eMarketer released a report today that estimates desktop advertising to drop by $1.4 billion while mobile search will increase over 82 % in 2014. Of course Google has been talking about this in their earnings reports for the last couple years. This is certainly not great news for domain investors who park their domains, as mobile clicks pay less than desktop clicks. It stands to reason that parking earnings will be down across the board as the traffic becomes more mobile centric and a lower cost per click.
eMarketer estimates that desktop search ad spending will drop $1.4 billion this year, a decrease of 9.4% from 2013, while mobile search will increase 82.3% year over year. Mobile search will total $9.02 billion, compared with $13.57 billion for desktop search. Overall, US spending on advertising served to desktops and laptops will decline 2.4% in 2014 to $32.39 billion, down from $33.18 billion in 2013.
Devindra Hardawar wrote on Venture Beat that mobile has the flexibility to offer more opportunity to be creative.
For example, Yahoo’s newly launched Gemini product, a “unified marketplace” that marries mobile search and native advertising.
“By bringing the two together, advertisers can now buy, manage, and optimize their mobile search and native ad spend in one place — driving greater performance and higher impact for their businesses and brands,” wrote Jay Rossiter, senior vice president of Yahoo’s cloud platform group, and Adam Cahan, senior vice president of mobile and emerging products.
Speaking broadly, the mobile advertising market is still nascent, but it’s heating up quickly, with more and more mobile marketing startups popping up every week.
Overall, mobile advertising is expected to be a $40 billion market by 2018.
Am I wrong in assuming that mobile clicks cost less than desktop clicks because there is currently more advertiser competition for desktop ad space?
If I’m not wrong, then as search and advertising become more mobile, the competition for mobile ads will increase, thereby raising the price of mobile clicks.
Law of Conservation of Ad Bid Competition?
Maybe I’m missing some inherent reason why mobile clicks can never pay as much as non-mobile clicks. If so, please educate me.
It’s all about intent (user) and conversion.
@ Joseph Peterson
1. A large percentage of mobile users are searching to find brick and mortar locations rather than doing e-commerce transactions. While mobile is a very valuable channel, the conversion attribution problem has not been solved. In other words, you can spend money and drive foot traffic, but it’s hard to measure the effectiveness of the campaign, and therefore how much you should spend. Solving this problem is the holy grail of digital marketing right now, with many companies attempting to do so. Mobile traffic will cost more when this problem is solved.
2. E-commerce on mobile phones isn’t as streamlined as on the desktop. For example, filling in your credit card information or forms in general is a lot more cumbersome. As more traffic shifts to mobile, expect more conversion optimization, and therefore higher bids.
The above applies to smart phones. Tablet traffic is very similar to desktop traffic. And I believe people often use tablets when in more of a shopping mood. For example, they’re using tablets while they watch TV and direct navigating when they see an ad.
Thanks for the detailed answer, Dave.
In truth, mobile ads still command lower prices than desktop ads do, the argument being that people remain less likely to click ads on their phones or tablets than desktops. (What’s more, many users may be clicking on them accidentally.) “The saying goes that ad dollars follow eyeballs, but that’s not entirely the case,” explains Clark Frederickson, vice president of New York-based digital market research firm eMarketer. Companies may be quick to tout growing mobile sales, but at the end of the day, just over 10% of e-commerce occurs on mobile. And until mobile phones and tablets become just as much a buying device as they are say, a consumption device, Frederickson says many advertisers will continue to focus their ad dollars on the desktop for the time being — even if the desktop’s days appear numbered.
http://mashable.com/2012/10/23/mobile-ad-prices/
http://www.mobilemarketer.com/cms/news/social-networks/14550.html
Supply and demand
One of the issues facing companies dependent on advertising revenue is that mobile ads typically cost less than desktop ads.
However, Facebook appears to be defying this trend, according to the data from Kenshoo. Per the report, cost-per-click for Facebook ads was $0.81 for desktop ads and $1.38 for mobile ads.
The report reveals that leading global brands are spending more than $1 out of every $5 spend on Facebook advertising targeting mobile devices.
“We’ve seen that mobile on average on Facebook has commanded a premium,” Mr. Herrold said. “We attribute it primarily to available inventory.
“If you think about using Facebook on desktop, you have multiple ad placements along the right hand side and in the newsfeed,” he said.
“On mobile, they’ve been very cautious about the frequency and the number of ads shown during a session so it comes down to a supply and demand issue.”
Good answer! 😀
Thanks, Raymond. This is a thread to bookmark for me, since — as someone who never ever surfs the web by phone — I’m largely oblivious to the kinds of mobile advertising in use.
There is a new player, and I can’t wait, @ Raymond Hackney, until you post an article about it: deep links!
In the wiki definition, it refers to linking to a url within a site, bypassing the homepage . . . An engineer was granted the trademark for, “Deep link,” for a cable connection – not related.
The latest meaning, is, “technology that makes it easy to put links into a mobile app, Web page, or e-mail that with a single tap take a person to a specific section of another app installed on the device.”
– Technology Review
http://s.wsj.net/media/swf/WSJMediaPlayer.swf?videoGUID=%7B7F414646-6E9E-4B8C-B6DF-98E5134341B1%7D&playerid=1004&plyMediaEnabled=1&configURL=http://m.wsj.net/video-players/&autoStart=true
@ Dave Mead @ @ Joseph Peterson, Here is an article from last year, substantiating your point, that “the conversion attribution problem has not been solved:”
Why No One Likes Mobile Ads and How Companies Hope to Change That
http://www.technologyreview.com/news/511811/lack-of-ways-to-measure-success-holds-back-mobile-ads/
I disagree with the argument in the above link that “no one likes mobile ads.” Airpush recently posted something about the latest study showing 70% of users consider mobile ads on smart phones as a personal invitation rather than an intrusion. This is a very healthy sign for the future of mobile ads and the industry’s growth. I think these numbers will keep climbing as advertisers see improved ROI and mobile ad networks make ads more engaging through new ad formats and with improved ad targeting. http://blog.airpush.com/how-consumers-are-driving-a-new-acceptance-of-mobile-advertising/
Congrats to Adam and Mike Berkens on the new theDomains responsive theme – I’m digging it! 😀
Grab the lower right corner, and pull the window to a narrow rectangle, the size of a smartphone screen. The menu shrinks to a horizontal bar at the top, and the text and images realign to fit the small screen – that’s what it is about!
As, “Search Becomes More Mobile,” the new theDomains.com will serve its mobile searchers better – kudos!