Consumers lead, and advertisers lag. It's what happened on the internet, and it's what we're seeing in mobile too. It literally took years after the majority of U.S. consumers had adopted the internet for mainstream marketers to start putting any real money into online advertising. One could argue that still hasn't happened; online represents only about 8 percent of all ad spending in the U.S., though the web has more and more influence over consumer purchase behavior.
The "mobile internet" is following a parallel course; it's already a so-called mass medium, but it's hardly taken seriously by most marketers. Depending on the data source, there are between 40 and 50 million (or more) U.S. consumers accessing the internet from their mobile phones today. Apple reported last week that it sold almost 7 million iPhones last quarter, and smartphone sales in general are dramatically outpacing the rest of the market. As the folks at Nielsen have argued, the mobile internet has already reached "critical mass."
Supporting that view, a recent TMP Directional Marketing-comScore consumer survey found that 16 percent of wireless users had conducted a local business search through a mobile browser. That would translate to roughly 41 million people, assuming a U.S. mobile population of 260 million (according to CTIA). But the survey also showed that for smartphone users, the numbers shoot way up -- past 50 percent.
The question in the chart above -- "Have you ever used your mobile phone to conduct a local business search?" -- also raises the issue of frequency. How engaged are people with the mobile internet, and how often are people searching for things using their mobile phones?
In research conducted this August among roughly 800 mobile users, Opus Research found that 29 percent of respondents used their mobile devices to access the internet, and 16 percent used search, essentially identical to the TMP findings above.
The Mobile Marketing Association and Nielsen have both reported that mobile users conduct about nine searches per month on average. However Google and Yahoo have privately told me they're seeing more frequency than that. Indeed, the Opus findings show unexpectedly high mobile-search usage.
In the Opus research, 43 percent of survey respondents said they were conducting at least six searches per week in mobile. While other data might show less frequency, the market's clear direction is toward more engagement with mobile devices. Eventually that may even come at the expense of the desktop internet. A very recent survey by IBM, conducted among 600 internet users in the U.S., the U.K. and China, found that 50 percent of consumers would substitute their internet usage on a PC for a mobile device. And in some developing countries, the mobile internet is effectively the only internet.
Even though it's something of a cliché to call wireless phones the most personal piece of technology, that's clearly the case. The chart below shows that among various platforms and communication tools, including the internet, the most difficult one for consumers to give up is now the mobile phone.
Source: Pew Internet & American Life Project (n=2,054 US adults, 12/07)
There's a big disconnect, however, between behavior of a growing number of mobile consumers and the perceptions of advertisers. Although consumers are increasingly taking the "internet to go," most brands and agencies are far from undertaking mobile advertising. Agencies and marketers, for the most part, continue to see mobile as an unproven or experimental medium.
For example, the CMO of Chrysler, Deborah Meyer, was quoted in the Wall Street Journal ("Marketers Cut Back on Digital Media," Oct. 15, 2008) saying, "We won't experiment in a lot of things that are fun to have. All of our dollars have to go to hitting in-market shoppers with the appropriate media." That means in this recession, so-called experimental platforms and strategies, such as mobile, will need to wait.
Recent national and small business advertiser surveys, conducted within the past three months (by Marchex, Opus Research and Where2GetIt), show that only about 10 percent of marketers are doing anything with mobile. Where2GetIt's findings, drawn from its roster of national advertiser and franchise clients, reveals that those allocating any money to mobile advertising are spending "less than $10,000" and taking it from existing budgets.
In January of this year, the Search Engine Marketing Professional Organization (SEMPO) found that 56 percent of search marketers expressed interest "in being able to serve geographically relevant advertising to mobile search users." But most respondents did not want to pay a premium for the ability. And 25 percent said they wanted to pay less for mobile than conventional paid search, reflecting the perception of mobile as an unproven medium.
Most agencies and advertisers are still trying to figure out the internet. So perhaps it's a lot to ask them to take on yet another (and more complex) digital medium. But as with the "salad days" of search marketing, there's an equivalent early opportunity for advertisers willing to be less conservative and go mobile.
With the majority of marketers on the sidelines, those that launch mobile campaigns can expect less competition and more recognition, given mobile's higher recall and response rates. So while most advertisers defer mobile campaigns until "next year," it's worth noting that mobile is here this year. The mobile internet is already a mass consumer medium -- and it's only getting more so.
Greg Sterling is the lead analyst for LocalMobileSearch, an advisory service from Opus Research dedicated to the mobile Internet.