Think BR: What next for the mobile ad market?
How will the market react to Google's recent changes to its AdMob platform, asks Andrew French, trading director, Somo.
Andrew French, trading director, Somo
Mobile marketing is a complex business at the best of times - the speed of change is lightning fast and the fragmented ecosystem of ad networks, publishers, platforms and operating systems is tough to keep track of.
It’s like the digital world was a few years back, but on steroids.
The last two weeks have been particularly volatile, thanks to Google shaking things up in the mobile ad space by changing the way its AdMob network runs its mobile display auctions for cost per click media.
Mobile ads that are run on the networks are now paid for on a ‘second-price auction’ model, in the same way as online search.
The advertiser now pays only the maximum amount needed to secure a click, not necessarily the max bid.
Plus, the minimum bid floor has been removed so clicks can be bought from just $0.01.
The other change is that the quality score now comes into play, as it does in search, so the rank of the ad depends not only on the bid price but also quality score, which is predominantly determined by click through rate.
This isn’t a surprise - Google’s all about creating the best experience for the user and the application of a quality score helps to ensure this.
To anyone not in mobile, this all sounds a bit ‘so what?’ I know. But when Google moves, the ground shakes, and the tremors have been felt across the mobile industry.
There’s been an eruption of activity as smaller players have reacted to the changes and altered their pricing structures to be comparable to Google’s new set up.
There’s been consolidation of pricing across many networks, with some dropping their minimum campaign spend limits.
There have also been lots of global deals being offered and rock bottom CPCs.
Everyone is scrambling to make sense of the new market, and, with the long-awaited entry of Facebook into the mobile ad market looking imminent - the announcement is rumoured to be made at this week’s Mobile World Congress in Barcelona - things won’t be settling down for a while.
In December, Facebook reported that more than half of its 845 million users were accessing the service via mobile.
Its move into mobile advertising will make it one of the biggest publishers overnight.
With one in four online display ads delivered by Facebook and a data mine that’s a dream for targeting, it has been tipped to take the lead in personalised mobile ads.
Google’s changes have unsettled the market, but what’s still a good bet is that Facebook will do very nicely indeed out of mobile advertising - Mobile Square analysts reported recently that it could rake in $1.2 billion across just five of the territories in which it operates.
So it’s a bit of a whirlwind out there in mobile at the moment. But the good news for advertisers is that all this change means more ad inventory to choose from, much of it at a newly lowered cost, and targeting options that are improving every day.
Advertisers are starting to move their budgets to mobile as consumers spend increasing hours consuming their media in this space.
And as ad dollars move, there’s inevitable competition between the biggest global players to secure those budgets.
That’s what we’ve been seeing recently, and it’s a good thing.
Mobile is growing up and being taken seriously by the big boys of digital media and the big brands in advertising.
Andrew French, trading director, Somo
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