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How the industry can help mobile developers survive “Apptropolis”

March 28, 2016 | By Pat McCarthy, SVP, Marketing—AppNexus

As of early 2016, millions of apps are ready for download on Google Play, Apple’s App Store, Amazon, Microsoft, and Blackberry World. Elsewhere in the world, China’s Wandoujia app store adds a stunning average of 500,000 new users per day to its platform.

Welcome to a form of digital sprawl I call “Apptropolis.” While it’s not a city made of brick and mortar, Apptropolis has plenty in common with the boomtown megalopolises dotting our planet: it presents a near-constant stream of obstacles to the people striving to make a living within its prescribed “city limits,” foremost being the mobile developers who build apps in hopes of monetizing them.

In his celebrated collection of modern-day fables, Invisible Cities, Italo Calvino relates the story of the (fictional) city of “Leonia,” a city that “refashions itself each day: every morning the people wake between fresh seats, wash with just-unwrapped cakes of soap… And on the sidewalks, encased in spotless plastic bags, the remains of yesterday’s Leonia await the garbage truck.”

In writing of Leonia, Calvino might just as well have been writing about Apptropolis. In a digital space where anything can be uploaded, upgraded, and then just as swiftly deleted, apps become disposable almost from the moment they hit the app store. For most mobile developers, monetizing in Apptropolis remains an elusive work of fiction. If you don’t believe me, here’s a case study to consider: the Helsinki-based mobile games studio, Rovio, was actually on the verge of bankruptcy on the eve of releasing its multibillion-download app, Angry Birds.

According to Andrew Chen, Head of Driver Acquisition at Uber, today’s average Google Play app loses 77% of its daily active users (DAU) within 72 hours after initial download. In other words, unless your app is on par with the likes of Uber, Facebook or Clash of Clans, the odds of high user churn rate are almost certain. Fickle mobile users will simply dispose of one newfangled app in favor of another, newfanglier one.

A recent study, conducted by AppsFlyer, asked users to list the reasons they chose to uninstall certain apps from their mobile devices. A full 29% of respondents indicated that “Intrusive ads” were a principal reason they chose to uninstall their apps.

That’s much too high a percentile. In fact, it’s unacceptable. What should we, as an industry, do to fix it?

First, we can accelerate new mobile in-app video advertising formats like outstream. We already know that TV viewership is tumbling steadily in favor of digital devices, and that many of these new viewers access their favorite movies and TV shows via mobile apps. Unlike pre-roll video advertisements, outstream videos are displayed in a format that allows all publishers—not just video publishers—to monetize their apps successfully with video advertising. Moreover, studies show that outstream video ads increase brand exposure 10% more than their pre-roll video cousins.

In the same way that cookies track the demographics of different web audiences, new and powerful mobile analytics tools are able to analyze the actions of app users. Better mobile forecasting and analytics tools can only lead to better outcomes – and to better video ads being served. App developers ought to look at the TV buyer market, enrich their mobile outstream impressions with demographic data, and sell into video buyers.

Second, we should implement programmatic native in-app advertising on a scale that has yet to be attempted. It’s long been proven that native ads have higher CTRs than display ads, especially for mobile. But our industry should also develop new ways to use native advertising in gaming apps so that they become a seamless part of the game experience. The MRAID mobile interstitial ads of today should be replaced with outstream video, natively pre-cached into feeds.

Finally, we need to find better ways for app developers to maximize their yield. Header bidding helps display publishers improve their total yields by allowing multiple buyers bid for their inventory on a level playing field rather than via a single exchange. Having multiple bidding partners vying for your inventory means more price competition to monetize your app.

New “mobile” versions of header bidding are now cropping up in the market, allowing mobile developers to partner with multiple mobile ad networks simultaneously. Given the success of header bidding, it stands to reason that mobile app developers should adopt these new tools as soon as possible.

As an industry, we often find ourselves engaged in Herculean feats of hand wringing about the need to “create better ads,” ads able to engage and retain the interest of users across multiple digital channels. Real solutions already exist on the market that can help app developers monetize. It now becomes a question of integrating and scaling these solutions into the marketplace that’s able to provide them.

As Senior Vice President of Marketing at AppNexus, Pat drives the company’s effort to ensure that all stakeholders enjoy optimal visibility into our products, capabilities and vision. He leads the company’s corporate marketing functions, including corporate communications, branding and customer experience, and works across Business Units and product teams to ensure the consistency and quality of our communication. Previously, Pat served as Senior Vice President of Products at AppNexus and he joined AppNexus via the acquisition of Fantuition, a startup he co-founded. Prior to founding Fantuition, Pat was an early executive at Right Media and later served as Vice President of Marketing at Yahoo!.

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