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Liz Claiborne: Ads targeting smartphone users driving growth in mobile commerce

Budgets for mobile advertising have skyrocketed over the past year from $1.2 billion in 2009 to around $2.4 billion in 2010, and those ads are influencing holiday shoppers, according to a study commissioned by Liz Claiborne Inc.

Bloomberg recently reported that mobile advertising budgets could multiply tenfold to $24 billion by 2015. Companies such as Amazon, eBay and Best Buy have all created applications for smartphones and other mobile devices, letting retailers inform consumers of promotions or discounts at all times.

“The key finding of the study is that being unmemorable, and not targeted, is a death sentence for many mobile ads,” said Melissa Lafsky, editorial director of Liz Claiborne’s, New York. “The biggest factors that hurt mobile ads, according to the study, are a lack of promotional focus or personalization, being visually unclear, and offering no incentive to opt-in such as a coupon or discount.

“The biggest ways to make a mobile ad successful are creating something eye-catching, targeting the ad to its ideal consumer and including a time-sensitive call-to-action: ‘Only 4 hours left!’ or ‘Going fast!’”

But just how effective are mobile ads?

The new consumer study done by marketing firm Group SJR and sponsored by Liz Claiborne examined how young, tech-savvy shoppers view these ads, and how they have influenced holiday shopping in 2010.

According to the study, the biggest trap mobile ads fall into is failing to target specific consumers—a too-general mobile ad is unmemorable.

One 25-year-old respondent was quoted as saying that “when you’re on your phone, you are so on-the-go that you would not necessarily take the time to click on a random advertisement.”

Here is a rundown of the study’s further results.

Factors that hurt mobile ads
A major factor that can hurt mobile advertising is the lack of a promotional focus.

One respondent noted that if he was searching for a particular retailer, and an ad for a similar retailer popped up with a coupon for a related product, he would be more likely to click on it.

Another no-no is mobile ads that are visually unclear.

One iPhone 4 user responded, “If [an ad] is off to the corner, I might get it confused with another app and not realize that it was an advertisement.”

“The most surprising finding is that visuals matter so much,” Ms. Lafsky said. “Many online ads do not look great, but they are successful nonetheless.

“However, with an ad on a smartphone, its appearance is crucial,” she said.

In addition, if a mobile ad does not offer an incentive to opt-in or participate in the campaign, it will probably not be successful.

By adding a phone-accessible coupon or discount, ads increase the chances that they will be noticed and will be spread from friend to friend.

“You want to brag about [the deal],” one study respondent noted.

There are various ways to make a mobile ad successful:

• Create something eye-catching: “The bigger the ad, the better,” said one iPhone owner.

• Target the ad to its ideal consumer: “[Ads] specific to my interests would be more effective,” one respondent said. Many smartphone owners are still open to using mobile commerce and willing to share personal information if it would help create more specific, eye-catching ads in the future.

• Include a time-sensitive call-to-action that will encourage shoppers to make a purchase before stock is gone or a sale concludes.

“The massive increase in popularity of smartphones and their increasing use as a tool for mobile commerce are both the biggest factors driving the growth of mobile ads,” Ms. Lafsky said.

“Any retailer who wants to grow and take advantage of opportunities in the digital era needs to turn some attention to mobile ads,” she said.

“Many retailers are eager to understand how mobile phones are being used for shopping, and as a major player in this sector, Liz Claiborne wanted to explore this trend at the height of the shopping season.”

Final Take’s Sarah Bleyer