During a closed-door, invitation only meeting at the MMA CEO and CMO Summit, the MMA unveiled its new initiative, “MXS” which challenges marketers and agencies to look deeper at how they are allocating billions of ad dollars in their marketing mix in light of the radically changing mobile centric consumer media landscape. MXS – which stands for Mobile’s X% Solution – is believed to be the first empirically based study of the rebalancing and optimization of a marketing mix to help marketers achieve a higher return on their marketing dollar investment.
MXS bypasses the equation used by some that share of time (should) equal share of budget and instead looks at an ROI analysis of mobile based on actual market cost, and current mobile effectiveness impact, as well as U.S. smartphone penetration and phone usage data (reach and frequency). This mobile analysis was then merged with data from dozens of cross media studies of other media against specifically defined campaign goals by product category and thereby allows for an algebraic analysis of mobile’s role in an overall marketing mix.
The study concludes that the optimized level of spend on mobile advertising for U.S. marketers in 2012 should be seven percent, on average, vs. the current budget allocation of less than one percent. Further, the analysis indicates that over the next 4 years, mobile’s share of the media mix is calculated to increase to at least 10 percent on average based on increased adoption of smartphones alone.
“Media consumption habits are shifting towards mobile and it is our responsibility, as global marketers, to engage with consumers in the most meaningful way,” said B. Bonin Bough, Vice President of Global Media and Consumer Engagement at Kraft Foods. “At Kraft Foods, we’re committed to making a difference in mobile innovation, so I’m very pleased that the MMA is leading the industry with this valuable data.”
More detailed data suggests that the range marketers should spend on Mobile varies based on the marketing goal and industry category. For example with high involvement brands and/or lower purchase funnel objectives, marketers should consider a higher than average 9% allocation with an increased projection to 13% over the next few years based on smartphone growth.
However, as with all new media, improvements in targeting, creative excellence, better ad units, tighter industry standards, innovation in technology and other factors will all contribute to increased spend and the further development of mobile beyond these levels.
“The mobile industry has been plagued from what I call a ‘cold start syndrome,'” said Greg Stuart, CEO, MMA Global. “Finally, we are able to give marketers a level of empirical data that takes out the guesswork and offers a baseline for further discussions on what a rebalanced marketing mix should look like to achieve a stronger ROI on every dollar they spend. The next step in this process will be to validate these findings with the recently announced MMA SMoX.me program where we will conduct cross media research with key leading marketers globally to provide additional critical ROI data for them and the industry.”
While MXS was not developed to calculate total Mobile industry spend, the MMA expects comparisons will be made so one could conclude that overall “Mobile Marketing” (measured marketing spend) could be an approximately $26 billion market in the U.S. and higher globally.
“MXS is intended to kick-start a meaningful, but scientific-oriented dialog about the obvious disconnect between spend on mobile advertising and current patterns of marketing ROI and media consumption to help marketers reach the right answers for their businesses,” said Rex Briggs, CEO, Marketing Evolution. “Regardless of variances in campaigns, it’s clear that marketers, on average, are spending significantly less than they should on Mobile and are losing out on sales and profits by settling for a sub-optimal media mix.”
This project was conducted by Marketing Evolution with input from a consortium of major agencies, marketers and media companies over the last three months, as detailed in the white paper.
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