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Mobile Marketing Trends: Interview with eMarketer's Noah Elkin

I read two recent eMarketer reports on mobile usage and marketing trends. One report says by the end of '09, roughly $760 million will have been spent on Mobile Marketing.

But wait. It also says by 2013, over $3.3 billion will be spent in this marketing channel. During my interview with eMarketer's Senior Analyst Noah Elkin, he said those figures are under review and could go up or down. But either way, Mobile Marketing is obviously going to hit like a house afire.

It's really time to get our heads around the implications of this tectonic shift in consumer behavior and marketing potentials therein.

Sr. Editor Janet Roberts meticulously organized this content-rich interview. Enjoy.

The Mobile Internet Universe

Larry Chase: Out of all the cell phone usage in the United States, what percentage of the phones are on the Internet one way or another, whether it's checking email, surfing the Web, doing Twitter or Facebook?

Noah Elkin: We estimate approximately 26.3%, based on end-of-year projections, will be accessing the Internet on mobile devices at least once a month.

LC: How fast will that grow?

NE: By 2013, we project about 44% of mobile phone subscribers in the U.S. will be doing that, or about 134 million people.

LC: That's a lot. Is this at the expense of laptops and desktops or does it augment that use?

NE: It's largely additive. For many people, the smartphone is not just a phone. It's actually a PC. They use it for simplicity and ease of use. You don't have to boot up a computer or go to the Web site.

LC: So, are we seeing a dramatic shift away from "stupid" phones to smartphones?

NE: The shift is underway. We're inundated with media exposure to smartphones, but smartphones represent only 15% of the mobile population right now. There is still a large population of mobile users using standard phones.

We actually call these standard phones "feature" phones. The market momentum is for smartphones to come down in price a great deal, thanks to incentives, carrier subsidies and so on.

iPhone Versus Everything Else

LC: We hear a lot about the iPhone, but is it the market leader now?

NE: The iPhone has about 2% of the market in the United States. Right now, the BlackBerry has a bigger share of the market than the iPhone. However, the iPhone really is an iconic device and remains the one to beat.

LC: The iPhone is the game changer?

NE: No one has been able to surpass it. The [Palm] Pre has come close to replicating what Apple offers. But overall, no other manufacturer has been able to replicate that same confluence of application and interface.

LC: Who's close on the interface? Google Android?

NE: It's kind of an "apples and oranges" thing. The Pre has come close. The BlackBerry has a different value proposition. Some of the new Windows Mobile devices are good, but they fall short in terms of the universe of applications that extend the appeal of the phone.

LC: So, it's the total user experience?

NE: Yes. They come for the phone, but they stay for the apps.

LC: I read in your eMarketer report that the recall rate for ads on the iPhone is twice that of any other phones.

NE: Yes. Part of the reason the iPhone gets so much attention is in terms of the Web surfing experience and exposure to ads. The browser on the iPhone is close to replicating the experience you have on your desktop or laptop.

LC: Which phone do you use?

NE: I have a BlackBerry for personal use. My iPhone is my work phone. I've always been a BlackBerry user because of the network quality of Verizon versus AT&T, and the battery life.

NE: I'm a typical iPhone user. I download a ton of them and use only a portion of them. The ones I use the most are my Twitter apps, like TweetDeck. I have a Facebook app and mobile readers for The New York Times and The Wall Street Journal.

Applications and Mobile Marketing

LC: How do advertisers who sponsor or underwrite mobile applications measure success? The one that comes to mind is Charmin's "SitorSquat" app. [This is an app that enables you to find a toilet anywhere in the world.]

NE: A lot of mobile apps are branding plays for sponsors or their creators.

In Charmin's case, their agency found them an existing application that would be a good partner for them. Charmin gets exposure through use of the application and its popularity.

LC: What kind of numbers are they seeing?

NE: A couple of months after the launch, they had about 80,000 downloads.

Mobile Marketing: More than Texting, Search and Sponsored Apps

LC: I saw a figure in your report that says $3.3 billion in US dollars will be spent on mobile advertising by 2013.

NE: That's the projection put out earlier in the year. I am in the process of revisiting that. We don't have any way of knowing which way it might go.

LC: For this discussion, let's call it around $3 billion. That's a lot of money. How does it break out in made-for or sponsored apps, in SMS messaging or in other types of advertising?

NE: I think message-based advertising, whether SMS or whatever, will continue to be an important format on mobile. Search is going to become more important. But, mobile display ads and spending, not only on apps but also on advertising applications, whether Twitter or a game you download, will become important as smartphones gain greater penetration.

LC: Will advertisers be able to buy day-parts and segments of the audience, like GPS locales? Could you order a PPC ad that shows only in specific locations?

NE: Mobile networks allow day-parts now. With location-based ads, often the subscriber's location is provided by the subscribing service.

On the iPhone, the app will ask "May we use your location?" and you can say "Okay" or "Don't Allow." If they click "Okay," then they opt in to the ability to be reached by advertisers.

LC: Do you have any stats showing how many people are saying, "Yes, I want to see geo-specific advertising?"

NE: I haven't seen anything yet, but you see it on map functions or mash-up applications that Citysearch or Urbanspoon use.

Mobile Video: Not Ready for Prime Time?

LC: U.S. cellular network providers have announced that they are about to upgrade their networks from 3G to 4G, which will allow enough bandwidth to support full motion video. How does that impact use of mobile devices?

NE: Cynically, I will be happy when the video quality improves. The challenge is finding places that deliver 3G speed now.

LC: So, 4G full motion video on cell phones is a ways off for most people?

NE: Some people do get TV shows or movies from iTunes and watch on their iPhones if they can make the battery last long enough. I think the challenge is overcoming tech hurdles. One is network quality and consistency. Then, handset level, processing and battery power are needed to make that experience enjoyable and viable.

You have to be able to do all those things well without compromising the phone's primary function. You can't use the phone as a video player and then not be able to make a call because the battery died.

Tough Times Don't Threaten Mobile's Growth

LC: Phone fees are not inconsequential. In tough times with the economy, do people pull back on telecom charges, or will they have their cable pulled before their mobile?

NE: We haven't seen a comparison of mobile versus cable, but all the survey data suggests people are unwilling to part with their mobile devices.

Once you start using your smartphone, it is hard to give up. The phone becomes an essential part of your life and routine, and you come to depend on it.

Mobile is a flexible medium for advertising. You can do campaigns that are as simple as sending messages or coupons, or you can do much more complex and integrated campaigns that mix display and search and SMS and a variety of ad formats.

This bodes well for mobile, even in today's economically challenged environment. People have their mobile devices with them at all times, unlike a laptop or TV or other media that traditionally absorb advertising dollars. Smartphoness really are the bridge between the desktop and the mobile Web.

Resources

Noah Elkin is Senior Analyst for eMarketer, a digital marketing and media research, analysis and publishing company.

These eMarketer reports below provided background information for this interview:

Mobile Advertising and Usage ($695).

Mobile Applications: Moving Beyond Apple by Noah Elkin (available with paid Total Access subscription).

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