September 2, 2010
In the columns, “Digitalization of Retail,” and “Digitalization of Grocery Shopping,” I touched on some ways that mobile is changing shopping behavior. Today, let’s narrow in on one piece of that puzzle: the importance of mobile to retailers and why mobile should be part of each retailer’s marketing mix.
Follow the Eyeballs
Today, in the U.S. alone, there are more than 85 million mobile Internet users, according to eMarketer. The consultancy projects that number to reach 100 million by next year. Smartphone growth is clearly driving a sea change here, and other data points to mobile Web access outpacing PC Web access within the next five years, globally.
I could go on, but the trend is clear: the mobile Web and associated media consumption behavior is growing by leaps and bounds. For many retailers, your audience is already there.
Follow the Money
Ad spending on mobile/wireless continues to explode, reaching more than $1.1 billion in 2010, according to this Fast Company infographic. The category breakdown is all over the board depending on source, but retail is usually among the top players. At that level, it’s no longer an option, an afterthought, or an experiment. It’s a strategic and tactical imperative.
Mobile Works, Especially for Retail
Among our clients, retailers have been early adopters of mobile advertising. And they, for the most part, have run successful programs across a wide variety of key performance indicators (KPIs), ranging from opt-ins to purchases to driving store traffic and more. InsightExpress reported back in February that – for retail purchase intent – mobile norms outperformed online norms by a factor of eight. In other words, across all of the thousands of PC Web and hundreds of mobile Web programs that they have analyzed, when looking at retail initiatives, the mobile Web campaigns were eight times more effective at lifting purchase intent than PC Web campaigns.
Insight Express is not alone in its assessment of mobile advertising initiatives. Forbes and RIM recently published a report that polled more than 300 top executives at retailers. Seventeen percent of respondents said that mobile programs exceeded their expectations in terms of return on investment, while another 45 percent suggested that programs met expectations.
Clearly, there is something to be said for the immediacy and proximity of mobile to point of sale.
Mobile Purchasing Is Growing, But It’s Not the Only Thing
There is little doubt that m-commerce and mobile-based payment solutions are the future of retail. But in the interim (and potentially beyond), while the industry sorts out ways to make purchases via mobile Web easier and navigates the challenges of mobile point-of-sale (POS) integration, retailers are leveraging mobile advertising to accomplish a multitude of goals, ranging from application downloads to driving sales via click-to-call and various retail promotions. Driving an immediate sale is one thing, but retailers are clearly looking beyond that possibility and are factoring mobile into longer-term strategic plans that involve building a relationship with their consumer base over time.
New Interactions Enabled by Rich Media
Mobile rich media is reinventing the mobile display landscape much in the same way that its desktop PC cousin did. It broadens the horizon of what is possible with interactive advertising. It brings new interactions modes and KPIs to the party. It creates entirely new ways for advertisers to interact with their consumers, whether via touch, gesture, shake, location-driven messaging, or whatever else. It delivers an entirely new creative palette for retailers to leverage. This is why there are several retailers in the iAd charter program. It’s why mobile-rich media companies count retailers among their earliest clients. I recall our early testing with PC rich media for some of our retail clients. The learning was clear: if you can get a consumer to take a couple of steps down the purchase path via a harmless and non-intrusive ad (that doesn’t require them to leave whatever they were currently doing), they are far more likely to ultimately make a purchase from said retailer, whether immediately or over the coming days. We’re already starting to see the same thing occur with mobile rich media. It may well become a retailer’s best friend.
Location May Actually Be Everything
The whole marketing industry is abuzz about location, driven by the popularity of geo-social applications like (but not limited to) Foursquare. Retailers are chasing this opportunity quickly, joining programs like Shopkick, getting deeply involved with Foursquare and others, and so on. But it’s really just the beginning. Already, companies like Placecast are enabling retailers to send location-specific messaging to an opted-in group of consumers when they enter a specific geographic region (say, within two miles of a particular brick-and-mortar location). The opportunities and implications are massive in this space.
Retail needs mobile. And mobile needs retail. Consumers expect solid service and integration between digital platforms, with mobile at the center. It’s our obligation to make it happen. As the utility and entertainment value of mobile media continues to expand, the audience is following – and the new options represented by mobile are fundamentally changing media consumption. To ignore the channel’s massive advertising potential is folly.
Special thanks to colleague Paul Gelb (@paulgelb) for his insights that contributed to this piece.