The future of mobile advertisement (Summary Home Assignment)


The mobile marketing industry is one of the fastest growing industries. In 2012 the invested mobile advertisement budget was $2.3 billion and it is expected to increase to $11 billion in 2016. The question is if these investments are effectively devoted. Not according to Gupta (2013). As you might have read, he thinks “app-vertising” is the future, and the investments should go to designing mobile applications instead of mobile web advertisement.

However, there seem to be multiple difficulties in designing mobile applications. First of all, an average mobile device has 40 apps, but only 15 of them are used. Besides the low usage rate of the applications, there is an incredibly large application market. In 2015 the Appstore consisted of 1.5 million applications and the Google Playstore consisted of 1.6 million applications. These large numbers of applications makes it hard to differentiate your app from all the others. Thus application design seems to require a lot of creativity.

Research has shown that consumer acceptance is the key to successful mobile advertising. Merisavo et al. (2007) identified five possible components that may lead to consumer acceptance. Namely: utility/usability, context, control, sacrifice and trust. Usability was defined as usefulness, relevance, monetary incentives, entertainment and informational value. Context was closely linked to utility and was defined to the extent to which contextual information was used, as an example using your location. Control was defined in how much control the consumer thinks to have about the advertisements. Sacrifice could be seen as the annoyance caused by the advertisements. Finally trust was defined in how the consumer thinks their privacy was protected. The results made it clear that utility/usability and contextual information are the strongest and most important drivers for consumer acceptance.

A great mobile web alternative that uses utility and contextual information is mobile search advertising. As an example, Google Adwords. As an company it is possible to register your company for the Google Adwords Remarketing strategy. For example you use Google to look for another bicycle and you visit a Google Advertisement.The next time you come to another website that is connected to the Google Display Network you will see an advertisement for that previously visited website. A successful story of Google Adwords Remarketing Strategy comes from Yankee Candle Company. The Yankee Candle Company increased his conversion rate by 600% through remarketing with Google Adwords and at the same time their cost per conversion was cut in half.

An example that illustrates “app-vertising” is not always the solution, is the application from McDonalds. Although this application added convenience and special offers, it received the lowest rating of all restaurant applications. This illustrates that although you use the right strategies, success in the application market is not guaranteed. So in my opinion companies should not invest all their money in application design and shift their focus to improving their mobile web advertisement strategies. Do you think “app-vertising” is the future or should companies improve their mobile web advertisements?

References

Gupta, S. 2013. For mobile devices, think apps, not ads. Harvard Business Review 91(3) 71-75

Gray, B. 2015. The Best and Worst Rated Retail Apps. ARC Report. Retrieved, September 13, 2015,       from http://arc.applause.com/2015/08/11/state-of-us-retail-apps/

Hoffman, D. L., and Fodor, M. 2010. Can you measure the ROI of your social media marketing? MIT     Sloan Management Review 52(1) 41-49.

Merisavo, M., Kajalo, S., Karjaluoto, H., Virtanen, V., Salmenkivi, S., Raulas, M., & Leppäniemi,                              M.  (2007). An Empirical Study of the Drivers of Consumer Acceptance of Mobile         Advertising. Journal Of Interactive Advertising7(2), 1.

Statista. (2015, July). Number of apps available in leading app stores as of July 2015. Retrieved,            September 13, 2015, from http://www.statista.com/statistics/276623/number-of-apps        –              available-in-leading-app-stores/

Wordsteam. (2012, August). 25 Fast Facts About Adwords. Retrieved September 14, 2015, from                 http://www.wordstream.com/blog/ws/2012/08/13/google-adwords-facts

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One thought on “The future of mobile advertisement (Summary Home Assignment)

  1. Great blog post! From my own experience of downloading companies’ apps, I hardly ever use them after the initial download to earn an in-store deal. When apps include catalogues, I try to use them at first but then turn to my computer because the phone screen is too small for me to see the details of the items I am looking at. Every time I go through my phone looking for apps to delete, I always delete those app-vertising apps first, because they do not do any service for me. I agree with you in thinking that app-vertising isn’t what companies should be focusing on, that they should be coming up with more clever ways to advertise on mobile devices through other apps like Facebook. I think that the most effective advertising strategies for companies right now are having their adds show up on my Facebook Newsfeed or my Instagram feed.

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