Why Mobile ROI Is So Hard

Huge gap between mobile usage and mobile ad spend (source: KPCB)

Consumer shopping behavior on smartphones

There have been multiple recent studies that have reported the growth of mobile commerce on smartphones. For example, in August 2013 Comscore reported that in the first half of 2013, nearly 10% of digital commerce spend is happening on mobile devices. Year-over-year growth for m-commerce is 24% over one year ago.

Year-over-year growth for m-commerce is 24% (Source: Comscore)

Smartphone form factor

Smartphones are fundamentally different devices from desktop PCs. The form factor is different, the connectivity to the web is different.

  1. Screen size is too small (40%)
  2. Cannot see detailed product/service information (27%)
  3. Hard to type (25%)
  4. Hard to compare prices and options (22%)
2013 Top barriers for mobile purchase (Source: Google)
Mobile traffic to commerce websites has surged (source: Monetate Q1 2013)
Conversion rates for smartphones are fraction of PC (source: Monetate Q1 2103)

Usage of smartphones “on-the-go” for offline shopping

In addition to the smartphone form factor, another reason why smartphones results in fewer commerce transactions is the heavy consumer usage of smartphones “on-the-go.” Smartphones are always with you, wherever you are (including when you are out and about). They are often used for short bursts of activity for immediate needs, rather than for lengthy browsing sessions. As a result, smartphones are often used for local search and in-store/offline shopping. So the “share” of digital conversions from smartphones is lower, whereas the share of offline conversions is much higher, than traditional desktop PC.

Many of the top pre-shopping activities on smartphone results are for offline shopping (Source: Google/MARC)
Mobile search drives online and offline conversions (source: Google)
Over half of the purchases from mobile search are in person (source: Google)

Fragmentation of consumer Internet usage

So far, our discussion has been focused on smartphone user shopping behavior, and how the smartphone phone factor and on-the-go usage have resulted in the lower digital conversion rates that advertisers see from smartphones. Let’s now analyze why it is difficult to measure the smaller number of digital conversions that are occurring on smartphones.

On-device fragmentation

In the pre-mobile world, the user saw an ad on the desktop PC browser, clicked, and converted.

Cross-device fragmentation

In addition to the on-device fragmentation, there is also the more challenging issue of cross-device fragmentation. A user may see an ad within a mobile app on their smartphone, but then completes the purchase process on a different device altogether (most likely PC, though sometimes tablet).

After research on smartphone, large fraction of users convert on desktop (source: Google)




Entrepreneur. Product management @ Instagram.

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Ameet Ranadive

Ameet Ranadive

Entrepreneur. Product management @ Instagram.

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