ZO's Ideas for Digital

The State of Mobile Advertising 2012

Executive Summary

In our first edition of the State of Mobile Advertising report, we take an in-depth look at the monetization of mobile advertising from four perspectives within the ad delivery value chain: Devices, Publishers, Ad Networks and Advertisers. This report is based on insights from the second quarter of 2012 and summarizes our experience gained as the world’s leading mobile ad platform serving more than 9,000 global customers, with more than 35 billion ad impressions per month and driving over $240 million (US) of revenue to mobile publishers in 2011.

iPhone is the top smartphone device in monetization performance

The iPhone leads the smartphone OS pack with an average eCPM of $2.85. Though it is closely followed by Android devices (at $2.10). The rest of the mobile phone field is significantly behind.

This indicates that devices with better usability (i.e., larger screen size, touchscreen) and those with features that allow more interaction between the advertisement and the device’s functionality (e.g., click to call, expand, play video) have better monetization potential than less capable and less user-friendly devices. For example, HTML5 Canvas, the mobile-friendly browser feature that specialist developers use to build stunning animations and full-screen rich-media overlays, relies on iOS Safari 3.2 and Android 2.1 or above to run. We also see the importance of device market share in encouraging advertisers to target particular devices. Windows phones have most if not all of the advanced features of Android and iPhones, but low levels of user adoption stifle its performance.

Further illustrating this point is the high eCPM achieved by iPad. Delivering an average eCPM of $3.96 across the Opera mobile ad platform, iPad epitomizes the user-friendly device with large, touchscreen interactivity, as well as other features that enhance the user experience.

The iPad is also achieving significant user adoption in user groups that are highly desirable to advertisers. For example, 40% of physicians own or plan to own an iPad or tablet by the end of 2012, according to Nielsen projections.

Yes, rich media does drive engagement

So far, in 2012 Apple iOS has delivered a clear majority of rich media ad impressions compared to Android devices. However, regardless, of the OS rich media has shown to always drive better customer engagement. In fact, leveraging the native functions of mobile devices — such as sophisticated HTML and camera interfaces — has been shown to have a direct correlation to time spent interacting with the ad unit.

For instance, according to our Rich Media Index, 66% of users that click through to a video will complete that interaction, with an average dwell time of 52 seconds.Photo-taking capabilities warrant an even higher dwell time (1 min 25 secs), and about half of consumers will continue to interact with the ad post-click.

Dwell Time & Interaction Rates

Advertisers are sitting up and taking note of the return on investment of rich media in mobile. From January to June 2012, we saw the number of standard and expandable banner executions diminish, while HTML5 rich media and video ad executions increased:

Business & Finance is the clear leader in mobile ad revenue

Among all publisher categories, Business & Finance generates more revenue per impression than other publisher category. We see this trend continuing in the near term, while remaining optimistic about social networking as a revenue driver over the long term.

Monetization by Site Category

North America is the market leader

The United States and Canada generate the majority of ad requests, with 73% of the global total. U.S. eCPM is also the highest ($1.98), closely followed by the EU5 ($1.94) — and both top the global average of $1.90.

Percent of impressions

Top 20 Countries by Impressions

1. United States
2. Canada
3. United Kingdom (EU5)
4. Indonesia
5. Japan
6. Italy (EU5)
7. Mexico
8. India
9. China
10. Australia
11. Netherlands
12. Spain (EU5)
13. Germany (EU5)
14. France (EU5)
15. Singapore
16. Saudi Arabia
17. Republic of Korea
18. Iceland
19. Philippines
20. Malaysia

eCPM by RegionregioneCPMGlobal Average eCPM$1.90US eCPM$1.98EU5 eCPM$1.94Rest of world$1.57

Ad network performance varies significantly over very short periods of time

Opera delivers mobile advertisements to publishers from over 100 advertising sources. These sources vary in many ways, including creative and geographic focus, and size. When reviewing traffic and eCPM rates from the most active ad networks connected to our platform, we also see a significant variance in the ad networks’ fill rates and payout rates. Across our customers, we have an average fill rate of 85.2% from these sources. As previously noted, we see an average global eCPM of $1.90.

We found that:

• The ad networks with the highest fill rates tend to have lower eCPM payout rates, while those with high payout rates tend to have low fill rates.
• High paying ad networks’ eCPM rates fluctuate radically (as much as 370%), while ad networks with lower eCPMs (and high fill rates) fluctuate at lower levels (but still as much as 43%).

Ad network eCPM

For this analysis, we took a sample of ad networks receiving very high volumes of ad requests from us over the course of one week. We selected three networks with high eCPM rates and three networks with high fill rates. We then looked at the fill rates for the high paying networks and the payout rates (eCPM) for the networks with some of the highest fill rates.

What does this mean for mobile publishers?

In order to maximize profit, publishers should:

• Connect to multiple ad sources including:
• Actively manage their traffic to maximize their eCPM across all ad sources.