Economy Puts Mobile Marketing on Hold

NEW YORK If all went according to plan the day after Thanksgiving, JC Penney customers were roused with a wake-up call. The service was provided free as part of a Black Friday mobile marketing push. Consumers had been invited to come to to sign up for the call, SMS shopping tips and sales alerts.

This is a prime example of how this much-hyped marketing channel is helping companies like JC Penney, Subway and Coca-Cola court consumers through their cell phones and PDAs. The only problem: The economy is in free fall, leaving some marketers leery of dumping dollars into an unproven medium.

The fledgling mobile channel has in many ways mirrored the evolution of online marketing. Experts touted it as the next big thing well before an infrastructure was put into place to support such grand proclamations.

Today, the advent of smart phones, better cooperation from carriers and the consolidation of mobile vendors has mobile poised to reach its vast potential. But it may take longer than expected to reach. Whereas eMarketer projected the sector to explode from $1.7 billion in U.S. ad spending to $2.8 billion, many analysts see 2009 as the year mobile spending is put on hold.

Forrester Research analyst Neil Strother forecasts the segment to be flat or up slightly. “It’s still part of the experimental budget. I’m not wildly bullish [for 2009],” he said.

Many companies that have already invested in the medium will continue to spend. However, “a whole lot of the companies that haven’t done it won’t jump in,” said Strother.

Brands like “Coke that have so much momentum won’t be scared away,” said Nic Covey, director of insights for the Telecomm Practice Group at the Nielsen Company, which is Adweek’s parent. “Brands still sitting on the sidelines are there for a variety of reasons, not just expense. Any reluctance they have will be heightened in today’s market.”

Others are optimistic that spending will continue to accelerate, pointing to the fact that mobile is measurable and return on investment can be calculated unlike with most traditional channels. “In the current economic environment, smart marketing teams will likely move away from generic branding campaigns towards trackable, direct response channels, one of which is mobile,” said Jim Shilale, vp of business development at mobile solutions provider 2ergo.

Text messaging, makes up the lion’s share of marketers’ spend. eMarketer has it pegged at $1.47 billion for 2008. However, display ads on the mobile Web are coming fast, per John Hadl, founder of BrandinHand, which counts Procter & Gamble among its clients. Entertainment companies make up 35.1 percent of the current impressions, per Nielsen, followed by Web media companies (20.2 percent) and financial services (14.4 percent).

Given the miniscule amount of spend currently flowing into the channel, there is no way but up. Strother estimated mobile makes up about 1 percent of marketers’ budgets: “There is so little to cut.” According to Forrester, 35 percent of mobile campaigns cost under $10,000 and that only 7 percent of mobile campaigns have budgets higher than $1 million. “Mobile is so small and there will be enough marketers who will test mobile for the first time in 2009 that we will see a lift in total spend,” said Hadl.

Indeed, new marketers are still entering the category. Zicam this month will launch its first mobile app. The Zicam Cold & Flu Companion allows consumers to enter their ZIP code to find out the percentage of sick people in the area. Those in the mobile arena are banking on such new entrants to keep the category healthy.

“There are more than 3.3 billion devices worldwide, compared to only 1 billion PCs,” said Laura Marriott, president of the Mobile Marketing Association. “It is only a matter of time before mobile is the ‘first screen’ with its always on, always available status.”