Mobile ad pricing is likely entering a state of flux. The more immediate reason is the probable entrance of Facebook in this space. There are longer-term trends impacting pricing as well, including new thinking about mobile’s role in the online ad budget and the evolution of this space towards better creative.
AdMob's Move
Perhaps the most visible sign of change came last week when both Google and Apple made significant adjustments to their price models. Google just revamped pricing for AdMob so that auctions for cost-per-click (CPC) placements on the mobile ad network now take quality score into consideration.
Apple dropped its cost per campaign pricing for iAd to $100,000, from $400,000. (via CNET).
Not Because of Facebook
While the industry is closely watching to see what Facebook will do, AdMob is unlikely to be affected, Somo’s international CEO Thomas Schulz, the former MD of EMEA at AdMob, told eConsultancy.
The expectation is that what Facebook rolls out will be based on a sponsored story format–which is not competitive to Admob. "On Facebook's mobile platform it doesn’t look like there would be any real estate for top and tail banners, while full page interstitial would likely be too intrusive and not in keeping with Facebook's 'user-centric' content policy," he said.
Nonetheless, Schulz also said, the change to Admob’s pricing is significant to the industry because it will prompt other providers to rethink their prices.
New Role in Budgets
These developments come as marketers are rethinking ad budgets to give mobile a greater share. However, new statistics from Flurry suggest there is more wiggle room in this calculation than previously assumed.
In short, marketers are underinvesting in the platform, based on the amount of time people spend on it. People spend 23% of their time on mobile devices–which is second only to TV at 40%. Yet mobile only gets about 1% of ad budget spend, Flurry said. TV, by contrast, gets 4%.
Changing Creatives
Another trend reshaping the mobile ad decisions is that the creative are improving. Advertising networks like Millennial Media and Jumptap, and self-serve platforms from rich media firms Medialets and Celtra have lent more creditability to the industry with new products, Adweek writes, pointing to a rich media campaign for Discovery Channel’s Storm Chasers crafted by Medialets and media agency PHD. It gave users a bird’s-eye view of a storm, complete with vibrating phone.
