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Mobile Ad Budgets – Where’s the Money Coming From?

Where Is The Money Coming From?
by Mark Walsh for MediaPost

One of the more intriguing pieces of advice handed out during MediaPost’s Mobile Summit last week was Eric Bader’s exhortation to look elsewhere besides digital budgets to fund mobile campaigns. He argued that because digital budgets were already small–between 5% and 8% of a brand’s ad spending–it wasn’t a good place to look for extra dollars.

Instead, those who champion mobile as an emerging ad vehicle should look to more established but potentially vulnerable areas like print, email and traditional direct marketing. “Chasing digital dollars for mobile is nuts,” said Bader, chief strategy officer at Initiative. The problem is that mobile is typically considered an extension of digital spending, not a separate format. So any money diverted to the category comes from online budgets.

Executives at other agencies agreed with Bader but indicated it’s not so easy to wrest funding from other media categories .”It would be ideal for mobile to take budget from other media but it often plays out differently. It’s usually taken out of digital budgets,” noted Adam Kasper, managing director, digital innovation at Havas Digital’s Media Contacts. Naturally, digital groups within agencies don’t want to cannibalize budgets for search, display or social media to fund expansion into mobile marketing and advertising.

But even with a separate mobile unit in Mobext at Havas, the dollars for mobile end up coming from digital. “Having a mobile unit allows us to go in and pitch [business] separately, though, where if we were selling it through the digital group it would be impossible to pull budgets from other media,” he said.

Brenna Hanly, who holds the title of “mobile catalyst” at Boston-based agency Mullen’s newly formed mobile group, confirmed mobile dollars typically come from digital as well as email and direct marketing budgets. Because the agency doesn’t view mobile as a separate entity “we also recommend taking a small percentage out of venerable media vehicles like print and out-of-home to fund the mobile activation,'” she said. You can always ask.

The best hope for mobile may be that as spending overall shifts from traditional to digital media, it will benefit indirectly from the trend. Preliminary results from a Mobile Marketing Association survey released in June found that U.S. marketers plan to increase spending on mobile 124% by next year, from $2.3 billion to 5.5 billion. That would make the allocation for mobile roughly 4% of overall marketing budgets.

That total includes paid and unpaid mobile segments including SMS, mobile sites, location-based services, mobile video and mobile email. Other projections tend to be lower. Forrester, for instance, predicts U.S. spending on mobile marketing will grow from $561 million this year to $748 million in 2011. Where will your mobile budget come from? Do you even have one?

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