REDMOND, WA – The keynote speaker at a Microsoft workshop said that mobile is the most effective advertising medium to drive consumers through the purchase funnel, from reach, targeting and engagement to viral spread and transactions.

Mobile advertising is already a multibillion dollar industry, according to a September Zenith Optimedia study, and by 2013, there will be more people accessing the Internet via mobile devices versus desktop PCs. More than 50 percent of the devices sold by carriers in the U.S. are smartphones, leading to engagement on mobile that is quite high—consumers are spending almost 5 minutes of average session time with mobile campaigns.

“Mobile is not just a high-volume personal fashion statement that is always on you, but it is also location- and context-aware, which makes it different from other mediums,” said Chetan Sharma, president of Chetan Sharma Consulting, Issaquah, WA. “Mobile is also unique in that it has built-in payment mechanisms.

“Looking at mobile, the PC Internet, TV, print, radio and outdoor, mobile is the most effective advertising medium due to its unique characteristics,” he said. “My belief is that over the long haul, mobile is the most effect advertising medium in terms of reach, targeting, viral spread and audience engagement, all of which lead to transactions.

“Next year mobile commerce will make great strides, with NFC-enabled handsets [in various markets] and greater retail point-of-sale integration.”

Mobile drives consumers through purchase funnel
Mr. Sharma emphasized mobile’s unique characteristics—mobile devices are always carried by consumers—mobile is instantly viral, location- and context-aware and always on.

Mobile has the unique input experience of cameras, touchscreens, gesture and voice, and it has built-in payment mechanisms, from credit cards via third-party integration to carrier billing and contactless mobile payments.

Sprint recently announced its mobile wallet, and credit card issuers and financial institutions such as Visa, MasterCard, Citi and American Express have made mobile payments a priority.

While sales of mobile content have been around since the early days of ringtones and wallpapers, a growing area is enabling one-click purchases of non-digital goods.

While many players have been waiting a while for mobile commerce to reach the mass market, the various players of the admittedly fragmented mobile financial services ecosystem are finally starting to come together.

“Once the POS integration is there, you will see rapid adoption of mobile commerce, whether it be carrier billing or credit cards integrated on your mobile phone,” Mr. Sharma said.

While reach, targeting, engagement and viral spread are key elements of advertising, the most important element is driving transactions.

“Are we there yet in mobile? Clearly no, but as a whole the industry is moving in the right direction,” Mr. Sharma said. “The standardization of mobile advertising measurement is not developing as quickly as it should, but it’s coming along and mobile makes the other channels more accountable.

“Mobile is quite successful in helping marketers reach their target audiences, and big brand advertisers are moving a lot of their traditional advertising dollars from TV and print to digital, especially mobile,” he said. “Today mobile is much more effective when integrated into other channels, but in some markets mobile is the only digital channel to reach consumers, so stand-alone mobile campaigns outperform all other channels.

“You have to focus on what’s my goal, what do I want to do, which users do I want to reach, what is their device base, then work backwards from that.”

Mobile: the big picture
In North America, penetration is approaching 100 percent, with 3G network access at 50 percent, access to mobile data at 60 percent, ARPU at $50—$75 for smartphone users, $40 for feature phone users—and data revenue at 35 percent of carriers’ overall revenue.

Mobile spend in doubling year-over-year in the U.S., according to Mr. Sharma, who said that mobile advertising spend is increasing more in the U.S. than any other market worldwide.

Location-based services—and location-aware targeting—are increasing the relevancy of mobile ads, and making them more immediately actionable.

“Location is the primary way for advertisers to deliver context, which is having a ripple effect on traditional mobile advertising as well as mobile social network-based campaigns driving check-ins and viral spread.

The market is experiencing significant demand for local mobile advertising based on location, and that is set to increase significantly going forward.

“The traditional way of thinking about advertising, you just don’t know where consumers are going to start, so the reason mobile is critical is that it impacts awareness, engagement, consideration and loyalty,” Mr. Sharma said. “Mobile is right in the middle of all of these interactions across all channels.

“Mobile gives you a lot of targeting capabilities, and it is very easy to build personas of consumers,” he said. “Over time both explicit and, even more importantly, implicit personas are going to be built very effectively in mobile as users tell you about themselves and their preferences.

“Having the ability to understand users’ preferences and behavior on an ongoing basis is essential to effective advertising.”

Context drives everything, per Mr. Sharma. Context is the Holy Grail of advertising, because the mote marketers know about consumers, the better they will be able to drive transactions that benefit their bottom line.

Location is driving a lot of contextual analysis and targeting today. Targeting helps eliminate wasteful advertising, letting brands focus only on users that are most likely to be interested in the product or service being offered.

“The benefits of targeting enable marketers to show the relevant ad at the point of intersection rather than spread it far and wide and hope that it will work,” Mr. Sharma said.

Mr Sharma provided five key elements to success in mobile: reach, targeting, engagement, viral spread and transactions

“The transaction element is very important, because advertising has to show a correlation to how it impacts the bottom line,” Mr. Sharma said. “If you can track from first engagement to actual sales, you are in a much better position to change things in real time and optimize.

“Mobile enhances advertising for all channels—it won’t replace other channels, but it makes them more accountable and more effective,” he said. “Brands are taking notice—we’re seeing advertising budgets north of a million dollars per mobile campaign.”