Quantifying the Full Value of Mobile Advertising

As the multi-screen world continues to grow, advertisers are focused on ways to measure the “full value” of their mobile efforts.  In other words, the connection between driving prospects from their phones to websites, stores, apps and across devices to determine how this translates into actual revenue generated from advertisers’ mobile campaigns.

Recent statistics from Google show that 90% of smartphone shoppers use their phone for pre-shopping activities, whether it is to find a location or directions, determine a store’s hours, make price comparisons, view promotions or to just browse the web.  While the specific context of a situation (i.e. where they are located) dictates which device a shopper will use, the mobile experience is transforming the way consumers purchase. The ability to search via mobile devices has become the starting point for the shopping experience, even while in the store itself.   In fact, studies show that “frequent mobile shoppers spend 25% more in-store than people who only occasionally use a mobile phone to help with shopping.”

Similar to quantifying any ad campaign (whether online or offline), one of the main challenges with mobile campaigns is attribution— tracking the revenue generated from an initial action, in this case a mobile click.

If a business only looks at the direct revenue from their mobile traffic, they are looking at skewed numbers that don’t tell the full story.  For example, if a business is spending $600,000 on mobile ads and converting 10K orders with an average order value of $30/order, the numbers will reflect a -50% ROI.

These numbers do not account for the fact that while customer purchases may originate from a mobile click they also convert through other channels (such as in-store, mobile sites, cross-device, apps or direct phone calls).  With the various “customer journeys” that a buyer may take it’s important to analyze the total revenue generated from a mobile campaign as determined by where each conversion starts and ends, not just the revenue from the mobile channel alone.

For a more accurate picture, let’s look at how a mobile campaign generates revenue beyond the initial click:

How do we get this number?

Advertisers need to assign a value to the various actions users take in response to mobile ads.   The value of each action is determined on a case-by-case basis using either actual or estimated data and often depends on the advertiser, their industry, etc.  Keeping this in mind, we can analyze the same investment of $600,000 and the actions that generate leads, app downloads and revenue, providing a holistic view of the advertiser’s mobile investment:

The numbers above now reflect the true value of mobile ads as they account for how mobile drives sales through all channels.

Using Google’s Mobile Calculator to Help Access the Full Value of Mobile

Google recently launched a new tool that helps advertisers with the exercise above to calculate how mobile drives sales to their business.  This calculator provides advertisers with a framework to analyze data (whether based on pure assumptions or derived from tracking sources such as Google Analytics or Adwords).

It is a simple tool that produces more directional data; however, it is extremely useful when analyzing how your mobile campaigns are truly generating revenue for your business.  The tool uses several variables (i.e. clicks from a mobile campaign, the percent of actual store visits from those clicking a “get direction” button, the percent of store visitors who make in-store purchases and an estimated AOV per sale) which are then tied to a dollar amount reflecting the approximate return from each variable.  When it all comes together, advertisers can review a number with a breakdown of the value derived from in-store purchases, phone calls, app purchases/downloads and cross-device interactions from their mobile campaign — the “full value of mobile” across all channels.

In Summary – Why it’s important to test mobile advertising

As the use of mobile grows every day, all businesses must take a broader look at the impact that mobile campaigns have on their business or they will be making decisions based on inaccurate and incomplete data.   Check out the new tool from Google to see how leveraging mobile advertising is worth the investment and will drive revenue to your business.

If you’d like to learn more about how Elite SEM can help with your mobile marketing campaigns feel free to email me directly at Michael@EliteSEM.com

Data and Examples for this post derived from Elite/Google Summit presentation June 7, 2013

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