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[28 comments]

Retailers Still Timid on Mobile Marketing

December 9, 2013

A survey of chief marketing officers at leading U.S. retailers found that stores remain divided on mobile marketing's potential and its ability to convert sales.

Overall, BDO's survey of 100 retail CMOs found that 38 percent are including mobile in their marketing strategy this holiday season, down from 50 percent in 2012.

At the same time, however, those who are embracing mobile marketing are ramping up their efforts. Last year, mobile comprised an average of 5.9 percent of retailers' overall marketing budget; this year, that number has jumped to 15 percent.

There is apparently less hesitation around social media, with 88 percent of retailers leveraging social media this season, comprising 14 percent of their marketing budgets, on average, up from 10 percent in 2012.

The reluctance around mobile marketing by many stores comes despite eMarketer's prediction calling for a 15 percent rise in mobile shopping volume this year. A lack of clear ROI was seen as one reason for the hold-up.

"I think retailers are indecisive," Natalie Kotlyar, a partner in BDO's retail and consumer products practice, told MediaPost. "There are an overwhelming number of mobile possibilities, and to a certain extent, the economy is uncertain. So it makes sense to me that they are thinking they will sit on the sidelines for now, and wait to see what works for others."

While m-commerce is growing, smartphones are still being used much more for research rather than actual purchasing. She added, "So retailers are stuck on that question: Is mobile creating brand recognition? Or is it creating demand and building sales?"

Finally, she said that while mobile marketing appears integral to any multichannel approach, "Omnichannel is easy to talk about, but very difficult to do," particularly with Big Data's challenges.

Traditional ads lead the way, with 41 percent of retailers investing most of their holiday advertising budgets on traditional print ads, followed by 29 percent planning to spend the majority of their holiday budget on broadcast.

Discussion Questions:

What do you think is driving the apparent reluctance by many stores to invest in mobile marketing? Are retailers missing an opportunity with their go-slow approach?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you agree or disagree that retailers are missing an opportunity to build sales with a go-slow approach to mobile marketing?

Comments:

What they don't get is that you must do both. They are comfortable with social media but not with mobile? They really do work hand in hand. Many people interact with social media through their phones. They also interact with offers from retailers through their phones. They may ultimately make their purchase on their laptop, desktop or tablet but it most likely started with their mobile device on the path to purchase.

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Zel Bianco, President, founder and CEO, Interactive Edge

The reluctance to invest in mobile marketing is coming from two areas: 1) Lack of quantifiable ROI and 2) Lack of understanding how to use the medium. These are the same reasons why many retailers were slow to embrace social media.

As more information becomes available about mobile marketing, and CMOs feel safer and therefore more comfortable using it, look for its use to become more widespread.

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Max Goldberg, President, Max Goldberg & Associates

It's a lack of understanding on how to best deliver an exceptional customer experience via mobile and probably the cost that accompanies it, right now. Early in the adoption cycle of any new technology, companies are hesitant because most don't know how best to approach it given there are few "experts" early in the lifecycle. In addition, costs are generally higher in the beginning.

Mobile is absolutely where shopping is headed so retailers should be taking on incremental initiatives here that will help them through the learning curve. The knowledge gained in making some controlled mistakes generally outweighs the investments, but finding a retailer willing to embrace making some mistakes in the name of increasing its understanding is the exception, rather then the rule.

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Bill Davis, Director, MB&G Consulting

If it worked, more would be doing it. I think the hype does not match the customer request, desire, or proof they want mobile ads on their phones. I quite expect the opposite.

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Bob Phibbs, President/CEO, The Retail Doctor

Retail marketing executives are spending where they see the numbers - the number of customers who have their app on their smart phones vs. the number of customers they can reach via normal advertising spend. I also think there is a bit of fear of showrooming if more of their customers use their phones while shopping. It is just a matter of time and knowing who your customers are that will make the change possible.

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Frank Riso, Principal, Frank Riso Associates, LLC

Mobile represents an important way to connect with consumers in context - that is, while they are near your store, potentially in the mood to shop. But rudimentary marketing that blasts text messages isn't always relevant.

Use of geo-fences outside the store, and technology like iBeacons inside the store will allow for better targeting, and the effectiveness will improve. The retailers that are that sophisticated are increasing investments and those that take a simplistic approach are left disappointed with the results.

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David Dorf, Sr. Director of Technology Strategy, Oracle Retail

It's lack of research because the results have not been analyzed on a wide enough basis thus causing this reluctance by retailers. I believe that retailers are missing an opportunity simply because of the amount of time people spend utilizing their smartphones! ROI is difficult to quantify, but number of impressions can be calculated and early adopters are ahead of their competition in this race to consumers' top of mind.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Retailers need to realize (quickly) that mobile is going to continue to grow. There have been barriers that have held back mobile purchasing, e.g. 1) one click purchasing, 2) screen size, 3) smart phone user base.

All three of these barriers are going away in 2014/15. Now is the time to focus on a mobile strategy, not after it takes off.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

It isn't that we don't want this technology, it is a generational thing. No offense to all the young business owners out there, but I need to make sure how all of this stuff fits into my business plan before I invest in it. Facebook is going well and we stay on top of it, and e-mail ads have been sent out for over ten years.

There are also security concerns, with charging something from our phone, and in general it is becoming overwhelming to some who are old fashioned in how they run their business. Making a guy like me obsolete is coming unless I continue to see what I need to be relevant. The core principles I learned will not ever change, because how customers are treated when they are in your store still matters.

Adding in the mobile and other high tech stuff takes time for people like me, and evaluating what is right takes time as well.

I am not hiding my head in the sand, but a blend of high tech to go with print, and Facebook ads will continue to keep my face out there in this crazy world, and give people a choice in where they want to shop.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

The consumer is not going slow. Shoppers are using their mobiles for research, price comparisons, looking for deals, and where possible, shopping and purchasing. Even "good old-fashioned" marketing emails are largely opened on mobile phones these days, just as many websites are being browsed on 5 inch screens. Retailers have no choice but to embrace mobile as the most frequent and convenient medium to connect to their shoppers.

Shoppers use their mobile phones/tablets to "pull" information all the time. Retailers do have to exercise some caution when they are using mobile to sms/push notifications to their customers and make sure this more intrusive communication is relevant and engaging. Mobile is a golden opportunity to create the most meaningful engagement with a shopper. It's way ahead of any other marketing channel that exists today.

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Peter J. Charness, SVP America, Global CMO, TXT Group

There are still many retail companies of all types that have no idea how to get into e-commerce in a way doesn't drain company assets. The information technology (IT) companies that exist and have been in the market for a while will never even guarantee what time it is now. So retail decision makers are funding IT projects that, for the most part, are seeing little or no return.

Small to medium sized companies many times do not have the capital for consulting companies with proven track records in the new technologies and devices. There are many marketing advantages to the present day, proven technologies that will provide a small company with the means to expand its market boundaries with little or no additional labor or overhead.

The number of leadership people that are tech savvy enough to get into the e-commerce end of the business continues to dwindle. Even generation "X" & "Y" are little more than user experienced. So until the tech giants can build, deploy and support affordable, turnkey, easy-to-use e-commerce improvements, the slow growth will most likely continue.

'gjarnoldjr'

When time and facts are in short supply, nothing is a more powerful in decision-making than our old habits. Many retailers today spin the wheel on that premise and drag their feet on investing in mobile marketing.

Are such retailers missing an opportunity? Yes, but what is the "opportunity" one is referring to? Are sales, profits, tonnage, ROI and/or SKU turnover via mobile marketing better today than they were a few decades ago after adjusting for inflation and foreign manufacture? Show the retailers the facts and they will follow. All retailers may not be Einstein but they aren't Rube Goldberg either.

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Gene Hoffman, President/CEO, Corporate Strategies International

The path to purchase has become much more varied and complex (start on mobile, review on a tablet or PC, convert online or in-store), so current tracking does not provide good ROI data on cause and effect. That makes investments in mobile marketing the domain of the bold and thoughtful - a small portion of any industry.

It would be good to see this kind of survey segmented by size of retailer and category as some large retailers are making significant investments in mobile.

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Todd Sherman, CMO, Point Inside

Retailers who hesitate to make use of Mobile Marketing will find that they may do so at the peril of lost sales and market share. Consumers have made a decided step toward making use of the Smartphones and tablets in making price and purchase decisions via these devices.

Let's put aging Boomers and traditional households aside, and just look at Millennial and Gen X Generations. Based on the Prosper Media Behaviors & Influence Study of over 19,000+ Adults, 18+, 30.1% of Millennial Adults say they regularly compare price and purchase opportunities at competitors stores via their digital devices. An added 39.0% say they do this occasionally. In addition 27.4% of Millennial Adults say they regularly compare competitive offerings and then buy they at the competitor's website.

These figures compare to only 19.9% of Millennial Adults saying that they make comparisons and then choose to buy at their original choice of retailer.

One out of five Millennials will price match and check for discounts on a regular basis, and one out of three will read product reviews regular on digital devices. At this point, 15% of this group say that they regularly scan QR codes.

Gen X isn't too far behind on these figures. Mobile marketing has to be a part of the media mix if retailers anticipate capturing the next generation of their client base.

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Roger Saunders, Managing Director, Prosper Business Development

I think this question is loaded with assumptions that might deserve to be reconsidered.

First, is mobile marketing really a distinct channel for retailers? Better, I think to conceive of it as an alternative set of touch points for shoppers. The core of our business still boils down to stores plus Web, to stuff plus information. Modes of interaction will evolve, but the foundation seems enduring to me.

Second, what do we mean by "invest" in mobile marketing? If we're talking proprietary apps and and mobile-specific ads, I think most retailers would be well advised to limit their commitments. Integrating mobile messaging and monitoring strategies is a different matter however, one that may not show up in the media spend.

Third, mobile tactics have some in-store potential as well, especially as sensors for shopper tracking and as an optional on-site service channel. There has been fairly brisk interest in these technologies too, although once again, they won't show up on the media budget.

This presents an opportune time to reiterate one of my Laws of Retailativity: Winning retailers invest in just enough marketing tech to address the practical objective; they do this just in time, and with an expectation that it will have a finite life cycle.

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James Tenser, Principal, VSN Strategies

I can't believe any retailer who wants to remain relevant is backing away from mobile marketing. Having said that, I don't believe the answer is using mobile to deliver the same promotions that could have been placed in the daily newspaper.

The role for mobile marketing is "Demand Management." Offering customers alternatives for out-of-stock items based on real-time (shelf) inventories, "selling up" when the customer is considering a lower price point, moving demand to overstock items, and "closing the deal" when the customer seems about to abandon a purchase are all reasons for mobile marketing. Brick and mortar retailers must understand that mobile marketing is going to be their biggest weapon against online fulfillment.

Customers are constantly complaining about an uninformed sales staff. As more customers turn to their mobile devices to do in-store research, it becomes imperative that the retailer have the mobile presence to meet their needs. I believe retailers who do not address this need will suffer significantly. On the other hand, the retailer who can offer an informative mobile presence that becomes a key source of information for its customers, can rebuild customer loyalty that has been lost.

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Bill Bittner, Principal, BWH Consulting

The book on digital marketing via Mobile is in its early days, but like any transformative technology, getting experience early is critical in figuring out how to deliver an engaging consumer experience that is both context-aware and personalized.

The good news is that technologies to do just this are available...and with cloud-based solutions, the CMO can now focus on experimenting to optimize his digital marketing investments rather than on the technology itself.

Sheila Zelinger, Global Vice President, SAP

Mobile marketing is fine, but at this point the only thing it seems that all my customers really care about on mobile media is deep discount, AKA loss leader promotion. I can drive tonnage via mobile, but it appears it is difficult to drive profitable tonnage.

'beavertontim'

What retailers don't seem to understand is, the consumer decides what is relevant and preferred in terms of media/channel, not the retailer.

As many have commented, retailers are stuck in the past and their comfort zone. When they run traditional media they have the "comfort metrics" of "reach and frequency." But all of the stats show that traditional media in decline ... especially for Millennials. Putting a print or TV ad in front them doesn't mean they even "see it."

Retailers who suggest that there is no ROI in mobile marketing are not investing in the right ways. Specific targeted offers through mobile marketing can be measured very specifically in terms of conversion rates, revenue, overall market basket, etc.

Retailers who are effectively using mobile marketing as part of a blended mix of media are seeing that people who shop by phone/tablet are spending 2X as much overall versus those consumers that just shop in store or just online.

Retailers are the ones worried about "channels of marketing/media" ... consumers don't realize that marketing media channels exist. Today's consumers engage with brands any time and everywhere on their device of choice.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

I'm not sure I would call a slow and - hopefully - thoughtful embracing of a new technology as "reluctance"...I would call it common sense. Despite the enthusiasm of many of the respondents here, the evidence that MM "works" - however one wishes to define that - is sketchy. But whatever one may think of the pace, I think by historical standards it is average (or even faster)... what percentage of retailer's ad dollars were spent on radio in the 1930s? I doubt it was as high as 15%.

'notcom'

I wouldn't bet the farm on this one survey, alone. I have seen many deep surveys around mobile both in the U.S. and globally. I don't necessarily see all that much hesitation of retailers diving into mobile. I believe that local stores may have less of a presence, however, large companies are definitely investing. Also, I wouldn't compare the social investments to the mobile ones. I believe they should be more independent and self-sufficient.

I have seen innovative retailers and CPG brands take advantage of mobile and it is becoming a huge driver of holiday sales this year. Also, based upon what's happening globally, especially in developing regions, mobile is THE driver of consumer commerce.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

I think this is an apples-to-oranges issue. Food retailing has years to go before mobile has an impact. The first change there will be the elimination of checkout for smartphones. Also, mobil will be used in food retailing for information on how to prepare a dish, components for making something, and health reporting.

Mobil is more important for electronics and apparel retailing.

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W. Frank Dell II, CMC, President, Dellmart & Company

Retailers, for the most part, have always been a 'wait and see' group. In this case, it's a big mistake! Embracing mobile is not an expensive thing to do and it puts retailers where the customer is.

If they want to drive sales or build brand awareness, that's where retailers need to be! IMHO

Lee Kent, Encourages retailers to meet share and learn, YourRetailAuthority

The constant push of marketing messages on mobile is somewhat of an affront to a lot of people, which is why the numbers are coming down. Why does Express keep sending me stuff when I haven't shopped there in a year? You know, the "leave me alone" factor.

The other reason is that mobile works great for pricing messages; X deal at X time. But if you've already given away the farm, as many retailers do now anyway, how effective is that going to continue to be?

Basically, we're getting to the point now where, like the aftermath of a gold rush, only the nuggets are coming to the top.

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Lee Peterson, EVP Creative Services, WD Partners

When it became apparent that an industry-wide collaboration was beneficial to help advance the supply chain, the industry came together, via associations like the NRF and FMI, to help provide road maps and tools. Yes, it's true that we are early and that new and pricey resources are needed, but what a perfect opportunity for the industry to help grease the wheel.

What I am asking for is not a lightweight initiative, I am asking for the best in the industry - technologists and practitioners - to come together and help jointly resolve the issue of adoption of the mobile channel for marketing and customer experience applications. The NRF Labs. Why not?

Vahe Katros, Consultant, Plan B

I suspect retailers are concerned about their mobile messaging getting lost in the noise of competing brands. Merchants should use their data, ideally their loyalty program data, to interpret what is relevant to their mobile customers and customize their message accordingly. Our research shows that 52% of word-of-mouth "champion" loyalty members use their mobile devices to recommend a product or brand, meaning these brand advocates are already engaged on mobile.

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Bryan Pearson, President and CEO, LoyaltyOne

I hope that those retailers sitting on the sidelines are watching carefully the actions and results of those who are embracing mobile marketing. Particularly, consumer products manufacturers have found mobile marketing to be a way to build reputation and buzz about their companies - which eventually lead to sales.

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Jerry Gelsomino, Principal, FutureBest

The problem is that most retailers bolted mobile onto their marketing strategy almost as an afterthought, treating it just like another channel. Because of the extremely personal nature of mobile, this is most often a failed strategy, with little or no ROI.

Mobility has caused dramatic behavioral shifts for shoppers. Expecting to apply tired marketing approach to mobile is destined to fail. CMOs who are willing to change marketing behavior in line with shoppers will - and are - finding success.

michael bigley, Director of Creative Technology, RGI Inc

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