Measuring Mobile’s Ability to Make Money

eddiedeguia“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Eddie DeGuia, general manager at Motility Ads.

Mobile is in a funny space. Usage is going through the roof. Mobile accounts for nearly 20% of Web usage while mobile ad revenue grew by 47% between 2012 and 2013, according to Mary Meeker’s latest Internet Trends presentation.

With m-commerce taking off, the sky is the limit. But how does all of this actually work?

Today, m-commerce is generally about shifting shopping behavior from one device to another. There’s nothing wrong with that approach, but it isn’t as exciting as generating brand new revenue. Mobile does create the possibilities for new revenue, but from a marketing perspective there are some challenges to overcome. The first is how to drive incremental sales. The second is accurately attributing those sales from a customer interaction perspective.

In terms of driving sales, there are some interesting things happening, with more on the horizon. The navigation app Waze, for example, creates ad units that are timely and relevant by displaying offers designed for people on the go. Taco Bell ran a campaign for its Taco 12 Pack using Waze that resulted in 3% of viewers clicking the “Drive There” button. This is an impressive achievement given the average click-through for a mobile ad banner is 0.52%.

Another successful approach to using mobile to increase revenue comes from The Home Depot. An early adopter of mobile, The Home Depot saw its cost per macro-conversion shrink by 75% between 2010 and 2012, while store visits originating from a mobile device tripled. That’s tremendous and demonstrates how a smart approach to integrating mobile into the customer experience can be successful.

Overall, marketers recognize the potential of the mobile platform to tell powerful brand stories. This can be seen in the rapid adoption of creative mobile ad formats that are more effective at engaging consumers. The number of interstitial, rich media and video units have increased dramatically between 2013 and 2014, at 178%, 216% and 404%, respectively, according to recent research from Nexage, an independent mobile advertising exchange.

As mobile advertising takes off, however, it’s harder to recognize which marketing inputs are leading to what specific customer behaviors. The road to attribution has become a long and winding one that is far from perfect. Just look at all the different approaches that are out there: last-click, customer journey, view-through, last nondirect click, time decay, position-based – the list goes on and on.

But how well do these models account for a sale that comes as the result of a consumer being more easily able to locate an item in a store? Or being notified of a sale taking place nearby?

Marketers should apply this kind of thinking across media channels. The use of shortcodes, live links, QR codes and POS check-ins can create an environment where mobile’s role can be elevated and accurately accounted for. One can imagine, for example, a case where in-ad or in-app couponing could encourage measurable consumer purchase behavior, or where posting a photo of a purchase would trigger offers for future related products.

The Amazon Fire phone takes the mobile buying experience to the extreme, by providing a platform designed to make shopping as frictionless as possible. Fire – and the phone’s Firefly feature in particular – make it possible for people to see something, snap a picture of it and buy it through Amazon. It’s perfect for impulse shoppers but will it add incremental revenue for most shoppers, or will it simply be another shopping experience, albeit an easier one?

Merchants and marketers who treat mobile as just another shopping cart are selling the platform short. There are so many mobile tests taking place – from Waze to better creative and Fire – that we’re witnessing a period of unparalleled advertising experimentation. That doesn’t mean that every approach will pay off. Recognizing which will be successful depends on being able to accurately connect marketing activities with consumer actions, and that is the challenge we as an industry need to address.

Follow Motility Ads (@MotilityAds) and AdExchanger (@adexchanger) on Twitter.

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