Introduction

How do you define mobile?

If you answered “mobile phones, smartphones and tablets,” you’d be so 2010.

Today, we see what Brian Vellmure, executive consultant, keynote speaker and award-winning syndicated blogger, calls “the digitization of everything.” As he explained, “More and more of our lives take place in a digital format. Where we go. Who we know. What we eat. What we buy. What we think. Who we are. All are transitioning into the digital world.”

Consider the array of new people-related digital technologies. Wearable devices, such as Fitbit and Jawbone UP, allow users to track daily activity, calories burned, sleep and weight, then upload this data wirelessly and see progress on an online and mobile dashboard.

We’re also seeing more digitization of “things.” For example, Nest is an automated thermostat that learns users’ heating and cooling preferences over time. FedEx uses sensors to track things like a package’s temperature, movement and condition of goods to make real-time adjustments.

All of these digitized devices are becoming increasingly networked. Said Vellmure, “Volvo is experimenting with a device that measures road friction. Seventy percent of accidents are caused by slickness on the road. Sensors can detect and share that information with other cars and drivers to improve road safety.”

With new mobile technologies coming to market at a breakneck pace, how do marketers keep up? How can they take advantage of new technologies to develop better relationships with their customers and deliver more value?

The key to making sense of mobile is analytics.

This conclusions paper examines trends in mobile adoption, user engagement and commerce to look at how marketers can use analytics to evolve their mobile strategy and improve customer relationships. It was developed from a recent webinar given by Vellmure and John Balla, Principal Marketing Specialist for Customer Intelligence at SAS, and produced by the American Marketing Association. During the webinar, Vellmure and Balla also polled audience members about their use of mobile technology and analytics in their marketing efforts. We include key poll results in this paper as well.

Mobile Adoption Trends

When we look at research into overall mobile growth trends, one of the most striking insights is that adoption rates are not linear – they’re exponential. Figure 1 shows mobile device adoption trends compiled by BI Intelligence. The chart reveals that we’re already into the growth trajectory for smartphones, tablets and the Internet of Things. That growth is expected to continue for the next several years.

[Download PDF to see Figure 1]

“If you go back just eight years to 2006,” Vellmure observed, “none of these things were even on the map. If we fast forward, we’ll see significantly more change over the next eight years. Five years from now, we’ll be talking about new things. The pace of change is accelerating, and the way that our customers communicate with us and with others will continue to change. We need to shift our strategies to adjust to these realities."

Vellmure predicted that among the changes, we can expect to see “a tighter integration between the digital and the physical and between humans and technology.” One illustration of this trend, shown in Figure 2, is a sensor that acts like a tattoo and gathers real-time biometric information. Similarly, Google has a license to embed a camera in a contact lens.

[Download PDF to see Figure 2]

It’s no longer far-out science fiction to consider that soon humans might even be able to use digital technology to transport themselves to distant locales. For example, Facebook recently acquired a company called Oculus, which is known among tech enthusiasts for virtual reality. During the announcement, Facebook CEO Mark Zuckerberg explained that he envisions people using Oculus technology not to visit virtual worlds, but to immerse themselves in physical places. A student might attend a distant class or visit friends on vacation for a few minutes.

Mobile in the Enterprise

How are enterprises using mobile today?

The simple answer,” said Vellmure, “is that mobile use is becoming more prevalent. A growing share of corporate employees are using mobile to do real work. Thirty-seven percent of employees are using mobile for more than 60 minutes per day.” Seventy percent of respondents to the poll conducted during this webinar said that mobile is important to their organizations.

[Download PDF to see Poll Results Image]

While mobile is employed for many purposes, Vellmure observed that there are two primary uses. “First, mobile is becoming the primary gateway to communication, commerce and sharing. It keeps everyone connected. Second, mobile is becoming a human sensor that can provide enterprises with a great deal of rich information about their users. Mobile tells everyone with access to our data who we are, what we’re doing and where we’re going. Alex Pentland, a computational social scientist at the Massachusetts Institute of Technology and Director of the Human Dynamics research group at the MIT Media Lab, has performed considerable research using sensors to track how people move, what they do and where they go. As mobile phones and smartphones became more widely adopted, Pentland quickly realized that these devices are sensors that tell us about human behavior. He now uses mobile phones to gather much of his data.”

User Engagement With Mobile

Users are becoming increasingly engaged with and dependent on mobile. On average, cellphone users check their phones 150 times a day. A recent study by Flurry showed that “regular users” increased their usage by 23 percent between 2013 and 2014. Mobile usage by “super users” more than doubled over the same period. And “addicts” who use more than 60 apps a day have increased their usage more than twice as much as super users.

Vellmure observed, “We can’t live without our mobile phones.”

Users are experiencing withdrawal symptoms when they’re unable to use their phones. Said Vellmure, “A research organization in Britain coined the term ‘no-mo-phobia’ after it found that close to 60 percent of respondents to a recent survey claimed to experience anxiety when they don’t have their mobile phone.”

Another way to understand user engagement with mobile is to look at Facebook’s mobile strategy. Vellmure explained, “Over a billion people use the Facebook mobile app. More than 300 million of them use mobile exclusively to interact with Facebook. Today, about 60 percent of Facebook’s revenue comes from mobile.”

Recently, Facebook paid $19 billion for a small startup with 55 employees called WhatsApp that provides instant messaging for mobile devices. To put this in perspective, $19 billion is the size of the entire US coffee industry. Said Vellmure, “Facebook paid that amount because they understand where people’s attention is and the power of networked communication.”

Mobile Commerce

As customers increasingly depend on their mobile devices, it should come as no surprise that these devices are becoming an integral part of the purchasing process. But it’s important to note that while mobile is an important tool, it’s just one of many tools and channels that consumers use to help make choices.

Explained Vellmure, “Most buying decisions start with search, which customers conduct from a desktop or mobile device. When consumers are out and about, they search for the product nearby. This usually leads to a visit to a retail store, especially for higher-ticket items. Once they’re in the retail store, they engage in ‘show-rooming,’ in which they use their mobile device to look at peer reviews and competitive pricing. In this scenario, mobile is critical, but it’s a fraction of the overall experience."

On the other hand, Vellmure continued, “People expect to use smartphones to access anything from anywhere right away.

According to a study by Google, 50 percent of users said that even if they like a business, they’ll go elsewhere if their website or app isn’t mobile friendly.”

Trends in Mobile Ad Spending

As consumers and businesses increasingly engage with mobile and use it to support their purchase process, it should come as no surprise that marketers are paying more attention to mobile advertising. Even marketers who don’t use mobile advertising personally understand that mobile ad spending indicates attention and conversion.

Figure 3 compares a projection of US mobile ad spending made in 2010 with one made in 2013. These projections matched actual figures until 2011. But over the past three years, a large disparity developed between the original projection and actual adoption. For example, the earlier projection pegged mobile ad spending for 2012 at $1.5 million; the more recent chart shows that actual spending in 2012 was $4.11 million. Said Vellmure, “As we observed earlier with regards to the adoption of mobile devices, we underestimate the pace at which these new technologies are adopted and can be leveraged for benefit.”

[Download PDF to see Figure 3]

Projections indicate that mobile ad spending globally is poised for dramatic growth. Said Vellmure, “Mobile ad spend is still small relative to overall ad spend or digital ad spend. But as people spend more time using mobile devices, ad spend and ad engagement will expand significantly. eMarketer forecasts that mobile ad spending globally will reach $77 billion by 2017. Gartner predicts it will be $42 billion by 2017. No one knows."

Marketers’ Adoption of Mobile

Although mobile is on the radar for most organizations, they’re still in the early stages of using it for marketing. The results from the poll taken during the webinar found that only 16 percent of respondents view mobile as a core part of their marketing strategy, while 43 percent said it was a small part. Nine percent had no current mobile plans.

The first step for most marketers in the mobile arena, said Vellmure, “is to be sure that their website is responsive and that people can engage with them there."

[Download PDF to see Poll Results]

Analytics: The Key to Achieving Results From Mobile

It appears that marketers who are achieving tangible ROI from mobile are very good at using analytics to make sense of structured and unstructured data.

Increasingly sophisticated technology is available to support these efforts. Exponentially cheaper storage and more powerful processors are driving a dramatic shift in every industry’s ability to take advantage of analytics. “Very advanced technology is available that allows marketers to use analytics to engage their audiences on mobile devices,” said John Balla, Principal Marketing Specialist for Customer Intelligence at SAS. “These solutions integrate a real-time decision engine with an ad-serving platform and a campaign management platform to enable organizations to contact customers according to their individual preferences and engage them in real time. “

The ability to take advantage of analytics is dramatically changing marketing because it allows companies to make datadriven decisions.

Traditionally marketing was an outward-directed activity. Marketers had a product and communicated the features and benefits using tactics such as email blasts. Said Balla, “The world has changed with the advent of social media, the proliferation of channels and the growing sophistication of customers. It’s now omnidirectional. You can make a variety of offers to customers. You can reach them on the web or with email, traditional mail, point of sale or a variety of social media, tablets and phones. Customers may prefer one or more of these channels. In this environment, reaching customers becomes exponentially difficult. The challenge becomes how to engage with customers with the most relevant channel. Mobile simply adds complexity to this already-complex environment.”

“As customer attention becomes increasingly fragmented,” Vellmure said, “organizations need to use data and analytics to engage with them and tell amazing stories in a unique and creative way.”

Varying levels of analytics are available to help answer complex marketing questions:

• At the most basic level,reporting systems can tell marketers what happened.
• More complex, ad hoc reports allow marketers to search for answers.
• Drill-down capabilities enable marketers to troubleshoot problems.
• Statistical analysis will tell marketers why something is happening.
• Forecasts explain what will happen if the trends continue.
• Predictive modeling goes into what will happen next.
• Optimization enables marketers to see the best that can happen.

Tremendous opportunities exist for improvement since most of the organizations in the audience polled during this webinar are still at the earliest stages of adopting analytics. A little over half use dashboards for reporting, and another fifth track data with spreadsheets. Only about a fifth are leveraging analytics to predict outcomes or optimize strategy.

[Download PDF to see Poll Results]

Yet organizations clearly understand the need for analytics. Although full adoption remains low, with only a small percentage of webinar poll respondents using predictive analytics as a core part of their current process, just over a third of respondents are experimenting with using predictive analytics to drive customer engagement.

[Download PDF to see Poll Results]

Using Analytics to Optimize Marketing Results

A quick example will illustrate how marketing organizations can take advantage of optimization to achieve the best results from their marketing efforts.

This example compares three scenarios. Each has three offers and nine customers. The example assumes that we’re allowed to send each offer to three customers.

“The first potential approach,” said Balla, “is to use campaign prioritization (Figure 4) to maximize projected profit. Here we pick the offer that promises the best results in sequence, starting with Offer A, and then selecting the best results for Offer B and Offer C consecutively, with the goal of maximizing revenues in all three columns of data. So, taking a campaign prioritization approach, the best combination of offers leads to $655 in revenue.”

[Download PDF to see Figure 4]

“The second approach is customer prioritization,” Balla continued. “In this case, a marketing manager wanting to maximize revenue starts by offering the highest revenueproducing offer to Customer 1, then proceeds to Customer 2, and so on through Customer 9 to maximize the revenue for each of the nine rows of data. Operating on this basis, you’d end up revenues of $715, as shown in Figure 6 – definitely an improvement over campaign prioritization.”

[Download PDF to see Figure 5]

The third approach is campaign optimization. Said Balla, “In this case, we use analytics to optimize the offers to produce the highest overall revenue by simultaneously considering offers and customers. By using optimization in this example, you can achieve the highest overall revenue, $745 – a marked improvement over campaign prioritization or customer prioritization.” And since the outcomes are mathematically derived, the model can be as simple or complex as the market in which you’re operating, including multiple factors, such as propensity to respond or resource constraints. So if you’re maximizing profitability, you can add budget constraints or cost structures to your model to optimize overall profitability.

[Download PDF to see Figure 6]

As we can see from this example, applying analytics to a multichannel scenario that includes mobile allows marketers to figure out – based on how customers describe themselves and self-select, and marketers’ own business constraints – the best ways to engage with their audience across all channels. This approach can be used to determine the most effective channels regardless of how many customers an organization has.

An Example of Mobile Analytics in Action

The National Football League provides a good example of how organizations are looking to use mobile analytics. Said Balla, “The NFL’s popularity is at an all-time high. But over the last few years, stadium attendance has declined because the in-home experience has become so good. The NFL is looking to invest in creating an amazing in-stadium experience. One of their new initiatives is to provide free Wi-Fi in all their stadiums. Along with that, they’re using analytics to determine what people are doing inside the stadium. When a great play happens on the field, how do people respond? Do they post on social networks? Do they share with other people in the stadium? Who do they know in the stadium? When do they get up and go to the restrooms? Buy concessions? What specific ads drive their behaviors? The NFL is using analytics to look at that data to differentiate the in-stadium experience.”

12 Key Questions for Building a Mobile Strategy

Most marketers are still in the early stages of mobile marketing. As you begin your journey, Balla and Vellmure recommended that you ask these 12 critical questions to help you chart the right course:

1. Who are your customers? It’s important to start with the basics and keep this understanding at the center of your mobile strategy. Said Vellmure, “This isn’t about mobile; it’s ultimately about people.”
2. What are your customers trying to accomplish? Said Vellmure, “Your customers, regardless of industry or service or product, want two things from vendors. They want vendors to help them accomplish what they’re trying to do, better, faster and cheaper. And/or customers want vendors to help them feel good or get some kind of positive emotional experience from engaging with the organization, whether it’s a product, service or entertainment.”
3. What are your customer touchpoints? Said Vellmure, “It’s easy to look at the world through a mobile lens. But mobile is just one touchpoint across a growing array of digital experience and physical-digital intersection. We need to understand mobile’s place and how it fits with the other pieces.”
4. What part does mobile play in your customers’ interaction and experience with you?
5. How do you expect customers’ use of mobile to change and evolve over the next 12 to 18 months?
6. How are people in general using mobile to achieve their goals? How are your customers doing the same?
7. How can you use mobile to learn more about your customers?
8. How can you use mobile to learn more about what they’re trying to accomplish?
9. How can you use mobile to provide greater value in the context of their journey?
10. How can you use mobile to reduce friction to allow customers to achieve their goals better, cheaper and faster?
11. What additional utility can you offer customers? Consider information exchange in addition to revenue.
12. Is it possible to predict what customers and prospects will want next and offer it to them?

In the end, Balla said, “This is a journey. What happened over the last eight years was dramatic. What will occur over the next three or four or five years will be equally dramatic – if not more so. Our job as marketers hoping to orchestrate engagement and improve the value we create with our customers is to get better every day.”