Is Mobile Ad Spend Too Low?

Written by Ed Anderson | Jan 30, 2014 4:30:00 PM


Ever hear the old saw, “Fish when the fish are running”?

Another way of saying this is you need to be where your prospect spends his/her time.








Let’s examine the following chart from Kleiner Perkins’ Mary Meeker’s set of 100 slides in March of 2013:



Mobile ad spend should be increased four-fold 

Mary Meeker’s point above is that to properly match ad spend to where the customer’s are spending time, $20 billion in US ad spend should be reallocated…and that is as of early 2013. That represents a fourfold increase in mobile ad spend today, but since smart phones are still growing, it is likely that it will take more than a 400% increase in mobile ad spend to be in synch.


This is not a news flash for any retailer. Most have been working for years on catch up for an ad spend mismatch on the Internet. And according to the above chart, even that re-allocation is not yet done.


Four questions:

  1. Since almost all of the money is from the retailer’s vendors, is there really a problem?
  2. What mobile ad spend should you pursue: push, pull or a combination of both?
  3. Should you aim to drive mobile activity go thru your retail mobile app rather than a third party’s?
  4. How do you split spend between driving traffic into your stores, increasing basket size or growing category spend?


Re the first question, it’s true that it’s not your money, but what if you are not optimizing results of all that spend?


Re the second question, push is the easiest to do, but are push offers personalized and relevant to your best customers? Striking the right balance is a tough problem because retailers’ circumstances vary so much. Are you promotional or every day low price? Do you have end-of-season markdowns or open box returns? Are you happy with your cross selling results? If your app isn't in the hands of enough of your customers, could some push marketing coach them to download your app to get deals?


Re the third question, most chain retailers already have a mobile app, and they view it as a strategic asset, although the percentage of frequent shoppers with their app is highly variable. What could deals on smart phones do for getting your app in the hands of more of your customers? Do you want the third party app to control your ecosystem, or do you want to control it?


Re the fourth question, you first have to think about which marketing/advertising outcome is still not good enough: store traffic/customer counts, basket size or individual category spend relative to your competitors?


All these questions and more are tough to solve without analysis of pressing the buttons harder or softer and seeing first hand the outcomes achieved. Many retailers vividly see conversion rates for e-commerce, but are flying blind when it comes to conversion rates inside the brick and mortar store. Smart phones present the chance to give visibility to conversion rates in the store.