Cost of mobile ads is rising says M&C

UK market data collected by M&C Saatchi Performance shows that smartphone advertising rates have increased by an average of $0.10 In the UK over the last year. That equates to an increase of over 20 per cent and includes Cost Per Click (CPC), Cost Per Thousand (CPM) and Cost Per Action (CPA) buys across the platform. M&C Saatchi Performance attributes this rise to seven factors. These are: rising demand; increasing mobile ad budgets; the proliferation of smart devices and apps for everything; and an upward trend in premium inventory cost; improved targeting; the growing maturity of the medium; and demand outstripping supply. The company claims that in order to combat these price rises the only way to get the lowest advertising rates in today’s market is to have the scale to buy media in a big way and to buy it globally. A lot of the blame for these prices increases has been lain at the door of tablets which has pushed up inventory costs. The company also attributes the rise in costs to oversupply. Whereas previously ad inventory was available to buy at rock bottom prices, today demand is continually outstripping supply.

However, inventory is still low and networks and publishers are not decreasing rates as inventory levels increase, since the platform is delivering strong results for advertisers, the company claims.

“The blanket approach of blindly distributing campaigns has passed,” commented James Hilton, CEO of Saatchi Performance.

Mobile ad agencies now need to be far more sophisticated in targeting and not just rely on run of network campaign buys.”

He continued, “It is this sophistication that is playing a key role in driving up the cost of premium mobile inventory, while wholesale inventory in many areas remains low.”

M&C Saatchi Performance argues that companies are now fighting to reach the same upper echelons because they deliver higher conversion rates and increased ROI.

“The rise in cost is also indicative of the growing maturity of mobile advertising generally in the wider media landscape,” says Hilton.

He continued, “All new forms of media go through growing pains, and mobile is no exception. But the growth of mobile has been faster than anything we’ve seen before, and that means the understanding of how to get the best out of it and how to build really effective campaigns is still concentrated in the hands of the mobile experts.”

The company’s conclusion is that the more mobile stops being treated as something separate and apart from other forms of media planning and buying, the more open and democratic mobile advertising becomes.


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