A Case for Mobile Marketing

For the past few years, Electronic Retailer has addressed the topic of mobile marketing as another method for marketers to broaden their market reach. We've done so through feature articles, case studies and even columns. These types of articles have resonated with many readers; however, we still find that others remain incredulous about the impact that mobile marketing will have on consumers in the long run. And, while these same people hold true to their "let's wait and see" skepticism, others see the light at the end of the tunnel.

A recent study conducted by the Kelsey Group predicts that the U.S. mobile ad market will grow from $33.2 million to $1.4 billion in 2012. The study shows that this forecasted increase--with a CAGR of 112 percent--can be attributed to the following:

• Since top-line search growth is slowing, portals and search companies must move their monetization products into markets where they can utilize existing paid search links to promote top-line revenue growth.
• Google has advertisers that want to spend more money than current traffic levels can support. Some estimates put the ad overhang at Google between $1 billion and $2 billion. In this context, mobile traffic translates to an increase in revenue events and top-line growth.
• The mobile and search markets are linked, and Kelsey Group analysts believe market share in one could affect the other. Therefore, Microsoft will move aggressively into mobile, and Google will attempt to retain its dominant search position. Meanwhile, U.S. carriers understand the market position Internet search dominance affords and will not allow their products to be relegated to a secondary standing.
• Apple's iPhone represents a transformative device, and many manufacturers will enter the market with similar form factors driving down prices.

Although it's a well-known fact that other countries such as Japan have embraced mobile marketing with open arms, the Kelsey Group study shows that giants like Google, Microsoft and Apple will be the catalysts that drive this form of marketing forward in the U.S.

I believe marketers and retailers that have already tested the waters in global markets such as Japan will have a definite advantage in the U.S. mobile ad market. For example, Lush, a U.K.-based cosmetic company that has expanded its retail shops globally, has seen first-hand how mobile marketing can help drive sales revenue. According to Founder and CEO Mark Constantine, 17 percent of Lush's business in Japan has come from people using their mobile phones to scan barcodes and place orders. And, this has occurred just in the past 18 months.

While some direct marketers believe that mobile marketing is more suited for the entertainment industry in which TV shows like "American Idol," "Top Chef" and "The Insider" encourage television viewers to use their cell phones to vote and text message their opinions, brand marketers are capitalizing on the vast audience reach. For instance, why wouldn't Sears Kenmore, which makes certain that "Top Chef" contestants compete while using their appliances, also take advantage of mobile advertising when the audience is asked to text-in their votes? It's simply a matter of expanding your multichannel horizon to provide potential customers easier access to your brand and product offerings.

Vitisia Paynich
Editor-in-Chief