The most important and fastest growing segment of Internet advertising is mobile advertising, which makes tracking the underlying key drivers and trends of great importance. Mobile eCPMs increased 68% y/y in 3Q13 and 9% sequentially despite what is typically a seasonal slowdown in Q3 (note that MoPub’s data showed a 10% seq. decline in 3Q12). A key driver of this price increase, in MoPub’s opinion, is the increase in the number of competitive bidders in the auction.
Both the Competitive Factor (i.e., the number of bids placed for auctions with winning bids) and Bid Depth (i.e., the avg. number of bids placed per auction conducted) posted record highs in 3Q13 and showed momentum exiting the quarter. Another interesting observation from the data included that Apple Family of iOS devices continued to command premium pricing as compared with Andriod (a 23% premium in 3Q13, or $1.08 vs. $0.88 eCPM), but that Android continues to close the gap (iOS was at a 53% premium in 1Q13).
We view positive mobile ad trends as positive for the Internet media sector in general, and in particular for companies like Facebook (FB, Buy), Google (GOOG, Buy), LinkedIn (LNKD, Neutral), and Yelp (Neutral), which all derive a meaningful portion of their revenue and incremental growth from mobile advertising.