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“The Era of Cheap Mobile Advertising is Over”, warns M&C Saatchi Mobile

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Rising demand, increasing mobile ad budgets, proliferation of smart devices and the upward trend in premium inventory cost means that the era of mobile as an inexpensive advertising medium is over. That’s the conclusion of the latest research to be published by performance mobile marketing agency M&C Saatchi Mobile on the current state of the UK mobile advertising industry.

UK market data compiled by M&C Saatchi Mobile shows that UK smartphone advertising rates have increased by $0.10 on average within the last 12 months – an increase of over 20%. This takes into account CPC, CPM and CPD buys across platform.

According to James Hilton, CEO of Saatchi Mobile: “The blanket approach of blindly distributing campaigns has passed. Mobile ad agencies now need to be far more sophisticated in targeting and not just rely on run of network campaign buys. 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. Companies are now fighting to reach the same upper echelons because they deliver higher conversion rates and increased ROI. However, this has pushed inventory prices up.”

“This development isn’t necessarily bad news”, explained Hilton. “The biggest pressure on cost is supply – and we’ve seen a general shift over the last 12 months, especially within the UK, from oversupply. Whereas previously ad inventory was available to buy at rock bottom prices, today demand is continually outstripping supply. The focus on reaching high-value tablet users – particularly iPad users – has also pushed up inventory cost. 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 rise in cost is also indicative of the growing maturity of mobile advertising generally in the wider media landscape. 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. Smaller media buyers simply don’t have the muscle to win on price.”

Hilton continues: “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 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 – which is good for those agencies like M&C Saatchi who understand that the future of advertising is mobile.”

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