Just as Facebook’s ad exchange is becoming popular with advertisers and Twitter is looking to set up its own, mobile ad service platforms that help apps monetize their services are making headway in the market. Mobile ad exchange platform MoPub reached a revenue run rate of $100 million on Thursday.
MoPub – backed by Accel Ventures – provides the technology for mobile apps to sell ads. It raised 18.5 million in two rounds of venture capital. It serves 2 billion ad auctions each day on more than 550 million unique devices each month, according to the company. Its competitors are not doing too bad either. InMobi raised over $200 million from Softbank in September of 2011. Millennial Media – a mobile advertising and data platform – raised $65 million in equity in January 2011.
The growth in mobile advertising products is bound to continue. Kleiner Perkins general partner Mary Meeker released a report on Wednesday that suggested mobile advertising was an untapped goldmine. Consumers spend 13% of their time online, while only 3% of the mobile advertising budget is spent on mobile.
But how can that gap be filled without alienating consumers? And how can advertisers prevent mobile ads from being ineffective once they proliferate on mobile screens?
Some platforms are limiting the number of ads they place, and raising the price per ad to increase revenue. Ad exchanges facilitate that because they allow advertisers to direct their ads at a certain population. They also allow platforms to charge higher prices and avoid empty spaces by giving placements to the highest bidder.
Twitter, for example, is rolling out a service that makes custom advertising lists for companies. It also plans to launch an ad exchange similar to Facebook to increase its ad revenue without increasing the number of ads. Over 20% of MoPub’s ads are sold in a real time exchange.
But no matter how good the technology, how well these mobile ads do depend on how much advertisers are willing to spend on mobile ads. Internet ad spending is just over half of what advertisers spend on TV ($35 billion versus $66 billion). And mobile is more recent territory than digital. Perhaps, having witnessed the rapid shift of viewers from traditional to online media, advertisers will be more receptive to pay up for a primetime mobile ad.