For the first time, in 2020, greater than two-thirds of US digital ad spend will go to mobile platforms. In 2020, in-app ad revenue is expected to reach $117 billion worldwide and predicted to witness almost 100% growth to reach $226 billion by 2025.
While expectations of forecast growth for mobile ad spend have had to be significantly adjusted due to the pandemic, in-app advertising has become one of the key monetization strategies for mobile ad publishers.
That makes it more important than ever for publishers to consider leveraging mobile ads as a valuable monetization strategy.
In this guide, we’ll walk you through exactly what in-app advertising is and how it works, crucial trends you need to know about, the benefits for publishers of considering mobile website versus in-app and finally the best in-app advertising networks to consider.
Let’s dive in.
What is In-App Advertising and How Does it Work?
In-app advertising is both a marketing and monetization strategy for app developers and brands where advertisers serve ads on their apps for compensation. These in-app ads are served using app advertising networks that allow developers and ad publishers or advertisers to work together. Here is how in-app ads work:
- The app on the user’s smartphone sends a request to the mobile advertising network to serve an ad.
- The ad network takes a multitude of factors into account using its algorithms to identify the best and highest-paying ad.
- The ad is then delivered to the mobile app in real time which the user can see on their smartphone.
These ads come in different types and formats and developers can choose between various ad types to optimize their app monetization process. These include in-app display ads, native ads, and video ad formats.
Pros and Cons of In-App Advertising
While overall growth of in-app ad expenditure has taken a hit due to the pandemic, ad placement numbers are still significantly high with global app sales revenue crossing the $50 billion threshold this year. App purchases grew with a year-on-year increase of 23% with annual smartphone app downloads forecast to cross $258 billion by 2022.
Mobile experience has become increasingly important for all brands and businesses with increasing spend each year on mobile-first marketing campaigns.
Let’s take a closer look at the benefits of in-app mobile advertising.
Pros of In-App Advertising
1. More Monetization Opportunities
On mobile apps, advertisers and app publishers have much more freedom to monetize the app in ways they cannot monetize a mobile website.
For mobile ad publishers, in-app ads have proven to be a successful monetization strategy. These days, smartphone app developers are making money for serving ads on their mobile apps. For example, the premier online real estate business, Zillow, publishes ads for allied businesses enabling them to reach targeted users through their app.
2. Users Spend More Time on Apps
According to a Smaato study, mobile users are spending 90% of their time on apps, equivalent to more than three hours a day. This means that when it comes to mobile experiences, apps have taken the driving seat with mobile web being the distant runner-up.
3. More Engaged Audience
Unlike traditional marketing channels, the mobile app audience is by far the most captive and engaged audience that leads to higher interest, click-through rate, and conversions.
4. Higher Chance of Conversion
Research demonstrates that apps are 120% more likely to convert compared to mobile websites. A Criteo report found that users coming from in-app ads view 4.2 times more products per session. Considering that, you may want to think about adding in-app advertising to your arsenal.
5. Greater Accuracy
When a mobile user is browsing websites, advertisers and publishers can only accumulate data about them using cookies which is quite limited. However, when using an application, ad publishers can collect more targeted information through device ID including age, internet provider, gender, operating system, device type, location, and more.
6. More Personalization
In-app-based mobile advertising enables ad publishers to create highly personalized and customized ads that have higher odds of engaging your audience and convincing them to click through. Also, through the app store, developers always get permission from the mobile user to collect their data prior to installation. Ad publishers are also in a better position to identify their audience giving them more control over the ad serving process.
That being said, you have to keep in mind that recent loss of data tracking across apps pushed forward by the latest iteration of iOS 14 is expected to cut down the cost per thousand mille (CPM) making personalized advertising substantially more challenging. This will increase the value of first-party data and immersive ad units significantly.
7. Better Results
According to AppSavvy, in-app ads perform 11.4 times better as compared to banner ads on mobile websites.
8. No Ad Block
If a user has installed an ad blocker, it is likely they won’t see banner ads. That’s not a big concern for in-app advertisers because of the freemium business model which allows them to serve ads to the mobile users who can use the app without paying any price.
Cons of In-App Advertising
As brands and marketers continue to increase their marketing spend on both mobile web and in-app advertising, they also need to consider the drawbacks of in-app advertising.
Without conducting a cost versus benefit analysis, it can be challenging to make your in ad campaign successful. Make sure there is enough time spent on programmatic planning. Some key points you need to keep in mind are as follows:
- Highly competitive channel
Since more and more advertisers are now looking to display their ads within apps, it has become an increasingly competitive and expensive marketing platform.
- Depends on your business niche
If your target customer is not a savvy smartphone user or doesn’t like to use app content, then mobile app ads may not be the best marketing fit for your brand. You will not get high enough click through rates.
5 Best In-App Advertising Networks
If you are an ad publisher searching for top mobile app networks, here are some of the leading ad networks that you can consider using:
1. Instagram / Facebook
These social media giants are some of the best ad networks to reach your target audience through a robust and programmatic advertising campaign within which you can include different ad formats.
With their enormous reach, Facebook pulled in a revenue of $17.74 billion in Q1 2020 alone, they have the potential to accumulate hundreds of thousands of impressions and thousands of conversions with an effective in-app marketing strategy.
Moreover, both Instagram and Facebook’s platforms allow you to be flexible when it comes to audience, timing, and advertising budget. Ad publishers can target audiences based on age, location data, relationship status, gender, job role, and likes and dislikes.
Owned by Google, Admob is the mobile variant of Google AdSense. It is an effective ad network for marketers who are just starting out as it is easy to use and quite intuitive. Marketers can use video, images, text, or interactive media to serve their programmatic ad campaign. They also have the option to choose from formats including interstitial, video, banner, native and reward ads.
With over 90,000 advertisers, Smaato is a great mobile ad network for those looking to publish ads. Smaato’s large advertiser base means publishers have a high probability of selling ad space. You can also make the most of real-time bidding with SPX, the Smaato Publisher Platform.
If you are targeting gamers, then you can’t go wrong with Unity, which has been especially created to display video ad content to monetize mobile gaming apps. The ad network is compatible with both mobile operating systems including iOS and Android and supports all game engines including Corona, Marmalade, and Adobe Air. Advertisers can also use this one-stop shop network to include in-app shopping which lets gamers search and purchase products without ever leaving the game.
One of the leading independent mobile ad networks, InMobi is capable of handling both mobile web and apps so you can run different types of advertising campaigns using a single platform. The network supports both iOS and Android and provides ad campaigns in CPI and CPC models. Rich media, interstitial, video, banner, and native are the available ad formats.
In-App Advertising Formats
When it comes to displaying third party mobile ads, you need to ensure you are delivering the best content and user experience by using the right ad format for your target audience.
Popular in-app ad formats you can use include interstitial, rich media, video, rewarded video, native and banner ads.
Here’s a quick guide to the different ad formats available:
- Interstitial Ads
This ad format consists of full-screen banner ads that appear between different game levels.
- Rich Media
These mobile in-app ads are served in the banner as well as in pop up formats using HTML, JS, CSS, and image files.
- Rewarded Video Ads
This ad format, as the name suggests, offers incentives to the gamer by watching video ads.
- Video Ads
Native video ads are served in mobile video format and may allow the users to skip in a few seconds if they are not interested. Mobile video ads can be a great tool to engage users.
- Native Ads
These are video or textual ads that mimic the appearance of editorial content present on the website. They are non-intrusive and blend in with the design.
- Banner Ads
These are simple and static ads that are either displayed at the top or bottom of the app. They are highly affordable and are supported universally.\
- Playable Ads
These types of game ads provide a playable or gamified version of the game for improved demonstrability.
Publishers should consider in-app advertising as a key monetization strategy to target the potentially mobile app user segment.
Remember to keep in mind some of the best practices for in-app advertising success:
- Keep in eye on where your mobile advertising is coming from.
- Choose full-screen ads for better engagement and banners for higher reach.
- If you are looking to maximize engagement, consider using video in-app ads.
- Ensure you are making the most of programmatic deals and private marketplaces.
- Ensure your targeting and content is optimised to serve engaging ads to your users for better responses.