Mobile Ads vs. Mobile Apps: Which One Is More Important?

When you’re trying to build up a rich store of customer data, mobile is one of the most powerful resources you have at your disposal. Just ask Starbucks, which referred to mobile and digital as “the big prize” in the context of where to focus executive leadership. The company last year announced it was shuffling management roles in an effort specifically to free CEO Howard Schultz to focus on digital integration as a top initiative.

While Starbucks names mobile as a key component in a larger digital strategy, it’s possible to argue that mobile is so important you could make it the only component of such a strategy. In fact, one analyst recently recommended doing just that, arguing persuasively in an Ad Age article that mobile should be the first, if not the only, focus of a company’s digital presence.

What makes mobile so important? The author of the Ad Age article mainly talked about it as a means of delivering a great customer experience. It is, after all, the main way many people experience the world today — from where they get their news to how they communicate with their families and friends. That makes it the main way they’re going to experience and learn about your company and, in turn, what you’re going to learn about them, based on the data you collect from their mobile interactions with you.

Start thinking strategically.
The next question is, naturally, what is your mobile strategy going to be? And that comes down to two things: apps and advertising. Are you going to invest in mobile applications through which customers interact with you, or are you going to invest in mobile marketing and advertising that’s going to expose your business to them? Or are you going to do both? If so, are you going to split your investment equally? Weight it toward one or the other?
Those are important questions to any company, and especially to startups or small companies with finite budgets to invest in their mobile presence. And your answers will depend on your company and your goals. I can’t advise you definitively which way to go, but I can tell you about the benefits of both and help you make an informed decision.

Ads drive awareness and action.
Mobile advertising has grown so fast as a category of communications that it’s hard to believe the media measurement company Nielsen only just started measuring mobile ad effectiveness in 2013. Since then, according to an eMarketer report, mobile advertising has come to account for 72% of spending on digital advertising in the US and will surpass spending on desktop-based digital advertising next year.

Based on that, you might think mobile advertising is definitely the way to go when it comes to your budget for mobile. And if your goal is improvement in metrics such as purchase intent and likelihood to recommend, you’re right. According to comScore research, mobile ads outperform desktop ads by four times or more in those categories. They’ve also been shown to nearly double scores for favorability and almost triple aided awareness.

But what about capturing the kinds of customer data the desktop has always delivered – fundamental information such as name and email address? That’s inherently tougher with smartphones, given the small screen real estate and keyboard size. But mobile advertising companies are working on ways to make it easy and painless for people to share their data, such as dynamic forms that are organic to ads.

Apps enhance the customer experience and loyalty.
Mobile advertising may be growing, but plenty of companies today are focusing their mobile investment on digital technology rather than digital advertising. Starbucks CEO Howard Schultz made the news again last week when he was quoted in a Marketing Week storyas saying that companies that have upped their digital advertising budgets (as opposed to spending on digital technology) are “significantly driving up their cost of customer acquisition and producing little to show for it.”

That’s just one CEO’s opinion, but it’s pretty compelling when you see the impact on Starbucks revenues, which increased to a record $4.9 billion in the third quarter of this year. Schultz attributes the growth to the company’s aggressive investment in digital and mobile. He points out that digital apps drive sales in companies like his because they mean shorter lines and faster service.

Ecommerce is one thing mobile apps are great at – but it’s not the only thing. Think about Pop Secret’s Perfect Pop app, which tells you the perfect time to take your popcorn out of the microwave, or Chipotle’s Scarecrow game, in which players earn buy-one-get-one offers. They’re engaging and fun as well as useful, and those qualities help build not only sales but loyal customers.

So what’s it going to be?
Although the focus of your mobile spend depends on your specific business goals, I suspect that for most startups and small businesses, a combination of both may be a reasonable choice. Think about what you want to accomplish and make your strategic decisions accordingly. Either way, it’s clear you can’t go wrong with mobile.

To view the original post, please visit Forbes.com.