Mobile Advertising has become an indispensable tool for businesses seeking growth: it is no longer just an option, it has emerged as a cornerstone of modern marketing.
In today’s mobile-centric landscape, mobile ad spend represents a crucial metric to understand how to reach the right audience when it’s best and where it spends most of its time.
To give you a sense of how significant mobile ad spend has become, it’s worth noting that according to Statista global digital ad spending reached $549.51 billion in 2022, with projections pointing to $870.85 billion by 2027.
Given this rapid growth, if you’re aiming to maximize returns from your advertising efforts you promptly need to learn how to optimize mobile ad spend. This article will explore the key strategies to improve your mobile ad spend efficiency, explaining what mobile ad spend entails and why it matters. It will walk you through calculating your ad spend, analyzing its relationship with Return on Ad Spend (ROAS), and uncovering strategies for optimization.
Mobile ad spend refers to the total amount invested by businesses in mobile advertising campaigns. These campaigns include expenses for digital ads on mobile websites, in-app ads, mobile-optimized social media marketing, and other efforts to target users via ads. It is a critical metric that highlights how much businesses are investing to engage their mobile audience.Typically, mobile ad spend is tracked per campaign, channel, or platform, allowing businesses to assess their marketing performance over specific time periods.
Calculating mobile ad spend depends on the pricing model used: different advertising platforms price their ads by click, impression, or download.
With fragmented metrics, it’s important for mobile marketers to understand how each one is calculated and to be able to compile their own KPIs to compare how different channels are performing.
Some popular KPIs for mobile ad spend are:
- Cost per mille (CPM): Advertisers pay for every 1,000 impressions of their ad. This pricing model is typically used for campaigns focused on awareness or visibility, but may provide a low Return On Investment (ROI) as it focuses on views rather than actual conversions.
This model is the reference pricing strategy used by Demand-Side Platforms (DSPs): this way, they enable advertisers to purchase ad impressions across various publishers programmatically, ensuring extensive reach to targeted audiences. - Cost per click (CPC): Advertisers pay for each click on their ad. Since advertisers only pay when users actively engage with the ad, this model is often used in campaigns aiming for user engagement. However, CPC doesn’t guarantee conversions.
This pricing model is employed by major advertising platforms like Google Ads and Facebook. - Cost per install (CPI): Advertisers pay for every app install generated through their ads. CPI is an effective way of determining user engagement and predicting potential sales, therefore often used in mobile app campaigns.
CPI can vary significantly depending on several factors:
- App category (gaming, productivity, betting..)
- Geographic location (GEO) where the ad is shown
- Ad format (video, banner, interstitial ads..)
- Operating system (iOS vs. Android)
- Cost per action (CPA): Advertisers pay for a specific action taken by a user, such as signing up for a newsletter or making a purchase. This model offers a measurable way to track campaign profitability, also minimizing the risks for the advertisers.
The choice of the cost model is a strategic decision that must be made by carefully considering the objectives of the campaign and the characteristics of the advertising platform used.
Platform-Specific and Campaign-Specific Costs:
To optimize ad spend, it’s essential to track costs by platform and campaign.
- Each platform may have different pricing structures, and understanding these can help businesses determine which offers the best return.
- Additionally, breaking down ad spend by individual campaigns, like user acquisition or brand awareness, provides insights into which strategies are most effective, allowing businesses to allocate budgets more efficiently for future campaigns.
Understanding the relationship between mobile ad spend and Return on Ad Spend (ROAS) is crucial for determining the effectiveness of your campaigns.
It calculates the revenue generated from the money spent on advertising.
It is calculated using the following formula:
ROAS = Total revenue attributed to the campaign / Total ad spend
If a company spends $10,000 on a mobile ad campaign and generates $50,000 in revenue from that campaign, the return on ad spend (ROAS) would be 5:1.
This means that for every dollar spent on advertising, the company earns $5 in return.
A higher ROAS indicates a more successful campaign, since it is converting mobile ad spend into a profitable outcome, and it can take a long time to achieve it.
However, it’s important to note that ROAS only considers direct ad spending and doesn't account for other marketing costs like salaries, software, or ad production.
Optimizing mobile ad spend requires a strategic approach to ensure every dollar contributes to meaningful returns. But what are the best ways to actually achieve this?
- Targeting: Accurate audience segmentation allows businesses to focus on high-value users more likely to convert.
By leveraging demographic factors like age and gender, geographic data to focus on high-demand regions, and behavioral insights such as browsing and purchase history, advertisers can ensure their ads resonate with the right users, also reducing wasted spend. - Retargeting: Target users who have already interacted with the app or website but have not completed the desired action. Retargeting can be an efficient way to increase conversions and optimize mobile ad spend.
- Leveraging AI and Automation: Using AI and machine learning tools, advertisers can automate and optimize bidding, targeting, and creative selection. These tools analyze vast amounts of data in real-time, enabling smarter decision-making and improving ad performance without increasing costs unnecessarily.
- Partnering with Ad Networks: Ad networks play a crucial role in scaling campaigns and improving ROAS. They provide access to a broad audience across multiple channels and platforms, simplifying campaign management and allowing advertisers to focus on the strategies that work best.
- Testing and Adapting Campaigns: Regularly conducting A/B testing on ad creatives, messaging, and targeting parameters to see which ones perform better.
Advertisers should experiment with variations in headlines, images, CTAs and formats.
This will help identify underperforming elements and therefore make real-time adjustments to optimize results. - Focusing on High-Performing Platforms: As previously stated, ad costs and performance vary across platforms. Monitoring platform-specific metrics helps identify the most effective channels for a campaign, ensuring resources are allocated where they drive the best outcomes.
By combining these techniques, businesses can optimize their mobile ad spend, enhance ROAS, and ensure long-term success.
- Mobile ad spend is essential for businesses aiming to engage their audience effectively in today’s mobile-driven market.
- Learn how to calculate mobile ad spend using models like CPM, CPC, CPI, and CPA, to align with campaign goals and platforms used.
- ROAS (Return on Ad Spend) is a critical metric to assess campaign profitability, with a focus on measuring revenue generated from ad spend.
- Optimize ad spend by targeting high-value users, leveraging AI for automation, and testing ads for better performance.
- Focus on high-performing platforms and ad networks to maximize returns and ensure campaign success.
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