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Borrell: Local Mobile Ads To Double This Year
Posted by: | CommentsBusiness 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
Apple Poised To Unveil ‘iAd,’ New Mobile Ad Platform Is Jobs’ ‘Next Big Thing’
Posted by: | CommentsEven as the buzz builds toward the April 3rd ship date of the iPad, Apple is preparing to announce its “next big thing” — a new personalized, mobile advertising system that could well be called the “iAd” — Online Media Daily has learned. The new ad platform, which will be officially unveiled to Madison Avenue on April 7th, has been described as “revolutionary” and “our next big thing” by Apple chief Steve Jobs, according to executives familiar with the plan.
Precise details of the system and its features could not be discerned at presstime (and calls to Apple had not been returned), but it is believed to have been built on top of Quattro, the mobile advertising developer Apple acquired in January for nearly $300 million, and it is expected to be the first real battle of a Silicon Valley Holy War between Apple and arch frenemy Google that is shifting its front line to Madison Avenue.
The war has been mounting ever since Google introduced its Android mobile operating system to compete with Apple’s iPhone, and agreed to acquire mobile ad firm AdMob for $750 million, but it is expected to reach ballistic proportions following Apple’s April 7th announcement, which insiders say will be every bit as important as other recent marketplace introductions, including the iPod, iTunes, iPhone and iPad launches.
Aside from the super egos involved — Jobs vs. Google chief and former Apple board member Eric Schmidt — the battle is key to the business imperatives of both companies, which have been racing to develop new revenue streams and models to expand beyond their core: in Apple’s case, consumer gadgets; in Google’s case, search advertising.
Apple appears to have been more successful in its revenue diversification, developing substantial software and service businesses, including iTunes downloads, iPhone wireless subscriptions, and App Store downloads. And while advertising has always loomed as a huge possibility for Apple, it had essentially been unexploited as a business model until Apple acquired Quattro.
Google, on the other hand, has made numerous investments to develop new advertising revenue models beyond its core search business, most of which have failed to yield much if any share of Madison Avenue’s conventional media or online display advertising marketplace.
But the gold rush is on for mobile, which many see as Madison Avenue’s next big frontier, even if it still is relatively miniscule compared to established media. According to the last mobile forecast from Interpublic’s Magna unit, mobile ad spending is only expected to reach $331 million this year and $409 million in 2011. One of the obstacles to mobile’s growth as an ad medium is the fact that there hasn’t been any single organizing principle for agencies and advertisers to rally around. The Magna mobile advertising report describes it as “a highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends” that are converging to create an advertising marketplace.
But Apple has already captivated Madison Avenue’s attention with the advertising possibilities of its App Store, and more recently, with the impending introduction of the iPad, and big agencies and advertisers have been lining up for opportunities to be the first — and in some cases, exclusive — sponsors of some of the earliest “tablet” editions of magazines and newspapers designed for the iPad.
While Apple clearly is accumulating gravitas in the ad community, agencies are generally still in the dark about the new mobile advertising system, though there already is plenty of speculation within the tech community.
Joe Mandese, Mar 26, 2010 05:21 PM
One of popular scenarios is that Apple will offer a hypertargeting capability that would enable advertisers to target ads to consumers based on their geographic proximity, paving the way for a new generation of location-based advertising. But some observers believe that could be trouble for Apple, because Google recently won the patent for systems that serve ads dynamically based on a user’s location, and given the current relationship between the two digital behemoths, such a move by Apple would likely invite litigation from Google.
Another potentially telling patent move is one that Apple registered for in 2008 that potentially could control ads served on virtually any screen connected to an operating system that would turn the content or application off if the user isn’t paying attention to the ads.
Meanwhile, Madison Avenue will be waiting with bated breath to see what Apple actually unveils.
“Everyone will be following this very closely,” says Josh Lovison, the mobile lead at Interpublic’s Emerging Media Lab, adding: “Given the way that Apple is able to package things up, with very slick presentations, it will be interesting to see what they do with advertising.”
Source: MediaPost Online Media Daily – Apple Poised To Unveil ‘iAd,’ New Mobile Ad Platform Is Jobs’ ‘Next Big Thing’
