7 things Digital Startups Need to Know - Mobile Monetisation

How is the Progress on Mobile Monetisation (Especially for Companies with an Indirect Monetisation Model)?

People are spending more time on their smartphones nowadays, and that means more ads can be served on such mobile devices. This has led to intense competition among Google, Facebook and Yahoo. Each is trying to extend its reach into third party mobile apps. However, the big challenge is that mobile’s CPM is the lowest among all online advertising formats.

CPM stands for “Cost per Mille”, which simply put, is the price a client pays to get a thousand views of its advertisement. Average CPMs in traditional media tend to be well above US$10, while online CPMs tend to be below US$5. Mobile CPMs can be even lower at around US$1. Programmatic buying is being increasingly used by publishers to sell not just remnant inventory, but also premium inventory. Automation means buyers of inventory are able to achieve access to premium placements rapidly, and without the need to commit to large amounts of spend. This makes inventory-buyers more powerful due to their superior reach.

Due to the shift to mobile and programmatic buying, the transition from desktop to mobile ad revenues may be painful for companies with high reliance on desktop ad dollars.

According to the data from eMarketer, Facebook has been quite successful in gaining share in the mobile ad-revenue at the cost of smaller players, as evident in the chart below. A big part of the growth has come from so-called click-to-download ads from other mobile apps. Increasing dominance of big players could become an issue for smaller players reliant on advertising dollars.

Report produced by: Asian Insights Office, DBS Group Research