Local Providers Should Take Care in Interpreting Big Mobile Advertising Numbers

One of the key themes of Mary Meeker’s annual Kleiner Perkins Internet Trends presentation last week was mobile advertising — its growth, targeting, and measurability. Yet Street Fight surveys of local merchants and national-to-local marketers show surprisingly low usage and perceived effectiveness of mobile marketing. So what’s going on and what can suppliers of local marketing technologies and services do about it?

Meeker cited data from the IAB/PWC interactive advertising report that showed U.S. mobile advertising revenue surpassing other digital advertising for the first time in 2016, reaching $37 billion and driving two straight years of increasing market growth after a slump in 2014. Local ad watcher BIA/Kelsey estimates that 35-40% of mobile advertising is local.

But Street Fight’s own Local Merchant Report 2017 showed fewer than a quarter of local small businesses using mobile marketing regularly and, as shown below, they were not giving it a high ranking for effectiveness. Our survey of big brands and retailers that market locally that we did 18 months ago (we’re doing a new survey this month) revealed similar results: about one quarter used mobile marketing regularly but fewer than 10% listed it as among their most effective tactics.

In a recent conversation I had with GoDaddy director of product marketing Eric Gilbert, he pointed out that our surveys likely understate the importance of mobile marketing. He said over half of the traffic to GoDaddy small business sites came from mobile devices, and 60% of their email opens were mobile, too. Online store traffic showed similar results. He’s right, of course, and Google and Facebook also report that their usage is over half mobile. The apparent paradox boils down to marketers’ focus/emphasis and some nuance in interpreting the numbers.

In the Street Fight surveys, both types of local marketer tabbed social media and email as highly effective marketing tactics. They’re reaching mobile audiences without having to think too hard — yet — about specialized mobile campaigns. When asked, they likely consider “mobile marketing” to be things like locally targeted offers, geofencing, beacons, and real-time location data. Those technologies and tactics are just getting started for most local marketers, but make no mistake, they are gaining momentum. Location data and mobile “push” marketing show up prominently when Street Fight surveys about interest in newer local technologies. And a third of local merchants and half of the big marketers said they were increasing their spending on mobile.

Applying BIA/Kelsey’s filter on Meeker’s data implies that way fewer than half of mobile advertising messages are targeted locally. And Meeker’s numbers are largely derived from media company revenues, so they don’t represent total marketing spending. They don’t account for spending on sites, agency services, sending email, customer service, or creative and staffing expenses. They also count tablets, which BIA/Kelsey does not, and, for that matter, reflect device type, not location. There’s tons of smartphone usage on the couch in the living room: “mobile” does not necessarily connote “on the go.” 

So what does this mean for companies selling to local marketers? Here are a few things to think about when prioritizing and pitching products:

• The mobile advertising spending data that many pundits throw around today probably says more about operating systems and screen size than it says about targeting and personalized offers — as of yet. And the platform emphasis shift should by no means be underestimated. Sites and ads must deliver useful mobile experiences on the smaller screen and require less typing for interaction. Small businesses are just starting to get their mind around that. Mobile is re-inventing search marketing — both paid and SEO — but that’s nothing really new, and search is where local merchants say they need the most help.
• Enterprise local marketers may still be thinking about mobile more for customer analysis than real-time geo-targeted promotions. Counter-intuitively, mobile may be a measurement and data analysis issue for ahem before it really establishes itself as a targeting vehicle.
• Both types of marketer appreciate digital channels for customer service. Real-time communications and remote service scheduling should appeal to the local merchants. Chatbots are likely overhyped for the moment, but simple menus and checklists can go a long way without AI.
• Facebook may have stolen a lot of display advertising, but inventory is opening up on mobile apps like maps and Uber. They are much more likely means for a customer to actively search for locations and product info than a social network.

As for local media, there’s no easy answer for the dilemma of AMP and Facebook. Local media that have traditional outlets should emphasize cross-channel campaigns, there might be an opportunity for branded local exchanges, and newsletters are promising vehicles for branded content and conventional advertising.

David Card is Street Fight’s director of research.

Click here for more on the Street Fight Insights report, The Local Merchant Report 2017.