This piece originally appeared in MediaPost on November 4, 2015
Do you remember when mobile advertising was in its infancy and there were all sorts of doubts around it? There was the classic line about the screen being too small, so how could you design great creative for it? And what about those clumsy fingers and accidental clicks messing up metrics? Tech publications warned app developers that ad revenue will never pay their bills.
Now, five years later, these doubts have been cleared up, and the promise of mobile advertising as a whole has completely overdelivered. Why? Because what some forgot was that mobile advertising was never a completely new thing; it was simply an extension of digital, and for that reason, it was bound to grow – and the kinks got worked out along the way. In the same way, mobile commerce is not new. It’s simply an extension of e-commerce, which is a concept that everyone, from investors to consumers, feels far more comfortable with.
There’s no doubt that e-commerce is blowing up. Total e-commerce sales in 2014 were over $300 billion, with nearly a third ($96B) taking place in the fourth quarter of the year. Now consider this: an October report from Forrester just placed total m-commerce transactions to exceed $115B in 2015 and jump to $142B in 2016. And by 2020, smartphones will account for 15% and tablets 33% of e-commerce sales.
The m-commerce opportunity is clear – so much so that some are even calling it out as the space where we will see the next $100B “super-unicorn,” on the same level as Google, Facebook and Amazon.
Right now, however, much of the innovation and financial investment in m-commerce is taking place at the very top of the funnel. Armed with the knowledge that 60% of retail browsing happens on mobile devices but that they only account for 15% of dollars spent (comScore), marketers have been focusing primarily on attracting those browsers, or user acquisition.
How are they doing this? Some take a page out of the online playbook and use contextual ads to help potential customers discover items they want to buy. Where it gets more exciting is when they layer in mobile-only tactics like geo-location and proximity targeting to create the connection to the offline world and drive traffic to the point of sale.
As mobile devices became more sophisticated and third-party location technology vendors sprung out of the woodwork, advertisers realized they could also get hyper-local and experiment with in-store marketing – promoting specific items or sending push notifications to deliver the right offer in the right place at the right time. This is where specific offer formats became essential, and fortunately, groups like the Mobile Marketing Association stepped up and launched a standard for the mobile coupon ad unit.
Now, if we just stopped there, m-commerce would continue to grow. It would certainly meet analyst expectations and play a larger role in retail marketers’ overall strategies. But we are now at a critical point where we have to think beyond brand awareness and customer acquisition and shift our attention to conversions – making it easier for customers to complete their journey to purchase – and retention, or building brand loyalty and post-sales engagement to create deeper lifetime value.
Two things need to happen before m-commerce will be able to reach that potential.
First, there have to be big steps taken in the mobile payments space to enable consumers to complete their purchases swiftly and safely. With significant movements from players like Stripe to create back-end APIs and infrastructure to power small businesses and let their customers buy goods through tweets, social media posts, in-app interfaces, ads or links, we are seeing the removal of some of the barriers that previously stopped customers from buying with their mobile devices.
Amazon and eBay, which account for one-third of all online shopping in the U.S., are investing in better mobile payment systems. Just a few months ago, Google quietly announced a Buy Now button on its paid product listing ads. In September, with the release of iOS9 and the ability to “deep link” within apps, publishers like Bleacher Report began creating more seamless experiences for consumers to buy items like tickets to sporting events. So with players both big and small moving quickly to remove friction from the purchase process, we are bound to see conversion metrics improve for mobile campaigns.
Lastly, m-commerce strategies must begin to focus more on retention. Given that 4 in 10 mobile shoppers (those that are using a device to shop online each month) are in the 16-24 age range, advertisers must attract and delight these mobile shoppers now, to build a strong customer base that will come back to buy over and over again. One of the ways they can start to do that is by integrating loyalty programs into the mobile experience. The average household takes part in nearly 22 loyalty programs each year, so there is a huge opportunity to connect the offline activity that is already taking place to their closest companion – the phone.
The best part? It’s not just about making it easier for the customer, like Starbucks has shown. It’s also about our second-favorite feature: data. Brands will have access to unprecedented first-party data about specific customer preferences, spending and shopping habits, as well as location, to be able to offer the most relevant offer for that single person. That’s the kind of personalization that will make them customers for life.