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InContext / An inside look at the business of digital content

Mobile apps are making a comeback and publishers better be ready

April 22, 2019 | By Eric Shih, Chief Supply Officer - Teads @Teads

The mobile app ecosystem will turn 11 years old this summer, and it has evolved into one of the largest industries globally with forecasted revenues of almost $190 billion. There are now millions of apps in both the Apple App Store and Google Play. And they account for over half of digital media usage and time spent in the US. We are obviously in a mobile-first world – at Teads, mobile traffic represents over 70% of our publishers’ traffic worldwide.

However, we find that many publishers continue to focus investment on web while either treating their existing apps as side projects or not developing an app presence at all. Given the rapid shift in consumer media consumption and shift in the publisher landscape, combined with digital dominance by the “duopoly” (and soon triopoly), the time is now for publishers to prioritize their mobile app presence.

Increasing consumption and engagement

Consumers not only spend the majority of their time on mobile in apps, but the average number of apps used continues to increase (by 15% in 2018) to ~35 apps per US smartphone user. Mobile app users are also more attractive audiences given their high engagement rates in app as opposed to mobile web.

The Daily Beast recently confirmed this trend, noting that their app users average 3x more pages per session than their mobile web users. Bleacher Report is a prime example of a publisher whose audience is primarily in-app vs. mobile web – with its users averaging 5 minutes per day in the app. More and more editorial publishers are now appearing among top apps, as names such as The New York Times, CNN, Bleacher Report, The Washington Post, BBC News, and USA Today, among others, continually rank in the top 500 apps in the US (per comScore, July 2018).

Mobile apps > mobile web

The mobile app user experience (and native apps in particular) is superior to mobile web for both content and advertising, which is probably a core driver of consumer engagement in-app. Native apps are typically faster, lighter, more interactive, and can often allow offline content browsing. They’re also easier to access for consumers, especially if apps are loaded on to the home screen of a smartphone.

These benefits extend to ad experiences in-app as well, where advertising growth continues to explode and expected to reach $77 billion in the US this year. Mobile app ads have evolved beyond just traditional display and rewarded videos, which are typically fueled by app-install spending.

The market has evolved to include video, outstream, and native formats, many of which provide more innovative and interactive experiences then web since these ads can tap into the native features of smartphones (i.e., Bluetooth, GPS, gyroscope, camera, compass, etc.).

Measurement is also greatly improved with the IAB’s Open Measurement SDK, which facilitates 3rd-party viewability and verification measurement in-app, and this is poised to further accelerate mobile app ad spending. In addition, mobile apps are relatively immune to ad blocking which is pervasive in web environments.

Better personalized ads

Mobile app inventory for publishers could become an even more critical component of a wholistic digital ad strategy as industry concerns around data privacy escalate and tech giants clamp down on tracking and personalization in browser environments. Apple’s ITP (Intelligent Tracking Prevention) in Safari and Mozilla’s Firefox browsers have placed significant limitations on cookie usage and hence programmatic ads on mobile web. And Google is rumored to be evaluating similar restrictions in Chrome, which would then effect the majority share of mobile web browsers.

Mobile apps represent both a hedge against these limitations and a superior environment for personalized advertising. In-app ad targeting can leverage Device IDs, which are tied to specific users rather than browsers, as well as more accurate location (GPS) and detailed demographic/behavioral data (particularly if the app requires registration).

Revenue diversification

Ultimately, mobile apps provide a new path for publishers to diversify their revenue streams. Not only do apps provide more opportunities for advertising, but also a channel for subscriptions, in-app purchases, e-commerce, etc. In-app subscriptions actually fueled growth in consumer spending in non-gaming apps by 120% since 2016. App stores also provide an easy way for engaged audiences (which are generally more prevalent in-app than web) to subscribe and make payments for transactions.

It’s time for publishers to start investing in mobile apps, which should no longer be an after-thought. While mobile app development and maintenance is not an easy task for many publishers, it should be considered an integral part of long-term digital strategy and a major growth driver. A successful transition of web users to app users can result in significant increases in loyalty and engagement, leading to new revenue opportunities while defending publishers against threats in a rapidly changing digital landscape. Mobile apps are no longer just a game (pun intended).

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