Sofa, so good, for mobile marketing

Smartphone searches are already big business and are sure to grow further, but mobile ads will never be a standalone medium.

For the past ten years at least, the new year has been greeted with the claim that it would be the “year of mobile”. So it might seem perverse to point out that, if there ever was a year of mobile, it’s already passed and we’re on to the next stage in mobile’s evolution.

This thought was confirmed when the IAB/PwC figures for mobile advertising were announced last month. These showed that total ad spend on mobile increased by 116% year-on-year to reach £83m in 2010. This may not seem a lot when compared with the £2.3bn spent on search in the same period (also according to IAB/PwC figures) but it’s significantly more than the £54m spent on pre-, mid- and post-roll online ads, particularly given the amount of hype surrounding online video at the moment.

The drivers of mobile advertising’s growth are obvious. The relentless innovation in the hardware market and the embedded upgrade cycle among both users and operators are pushing the capability of the installed base of devices upward. At the same time, innovation in mobile services is giving people more and more reasons to use the sophisticated capabilities of their handsets.

Add to this a rapidly growing advertising infrastructure that is making it easier for advertisers to use the medium, and further explosive growth looks almost certain. Indeed, the IAB/PwC figures include little or no contribution from Apple’s iAd mobile advertising network, which was only launched in the UK in December but which has already had significant success, not only in attracting brand budgets to the medium, but in persuading those advertisers to commit to long-term campaigns.

Unsurprisingly, search is leading the growth of mobile advertising, just as it did online. It accounted for 66% of the platform’s total ad spend last year at £54.9m compared with display’s £28.1m.

Smartphone searches are already big business and are sure to grow further, but mobile ads will never be a standalone medium

This makes sense, as not only is the mobile display proposition in its infancy, but search as an experience transfers neatly across from desktop to phone. The search box is a trusted element, with a behaviour that is understood in a way that a mobile display ad may not be, so users are happy to experiment with it.

If anything, search fits even more comfortably into people’s mobile behaviour. According to Google research, mobile searches tend to be acted on within a matter of hours, while desk-based searches may not be acted on for days.

We’re also in the earliest days of location-based advertising. Since the hype died down, services such as Foursquare and Gowalla have looked a little like a solution in search of a problem, and even Facebook’s introduction of its Places offering didn’t take the concept into the mass-market in the way that many of us expected. But the social network’s addition of Deals, where groups of people can work through Facebook Places to get discounts at shops or restaurants, suddenly makes location-based services much more compelling.

Stepping beyond mobile advertising, we’re also seeing mobile commerce developing rapidly, with retailers of all types experimenting with both mobile apps and mobile-optimised websites to extend their offer. And it’s these new services and behaviour patterns that not only show the way forward for mobile marketing, but also present marketers and their agencies with their biggest challenge, because mobiles aren’t being used in isolation. People are using their mobile as the second screen while watching TV, in the role that laptops have performed up to now.

Equally, while the stories of people buying sofas and cars through their mobiles are told partly to amuse and partly to show that mobile commerce has arrived, what really matters about them is the customer journey behind such big-ticket transactions.

It’s certain that any big-ticket item bought online wasn’t an impulse purchase where the phone was the only point of contact with the retailer, but the result of a long and complicated process involving both online and offline. I’m willing to bet that, in the case of that celebrated sofa bought via mobile, the process actually involved the purchasers visiting a number of furniture shops before slumping down in Starbucks and deciding that they liked the first one best and that they couldn’t be bothered to walk all the way back to the shop to buy it.

So while the argument for mobile advertising has grown more compelling with the growth of the audience and the improvements in the infrastructure, the need to understand mobile’s role in the customer journey has become even more important.

The unique combination of convenience, personalisation and location-awareness that the mobile creates, allied to its ever-increasing computing power, will see it take a central role in the way customers respond to advertising. The challenge for marketers is to understand that role and how best to respond to it.

Michael Nutley is editor-in-cheif of New Media Age and Reputation Online