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Direct Response Marketing

Size Matters

1 Jan, 2013 By: Nicole Urso Reed Response

Little tablets, big smartphones — and sizing up the mega opportunities of today’s mobile marketing.

Apple’s iPad Mini topped many wish lists this past holiday season.The exponential growth of mobile consumers and the amount of time they spend on these devices has dramatically outpaced the amount of mobile advertising. The latest “Internet Trends” slide deck from vaunted mobile expert Mary Meeker, a former Wall Street analyst and current Kleiner Perkins venture capital partner, articulates how dramatically mobile connectivity has revolutionized consumer behavior and how much catching up marketers have to do in order take advantage of this growing audience.

According to the report, almost half of mobile phone subscribers in the U.S. are on smartphones, and mobile devices drive at least 13 percent of all Internet traffic. However, when looking at mobile usage versus advertising, the report shows that consumers spend 10 percent of their time on mobile devices, but only 1 percent of ad budgets are invested in mobile marketing.

As marketers figure out ways to integrate mobile offers into the media mix, the landscape becomes even more complex as M-commerce fragments into smartphones, tablets and the latest onslaught of smaller tablets, such as the iPad mini, and large smartphones, like the Samsung Galaxy Note II.

Leaps and Bounds

There’s a lot of that proverbial low-hanging fruit just begging to be picked, and while no one will dispute the enormous opportunities that mobile technology created, everyone has different opinions on how to capitalize on it. Smartphones, E-readers, tablets and now mini tablets — the iPad Mini was a top item on many wish lists this past holiday season — enable on-the-go connectivity, but how consumers engage with the devices, access information and use various features is different from one device to another.

“Mobile growth has caught everybody a little bit by surprise in how fast and furious it has been,” says Joanne Bradford, chief revenue and marketing officer for Santa Monica, Calif.-based Demand Media. “So to catch up with it, we’re packaging it to be complementary to our Web-based offering.”

Bradford is widely recognized as a new media powerhouse. Prior to Demand Media, she oversaw North American revenue generation and branded entertainment sponsorships at Yahoo!. She also pioneered services such as in-game advertising and self-serve search ad platforms at Microsoft’s Internet Business Unit.

Now, like other seasoned marketing veterans and innovative newcomers, she is tasked with creating the best mobile content experiences for the millions of users who visit Demand Media websites and apps for, and every day and then delivering successful advertising opportunities around them.

In situations where consumers search for products and services on a mobile device, Bradford explains, they should be able to find what they need quickly and efficiently. This is the most straightforward and natural progression from Internet advertising to mobile integration.

“The next thing is working on the format. So ad format integration, sponsorship packages, which are a little bit more difficult because you’re just starting to see where the inventory is, how to get it to be predictable, what kind of creative things you can do and what users will tolerate, what they won’t tolerate ... That’s just now happening across the industry,” says Bradford.

The most difficult challenge, she says, is the predictability of measurement and the effectiveness of those ads.

“Do [mobile ads] work better and should they be worth more? Do they produce fewer results and [therefore] should be priced less? It hasn’t stabilized from what it’s worth to a marketer’s standpoint like Web-based and PC-based advertising has,” Bradford says.

Mobile Nation

Since Apple’s iPhone was introduced in 2007, the U.S. has quickly become a nation of mobile consumers. Almost half of Americans own a smartphone, and according to eMarketer, they’re spending an average of 82 minutes per day searching the Internet, using apps, playing games and listening to music — twice as much time as they were spending two years ago. The report also shows the slowing growth rate of time spent online with desktop and laptop computers, Internet-connected TVs and other non-mobile devices. eMarketer estimates that time spent on non-mobile devices will grow just 3.6 percent to an average of 173 minutes per day in 2012, compared to 7.7 percent and 167 minutes per day in 2011.

The abundance of features on smartphones, including geo-location and maps, social connectivity, calendars, apps that solve all sorts of everyday problems, photo and video sharing, games and music on the go have augmented the way that people connect with each other and with the world around them, and commerce is no exception.

Shopping with a smartphone enables consumers to purchase a product directly online, or to compare products and prices at various retail locations. They can carry electronic coupons in their back pockets and opt-in to receive specials offers and promotions when entering their favorite stores.

As marketers have learned, however, new opportunities to connect directly with mobile shoppers have come with some backlash over privacy protection. Although consumers will post photos and updates about where they are, they don’t necessarily want to be contacted with unsolicited promotions.

And while mobile offers have proven to be good incentives to shop, tracking conversion is not quite as simple. If someone searches for a shoe store, sees a mobile ad for a nearby retail location and then buys shoes, there’s no way to directly link that purchase. It’s the unpredictability and the lack of definitive results, which are vital to the ROI-driven direct response industry. With mobile coupons, the user experience has to be just right. Marketers are still trying to figure out what works best, which is constantly evolving with the rapid development of new mobile devices.

“The marketing that you’re displaying and conveying on a smartphone needs to be very specific to the phone itself,” says Anthony Medico, president of New York-based E+M Advertising. “If you’re in a shopping environment and you get a coupon, that coupon needs to be very easy to bring up and the user experience has to be good — and if not, then that’s a wasted opportunity.”

These and other challenges are a few of the reasons why some marketers are watching closely but waiting for the mobile landscape to mature before risking campaign dollars.

The growing popularity of tablets, however, brings an optimistic outlook for mobile commerce, and particularly to home shopping. According to Medico, conversion ratesIs the Samsung Galaxy S III a large smartphone or a little tablet? One thing is for certain: it brings those different types of devices closer together. on tablets are much better than smartphones. They’re still not as good as on a desktop, but they continue to improve.

The Big Screen

Meeker’s “Internet Trends” report calls for the “re-imagination of nearly everything.” Keyboard and mouse are the graphical interfaces of the past. Touch, voice and gesture are the natural user interfaces of the future. Her research illustrates that Apple iPad purchases grew three times faster than the iPhone, and 29 percent of adults now own a tablet or eReader, up from only 2 percent three years ago.

“For the mobile device, the content has to be easily digestible, fast loading and quick because when you’re on the go ... for example, [searching] ‘How to Fix a Flat Tire,’ or ‘How to Get Gum Out of Your Hair’ is very different than ‘Baking Cookies for Christmas.’ There are very different modes that the consumer is in, so what we found is that the largest growth area is quick, easy-to-use content that renders quickly on the go,” says Bradford.

The use cases for tablets are very different.

“On the tablet side, they’re more visual and in-depth, so we think about that as a little bit of the magazine replacement,” says Bradford. “You sit on your couch, you have your tablet. You have more patience, more time, and a little bit more curiosity. In the PC, desktop-based world, we think that you’re really digging in on something and looking at much more active produced transactional solutions as far as content goes. There are different rules that apply to E-commerce, but when consuming content, we think those are the principles that you have to adhere to.”

Since the larger screens on tablets are more conducive to rich media displays and longer periods of engagement, marketers can be more creative in finding ways to integrate ads into the content of Web pages and apps. International Data Corporation (IDC) predicts that ad spending will grow much faster on tablets than on phones in the coming years. Currently, IDC estimates that about 30 percent of mobile ad spending is on tablets and 60 percent on phones, but by 2016, nearly 40 percent will be on tablets and 45 percent on phones, with the remainder spent on other mobile devices.

The ways in which consumers use their smartphones and tablets often present very different use cases. Medico advises marketers to break down their strategy into segments. If a multi-channel campaign includes a mobile component, then the mobile component must include a further breakdown between the smartphone and the tablet.

“Something that marketers are getting really good at is making sure that the marketing message — whether it’s display, search or video — fits the media,” he says. “When considering tablets and smartphones, you’re communicating a marketing message to two very distinct audiences.”

Refinery29 recently launched R29 Shops, which combines social marketing, expert trend reviews and a marketplace for fashion goods.The end result and the goal of the marketing message can be succinct among various media. However, setting expectations and being aware of how a consumer is engaging with the ad at a specific moment in time is most important.

“If you opened up your tablet today and it was nothing but text, and no visuals, you’d be disappointed. If you opened up your smartphone and there was nothing but slow-loading video, you’d be frustrated,” says Bradford.

The Perfect Fit?

For marketers who are only beginning to tap into the potential of mobile advertising, the fragmented media landscape may appear to be shattering even more. However, with the rapid development of mobile technology, there may be a “just right” device in the pipeline that satisfies all needs. Or, perhaps there is one out there already.

Today, mobile consumers have their tablets and smartphones, and Medico believes that they will continue to use both as the use cases are so different.

“You’re bringing your phone with you everywhere,” says Medico. “It’s really an extension of you at this point, so shoppers are still using their smartphones when they’re outside the home, and everyone has a phone on them at all times. I don’t think that’s going to change necessarily.”

Enter the iPad Mini. It’s smaller than a tablet but bigger than a smartphone, and it was on Josh Himwich’s holiday wish list. Himwich is the vice president of product development at New York-based Refinery29, a fashion and lifestyle website that bridges the gap between content and E-commerce. The company recently launched R29 Shops, a marketplace for shoppers to connect with their favorite brands all while reading up on the latest trends from fashion editors. In a Refinery29 gift guide, “What Guys Really Want (We Asked!),” Himwich explained why the iPad Mini was No. 1 wish on his list.

“It’s close to perfect because it combines the lightness and portability of the iPhone with the functionality and capabilities of the original iPad,” he said. “I believe how we access the Internet on the go will forever change with this device because, like our phones are today, it’ll always be with us.”

Medico expressed a similar sentiment about the “amazing” Samsung Galaxy S III. It’s not a little tablet, but rather a large smartphone.

“It’s a little smaller than the mini tablets, but it bridges those worlds closer together because it’s the device you can really do almost anything on.” ■

About the Author: Nicole Urso Reed

Nicole Urso Reed

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