Chidi Erike breaks down how supply and demand shape CPM prices across regions and devices. Mobile CPMs differ from desktop in the U.S., Mexico, India, and Africa. Advertisers should target high-intent users, account for regional and time-of-week variations, and understand mobile inventory constraints.
Chapters
So globally, real quick, I know we have some pretty global advertisers in here, but not everybody's global yet. But I just wanted to give you guys some examples of what's going on in the United States. So green is your mobile feed. It is cheaper to reach people on their mobile phones. Anybody want to guess why that is? Why would it be cheaper? Convenience. See that? Convenience. So convenience is one part of it, because convenience leads to more usability, more people are using our platform. But— So, and along the lines of third thought, more people have them, so more opportunities for people to click because I'm checking my seat with my phone. Yeah, so these are all the right answers, right? And not everybody thinks like this as an advertiser, aka it's just more inventory on mobile, right? It's more inventory because more people are using it. So because of that, the price is actually lower. Desktop, as you can see, is higher. That does not hold true for every single region. You have regions like Mexico, for example, where it's actually the other way around. Why? Because relative to how developed a country Mexico is, there's not yet too many users on mobile phones. Not yet. There's a lot of people that have phones, but not necessarily smartphones. So let me specify that. So as you can see, if you look at this whole entire year, I think this is 2016, towards the end of the year, it's getting closer. So that AKA means that more people in Mexico are starting to use smartphones, right? I was going to say even Africa. Yeah. In terms of the global market, there's more people now getting cell phones as well. Yeah. So Africa is an interesting case. So Africa actually missed the generation of desktops. So they're moving right into the mobile phone, right? Which is really good for anybody who's just trying to get sales and they don't care where those sales are coming from. Africa is going to have some of the more affordable CPMs, right? So just think about that when you're actually trying to hit literally everybody. There's more people that exist outside of the States than here, right? And I just want to show you something. This is just to give you an idea of what supply and demand is. So in India, it has nothing to do with the United States holidays, obviously, right? That little tick up is— that little tick that you see, I guess the second highest point on this chart, is actually because of the Indians— India's wedding season. Right? So many people in India get married that time of year, that's why you see CPMs going up. So the reason why I wanted to highlight that is because it's all supply and demand, right? It's not, it's not, oh, Facebook's trying to make more money towards the end of the year. That's not what's going on here. It's just that there's more advertisers trying to show their ads to any given individual. And this is what we typically tell people who are advertisers, and I'm sure everybody here is an advertiser in some way or another. Pretty much CPMs for mobile are less, so understand that everything's being moved to mobile, right? Not too many people are using desktops anymore relative to mobile. Also, make your advertising work for you. Target the users who are likely to convert. I mentioned earlier, if you're targeting clicky people but clicky people are not likely to purchase your product, that's a problem, right? You need to switch that because what's going to happen is we're going to say, okay, well, you want clicky people, we'll give you clicky people. So we'll try really hard to give you more and more clicky people, and then you're going to get increasingly frustrated because you're going to say, well, this is not necessarily driving sales, right? So that's a different dynamic that you want to consider. Think about when you actually reach users. So for some of the real small businesses, let's say a coffee shop in San Mateo, a lot of times small business owners, they want to be connected to their advertisements. So Monday through Saturday they keep ads going. Sunday we actually see a dip. In our platform. Why? Because a lot of small businesses decide that's the day they're going to take off, and therefore they're not going to show ads to anybody. That could be an opportunity for somebody else, right? So keep that in mind as well. All markets are slightly different is number 4. That's something we just spoke about. We did it more on the, on a global level, but that exists here in, on a regional level too, or right here in California. Every market is going to be different. San Jose, Oakland, San Francisco, each going to be 2 totally different, 3 totally different ballparks. And the objective you want to reach. We do a great job of doing targeting for you, right? Because what happens is if you do targeting incorrectly, it's also— it's actually going to go against your profitability. So you want to make sure that you say, well, I'm open to reaching anybody, and let our systems figure out who's most likely to make money for you, right? We don't profit unless you guys profit. We can't rise price— we can't raise prices unless you guys are making more money. Right, so that's incentives aligned, and that's how you guys want it. And I'll stop right there. If there's any questions, I'll be happy to answer them, and I'll stay a little after this presentation.
