“It is clear that consumers have shifted to mobile and businesses must know they need to catch up,” declared Facebook’s chief operating officer Sheryl Sandberg on an earnings call last month. “Marketers are realising if they want to reach their customers where they are, then mobile is essential.”
Sandberg’s warning was all the more startling when accompanied by the announcement that Facebook’s mobile ad revenue soared by 81% year-on-year in the fourth quarter of last year to $4.5bn (£3.1bn) – or 80% of total ad revenue. Only three years ago, mobile accounted for around 20% of the social network’s ad revenue.
The business implications of mobile’s rapid surge will occupy delegates during Mobile World Congress in Barcelona next week (22-25 February). In addition to the unveiling of new smartphones, wearable devices and virtual reality headsets, business leaders will debate how changing consumer behaviour on mobiles is reshaping their industries, and how they must respond if they are to stay relevant.
Ahead of the congress, Marketing Week has drawn up five key problem areas that marketers must address if they are to succeed in the transformational world of mobile.
1 Putting apps before strategy
Recent research by app developer Apadmi shows that only 11% of UK consumers have downloaded their favourite retailer’s app, while 59% agree that apps do not complement or co-ordinate with the in-store and online shopping experience.
Consumer apathy towards apps is becoming increasingly challenging for brands as mobile use matures. Most smartphone owners have developed fixed patterns of behaviour and as a result, new brand offerings are frequently ignored. For example, Forrester Research finds that the average UK smartphone owner spends 89% of their app time on just five apps: Facebook, WhatsApp, YouTube, Stocks and Maps.
Breaking into this pantheon of favoured apps is a nigh-on impossible task for most brands and particularly those with limited budgets. For the average app, almost 60% of users become inactive within 30 days, according to Localytics, while data from Quattra shows the daily active user rate drops 77% the first three days after installation. Instead of assuming apps are the answer, marketers need to think more creatively about how they can reach and engage with consumers on mobile.
Top of the list of priorities is enhancing the mobile web experience, which has come to play an increasingly prominent role in the fortunes of all brands. Google changed its algorithm last year to favour mobile-optimised sites in search rankings in an update dubbed ‘mobilegeddon‘ because of its negative effect on non-optimised sites. The new algorithm rates sites according to various criteria including the legibility of text on mobile screens, the ease of navigation within mobile sites and page loading times. A study at the time by website TechCrunch found that 44% of Fortune 500 companies in the US had mobile sites that fell foul of Google’s criteria.
With most consumers using search – rather than apps – to find the content they want, mobile web experiences have a huge bearing on how effectively marketers can reach their target customers. Google has made further updates since mobilegeddon, including a feature that supports push notifications in web browsers, not just apps.
Forward-thinking brands are also turning their attention to messaging apps, as they look to serve customers in the apps where they spend most of their time. Last year, American retailers Everlane and Zulily became the first brands to use the Facebook Messenger app as a customer service platform, while Dutch airline KLM plans to offer booking confirmation and boarding passes via the app. Meanwhile, shoe retailer Clarks used WhatsApp last year to share direct messages with consumers to celebrate the history of its desert boot.
2 Obtrusive mobile advertising
One of the most significant features of Apple’s latest mobile operating system, iOS 9, is an option that allows iPhone users to block mobile adverts. Within a day of the new system’s release last September, ad blockers soared to the top of the app chart, signalling consumers’ desire to avoid annoying or intrusive mobile ads.
At that time, Tumblr co-founder Marco Arment launched – but later withdrew – ad blocking app Peace. He said upon its release: “Web advertising and behavioural tracking are out of control. They’re unacceptably creepy, bloated, annoying, and insecure, and they’re getting worse at an alarming pace. Ad and tracker abuse is much worse on mobile.”
According to Arment it became the “number one paid app in the US App Store for about 36 hours” but he withdrew Peace just two days after its launch, arguing that “a more nuanced, complex approach” to ad blocking was needed.
The practice of ad blocking has generated plenty of controversy, following complaints from publishers that it deprives them of vital advertising revenues needed to sustain their free content.
While the debate rages on, it is clear that marketers need to rethink their approach to mobile advertising and meet the demand for less annoying or data-draining ads. This is imperative as brands allocate significantly greater funds to mobile this year. Research by eMarketer predicts that in 2016 the global mobile advertising market will surpass $100bn (£69bn) and account for more than 50% of all digital ad spend for the first time.
Daniel Rosen, global director of advertising at telecoms group Telefónica, which owns the O2 brand in the UK, believes that the growth of programmatic trading on mobile – where ads are served automatically according to different data points such as location or browsing history – is helping to improve the consumer experience. Two years ago, Telefónica launched its own ad network Axonix, which has access to Telefónica customers’ first-party data.
“Brands can definitely deliver more contextually relevant messages – we are only scratching the surface of what’s possible at the moment,” says Rosen. “The technology is there, the data is there, so the opportunity is there too.”
3 Failure to personalise
Smartphones are intensely personal devices, yet recent research shows that UK marketers lack confidence in their personalisation strategies. The survey by digital agency Greenlight finds that 88% of marketers believe their brand is lagging behind competitors in their use of personalisation, while only 24% say they personalise on mobile devices.
To overcome this challenge, brands and publishers are searching for ways to better personalise the mobile experience. Earlier this month, publishing group Time Inc launched Powder, a “mobile-first beauty service” that aims to provide personalised editorial content and product recommendations according to users’ needs and mobile behaviour.
Visitors to the Powder mobile site can create their own personal beauty profile, which allows the service to deliver bespoke advice and product recommendations based on the information they provide. It takes into account a range of personal characteristics such as age, skin type, make-up preferences and price points. Users can then purchase recommended products or save them in a ‘virtual beauty drawer’.
Time Inc digital director Rich Sutcliffe highlights the opportunity for advertisers to deliver targeted product sampling and native advertising via the platform. For example, different mobile video ads are delivered according to personal profiles to provide a greater level of targeting. Beauty brand L’Oréal Luxe is the UK launch partner for Powder.
“[Powder] is a utility, so it has to provide the user with useful information,” says Sutcliffe. “There are already millions of beauty ‘how-tos’ online, so we’re not breaking new ground in that respect, but because it feels very native to the product and is done in a premium way, it’s a much better approach than just throwing a load of ads onto what is essentially a small screen.”
L’Oréal Luxe managing director Amandine Ohayon agrees that the ability to deliver personalised messages is a key attraction for the brand. “A tailored, personalised approach to beauty on mobile is what interested us and we have gained deeper insight into customer behaviour as a result,” she says.
4 Ignoring the data opportunities
Many brands have not yet grasped the market research potential of mobile. This is partly due to a lack of imagination on the part of marketers in thinking about how their mobile activity might have an effect on consumers’ non-mobile behaviour, and vice-versa.
It may also be a resources issue, as such research projects often require significant investment that not all brands can afford. Last year, for example, electronics retailer Dixons Carphone revealed the results of a massive research project with Google that aimed to quantify the relationship between its spend on search marketing and its offline sales.
This involved creating a ‘ROPO’ (research online, purchase offline) study that cross-referenced two years’ worth of the retailer’s sales and media spend data with Google’s search spend data. From the resultant statistical model, it was discovered that for every online sale achieved through paid search, Dixons Carphone achieved three offline sales. This helped the retailer identify the extent to which people were using mobiles to research products before purchasing in-store, which in turn enabled it to adjust its investment in mobile search to boost sales and return on investment (ROI).
There are other examples of new research models that are helping marketers to quantify the effect of their marketing spend via mobile. Research group Ipsos has created a proprietary technology called MediaCell that passively measures the TV, radio or online ads people have been exposed to via an app on their mobile, rather than relying on their recall. It uses audio matching to record how often the person is exposed to a campaign, and serves follow-up survey questions.
5 Under-investment in mobile
Forrester Research predicts that most brands will under-invest in mobile this year because “too many marketers have a narrow view of mobile as a sub-digital media and channel”. Its 2016 Mobile and App Marketing Trends report finds that only 20% of marketers feel their companies are investing enough in mobile, while just a third say they are confident about how to measure mobile ROI.
“While most brands are trying to mobilise their ads, few are going the extra mile: serving their customers in their mobile ‘moments’ by transforming the entire customer experience,” suggests Forrester analyst Thomas Husson.
He also predicts that mobile will play a key role in facilitating the most exciting emerging technologies, such as artificial intelligence, virtual reality (VR) and the internet of things. “In 2016, smartphones will activate [these technologies] and enable business-to-consumer marketers to innovate,” suggests Husson.
Media reports last week suggested that Google is developing a new smartphone-based VR headset for release later this year. Google’s existing Cardboard VR product enables the user to slot their smartphone into the headset and experience VR thanks to sensor technology in the phone. The new product is expected to have a solid plastic casing and will be accompanied by updated Android technology.
Meanwhile, Samsung recently sought to take a lead on connected technology by launching its own internet of things home hub. The brand claims it offers secure but open protocols for connecting a range of smart home devices, all of which are accessible via a smartphone app. Samsung has predicted that the internet of things will become an increasingly mainstream phenomenon over the next five years.
Mobile World Congress next week promises to herald more such advances (see Innovations to look out for, below) – and further examples of how the smartphone will continue to drive this technological revolution.
In this context, Husson argues that leading brands must make mobile a core priority this year.
He says: “In 2016, [the] growing minority of leading marketers will start to fully integrate mobile into their marketing strategies.”
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What to look out for at Mobile World Congress
With the exception of Apple, which is reportedly planning to unveil a new iPhone in mid-March, all of the world’s major smartphone makers will be out in force at Mobile World Congress (MWC) in Barcelona next week (22-25 February). Samsung is holding its now customary press event on the Sunday evening before the congress, where it is expected to launch the Galaxy S7 smartphone. Sony and LG are also planning announcements, with new wearable and virtual reality devices likely to feature.
At last year’s MWC, industry leaders said the next generation of mobile internet – 5G – could be running by 2018. With its promise of a tenfold increase in data transmission speeds compared to 4G capabilities, 5G is seen as vital to facilitating new connected technologies such as driverless cars. This year, senior executives from global telecom groups like Deutsche Telekom and smartphone makers such as Huawei will discuss the technology roadmap and consumer applications of 5G.
Internet of things
Expect to see more of the connected appliances with which we are now so familiar – from smart thermostats to smart fridges – but also more details on how home hub packages and brand partnerships will help to take connected technology mainstream. Google will have a big presence at MWC 2016 and is also co-sponsoring an IAB event at the congress featuring speakers from diverse companies such as BMW, Visa and Unilever.