Two separate studies published recently by M&C Saatchi and the AOP demonstrate the transition the advertising business is undergoing by the emergence of mobile.
One suggests that while mobile advertising is continuing to grow with ad rates soaring 20% in the last year, for premium inventory (nma.co.uk 19 Sep 2012). But the AOP’s findings suggest that a generic lack of understanding about the merits of the channel is obstructing its growth.
While, the two may appear at odds with each other on the surface, further inspection would suggest they are complementary given that M&C Saatchi’s mobile-specialist unit indicates that UK mobile advertising rates have increased by $0.10 on average over the past 12 months with prices rising to as high as $0.60 per click.
This has been spurred by the clamour among brands to get their mobile apps as the first installed on new smartphones as they increasingly become the ‘must have’ device, according to M&C Saatchi Mobile CEO James Hilton.
“With more smartphone users coming on to the market there’s more inventory to bid on so what you find is that the cheap inventory is getting cheaper… but the premium inventory is getting more expensive… you’ve got more people bidding on the inventory,” explained Hilton.
This may seem like mobile advertising and publishing is starting to come good. But the AOP study, compiled among 37 media owners, found that 55% ranked ‘a lack of focus’ on mobile from advertising agencies as having the greatest impact on revenues despite acceptance of mobile ads from consumers.
This is despite at least 20% of the participants saying their digital traffic is from mobile users, but only 29% generate a fifth or more of their revenues from this traffic – a story we’re more familiar with.
No doubt bodies like the IAB and MMA will have to continue their efforts to raise the profile of the medium among the larger agency networks if this situation is to change.
The AOP study revealed that the biggest obstacles to growth would be ad agencies reliance on low-yield ad networks and the size of audience, both on 52%, in a statistic that also rang true with M&C Saatchi Mobile’s study.
Hopefully the long-tail of app developers – those who have historically supplied the majority of mobile inventory and sell it through such networks – will see increase in demand for mobile inventory and adjust their pricing accordingly.