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Retailers expected to invest $55B annually in mobile by 2015: study

By
January 24, 2013

Retailers will significantly bump up their mobile marketing spend over the next three years thanks in large part to coupons and advertising, according to a new study from Juniper Research.

In Juniper’s “Retail mCommerce: Mobile & Tablet Marketing, Advertising & Coupon Strategies 2013-2017” report, the research house looks at how retailers will ramp up their mobile initiatives to drive in-store traffic and online sales over the next few years. In addition to traditional commerce-driving methods, the report also points to the growth in augmented reality and near-field communications as sales drivers.

“Clearly, there is a marked migration of marketing budget into digital media, and as part of that migration, mobile’s proportion is markedly increasing,” said Dr. Windsor Holden, principal analyst at Juniper Research, Hampshire, England.

“Mass smartphone and tablet adoption amongst end users leading to a surge in mobile and nomadic browsing, the development of mobile and couch commerce, the attendant decline in circulation of newspapers and many magazines and leading brands seeking out new ways of engaging with consumers — these are all factors which, in isolation or combination, mean that including mobile as a marketing channel is absolutely critical for brands and retailers,” he said.

Invest in mobile
Per the report, the $55 billion annual spend in 2015 almost doubles the spend that marketers are expected to invest in mobile this year, which is $28 billion.

To compare, retail mobile marketing totaled $18 billion in 2012.

There is a difference between retailers using mobile for purely transactional purposes and those that place mobile in the center of their strategies to mesh the physical and digital worlds.

Retailers who use mobile to combine physical and digital use the channel for everything from helping consumers discover new products to driving both online and in-store sales via a mobile point-of-sale.

Mobile coupons will also grow in importance by retailers over the next three years, per the report.

However, savvy retailers should be looking at mobile coupons to do more than to simply drive incremental sales. When used with personalized and tailored messaging, mobile coupons help retailers establish closer one-on-one relationships with shoppers to drive repeat traffic and sales.

Although mobile commerce continues to grow, many retailers have not optimized for mobile – including both mobile sites and apps.

Per the report, it is critical that mobile sites be optimized for payment, registration and browsing in order to get the widest swath of the largest pool of mobile users.

Advertise on mobile
The report specifically singles out mobile advertising as a tactic that will grow in importance for retailers in the near future.

In particular, there is a growing gap between brand and transactional mobile advertising.

The goal behind brand advertising is to expose a consumer to a retailer with hopes that the brand stays top-of-mind and will lead to a future sale. The problem with this model is that there is not a clear way to close the loop.

Transactional advertising on the other hand aims to convert users on the spot, meaning that it is often placed close to the point-of-sale. As retailers become stealthier with mobile, it is expected that more retailers will swing to more location-based advertising to tap into this opportunity.

For example, brands are increasingly relying on foursquare and Facebook as a way to tie mobile into location-based and social campaigns.

Based on findings around mobile couponing and advertising, Juniper expects for eight major areas to lead the charge in the mobile space – Western Europe, Central and Eastern Europe, the United States, Latin America, the Far East and China, the Indian subcontinent, the Asia Pacific region and Africa/the Middle East.

Three areas – North America, Latin America and Western Europe – will control the largest percentage of mobile marketing spend.

“For the major retailers we’re certainly talking about omnichannel – there is a need to marry their physical and digital assets, and mobile allows a seamless route to that approach,” Dr. Holden said.

“The problem that you have here is the budget allocation time frame – it can be difficult for retailers to be sufficiently proactive and utilize the latest innovations in distribution channels because of this,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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