Why this shift to mobile?

Mobile devices have completely changed the way consumers shop, and search for information and looking for a new or pre-owned vehicle is no exception. Current mobile statistics reveal that there are over 1 billion mobile web users worldwide with more than 90% of smartphone users being mobile Internet users. According to a new mobile focused study by J.D. Power and Associates almost 60% of auto intenders in the US are looking at their smartphone while they are on a dealer’s lot. Briabe’s “Auto Shopping On-the-Go with Mobile: A Study of How Consumers Are Using Mobile Devices in Auto” survey in US found that:

• Three out of five respondents have noticed an auto ad on their mobile phone or tablet
• More than one-third (37 percent) have clicked on auto ads for more information
• Users are most interested in research (85 percent) and / or price comparison (86 percent) when shopping for cars on their smart phones or tablets
• Banner ads (68 percent) and social media ads (69 percent) are the most effective types of ads that cut through the online clutter
• Deals and promotional offers along with ads that highlight car features resonate the most among mobile users with 76 percent of respondents saying they are most likely to click on these types of car ads

Clearly, mobile has become the preferred channel for reviews on dealership websites, social media platforms or just searching for car related services in the locality. Smartphones have become the prime source of information among car shoppers. Consumers are making decisions based on research on their mobile devices. These trends have led the industry to push and adopt mobile media which traditionally has been reluctant to embrace new technologies. It is important for auto manufacturers to recognize this shift and set the stage with innovative and creative mobile ad campaigns.

As with other industries, auto companies need to focus on the following components to drive customer acquisition, strengthen relationships and achieve brand differentiation.

• Content drives traffic: A study by Millennial Media has found that nearly one-quarter of consumers who keep up with auto info (21 percent) read automobile content daily. Content is the key to prospective engagement. Creating original content with a clearly defined keyword strategy can help boost SEO rankings. It is important to frequently update and tailor the content to customer behavior to attract and covert site visitors.
• QR Codes: QR codes provide the ability to interact with customers who examine dealer stores during off hours. They also allow customers to find more information or deals via the brand without being bombarded by advertising. QR codes can also be included in their main website and print advertising. When customers scan the code, they can be directed to the dealership website to obtain more information such as pricing and specifications.
• Location based services: Auto dealers can leverage the mobile medium to deliver geo targeted alerts or push notifications on the offerings. This is very important for auto service companies as customers would be interested in tracking their services on-the-go.
• Mobile video: With every launch and review tracked on video hosting sites such as YouTube which is accessible over mobile, it is important for auto manufacturers to upload images and videos combined with reviews and commentaries to create an impression.
• Optimize and integrate: While most of the OEMs have comprehended the importance of mobile, it is important to optimize mobile search, strengthen mobile marketing and m-commerce for products and services to be purchased online. Integration with social media provides opportunities to auto retailers to engage customers, build brand credibility and loyalty.
• Mobile optimized website: According to the 2012 Automobile Mobile Site Study by JD Powers, 31% of shoppers actively looking to buy a vehicle have visited automotive websites via their smartphones compared with 24% in 2011 and 17% in 2010. Having a mobile optimized website which loads quicker and is simple and easy to navigate is crucial to for differentiation. The site can display the products, latest sale prices, and running offers with optimized mobile ad campaigns to improve user engagement.
• Rich Media: Mobile ads allow for a level of engagement not possible in traditional media and enable brands to expand their customer relationships. Marketers should embrace rich media ads to serve videos and images to create a unique experience which leads to high engagement metrics.
• Better use of targeting capabilities: Targeted and relevant messages will increase the response for auto related mobile campaigns. Automotive companies can target based on a combination of parameters including location, customer’s online behavior, handset, wireless carrier, age, gender, household income or time of day.

The future of mobile advertising looks bright and sophisticated. Although traditional forms of marketing and advertising will always have a place in the industry, the mobile revolution is changing the way businesses transact and traditional media may not be as effective. Mobile is becoming a much bigger part of day-to-day life and businesses can only benefit from understanding all that mobile technology has to offer. Marketers should take advantage of mobile’s unique abilities as a marketing channel to reach customers where they are, develop a richer understanding of mobile consumer usage and refine their efforts to cope with the change.

Want to talk options? We’ve got ideas!

This mobile revolution and the shift in consumer behavior is simply too large for CPG marketers to ignore. Here are a few things for CPG companies to differentiate their brand, strengthen customer relationships, loyalty and drive revenue.

• Optimized Mobile Website – There are high chances that the consumer is going to search a brand name before they look at mobile app store. Consumers use the mobile websites of CPG companies to plan their shopping trips (e.g. find store hours and nearest location) and enhance their CPG experience (e.g. check prices and product details).Having a mobile optimized website which loads quicker, simple and easy to navigate will be crucial to establish awareness. CPG companies can display their products and running offers up front with fully optimized mobile ad campaigns to improve user engagement.
• Having a Branded Mobile App – Having branded app which is informative, educational or gaming is a key part of any mobile strategy. Apart from the standard information, the app must also provide an added value and unique experience centered on the products. CPG marketers can leverage on mobile apps to boost brand awareness and affinity by thoroughly understanding their target audience. The best way to use apps is to create something that is both useful and valuable.
• Creative/Rich Media Ads - Mobile ads allow for a level of engagement not possible in TV, radio, print, or even online, and enable brands to expand their customer relationships. With the right ad execution, particularly in HTML5 rich media, brands can create a unique and participatory experience for the consumer. Properly targeted rich media banner and search ad creative leaves a lasting impression with consumers.
• Location Based Services – Location aware promotions are very useful for CPG companies as it helps shoppers on the move. Consumers value products and solutions far more when they are delivered at the right time, in the right place and in a relevant context. When consumers are near retail partners, CPG companies can use location-aware advertising to promote special deals to drive consumers in store. They can also push location based customized offers and coupons to increase retail sales and enhance user engagement.
• QR Codes – For CPG firms, QR code technology means the ability to interact with consumers without having a spokesperson, and for consumers to find more information or deals via the brand without being bombarded by advertising. Marketers should focus on creating useful QR code campaigns that deliver timely information, particularly when that information can be accessed at the moment of the purchase decision when consumers are in stores and seeking that little something extra (such as additional information, a review, comparison pricing, or a discount) that can tip them in the direction to pull out their wallets and buy.
• Mobile Coupons – Mobile coupons offer an excellent opportunity for marketers to appeal to users on the go and to drive them to take an action. Marketers can capture the identity, location and amount of the customer making the purchase by using various coupon redemption methods such as SMS codes, app based redemption and mobile bar coded coupons. Embedding QR codes with mobile coupons can drive both in-store and online sales, as consumers are 10 times more likely to redeem mobile coupons as they are traditional ones – according to Borrell Associates. Mobile coupons delivered through QR code can even be configured for timed expiration from the time they are unlocked to drive immediate or delayed response. Bath and Body Works, Sephora, JCPenney, Kohl's, and Olive Garden are few CPG companies who are already offering mobile coupons.
• In- Game Mobile Marketing - User engagement is critical to driving brand loyalty. Mobile gaming offers a different perspective on how CPG companies can engage their consumers. Brands need to understand how they fit into their consumer’s lifestyle and build games around that. By building games that reward consumers for achieving goals or fun to play will increase user engagement and brand awareness.
• Better Targeting – Targeted and relevant messages will increase the response rate of any CPG mobile campaign. CPG companies can target through a combination parameters including location, handset, wireless carrier, age, gender and time of day.

Next Big Question: How Much to Invest?

Now, there are so many ways the companies can attract consumers on the mobile ecosystem, the next big question would be how much should a CPG marketer need to allocate its media budget. Traditionally CPG companies have been spending mostly on TV and print advertising. With the shifting of market dynamics, there is a need for these companies to innovate and create a marketing strategy to engage the customer in the mobile world.

Procter & Gamble and Unilever have publicly announced they are shifting more resources to digital formats to keep overall spending in check. Procter & Gamble chairman, president and CEO McDonald has informed analysts in February 2012 that P&G would trim $1 billion in external marketing costs over the next five years, in large part by shifting from TV to digital and mobile ads and using more multi brand group marketing tactics to “build one-on-one personal relationships with every consumer.”

As per Marketing Evolution study: 1) 7% of a marketer’s media budget should be allocated to mobile advertising to optimize advertising goals; 2) By under-investing in mobile, marketers and thus businesses are losing out on profits; and 3) Over the next 4 years, marketers should invest at least 10% of their budget to mobile advertising

For categories like CPG 5% of media budget generally be invested on mobile. Campaigns aimed at building awareness would also have a smaller allocation for mobile (5%), while those geared toward boosting purchase intent and consideration would increase the share to 8%

So What Next?

CPG companies need to create a mobile strategy considering the big picture on how they would want to engage the consumers through the mobile channel and utilize the power of mobile marketing combined with traditional marketing to create and maintain a loyal and engaged customer base.

Thinking of having strong mobile strategy for your brands in order to truly unleash its potential? InMobi can help you win in today’s challenging world by crafting a winning solution. Check out our gallery of award-winning ads, our exclusive industry research reports or contact us today to learn more.

So what is LTV?

Lifetime value is a metric that measures the monetary value of a user over the lifetime through which he/she is engaged with your product. By attributing the time value of a user to your business, it differentiates itself from the other common metrics such as ARPU (Average revenue per user) – which measure the average quantum of revenue that users generate within a defined unit of time-typically in a month or so. LTV, on the other hand attempts to capture the net present value (pardon me for sounding like an investment banker) of the estimated cash flows from a user over his/her lifetime. By also taking into account the future estimates of cash flow/revenue from users, LTV allows marketers to plan, justify and adjust the marketing spends made towards acquiring users today. Remove the marketing spend from the estimated LTV of the user and you start measuring real profit per user!

Applying LTV to your app business

In this section, I shall attempt to provide a simplistic approach to measuring LTV, largely drawing upon common sense rather than on complex formulae. Measuring LTV for your app starts with laying out two broad components that comprise it

1. Average lifetime of your app user

The easiest way to measure this is to measure the average number of sessions that your users engage with your app in and the average length of each session. The product of these two metrics will indicate the average lifetime of your app user.

2. Revenue streams from your app users

Given that there are multiple business models to monetize your app, the LTV calculation is most accurate when you include all revenue streams for your app.

1. Revenue from paid downloads - If your app is a paid app, then this is simply the net revenue you earn from each paid download after deducting the appstore’s revenue share .Since this is a onetime revenue , this directly equals the user’s lifetime contribution towards the total LTV
2. Revenue from in-app purchases- This component can often be tricky, depending on what use cases exist for in-app purchases and how each purchase is priced- but to simplify this, you could start by measuring the following :
   • A. What percentage of your total unique users makes an in-app purchase?
   • B. What is the average value of an in-app purchase (net of rev-share to payment processer)?
   • C. What is the average number of in-app purchases made by each user who participates in any form of in-app purchase?
   These metrics should typically be available through reports from your appstores or payment processing vendors. Once you have these metrics, the user’s contribution towards the LTV through in-app payments is simply = a X b X c
3. Revenue from ads - this component is fairly straightforward to measure and is a function of the eCPM that your ads deliver and the number of ads you show to each user during their lifetime.

LTV component through ads

= (eCPM/1000)X Number of ads shown to the user in his lifetime

= (eCPM/1000) X {Average session length per user X Average number of sessions per user /Ad refresh rate(ie no. of ads shown to a user in 60 seconds)}

=(eCPM/1000) X {Average session length per user X Average number of sessions per user /Ad refresh rate(ie no. of ads shown to a user in 60 seconds)} X( % of traffic allocated to non-house ads)

The total lifetime value of the app user then is simply the sum of 1,2 and 3.

Please note- that this simplified calculation does not completely capture the indirect revenue streams from your users – such as the impact through social referrals, revenue from cross promotion ads and so on. But this is a fairly good start if you are just starting out on your journey to adopt an LTV approach to measuring your app business.

Now that you have calculated the LTV of your app user, you can measure the LTV of your app by multiplying it with the total number of unique users you have as on date. This number indicates the lifetime value of your app in monetary terms and helps you understand if you are justifying the marketing spends you may have made in acquiring these users. If your cumulative spends far outweigh your app’s lifetime value as on a particular date, there is a definitive need to increase and sustain the LTV of your app users. There are several ways to do this and LTV maximization is as much an art as it is a science. But it begins with understanding your users well and acknowledging the fact that they are a heterogeneous bunch. The more you learn to address this heterogeneity by bucketing your users into manageable segments , smarter can be the actions that you can take to keep them engaged or monetize them better. This leads us to the topic of behavioural segmentation, what it means and how it can be used to improve your app’s LTV. It’s a fairly important topic in itself, so I shall delve deeper into it on a separate post.

Watch this space as I share more insights into the world of app monetization and several tricks to the trade.

Interestingly, about two thirds of those who visited theaters once a month or more used mobile to pick movies and plan trips, showcasing the importance of mobile as a channel for marketers to reach valuable movie-going audiences. To access the infographic and the full findings, please visit our Insights Portal

]]> http://www.inmobi.com/insights/2012/09/17/triple-digit-growth-in-smartphone-ad-impressions-in-middle-east-and-north-africa/feed/ 0 http://www.inmobi.com/insights/2012/08/24/the-mobile-social-graph/ http://www.inmobi.com/insights/2012/08/24/the-mobile-social-graph/#comments Fri, 24 Aug 2012 21:43:37 +0000 Harish Nair http://www.inmobi.com/insights/?p=328 Continue reading →]]> Guest Post by Harish Nair