A couple years ago, rich-media ad units were all the rage. Oh snap! Videos and expandable banners and Twitter streams and buttons on top of buttons. "How can consumers and big-budget brand advertisers not come to love these interactive ads?" many proclaimed.
The same story was told when rich media ads hit mobile, but so far rich media mobile ads have been a failure—though, counterintuitively, the courtship of brand advertisers has not been.
Check out some of these numbers: during this past December—the peak of mobile’s biggest spending season—rich media mobile ads cost 1.6 times as much as their static counterparts but only returned 1.2 times the clicks, according to a report by mobile ad exchange MoPub. “In our view, [mobile rich media ads] are not quite meeting the expectations everyone had going into it,” said MoPub director of product marketing Elain Szu.
A logical outcome would be that brand advertisers—the intended target for rich-media ad units—would continue to keep their distance from mobile. Instead the opposite has happened. While mobile advertising is typically thought to be the domain of direct-response marketers, brand advertisers, including those that mix brand and direct-response goals, accounted for 30 percent of the advertisers MoPub saw purchase through its exchange in Q4. Those buys are taking place “through mostly demand-side platforms,” Szu said, “but it’s an indication that these guys are receiving value from mobile.”
Android publishers, in particular, are seeing the benefits of that shift. Mobile advertisers typically stay away from Google’s mobile operating system because “generally speaking Android users are less monetizable and spend less on virtual goods,” Szu said. That leads to DSPs calculating less lifetime value of those users for their clients trying to drive app installs and in-app commerce.
But with more brand advertisers on board, conversion is less of an issue. Szu said it's why eCPMs for Android devices are picking up, growing by 54 percent between October and December to $0.81 eCPM, though still short of iOS’s 66 percent growth to an average $1.12 eCPM for the month of December.
Brand advertisers may finally close the infamous mobile monetization gap, but for now that hole is still being plugged with pennies when compared with their desktop counterparts. Again, let’s examine mobile advertising’s most high-profile spending period, the second half of December. It’s right when a bunch of consumers are unwrapping new iPhones and Android phones and iPad Minis, juicing supply and demand. In that period between Dec. 15 and 31, the average mobile ad rate for iOS devices (mobile’s premium audience) was $1.25 eCPM (which measures how much advertisers are willing to pay to reach 1,000 users). That’s a bit better than the $0.75 mobile CPM that Kleiner Perkins partner Mary Meeker cited in last year’s Internet Trends report, but way worse than the $3.50 average CPM she attributed to online display ads. Even more problematically, those iOS mobile ads saw a 1.4 percent average click-through rate, which is about 10 times better than the CTR for desktop ads.
MoPub’s early January numbers, in addition to brand advertisers’ attentions, suggest that things may be getting better for mobile and staying that way. In past years, the first week of January has seen a complete drop-off in ad spending from the weeks leading up to Christmas, Szu said. That’s not the case this time.
Looking again at the iOS-related numbers, the average mobile eCPM of $1.07 during Jan. 1-7 only dipped by 14 percent from the average rate during Dec. 15-31 and was 10 percent higher than during Dec. 1-14. More surprisingly, ads run during Jan. 1-7 notched a 1.7 percent average CTR, whereas as those run during Dec. 15-31 generated a 1.4 percent average CTR.
Those pricing and performance numbers are “not at all what we’d expect” for the first week of January, Szu said. “It’s an indication that spend is continuing to go through and that user engagement is sustaining and still high,” she said.