‘Mobile is driven by consumers rather than marketers’

“50 per cent of my marketing budget is wasted,” according to legendary US adman John Wanamaker. “The trouble is I don’t know which half.”

Mr Wanamaker would have despaired at the mobile marketing industry. Of the $2.6 billion spent on mobile marketing in the United States in 2012, $2.5 billion was probably wasted, according to Scott Forshay, a mobile and emerging technology strategist for e-marketing company Acquity Group.

So how can brands use mobile to engage with customers more effectively?

“I would take you to task with saying that mobile budgets are not being used effectively,” says Alex Meisl, chairman of mobile agency Sponge. “The great thing about mobile is that, if it is used effectively, it can deliver a better return on investment than any other form of media. You can get a much more powerful bang for your buck and create a much better level of engagement than you would with any other technology.”

Research supports this as 46 per cent of smartphone owners have used their phone to look at products while on a shopping trip, with a 74 per cent conversion rate after visiting a retailer’s mobile site or app. The research, from Deloitte Digital, notes that around 6 per cent of in-store retail sales are being influenced by smartphone use as a result. This is equivalent to £15.2 billion in sales this year.

Direct sales via mobile apps are an important area for brands as well. Olivier Ropars, senior director for mobile at online auction site eBay, says that eBay shoppers around the world spent $5 billion in purchases via mobile devices last year, and he expects this to have doubled to $10 billion in 2012. “In the UK, an item is now purchased every second on eBay via a mobile device,” he says. “As a business, we absolutely think mobile first and that will not change.”

You can get a much more powerful bang for your buck than you would with any other technology

But is UK business mobile ready? It would seem not yet. Of the FTSE 100 companies, only 31 run mobile-optimised websites, research by mobile marketing firm Incentivated shows. “I wish I could say that it’s a shock to see that nearly three-quarters of them aren’t optimised for mobile, but this is quite typical,” says Jason Cross, marketing director at the company.

Although smartphone penetration is high in the UK – 61 per cent against an average of 44 per cent across Western Europe – brands do not allocate a similar proportion of marketing spend to mobile – just 7 per cent, according to the Internet Advertising Bureau (IAB).

“Consumers are using smartphones more than ever, but brands just aren’t investing in mobile yet,” says Alex Kozloff, senior mobile manager at IAB. “There is a lot of education to be done so that brands understand how and why they cannot afford to ignore mobile.”

Brands are moving in the right direction, however, and are starting to take customer engagement via mobile more seriously. “A lot of the larger brands and agencies are creating dedicated mobile teams within their business,” says Naveen Tewari, founder of mobile ad network InMobi. “This is good to see, as it will help companies catch up with user trends.”

Indeed, mobile is being driven by consumers rather than marketers and this needs to be at the front of brands’ minds when looking to engage customers via mobile marketing, says Paul Berney, Europe, the Middle East and Africa (EMEA) managing director of the Mobile Marketing Association.

“Before anything else, brands need to understand how their consumers think about mobile,” he explains. “Don’t just come at it from a technology angle – particularly in mobile, any marketing campaign needs to begin with consumer insight, with an understanding of what mobile means to them. The channel is mobile, but consumers are about mobility.”

One particular insight into consumer behaviour is when traffic peaks on mobile devices. Research by Adobe reveals that, while desktop traffic is at its highest during office hours, this is then followed by a peak in mobile phone traffic until 10pm, at which point tablets take over until 12am.

“You need to look at what are people trying to do when using a mobile device – what are they doing differently and what can you learn from that to personalise their experience?” says Jonathan Beeston, director of new product innovation at Adobe.

One of the most important trends is how consumers are using mobile for commerce and payments. In the UK, 71 per cent of consumers expect to buy goods via their mobile in the next 12 months and, of those, 25 per cent expect to spend more than £50 through mobile purchases in the same period, a study by InMobi shows.

One area where the interaction between mobile and money has made a big impact is in charity fundraising. Paul De Gregorio, head of mobile at Open Fundraising, a mobile fundraising specialist, explains: “SMS marketing and ‘text giving’ is changing how we work – it’s making other, more traditional, marketing and advertising channels work a lot harder.”

As well as encouraging more people to give, mobiles are changing how people spend their money. InMobi’s Mr Tewari says the growth in m-commerce behaviour is actively being watched by brands, which are increasingly investing in their mobile offering.