The mobile marketing ecosystem generated $139 billion in additional sales within the U.S. economy last year, with that figure expected to grow 52% annually to $400 billion by 2015. The vast majority of mobile’s sales impact -- at least 85% -- is taking place offline rather than through m-commerce transactions.
Separately, spending on mobile marketing (across mobile phones and tablets) in 2012 totaled $6.7 billion, with that amount projected to reach nearly $20 billion by 2015.
The findings come from a new study commissioned by the Mobile Marketing Association designed to provide what it calls the first overview of the mobile marketing industry and its contribution to U.S. economic performance. The MMA’s “Mobile Marketing Economic Impact Study,” was released Thursday at the trade organization’s New York Forum.
“Even in its infancy, mobile has irrevocably transformed society,” said Peter A. Johnson, who co-authored the study with Joseph Plummer. Both are principals at emerging media consultancy mLightenment and adjunct professors at Columbia University.
In addition to economic factors, the white paper also looks at mobile-related employment, privacy issues, and the social benefits of mobile.
To highlight the role that mobile marketing is already playing in the economy, the 118-page report noted that such activity added a half a percentage point to total U.S. output last year, when measured against the $33 trillion in domestic sales. That proportion is expected to rise to 1.05% of total output by 2015.
Almost 85% -- or $117.6 billion of the $139 billion in incremental sales driven by mobile marketing last year -- occurred in the brick-and-mortar world, according to the report. The estimate for mobile-influenced sales offline is based, in part, on deducting the roughly $21 billion in m-commerce sales in 2012 from the $139 billion total.
“The balance represents…the minimum amount that can be said to flow into the brick-and-mortar accounts of apparel merchants,
restaurants, supermarkets, and car dealerships across the country, although none of them will ever have a mobile “conversion” to which these mShopping sales could ever be traced,”
states the report.
What the study calls “mshopping” includes promotional vehicles like mobile coupons, sweepstakes, loyalty cards and mobile wallets used in physical locations, as well as showrooming -- the trend toward comparison shopping via mobile in offline stores that can lead to purchases elsewhere.
Regardless of where sales take place, the study suggested that increased sales caused by mobile marketing benefit all 16 major U.S. industry categories, especially CPG-related retail, CPG-related manufacturing, and educational services.
To help highlight the effectiveness of mobile as a marketing communications tool, the study calculated a “marketing impact ratio,” or MIR, by measuring mobile sales impact against marketing expenditure. In 2012, mobile MIR peaked at $20.77 billion, and it is expected to plateau or decline slightly to $20.25 billion in 2015.
The analysis indicated that increased marketing spend in mobile to date doesn’t appear to lead to diminishing returns. Higher-spending industries saw higher-impact ratios or returns. “The strongest hypothesis is that mobile marketing does not function alone, but serves as a catalyst for all other marketing platforms,” the report noted.
When it comes to the estimated $6.7 billion in mobile marketing spend, the study divides it into three categories: mobile media advertising; direct response/enhanced traditional advertising, which might include an 800 number, SMS short code, or QR code; and mobile CRM, including branded mobile sites and apps, as well as company-related social mentions.
Mobile advertising accounted for $3 billion in spend last year, direct-response, $669 million; and mobile CRM, almost $3 billion. The total is projected to increase to $10.5 billion this year, with mobile advertising again accounting for the bulk of spending ($4.9 billion). That pattern will hold through 2015.
In addition to the “media buy” of mobile marketing, the study estimated related costs for agency and PR fees and media measurement and metrics services -- which represented an additional $3.9 billion last year -- rising to $10.5 billion in two years.
Finance, retail (excluding CPG), and non-CPG manufacturing were the three largest industries in terms of mobile marketing investment last year, together accounting for about $3 billion in spending. By state, California ($865 million), New York ($587 million), and Texas ($573 million) generated the highest mobile spending levels.
Attracting the most marketing dollars,
mobile media advertising is credited with having the biggest sales impact -- driving $73.8 billion in incremental sales in the economy in 2012. Mobile CRM was responsible for $54.9 billion, and
direct-response, for $10.3 billion.
The report also addressed the paradox of mobile advertising; doubts still surround the medium despite studies showing that mobile campaigns deliver strong brand lift metrics compared to online or other channels. Skeptics point to the novelty of mobile ads and the “fat finger” syndrome as factors behind higher mobile response rates.
There are also long-standing issues with tracking and targeting in mobile, given the lack of traditional PC-based cookies, especially on iOS devices. That makes it hard to gauge the effectiveness of mobile marketing efforts.
“In our view, the greater factor keeping demand for mobile advertising low is likely that agencies and their clients have far more metrics and analytics for desktop than they do for mobile,” the report states. It argues that brands and agencies need to learn to measure mobile more broadly, beyond just clicks or taps, to see its full sales impact.
At the same time, the authors acknowledge that tracking the indirect influence of mobile is an especially “slippery moving target” because the medium crosses over both the online and offline worlds.
The findings of the MMA study were based on mLightenment’s own research, as well as that from third-parties. Underwriting the research were Google, mBlox, The Coca-Cola Company, ExactTarget and Target.