Get Out Your Checkbooks: The Price Of Mobile Ads Will Surge More Than 45% In 2018

Mobile programmatic pricing is about to have its hockey stick moment, set to grow more than 45% by 2019, according to a projection released by programmatic agency Goodway Group on Tuesday.

Mobile prices will increase incrementally, just under 4% month over month throughout the coming year, including for mobile display and mobile video ads served in-app and via mobile browsers.

By contrast, desktop display ad prices are beginning to level off, with a tame increase expected somewhere between 1% and 3% for the year.

Goodway analyzed billions of bids and average CPM pricing on a weekly basis in the US from January through September across more than 10,000 campaigns.

The findings align with a recent forecast from eMarketer predicting that almost 80% of programmatic ad spend will go mobile by 2019.

At first, Goodway Group COO Jay Friedman was surprised by the mobile’s dizzying price increase, but it’s not so crazy if you think about the baseline.

“Mobile inventory itself is not necessarily so expensive,” Friedman said. “What’s driving the prices is the ability to refine that inventory more accurately based on things like location.”

Although mobile supply still exceeds demand on “a broad open-market basis,” Friedman said, as advertisers and agencies get more sophisticated with their mobile buying and start layering on targeting signals, supply will constrict and prices will go up.

The ability to target more precisely based on cross-device identity could also nudge mobile inventory prices higher, especially as connected TVs enter the device mix, attracting CPG marketers and others looking to do more with attribution.

But despite the increase, multiple variables determine mobile prices, Friedman said, pointing to the growing trend of buyers bidding against multiple variables at once, or “combinatorial bidding.”

Most advertisers would pay more to target a user in their first-party segment, for example, but that price should also take environment, device type and other components into consideration.

“There’s a wide band of pricing, even within what we think of as our most valuable indicator,” Friedman said.

Combinatorial bidding is a growing trend, Friedman said, though only a few platforms like AppNexus and The Trade Desk offer it today.

“It’s a quantum leap in terms of targeting abilities,” he said. “The mass market may not start to take advantage in 2018, but it’s starting to pick up and it’s worth knowing about."

3 Comments

  1. What exactly is this projection based on? There is no link to data or a study or anything, just the claim.

    It's fine that "almost 80% of programmatic ad spend will go mobile by 2019" but reading is increasing there as well, so why should prices spike so much? Demand is going to outstrip supply that quickly?

    Would love to hear more about the reasoning. It would be great news, but I'm feeling a bit skeptical.

    Reply
    • I think that there are some other key events taking place in the programmatic ecosystem, that aren't referenced by this Goodway analysis/projection, which can be cited for a more direct link to expected price increases, actually. The supply is ultimately shrinking because of initiatives like ads.txt which are purging false traffic from the marketplace and driving up competition for smaller pool of authentic inventory, thus driving up prices (prices have already started increasing since adoption of the ads.txt standard has begun this year). Additionally, organic demand is going to rise at a significant overpace compared to desktop which will produce the same effect. These are the reasons that I see for mobile programmatic price increases. Agreed, that the Goodway projection basis seems weak (especially considering that it's based on Q1-Q3 2017 trend which will look nothing like the trend going into 2018, precisely because of changes stirred by initiatives like ads.txt; this could vastly accelerate price growth beyond what the Goodway analysis has projected

      Reply
  2. The projections are part of an annual study of programmatic prices by Goodway Group. We built a statistical projection based on historical pricing trends. We believe things are trending this way due to the fact that mobile has been historically undervalued, and as marketers continue to shift to more cross-device and people-based marketing tactics, it will put an increasing squeeze on supply. You can download the entire report for a deeper dive here - https://goodwaygroup.com/library/whats-programmatic-worth/.

    Reply

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