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Is desktop obsolete? Mobile ad prices offer a clue

Apple Iphone sales
Tomohiro Ohsumi | Bloomberg | Getty Images

A new study has found that mobile ad prices are for the first time more expensive than desktop ads, driven by brand demand and the shift by consumers to smartphones over laptops and PCs.

"In terms of time and attention, it's clear that we're already in a mobile-first era," said digital agency Firstborn senior strategist Scott Fogel.

The research was part of PubMatic's Quarterly Mobile Index, which looked at billions of ad impressions, revenue and pricing data during the third quarter of 2015.

The programmatic ad platform discovered that mobile costs per thousand impressions (CPMs) — one of the standard pricing measurements for digital ads — were 34 percent higher than desktop prices. Mobile CPMs went up 12 percent year over year, while desktop only increased 10 percent.


The fact that brands are demanding more mobile ad space is a reflection of the fact that more people are using smartphones over computers. An eMarketer study suggested that about 24 percent of time spent in the U.S. consuming media is through mobile devices, compared with just a little over 16 percent for desktop.

Not only are more consumers on mobile, but advertising can be more advanced, Fogel said.

"In 2015, I would actually posit that mobile is now the fully featured version of the Internet, and PCs are the limited version," he said. "What mobile can do now — geolocation, deep linking, iBeacons, payments, sensors, touch ID and activity trackers — makes the PC look quite limited in comparison, as there's only a browser and a keyboard."

Matt Waghorn, director of communication planning for digital agency Huge, said the fact that mobile was outpacing desktop did not surprise him. He pointed out that other worldwide markets suggest that mobile will eclipse tablet, PC and laptop usage. Compared to other countries such as India, China and Brazil, the U.S. lags a bit in mobile adoption.

He said the lack of ad blocking also makes mobile advertising more appealing to brands. Ad blocking capabilities doesn't seem to be as advanced for smartphones, especially when it comes to in-app advertising, he said.

"The rate of growth in mobile and the rate of adoption is only going to escalate," said Waghorn.

But, he pointed out the higher mobile prices may be more applicable to certain ad categories. In his experience, display advertising such as traditional banner ads tended to go for twice the price on mobile compared to desktop. Other types of ads, like preroll video advertisements that show up before a clip, still came in about equal, he added.

The PubMatic study also found that Apple iOS app advertising was found to be increasing the fastest in price and volume, compared to Android app ads, mobile web ads that show up in browser, and tablet web ads.

"Apple iPhone customers are seen as more valuable," Waghorn said. "They're wealthier and older, where Android users are younger. I would imagine it's an audience play."


Still, many brands are still placing most of their advertising budgets on desktop advertising. Warren Zenna, executive vice president and managing director of Havas Media's Mobext, said during a panel at Ad Revenue this week in New York that companies still put about 80 percent of their digital ad budget towards desktop advertising and just 20 percent to mobile. He argued it should be flipped.

Fogel said part of the reason is that companies are still wary of the ability to measure the success of mobile campaigns and the inability to track consumers without having tools like "cookies" that exist on desktop computers.

"I believe this is due to marketers thinking about mobile in the same way we think about PCs — driven by the web browser," he said. "On mobile, where people spend nearly all of their time in apps and not the mobile web, the platform has to be rethought entirely. And that's a harder task than investing in things that are tried and true."

Huge's Waghorn added that a lot of the companies are used to conducting their business on desktop, so telling them to advertise away from it can be difficult. But as the public starts buying more on their devices, he thinks these companies may come around.

"You have clients that have their heads stuck in the desktop display," he said. "They drive transactions on desktop, and that's where they want to be."

Correction:

The story has been updated to reflect that CPM stands for cost per thousand impressions, not cost per million as it initially stated.