Mobile advertising is growing rapidly. Because of this, the inventory of available ads is growing faster than ever. With more inventory, prices must fall, and that’s exactly what’s starting to happen. While many think the economy is what’s effecting mobile-ad costs, as it is with other industries, the onslaught of inventory over the past year is the culprit.
Just last year, according to Advertising Age, the cost of mobile-based CPMs (the cost of reaching 1000 mobile-based consumers) was an average $40-$50. Just after the first of the year, the cost had already dropped to around $20-$25 per CPM. Now, with the advancement of mobile devices, social applications, and full-web capable mobile-browsing, the inventory has grown to accompany the upturn. As of lately, this influx in inventory has lowered CPMs to an average $15.
While many think the sudden drop in prices could be a bad thing, many industry experts disagree. To them, it means stability and long-term success overall. Also, a wider range of CPMs are being offered, promising varying degrees of “targeting granularity.” Last year, an advertiser might have been stuck paying $40, now they have a choice from a less targeted $2 CPM to a more specifically targeted $30 CPM. Plus, mobile impressions, while more expensive than online, still gets better responses with average click through rates of 1.5 percent versus 0.15 percent for online.
The addition of the iPhone and its continuing flow of new apps most likely accounted for the drop in mobile inventory pricing. Mobile gaming and other iPhone app developers rely on targeted advertising to monetize a majority of their work, and with thousands of apps coming to market every month, the inventory gets diluted that much further. Whatever the case may be, prices going down is always a good thing, even through the eyes of mobile-ad networks.