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Business spending on mobile-marketing will more than triple this year as the category starts a soaring 5-year growth trajectory, according to a Borrell Associates forecast to be released this week. And local mobile spending will double in 2010 as it begins a similar 5-year boom.
“If this were a drag race, the pacer car just exited the track and everyone’s hitting the gas,” said CEO Gordon Borrell. “With mobile devices already in the hands of 80% of consumers and devices suddenly becoming more graphical and useful, local mobile marketing appears to be on a very fast jag.”
It’s a breakout year for a new disruptive marketing channel, says Borrell’s 2010 U.S. Local Mobile Advertising & Promotions Forecast. Starting with mobile coupons, mobile spending will eat into print Yellow Pages and direct mail revenue much as the Internet has disrupted newspapers. It may even pull dollars away from the Web-based advertising that spawned it.
Nationwide, mobile marketing will jump from $2.7 billion in 2009 to $9 billion in 2010, the report predicts – and then will rocket to $56.6 billion by 2014. Two-thirds of the spending will be various forms of advertising, but one-third will come from promotions budgets to enable coupons, contests and discounts.
Spending by local businesses will follow a similar path at a slightly slower rate, jumping from $285 million in 2009 to $586 million in 2010 – and then spiking to $14.7 billion by 2014.
“It all begins to look a lot more local,” said CEO Gordon Borrell. “Marketers really understand that the people who are going to buy from them are 5 or 10 miles down the street. Even national marketers are targeting local.
“ Today at lunch I’ll go on my Droid phone and touch an app that will guide me to coupons within 10 miles of wherever I am, whether I am in Orlando or Williamsburg or New York city. It’s much more powerful than a stack of coupons that are only for businesses within a 10-mile radius of my house.“
Adoption of this new marketing medium will be the fastest yet, the report predicts, with several factors driving the growth:
- A pre-installed user base. With 80 percent of the population using cell phones, and 31 percent already switched to smartphones, Borrell believes mobile ad share could reach dominant penetratration faster than any medium before it, including broadcast TV and the Web.
- Ease of use and convenience of portable devices.
- A proliferation of new mobile devices and apps. “Think beyond phones, PDAs, and notebook computers,” the report reads. “Gaming devices, e-readers, cars, and cameras can also be included.”
- What about tablet computers like the iPad? “Yes, that’s what drives a lot of the future growth,” said Borrell. “These projections are for personal interactive devices – but not out-of-home screens that ‘move’ in elevators, taxis or buses.
Borrell Association projections are based on a mixture of media companies’ receipt-level data, plus surveys and other research that tracks business spending. “We dig deeper into more sources and deeper local sources than other projections,” Borrell said. “That’s why our numbers tend to be a bit bigger than other numbers.”
“It’s like trying to count the trees in a forest. You can take an aerial snapshot and get a pretty good count of the big trees, but we’re getting in there and counting saplings and new growth in the forest as well.”
Borrell is bullish on mobile coupons to kick-start the growth, particularly for small- and medium-sized businesses.
“Anecdotal results are already there, big time, for the few SMBs who have tried it.” reads the report. “Redemption rates for mobile coupons are 10x that of mail- or newspaper-distributed coupons. When a restaurant in Texas pays $37 to send out 500 text messages for a “buy-one/get-one-free burger” offer and gets 60 people to walk in the door, for incremental revenue of $1,000 per day, there’s something dramatic going on.”
Beyond the obvious appeal to consumers, Borrell sees coupon functionality growing as devices mature. “The simplest thing – texting – will take hold first,” he said in an interview. “With all the other things like the iPad, what will happen likely is newspapers and other companies will port over all the content and put some ads on it. But the winners in the end are people who come out with completely new applications. …
“The winners in the end will be the people who build the business to the exact specifications of what mobile can do for it.”
The rapid rise of mobile media gives great opportunity to companies that make the most of it, Borrell said.
“Yellow Pages could be big winners if they transfer customers from one medium to another,” Borrell said. “The biggest potential loser in this is direct mail, particularlly with couponing. … Actually, big losers are any local media companies that don’t understand or misinterpret the power of digital marketing.”
Many media companies are shifting from “selling ads” to acting as marketing and research consultants to help business understand the explosion of interactive options, Borrell said. “Local advertisers are even more confused than media because they’re getting so many opportunties thrown at them. We recommend that sales forces explain what’s going on. …
“They’re not saying ‘How much would you like to buy?’ They’re saying ‘How can we serve you?’ …
“Everyone underestimates the confusion for the local advertiser. If you have a local sales force, you have a much stronger opportunity to sell. It’s just much more comfortable for a local business face to face than with someone they don’t know on the phone. Of course, the results have to be there, as well.”
What about media companies who don’t embrace this kind of change?
“It feels like being nibbled to death by ducks.”
Source: NewsCheckMedia LLC. – Borrell: Local Mobile Ads To Double This Year