Should cell ads cost more than Web ads?

This may finally be the year of mobile advertising, but debate rages as to whether display ads on mobile devices deserve more dollars than conventional online channels.

Roger Wood
SVP and GM of the Americas at Amobee Media Systems
15 years of experience at Motorola, Reebok and others

Precision plus scarcity equals premium prices for carrier-controlled ad inventory. As a general rule, rare and prominent pieces of visual real estate that reach millions of people usu­ally cost brands more to rent. When visual real estate is severely limited and highly desired, demand for it among media buyers is naturally very high. It’s why mobile ad inventory will com­mand a premium price.

Wireless carriers will maintain an advantage for quite some time because the specific screens they control have audience reach beyond that of any other media. The carrier’s precise tar­geting ability and its near limitless con­trol of the supply of visual real estate is unmatched by any media platform.

By contrast, there will likely be hundreds of millions of Web sites accessible by mobile phones in the near future. This creates tremendous excess ad inventory, with each vying for the attention of some percentage of any wireless carrier’s audience. Although any one particular site might become a “hit,” there is virtually no control of overall supply and demand.

We are at the earliest stages of mobile advertising. Questions remain to be answered as the mobile advertising mar­ketplace landscape evolves; however, we do know that the fundamental elements of reach, precision and supply are aligned for the wireless carrier to charge a premium price in any scenario.

Robert Arena

VP and interactive director, Carton Donofrio Partners
12 years of Internet marketing experience including with the Bob Dole and George Pataki campaigns

Mobile advertising is far from commanding the same kind of CPMs as traditional display advertising. It will only see the same kind of demand once devices and sites deliver the same qual­ity of Web experience on the mobile phone that users enjoy at their desktop.

Mobile advertising is an $871 million market, yet 84% of Americans own a mobile phone, according to CTIA – The Wireless Association. But Internet adver­tising is a $24 billion market and, accord­ing to the Pew Research Center, 75% of Americans have access to the Internet.

Why? Metered pricing, slow networks and a frustrating user experience have dissuaded consumers from integrating mobile into their daily lives. More sites need to be built for mobile, with appro­priately sized and located ads, before advertiser demands for mobile ads start to match display advertising. And, as advertisers, we don’t yet know if our tactics on the PC-based Internet will carry over to mobile.

There’s a mobile broadband future coming where ads are tied directly to the moment. The potential of location-based mobile ads is huge, but may mean an entirely new style of creative is needed in order to be successful.

Mobile usage of the Internet is roughly at the same penetration that the Internet enjoyed in 1995. It took us a long time to reach the kind of CPM rates online we have today. Mobile still has a long way to go.

Wood makes a compelling case for why mobile ad space will eventually be at a premium but, for the time being, Arena’s case that there is more development needed for mobile’s potential is more realistic. As is often the case with new technology, the mobile space remains a way to reach early adopters before guaranteeing a significant reach to the masses.

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