Google released a lot of their financial numbers recently, and to put it mildly, it was a good year for the company. They had an overall revenue of $26.1 billion for the fourth quarter, which is a 22% increase year over year. Of that revenue, $22.4 billion of it was from ads, up 17% YoY.
In just about every other measured category, Google revenue went up as well. What didn’t climb nearly as fast in terms of ads, however, was the inventory of ad slots for mobile. The demand is continuing to rocket both in terms of overall ad dollars, and ad dollars specifically spent on mobile. Since the market saturation of smart phones is so high, the total number of places where Google can display ads is slowly starting to level out.
This means that demand is continuing to shoot up, but supply is growing at a much more modest rate. Anyone with even a basic understanding of economics knows what this leads to. The price for mobile ads is poised to go up.
Of course, most people have been expecting that this would happen at some point. And at least for now, mobile ad space is still extremely inexpensive for what you get. Even compared to desktop ads, mobile is cheaper in almost every category.
The question on many people’s minds is going to be how high the prices will rise over the next 12-24 months, and at what point will the industry find its balance between supply and demand, and at what price.
Anyone who is relying on the cheap mobile ad prices for their success, however, better really start looking for some alternative marketing options. It is almost certain that the prices will be on the rise over the course of 2017.