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On the whole, cost-per-thousand (CPM) averages in 2014 were on par or above 2013 rates, despite the dramatic rise in impressions that occurred over the same time period. In an environment where supply outweighs demand, steady or higher CPM averages are an indication advertisers are finding greater value in mobile advertising.
According to a new eMarketer report, “Mobile Display Ad CPMs: The Going Rates and the Inventory Advertisers Value Most,” the following five factors worked in harmony to keep mobile CPMs up in an environment where supply increased faster than demand.
More big brands—and their ad budgets—moved into mobile advertising: A wider array of advertisers, including big brand advertisers, invested in mobile display advertising in 2014. In addition, those that had previously invested in mobile display at experimental levels invested more heavily this year. eMarketer expects the total amount spent on mobile display advertising in the US will increase 81.7% in 2014 to $9.65 billion.
Ad formats grew more sophisticated: Publishers expanded the menu of ad format types offered and better integrated ads with mobile content, both of which attracted more ad dollars. Increased availability of higher-priced mobile video ad formats and rich media interstitials also played a key role in offsetting the glut of cheap banner formats.
Audience targeting and retargeting improved: Persistent and reliable identifiers the likes of Apple’s Identifier for Advertisers (IDFA), Android’s Advertising ID, publisher-specific login IDs and a growing number of probabilistic IDs that enable advertisers to track users across mobile apps and mobile websites made audience targeting and retargeting in mobile not only more possible, but also more measurable. This increased marketers’ confidence and willingness to pay higher prices.
Facebook broke ground in mobile audience targeting and effectiveness: The evolution of Facebook’s mobile ad offerings, audience targeting tools and persistent login ID made it easy for the social network’s desktop advertisers to find and follow their target audience to smartphones and tablets. In addition, app developers found Facebook’s mobile ad targeting and retargeting capabilities to be highly effective at driving app downloads, which justified paying higher CPMs.
Advertisers embraced programmatic buying: The inflationary effect programmatic buying is having on mobile display prices is evident in not only the higher CPMs reported by platform providers and real-time bidding marketplaces, but also the higher prices paid for Facebook’s and Twitter’s mobile ad products in 2014. With Facebook and Twitter expected to generate a large share of US mobile display ad revenues in 2014—nearly 42%, eMarketer estimates—any CPM gains made by these two programmatic-centric companies is a strong indication that programmatic buying is having a positive effect on mobile CPMs as a whole.
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