Mobile Marketing Economic Impact Study Commissioned by the Mobile Marketing Association Directed and produced by: Peter A. Johnson and Joseph Plummer With the assistance of Marina Bregman, Barbara Clark and Douglas Clark In Partnership with IHS / Global Insight This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty, whether express or implied, is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the authors do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © Copyright MMA/mLightenment/IHS Global Insight, 2013. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the copyright holders. Acknowledgments The authors would like to thank the hundreds of marketers, agencies, supplier firms, public policy experts and academics in the mobile marketing ecosystem who generously answered our detailed survey questionnaires, offered their experiences and insights during confidential interviews, and replied to our email inquiries. We regret we cannot thank them individually by name, we promised them all confidentiality. Special mention goes to our partners in economic impact research at IHS Global Insight, particularly Mike Raimondi and Scott Fleming and their associates in the economic consulting group. We also would like to thank current and former staff of the Mobile Marketing Association for their very helpful administrative assistance with fielding our surveys and in helping to arrange some of our interviews. Finally, the principal author gratefully acknowledges additional research assistance provided by Elizabeth Margid and Scott Aronin. Table of Contents Executive Summary ..................................................................................................................... 1 Understanding Mobile Marketing ............................................................................................. 13 Expenditure on Mobile Marketing Communications and Related Services .............................. 28 Mobile Marketing’s Sales Impact on the US Economy ............................................................. 49 Mobile Marketing’s Employment Impact .................................................................................. 80 Consumer Data Best Practices and Privacy ............................................................................... 84 Social Benefits from Mobile Marketing ..................................................................................... 95 Conclusion: From Mobile-Enhanced Media to a Mobile-Enhanced Economy ........................ 100 Methodology: Measuring and Modeling US Mobile Marketing Communications .................. 104 Appendix I: Summary Tables for Expenditures, Sales and Employment Impact by Industry .. 112 Appendix II: Definitions of Major Industry Groups .................................................................. 117 Executive Summary The Economic Impact of Mobile Marketing In the United States The pages that follow report the results of a six-month investigation by the principal authors into the size and scope of the impact of mobile marketing on the United States economy, conducted at the behest of the Mobile Marketing Association.1 We found that the mobile marketing ecosystem… • …exhibits remarkable levels of investment for an industry so young: $6.7 billion spent on it by client-side marketers and retailers across all industries in 2012, a figure likely to reach almost $20 billion by 2015; • …contributes even more impressive levels of incremental output to the U.S. economy: $139 billion in 2012, and reaching $400 billion by 2015, with at least 85% of this sales impact taking place in “off-line”, “brick and mortar” locations; • …currently sustains over a half million jobs in 2012, and will likely support upwards of a million and a half workers by 2015, including both direct and indirect employees; in fact, every single employee in a direct mobile marketing communications role will support over 23 workers in non-mobile occupations throughout all 50 states and the District of Columbia in that year. In interpreting these facts, the reader should bear in mind that these figures of increased economic output and employment are entirely comprised of supplemental U.S. income and jobs that would not exist but for the successful exchange of marketing communications through mobile media. We would be remiss if this first recital of mobile marketing’s quantitative achievements somehow failed to pay tribute to what we consider its no less impressive qualitative accomplishments. Every day that we worked on this project, we could not help but notice how the very industry we were studying so intensively was so busily transforming our society extensively. We would wake in the morning to hear one of its new gadgets lauded as the object of fascination on a radio broadcast; stepping outside our door, we saw the object of our study in constant use by our fellow pedestrians and commuters (heads down, hands and device forward, ear buds in); its 1 The Mobile Marketing Association commissioned this study in the summer of 2012, but the research was conducted entirely under the independent direction of the two principal authors from that moment forward. 1 productivity tools indispensable to our own collaboration; its capacity to reinvent itself seemingly every few months dizzyingly if intoxicatingly relentless. But whether one uses hard numbers or soft impressions, the mobile marketing ecosystem presented us with a picture of economic vitality that in our experience is almost certainly unequalled anywhere else in the nation. It is that picture we briefly summarize in the next few pages, and fill out in the sections that follow. (Note: additional state-level information and information about individual industries can be found in the spreadsheets that accompany this report.) Study Objectives Our main goals in conducting this research were to: • Provide the mobile marketing ecosystem with its first objective and comprehensive picture of its own size and contribution to US economic performance; • Provide business decision-makers with data that can help them gauge overall trends in mobile marketing communications investment, sales impacts and employee resourcing in their industries; • Take a snapshot of the industry’s current consumer data collection and privacy policy landscape so as facilitate forecasting of economic impacts and provide policy makers with a baseline from which to gauge the economic consequences of potential legislative changes. Research Design: Expenditure, Sales, Employment mLightenment’s approach measures mobile marketing’s economic impact consistent with mobile’s core value proposition as a marketing medium, namely its ability to increase sales (and by extension, employment) for client-side industries that invest in its services. This required us to quantify three key metrics: • Expenditure by industry on Mobile Marketing Communications and related services • Sales Impacts (incremental net top-line revenues) to industry in any location resulting from marketing communications accessed by end-customers via their mobile devices. 2 2 “Any location” means sales impacts could take place either “on-line”, as mobile-enabled digital purchases (ie mCommerce ) or in the offline, brick and mortar world, such as in a convenience store, doctor’s office, or automobile dealership; all such real-world venues we group together under the umbrella term “mShopping.” 2 • Employment Impacts comprising both advertiser employment (supported directly by industry expenditure on mobile marketing communications or related services); and seller employment (supported by the increased sales revenues resulting from mobile marketing communications.) In addition, we calculated mobile’s “marketing impact ratio” (MIR), which is an industry’s total media sales impact divided by its total media expenditure. This metric allows us to compare the efficiency of marketing in a given media on a per-dollar of expenditure basis across industries, regardless of industry size. (See below, and methodology section of the main report.) Expenditure On Mobile Marketing Already Significant & Will Grow Strongly In 2012, mobile marketing communications expenditure in the US we estimate to be approximately $6.7 billion. This includes spending on three principal marketing communications categories of interest: mobile advertising, mobile direct response / enhanced traditional media and mobile CRM. Within the overall mix of mobile marketing communications, Mobile Media Advertising will remain the largest single component of spending over the forecast period, reaching $9.2 billion by 2015. But expenditure on mobile marketing communications is not limited merely to advertising in on-device media. Expenditure on mobile direct response (DR) advertising or mobile enhancements within non-mobile media is projected to grow the fastest, growing over