Google Sees Price Of Mobile Ad Units Increasing. Are There Alternatives?

The mobile industry is united in the thought that the use of mobile search and the high response rates associated with mobile ads will continue to grow. Taking this view one step further, Google exec Gundotra expects the actual price per mobile ad unit to increase and ultimately exceed the price of desk top ad units.

Paid Search Is Already Expensive. Can It Really Go Much Higher On Mobile?

For mobile ad unit pricing to increase, marketers will have to

• Increase their overall marketing budgets and
• Increase the amount that they allocate to mobile 

But the unit cost of paid search is already very high. It is difficult to see how it can go much higher and still present an attractive option for marketers even on mobile. This is especially true if there are credible alternatives.

One consequence of the increasing cost of paid search is the shift of budgets to Search Engine Optimisation. Another, more recent consequence is the growing use by marketers of Social Networks. Both of these will put pressure on the price of desktop search. This will be carried through to mobile.

  

Are There The Budgets Support Higher Priced Mobile Ads?

Marketers continue to shift their budgets to more personally engaging channels rather simply increase them. Mobile and social networks are amongst the beneficiaries. To anticipate a growth in the price per mobile ad unit and at the same time a growth in the use of mobile ignores the growing importance of Social Networks as a direct to consumer channel. Social Networks will continue to gain at the expense of mobile and here again, mobile search will come under pressure.

What Will Marketers Allocate To Mobile Search?

Determining the budget that should be allocated to mobile is difficult for advertisers and will continue to be so whilst it remains difficult to measure and evaluate the effectiveness of mobile advertising. comScore’s recent efforts in producing an industry standard model for mobile metrics will start to make measuring some aspects of mobile more transparent. This in turn will ensure a greater allocation of budgets to mobile. However, the increase will be shared across all mobile channels – Mobile Apps, Messaging, Mobile Video – not just search, and this too will put pressure on the price of mobile ad units.

  

Challengers To Mobile Search
Mobile search is on the increase and marketers do want to tap into this channel. However, marketing ROI is ultimately more important than the fashion of using mobile. If the cost of mobile search ad units does soar, there could be a shift away from search to other mobile channels and social networks.