According to data collected by eMarketer, from Q4 2016 to Q4 2017, CPM rates for the popular mobile web 300x250 medium rectangle experienced a 48% jump from $1.02-$2.40 to $1.51-$2.47. In 2018, however, pricing has tapered off. In the first three quarters of 2018, mobile web CPMs across all formats averaged a $1.05 for open auction and $1.47 for Private Marketplace (PMP).
The question becomes: why?
The tapering of CPM rates for mobile web advertising may be related to a maturing of programmatic measurements and analytics. With stronger forms of measurements and analytics, buyers can more strategically place their mobile ad spend and reach a more precise audience. As buyers more precisely spend their budget, CPMs for lower quality inventory will begin to taper, bringing down the average CPM rate.
As programmatic measurements and analytics mature, mobile web CPMs are not the only rates leveling off. Mobile app CPM rates are leveling off, too. In fact, EMX data showed that, from Q1 2017 to Q2 2018, mobile app CPM rates have tapered to an average of $1.03 for open auction and $2.03 for private.
Again, the question becomes: why?
An analysis of our proprietary data suggests the following three reasons:
1) Inventory Quality
While programmatic is steadily maturing, the mobile app space continues to struggle with inventory quality. In fact, according to a Forrester survey, more than half of mobile ad executives feel at least 30% of their mobile in-app spend is at risk of ad fraud. As a whole, this can cause a slowing down of the adoption of in-app advertising.
2) Stronger Targeting
In the past, inaccurate location data and fraudulent inventory has inflated and skewed pricing. As the use of geo-targeting becomes more prevalent, and strategies that use device IDs become the norm, targeting is becoming stronger and buyers are able to spend smarter. Now their message can reach the right users, at the right time, in the right place—no longer losing money on empty impressions.
3) Complicated Technology
Mobile app technology is still very new. Because of this, the technology itself has not yet matured, often complicating what should be easy solutions.
“There is still so much we need to learn as an industry. Many in-app monetization offerings will add another layer of tech to the app, forcing publishers to make tough engineering tradeoffs when implementing solutions.”
- Mike Grosinger, EMX Director of Product Management
Regardless of the constantly shifting trends, buyers and sellers are continuing to invest in mobile app—and for good reason. Consumers are on mobile. According to data collected by Statista, in 2018 alone there has been a total number of 205.4 billion mobile app downloads, with a projected 25% increase in mobile app downloads in the next four years.
An analysis of EMX proprietary data, combined with third-party sources, suggests the tapering of mobile CPM rates could be due to poor quality inventory, stronger targeting, premature technology, and sophisticated measurements. With that said, being a relatively new technology, mobile in-app advertising has time to mature and grow to its full potential as an advertising platform.
It’s important for marketers to stay ahead. Find out where the programmatic industry and mobile advertising trends are headed next in our whitepaper, Pricing Programmatic: An Analysis of Digital Ad Marketplace Trends.