Topical insights on mobile marketing to glean from the February 2020 CMO Survey
Mobile marketing is more important than ever. The average American consumer spent about three and a half hours a day on a mobile device in 2019—up 20 minutes from a year earlier. That number is sure to grow when 2020 data are available. Around the world, people sequestered in their homes due to COVID-19 are turning to news, social media, video, chat, texting and games on mobile devices to pass the time, steepening an already fast-growing consumer trend.
How will COVID-19 affect marketing? See what senior executives are saying.
As marketers scramble to redirect strategies in the wake of COVID-19, they are undoubtedly placing more emphasis on mobile marketing. Results from the February 2020 CMO Survey (which was administered in January before COVID-19 became a pandemic) show that marketers are spending 13.5% of their marketing budgets on mobile—a whopping 321% increase over the 3.2% reported in February 2015. This number is expected to grow 73% to 23.3% in the next five years, but will likely reach that number faster due to current world events. Even before COVID-19, 2020 was set to be mobile’s biggest year, with mobile ad spending reaching $240 billion.
Mobile’s big spenders include, not surprisingly, retail and wholesale retail companies (which dedicate 21.5% of their marketing budgets to mobile) and consumer services companies (who spend 20.2%). Both industries will allocate more than 34% of marketing budgets in five years to mobile. In the education, energy and healthcare industries, mobile spend will more than double across the next five years. Finally, companies with more than 10% of their sales over the internet spend 21.8% on mobile marketing today, but will spend 36.3% in five years.
What Enterprise Companies Spend Their Mobile Marketing Budgets On
What are companies spending those mobile dollars on? Social ads account for the greatest portion of spending, notching more than one quarter (25.6%) of mobile spend, followed by user experience (18.5%), display ads (15.8%), video ads (12%) and app development (9%). Spend on social ads shows no sign of slowing down, as marketers expect their overall social media spending to increase 62% in the next five years. User experience represents the second largest spend category. This is consistent with other survey findings that customer experience spending has increased from 8.9% of marketing budgets three years ago to 15.2% at present.
However, these numbers hide a high level of diversity in mobile spending, as companies with 10% or more of their sales from the internet tend to outspend other industry companies on user experience, app development and video ads, but not display and social ads. Consulting allocates the most to social ads, at 35.6%, while the technology sector is a top spender on user experience at 26.5%. B2B companies focused on mobile spending to improve the user experience (20.6% compared to B2C companies at 14.2%) and B2C companies focused on display ads (20.8% compared to B2B companies at 13.5%). The table that follows reveals other differences:
Mobile Performance Challenges
Marketers are continuing to pour dollars into mobile, to reach customers on the device of their choice, increase engagement and drive faster purchase decision making, among other aims. In the February 2020 CMO Survey, CMOs rated mobile’s impacts as a 3.2/7 (on a scale of one to seven, with one meaning not at all and seven meaning very highly) when asked to rate mobile marketing’s contributions to company performance, an increase of 33% since the question was first asked in 2016. The greatest impacts are observed for companies with more than $10 billion in revenue (4.2/7), likely because they are pouring in more resources to unlock mobile’s potential, and for companies with more than 10% of sales over the internet (4.1/7), which likely have developed stronger capabilities converting mobile impressions to mobile sales.
Despite these consistent gains in mobile’s performance, there is considerable opportunity to improve further. What are the biggest barriers faced by marketers? Here is what we learned in the February 2020 CMO Survey and what steps marketers might take to increase mobile marketing effectiveness.
Challenge No. 1: Tracking Customers Across the Mobile Journey
What is the underlying problem?
First, customers take many different paths on their way to purchase. Marketers constantly analyze data to fine-tune their approach, but are challenged with an ever-growing set of new pathways and new influences. Accurately capturing the most common paths (both online and offline) and categorizing customers accordingly is a moving target. Second, capturing the correct data is a challenge. Marketers can start by acquiring the right customer data from channel partners or from different internal departments that “own” a critical piece of customer or sales data. Even for those lucky enough to get all the data they require, legacy technologies and outdated systems can make integration and analysis very challenging. While centralized CRM systems help, rarely do they sufficiently integrate critical offline data. Third, mapping the customer journey requires significant investment and buy-in across the organization. Convincing sales and account management of the importance of CRM data management or getting the finance department to invest in integrating real-time financial data takes leadership and resources.
To tackle this challenge:
First, work to determine the most frequent paths to purchase and build out personas to capture different approaches. This analysis can include observation, experiments, surveys and the use of big data tools. Marketers should also have a solid understanding of moments of truth, pain points and delights across the offline and online customer journey to understand how different segments are influenced differently along the way. Second, assess the service blueprint and understand how your organization is structured to track customers along these journeys. Which internal and external partners own the data across these common paths? How well equipped are current IT solutions and databases to capture this data? Third, advocate for cross-functional collaboration and encourage leaders to challenge a culture of siloed data “ownership.” Finally, prove ROI to business partners. To garner cross-functional buy-in, marketing needs to show partners how customer journey mapping will benefit them. One example of this is the use of “lead scoring” to assign a numeric value to customers based on their position in the customer journey. This information is particularly valuable to sales in order to know when customers are in the “buying zone,” but often can’t be generated without the accurate capture of CRM data initially provided by sales.
Challenge No. 2: Insufficient In-House Expertise to Manage Mobile Marketing
What’s the problem?
Results from the February 2020 CMO Survey found that companies continue to approach the development of new marketing capabilities by building them on their own—57.9% of firms report they build new marketing capabilities by training current or hiring new employees with needed skills. However, this may be limiting performance as companies waste time and resources training in-house when a partnership would allow them to get to market faster and leverage external expertise to avoid predictable challenges. Second, the mobile landscape is rapidly evolving. As new channels and modes of entertainment gain relevance, expertise can easily become obsolete.
To tackle this challenge:
Find and integrate the right partners. The February 2020 CMO Survey found that CMOs are leaning heavily on external agencies for social media, with almost a quarter (24.1%) of activities performed by outside agencies. The process learnings that companies used to select social agencies should be leveraged to find mobile partners. Better yet, look for partners who can do both mobile and social. This increases integration and improves efficiency.
Challenge No. 3: Unclear Objectives for Mobile Marketing Strategy
What’s the problem?
Given mobile’s evolving character, developing and executing a mobile marketing strategy can feel like a never-ending game of catch-up, causing marketing departments to develop and implement strategies before they are clear on objectives.
To tackle this challenge:
Don’t try to boil the ocean. Instead, pick an area of focus. Results from the February 2018 CMO Survey suggest that mobile has the most positive effects on customer engagement and delivery of brand message and weaker effects on customer acquisition and retention. Making the connection between mobile and purchase will ultimately need to occur, but that is largely reliant on your ability to map the customer journey.
Challenge No. 4: A Weak Link Between Mobile and Broader Marketing Strategy
What’s the problem?
Similar to social, mobile often resides in departments outside of marketing—for example, in IT—or it is spread out across agencies. Budgets may be independently developed and allocated. All of these can disrupt making the mobile strategy a seamless part of the firm’s marketing strategy. Unclear objectives (see No. 3) worsen this if it’s unclear what mobile is trying to accomplish.
To tackle this challenge:
Convince leaders to co-locate mobile within marketing. In particular, ensure mobile managers work closely with the strategy side of marketing and develop mobile budgets as part of marketing’s overall budgeting process. Don’t get distracted: 81.7% of marketers replied that they do not “think the opportunity to pursue digital marketing opportunities has drawn your company’s attention away from marketing strategy fundamentals” back in the August 2018 CMO Survey—we hope the same holds these days. Keep focused on your activities.
We predict that 2020 will be the year of both mobile and social marketing as captive consumers suddenly have hours more available for online browsing and shopping. Certainly, it will be challenging for many consumer-facing, presence-based industries to make a profitable connection.
For CMOs in many industries, this is the year to get it right: to build relationships with consumers during a challenging time, demonstrate mobile’s contribution to revenue and fully integrate mobile (and social) into the marketing strategy and playbook. Focusing on key marketing fundamentals will help them achieve these goals.
Read the February 2020 CMO Survey. The CMO Survey is sponsored by Deloitte LLC and Fuqua School of Business, Duke University. Holly Larson contributed to this post.
Photo by Negative Space via Pexels.
Christine Moorman is T. Austin Finch Sr. Professor of Business Administration, Duke University, USA, and Founder and Director, The CMO Survey.
Torren McCarthy is a second-year MBA student from Duke University’s Fuqua School of Business, with concentrations in marketing and decision sciences.