Mobile usage and traffic have grown significantly over last several years, opening the door to significant mobile ad growth
The Rise of Mobile Consumption
Among traditional TV, online and mobile, the fastest growth area for consumption is in mobile. Nielsen’s Cross-Platform Report shows that the number of people watching video on a PC is decreasing, while the number of people watching video on a tablet or smartphone has increased. Adults, on average, have spent nearly two and a half hours per day on non-voice mobile activities, according to eMarketer–much less than traditional TV, but growing quickly. To be sure, established platforms like TV continue to dominate ad revenues, and the opportunity in mobile is increasing steadily.
Monetization Challenges
Mobile monetization relative to consumption has only recently started to catch up to that of other platforms. Analyses from KPCB, eMarketer and IAB show that the percentage of advertising dollars spent on mobile platforms is not yet fully reflective of the time that consumers spend on them, as compared to traditional platforms. In 2011, consumers spent 25% of their Internet time on mobile while it captured less than 5% of digital ad spending., the mobile ad spend had doubled while users were spending just 1/3 more time on mobile. The mobile and tablet market has reached an inflection point as consumption continues to increase, new content and advertising players enter the ecosystem, and business models evolve.
The success of mobile video has led many publishers to ponder how best to monetize their content. While payment models offer higher per-unit pricing, advertising provides an opportunity to scale usage. The existing players in the mobile video ad market have proven that the advertising concept is attractive. However, publishers looking for a mobile video ad network should look to the arrival of the online ad networks to the mobile scene to drive the market to its real potential.
CPM values
Advertising brands have viewed mobile as one of the best media to reach users. Mobile helps address some of the key issues of audience fragmentation and brand clutter. In a multichannel and multi-device world, the mobile screen offers a fully-immersive experience and the ability to target users with a device that is unique to them as well as the opportunity for deeper brand engagement than television or online.
This is reflected in the high CPMs that the industry attracts, particularly in mobile video where this deep engagement is coupled with a scarcity of premium inventory. Typical CPMs for mobile video are above $20 CPM, with interactive video ad units driving the CPM as high as $30-$35. In comparison, the average CPMs in online are closer to $15, or TV where prime-time ad spots are on average $6 CPM.The premium CPM of mobile ads is supported by their campaign results.
Screen savior
As with online video, the industry expects the biggest opportunity lies in drawing advertising dollars from TV to mobile. Mobile is positioned as a natural extension to the TV experience, due to both the fully immersive nature of the experience and viewing time. Advertising brands are interested in running mass-market campaigns that can reach their target audiences. While mobile can offer great engagement, the market lacks the necessary scale to deliver a six-figure digital ad campaign.
Tube tops
Media firms such as CBS, Discovery, Fox and Scripps did not initially enter the market with their own mobile ad sales team. Instead, they entered on the shoulders of the mobile ad networks until the medium had proven its value.
These media companies are now building out their ad sales teams, but more from a perspective of a cross-platform ad sales team selling digital. Digital ad sales, which used to be solely online, now increasingly means online and mobile. Meanwhile, ad operations teams at publishers are looking at ad platforms that can deliver campaigns from online to mobile. Consequently, publishers have addressed the issue of mobile scale by bundling the inventory as part of 360-degree buys comprising TV, online and mobile. Advertising agencies have responded to the growth in mobile either by merging mobile into their current online teams or in a few cases creating mobile-specific agencies
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