Mobile advertising costs are increasing on average by 20 percent as the marketplace matures, James Hilton, CEO of Saatchi Performance, has stated.
Following research undertaken by the performance agency on the state of the UK mobile advertising industry, with an increase of $0.10 on average found to have taken place within the last year. Hilton stated that the ‘blanket approach’ in ‘blindly distributing campaigns’ had now passed and that ad agencies working within the mobile sector has become more sophisticated in their approach to targeting.
“It is this sophistication that is playing a key role in driving up the cost of premium mobile inventory, while wholesale inventory in many areas remains low. Companies are now fighting to reach the same upper echelons because they deliver higher conversion rates and increased ROI. However, this has pushed inventory prices up,” explained Hilton.
“This development isn’t necessarily bad news”, he continued. “The biggest pressure on cost is supply – and we’ve seen a general shift over the last 12 months, especially within the UK, from oversupply. Whereas previously ad inventory was available to buy at rock bottom prices, today demand is continually outstripping supply. The focus on reaching high-value tablet users – particularly iPad users – has also pushed up inventory cost. Inventory is still low and networks and publishers are not decreasing rates as inventory levels increase, since the platform is delivering strong results for advertisers.
“The rise in cost is also indicative of the growing maturity of mobile advertising generally in the wider media landscape. The only way to get the lowest advertising rates in today’s market is to have the scale to buy media in a big way and to buy it globally. Smaller media buyers simply don’t have the muscle to win on price.”
Hilton also said that the growth of mobile had been faster than anything seen before, which meant that mobile experts were still the best people to understand how to effectively use the platform and the promises of mobile apps.
“The more mobile stops being treated as something separate and apart from other forms of media planning and buying, the more open and democratic mobile advertising becomes – which is good for those agencies like M&C Saatchi who understand that the future of advertising is mobile.”
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