like Gowalla and Foursquare but these are still the minority, however loved they might be with

by their users and the media.

Figure 24: Interest in device form factors and features

Source: Ovum

91

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What are the most important device

form factors and features for mobile

advertising? (% of respondents)



33

AGENCY RELATI ONSHIPS

MEDIA BUY ING AGENCIES

Almost half the sample use a media buying agency for mobile advertising– and are satisfied

with the results

Forty-seven percent of the survey sample currently partner with a media buying agency for mobile

advertising. In terms of use across vertical markets, the media and entertainment sector scores the

lowest with 68% of respondents not partnering, as shown in Figure 25, which is likely to be a reflection of

maturity of mobile advertising strategies across many companies in this sector. This could in turn relate

to a wider trend for large, experienced brands to bring certain advertising functions in house, includingmedia buying, planning and creative, capabilities previously provided by agencies. More generally it could

be that the use of media buying agencies is still modest in mobile because many of the agencies involved

are small and specialist, which means reduced visibility particularly to those companies that are relatively

new to mobile. Another factor that could be affecting the response is the trend for consolidation in roles

across the mobile advertising value chain, for example specialist mobile advertising networks offer media

as a matter of course.

Figure 25: Use of media buying agencies for mobile advertising across verticals

Source: Ovum

The survey results make clear that those companies that do partner with media buying agencies are

satisfied with the results, as shown in Figure 26, where 54% of respondents said they were reasonably

satisfied with the ability of their media buying agency to support their mobile advertising objective while

24% were completely satisfied.

45 4238

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4649

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1 = Yes

2 = No



34

Figure 26: Satisfaction levels w ith media buying agencies for mobil e advertising

Source: Ovum

More modest use of creati ve agencies for mobile but even greater levels of satisfaction

The survey revealed lower use of creative agencies for mobile advertising across all verticals in the

sample, as shown in Figure 27, and as with use of media buying agencies for mobile, the trend was most

pronounced in the media and entertainment sector. We think that many of the reasons for companies

not partnering with media buying agencies are applicable for the modest use of creative agencies, that is

consolidation of roles, creative functions being taken in house by big, experienced brands and the lack of

visibility among many smaller, mobile specialists in this space.

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Completely

Dissatisfied

Reasonably

Dissatisfied

Reasonably

Satisfied

Completely

Satisfied

How happy are you with your

media buying agency’s ability to

support your mobile adver tising

objectives? (% respondents)



35

Figure 27: Use of creative agencies for mobil e advertising across verticals

Source: Ovum

What is striking from the survey results is those companies that do use creative agencies for mobile

advertising are very happy with the results, as shown in Figure 28, with 45% of respondents saying they

are reasonably satisfied while an impressive 40% are completely satisfied. This response is also

interesting in light of another of the perceived challenges facing mobile advertising – lack of lack of

creative opportunities. The high levels of satisfaction recorded by those that work with creative agencies

on mobile advertising strongly suggest these partners can help address such concerns.

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Figure 28: Satisfaction creative agencies for mobil e advertising

Source: Ovum

Memorable mobile advertising campaigns

We concluded exploration of agency roles by asking respondents an open ended question about

memorable mobile advertising campaigns, specifically “Are there any mobile advertising campaigns you

admire and if so, why?” The majority could not recall any specific campaigns but many expressed

preferences in generic terms – e.g. text to make a donation, use of mobile location targeting, video and

on a couple of occasions a favourable response to mobile campaigns on specific devices such as the

iPhone and Blackberry. The lack of recall of inspiring campaigns is a little disappointing but not that

surprising:

• Spontaneous recall of advertising is always difficult and if recalled is typically in the vague or

generic terms noted here

• The response also underscores that many brands in the sample do not use creative agencies

Of those campaigns mentioned, the automobile sector faired best and we have these and shared a few

references in this and other sectors in Figure 29.

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Completely

Dissatisfied

Reasonably

Dissatisfied

Reasonably

Satisfied

Completely

Satisfied

How happy are you with your

creative agency’s ability to

support your mobile advertising

objectives? (% respondents)



37

Figure 29: Use of media buying agencies for mobile advertising across verticals

Source: Ovum

“Toyota For Auris and Verso cars . It

Incorporated clickable video and banners”

“Campaigns from car

companies: Jaguar, Ford”

“ESPN Sports. The ad is very realistic”

“Heineken's Dual Screen mobile marketing scores”

“Google and Facebook because every time you log-in there is a

banner on the side, The first thing you see is the advertising”

“State Farms that use the iPhone. It

Blew My Mind”

“Mercedes-Benz: The ad helps purchase consideration. It also

increases product awareness and

commitment among the target audience”

“Intercontinental Hotels Group Boosts Mobile Search: Excellent Mobile Ad

Campaign By Google Ad They Launched A Good Campaign For The Customer Room Booking And Other

Campaigns”



38

ABOUT OVUM

OVUM AT A GLANCE

Expertise across the value chain

Ovum was founded in 1986 and has its HQ in the UK, with further offices in France, Germany, US, China,

UAE, Taiwan, Japan, Australia, and South Africa. Ovum is comprised of two core business areas:

consultancy along with research and analysis (R&A) teams, as shown in Figure 30. R&A is organized

around key practices that together cover the whole of the telecoms, media and IT value chains. We have

team of 150 media, telecoms and IT analysts and consultants, with 30% of analysts based in the US. We

largely employ experienced analysts with10-15 years in industry (many 20+ years), which means thatour advice is founded in practice

Figure 30: Summary of Ovum services

Source: Ovum

Ovum consulting

Ovum provides specialist consulting services across the media, commerce, telecoms and IT services

industries – and their customers in a wide range of verticals, as shown in Figure 31. We differentiate

ourselves through our focus on these industries and the access that we have to our extensive research

base, analyst experts, developed methodologies and models, and deep relationships with the industry.

Research & Analysis

delivered online viaOvum’s Knowledge

Centre Portal.

Optional ‘Add-on’

services deliveredonline via Ovum’s

Knowledge CentrePortal.

Ovum ‘expertise on

tap’ for existingcontent, accessed

through pre-paidanalyst hours.

Bespoke analysis and

project work deliveredby Ovum analysts and

consultants

Consulting

Analyst Access

Premium Tools

Published Content

Whilst Ovum’s Research & Analysis provides

expert business and technical insight into the

trends and issues that affect media, telecoms

and IT sectors, it cannot always answer

questions or issues that specifically impact a

segment of that market or affect particular

clients or competitors

In addition, our clients often require guidance

and assistance with regard to decision and

operational support

Consulting from Ovum is able to help our

clients through bespoke, targeted analysis, and

by applying our research, data and experience

to support and resolve their strategic issues

By leveraging the Ovum analyst expertise

alongside our dedicated consultants, we are

able to deliver pragmatic, fact-based consulting

focused on our client’s specific needs



39

Figure 31: Cross section of Ovum consulting clients

Source: Ovum



40

Ovum Research and Analysis

The key research team covering digital advertising is Ovum’s Consumer Practice, and as shown in Figure

32 this group combines depth and breadth in its coverage of entertainment, applications, social media,

devices and associated strategies and monetisation.

Figure 32: Ovum Consumer Prac tice 2011 research plan

Source: Ovum

Ovum has been covering mobile advertising for eleven years and it is a core, ongoing research program

with highlights including the following:

• New Dynamics in Digital Advertising (including mobile)

• The Digital Content Economy: supply side factors

• The Digital Content Economy: demand side factors

• Telecoms 2020: digital content and advertising (including mobile)

• Beyond Web 2.0

• Mobile Social Networking: services and monetization (including mobile advertising)

• Case studies of key players in the ecosystem including Google, Apple, Microsoft, and also mobile

operators

• Mobile market forecasts: revenues, users, devices

Ovum also has proven expertise in large scale survey design, management and analysis. For example we

are currently running an ongoing survey called the Consumer Insights Analyzer that provides detailed

information on consumer trends around broadband access, connected devices and Internet services and

applications. The survey consists of a panel of over 9,000 people across 9 countries including the US and

is updated on a six-monthly basis. It can also be expanded into other countries on client demand. The

Content strategy

Advertising

Connected home

Social media

S m ar t c ar s

T V

D i gi t al M u si c

Onl i n e G a mi n g

M e s s a gi n g

E x t en d e d h o m e

M o b i l e s o ci al m e d i a

Onl i n e G a m b l i n g

C on s u m er M2 M

C on s u m er cl o u d s er vi c e s

2011 research plan

Already covered

S o ci al T V

Focus: Strategies, opportunities, challenges & business models

E - b o ok s



data is made available to Ovum’s clients, as well as feeding directly into Ovum’s consumer research,

forecasts and a dedicated report series entitled ‘Consumer Insights’.

DISCLAIMER

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by

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the publisher, Ovum Ltd.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.

Please note that the findings, conclusions and recommendations that Ovum delivers will be based on

information gathered in good faith from both primary and secondary sources, whose accuracy we are not

always in a position to guarantee. As such Ovum can accept no liability whatever for actions taken based

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Documents

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