Basic Maths on Mobile Advertising Rates

I continue to be astonished by a number of (predominantly) large brands with mobile portals seeking to charge mobile CPMs of £25 or more. At these rates the Brand needs to be very confident of the brand value it will receive. If you were to undertake a campaign purely on a call to action basis you would really struggle to make such rates pay.

The chart below illustrates this point. If your business is selling ringtones to customers and assuming that you have a conversion rate of 25% i.e. 1 in 4 visitors to your site buy one, then at a CPM of £15, the host site would have to generate 10% clickthrough for you to acquire that customer for less than £1.

More typical mobile clickthrough rates at the moment are in the range of 0.5% to 3% with 1-1.5% being the norm. At such clickthrough rates, CPMs should be in the region of £2 to generate that paying customer at a cost less than £1.

Larger brands of course are not just looking for lead generation but also for brand value from a campaign - the premium for that brand value right now is significant at these higher CPMs.

All receivers of mobile advertising need to consider how they can best increase targeting and clickthrough for each campaign, else these CPMs really shall slide. The operators and other large scale brands at the moment are trying to set a price in the market which is to be applauded but this needs to provide value to the buyer. At the moment, it seems as though the squeeze on mobile inventory is being exploited a little too much.