Will U.S. Mobile Marketing spend climb to US$ 72 billion? MMA says it should

What: The Mobile Marketing Association (MMA) released a report during Adweek in New York City, explaining that Mobile Marketing Expenditures shold increase to US$ 71 billion in the U.S. within the next decade and close to US$ 220 billion globally. Actual Mobile Advertising expenditure in the U.S. is growing at a high rate in the U.S. and is expected to reach US $5.9 billion in 2014.
Why it matters: Mobile Marketing and Advertising are changing the way major marketers and media connect with the consumer and this is reflected in the high growth rate of Mobile Advertising, albeit from a low base. However, according to a study released by the MMA, optimal spend should be even higher.

mobileMMA, a trade association for the mobile marketing industry, released a report during New York’s Advertising Week, “How Big is the Mobile Marketing Opportunity”, which explores the mobile ad market opportunity for both marketers and mobile ad/media sellers. Based on a study that combines empirical data about the effectiveness of mobile advertising with estimates of future mobile device market penetration, the report suggests that within the next decade global ad spend could reach as much as $220 billion globally and $70 billion in the U.S. alone (excluding mobile search).

Instead of US $5.9 billion spend in 2014, the optimal total amount (excluding mobile search) could be US $28.5 billion in the U.S. today.

According to the report, “Instead of US $5.9 billion spend in 2014, the optimal total amount (excluding mobile search) could be US $28.5 billion in the U.S. today. Extended to the total worldwide ad spend of US $543 billion, optimal worldwide spend should be US $86.8B – or more than the current GDP of 123 of the world’s nations.

The MMA bases its recommendation on the following factors:

• Current U.S. smartphone penetration is 51.8% today, and will be 80% within a decade.
• Market Evolution sees impact gains of 20% typically in a new media’s lifecycle, as best execution practices in areas like
targeting and creative optimization techniques take hold. Mobile presents intriguing impact improvement opportunities in areas such as advertiser mobile app deployment, geo-targeting, and highly personalized behavioral targeting.
• The ad spend market should keep its 3.2% annual growth rate.

Given these assumptions, mobile can be expected to hold 29% of the overall optimized mix: a staggering US $71.7 billion in the U.S. and US $ 218.7B total worldwide, and the dominant portion of overall digital ad spend.

Mobile MarketingWhile most popular projections are based solely on time spent, this analysis includes empirical data from a newly developed research methodology (SMoX) that allows MMA’s brand partners to measure the ROI of mobile and its optimized level in the marketing mix. The conclusions of the report confirm what many in the industry suspected: that the current allocation to mobile by marketers is disproportionately low. If marketers were to adjust their mix to align with the current patterns of marketing ROI and media consumption, marketers’ allocations to mobile would rise dramatically. In fact, early indications suggest that the optimized level of media spend should increase by 4-7x compared to current levels in the marketplace.

“Our analysis indicates that the amount brands should spend on mobile has been grossly underestimated and that the industry is likely to be larger than currently predicted,” said Greg Stuart, CEO at the MMA. “We hope this report challenges marketers and agencies to look deeper at how they are allocating their ad dollars, as marketing executives who choose to move first to optimize mobile advertising spend will open an important competitive advantage – a tangible share shift. For the largest advertisers, this could mean hundreds of millions of dollars of additional annual revenue with billion dollar incremental market cap implications, all without spending another advertising dollar.”