iPhone 7 and holiday spending driving up holiday spending

Indexes from Fiksu DSP, the data-fueled mobile marketing technology company, reveal that mobile ad costs are on the rise, a result potentially due to iPhone 7 adoption, as well as early holiday ad spend. Fiksu’s indexes track year-over-year and monthly metrics, measuring cost per thousand impressions (CPM) and cost per purchaser (CPP) across mobile RTB advertising.

 The data also shows that as advertisers see sustained returns and recognize the opportunity to find high quality users on the maturing Android platform, the marketplace is becoming flooded with competition, especially as the holiday season approaches.

“Seasonal competition is evident in this data, but the numbers indicate that these trends may be sustained over the long run,” says Tom Cummings, vice president, new market strategy at Fiksu DSP. “It’s growing increasingly evident that Android represents a great opportunity to find users who are more likely to make a purchase, so while many advertisers enjoyed the opportunity to find the right users at a lower initial investment, the rest of the market is quickly catching on.”

CPM on iOS reached $6.74 during October, with both CPM (+26%) and CPP (+40%) rising over the course of the month. It took about three weeks for the new operating system to take over as the most rapidly-adopted OS launch to date, and the index data reflects a rise in competition as advertisers fight to get in front of new users, including both recent iPhone 7 owners and those who upgraded to iOS 10 on older phones.

 When viewing the data on a week-to-week basis, the indexes confirm that the spike can be tied to recent device and OS activations, as CPM and CPP during the last week of September and first month of October were among the highest ever recorded by Fiksu. Since October of last year, CPP and CPM on iOS are up 69% and 37%, respectively.

On both iOS and Android, CPM is up across the board, rising by 26% on iOS and 6% on Android over the past month. From now through the end of December, these numbers are likely to continue to rise as advertisers seek to reach consumers who are most probable to make purchases and activate new devices during the holiday season.

“Advertisers will be laser-focused on getting their share of the mobile surge around the holidays, driving up bids for higher-quality impressions and emphasizing lifetime value and loyalty,” says Cummings. “We already saw this start to happen in October, so those that wait much longer to launch holiday spend are likely to be left out to dry earlier than they may have expected.”

After dropping by 25% from August to September, CPP dramatically changed directions in October, rising by 65%. While some of this month-to-month increase can be tied to early holiday ad spend, a 129% increase in CPP year-over-year from October 2015 indicates a natural progression tied to the increasing maturity of the Android platform, according to Fiksu DSP. 

CPP rising on both Android and iOS also reflects an influx of smaller developers spending on these platforms. Without the wealth of data, access to creative resources, or sophisticated marketing strategies that larger publishers have, CPP for the smaller player can be higher despite less total spend due to shortcomings in efficiency. 

 Along with platform maturity, advertisers on both iOS and Android should also be aware of new developments in advertising content that could impact CPM and their return on investment. “One thing we’re watching for is the impact of playable ads,” says Cummings. “CPM is typically high for playables, but users tend be very high quality which we see play out as lower CPP results. We’re beginning to see that impact and expect that the remainder of Q4 will reveal more of the same.”