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Marketers should allocate 7pc of budgets to mobile: MMA

Marketers are spending significantly less than they should on mobile and are losing out on sales and profits as a result, according to a new report from the Mobile Marketing Association.

The "MXS: Mobile's X% Solution" report found that the optimal level of spending on mobile advertising for United States marketers in 2012 should be 7 percent. However, the average current budget allocation is less than one percent. The MMA, working with Marketing Evolution, developed a model incorporating cost, impact and media usage to determine the optimal level of media spend.

?The big news is that by rebalancing their advertising budgets with mobile, marketers will absolutely increase their ROI,? said Greg Stuart, global CEO of the MMA, New York. ?This study gives marketers real, empirical guidance on how to reallocate their mix.

?The findings were really as expected ? everyone knows that marketers are not spending what they should be on mobile,? he said.

Spending will vary
The media landscape is changing dramatically as mobile adoption grows and users increasingly engage with their devices for a variety of activities, including consuming a wide variety of media.

As a result, over the next four years, MMA forecasts mobile?s share of the media mix will increase to at least 10 percent on average based on increased adoption of smartphones alone.

Additionally, improvements in targeting, creative excellence, better ad units, tighter industry standards, innovation in technology and other factors will also contribute to increased spend on mobile marketing.

The report also suggests that what marketers spend on mobile can vary based on the marketing goal and the industry category. For example, for high involvement brands and lower purchase funnel objectives, marketers should consider a higher than average allocation.

Based on the findings, the MMA expects that overall measured marketing spend in mobile could be an approximately $26 billion market in the U.S.

Reallocating budgets
The MMA study was designed to look at how marketers can best rebalance and optimize their marketing mix in order to achieve a higher return on their marketing dollar investments.

The study did not use the popular method of having share of time equal share of budget. Instead, it is based on an ROI analysis of mobile using actual market cost, current mobile effectiveness impact and U.S. smartphone penetration and phone usage data.

The analysis was merged with studies of other media.

The MMA will attempt to validate the findings with its recently announced MMA program where it will conduct cross media research with key leading marketers globally to provide additional ROI data for the industry.

?It is clear that marketers should immediately be rethinking their current budget allocations, if they aren?t already,? Mr. Stuart said.

?Additionally, the data suggests that marketers need to consider their marketing objectives, their brand vertical as well as whether they have a high involvement or low involvement brand ? all of these criteria will impact the percent they should allocate,? he said.

?To get started, they can simply apply the average, which is seven percent, and then adjust accordingly based on actual results.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York