According to Statista, around 3.4 million apps are available on Google Play Store. Additionally, the Apple Store has about 2.2 million apps.
The high number of mobile apps signifies a serious revenue-driving opportunity for media companies. App Annie’s State of Mobile Report 2022 shows that mobile ad spending hit a colossal $295 billion in 2021 (23% growth from the previous year).
Whether you are considering moving into mobile, or simply want to up your game, here are answers to the critical questions publishers will have as they consider in-app ad monetization.
Which ad formats work the best for in-app monetization?
Ad technology has come a long way since its inception, and multiple ad formats are at publishers’ disposal. Choosing a suitable ad format can be difficult – but it’s essential.
Many app developers stick to banner ads because they are the most widely deployed ad format. But to maximize revenue, it is critical to keep up with the times. Nowadays, there are a variety of engaging ad formats that retain users and keep their app experience intact.
We recommend that publishers explore rich media ads, interstitial ads, native ads, and rewarded ads. Experimentation is key, and the best way to learn what works best for your app’s inventory is through a split test. Here are some ad sizes that have historically performed well for our app publishers:
Banner Phone (320×50)
Medium Rectangle (300×250)
Fullscreen Interstitial Portrait (320×480)
Fullscreen Interstitial Landscape (480×320)
Is gamification of ads an ideal solution?
Gamification allows users to interact with ads in fun and engaging ways. By turning ads into mini-games, audiences are more likely to enjoy interacting with them, and even be more likely to remember the advertised products or services.
This technique is similar to rewarded ads, except that users actively play a game instead of simply watching an ad. This helps keep their attention and provides a sense of satisfaction or accomplishment once the game is completed.
Overall, the gamification of ads is a solution that could help address user fatigue with more traditional advertising methods.
Instream vs. outstream video ads: what works?
In-stream ads are played within the same video player that a user is viewing video content. Outstream ads, on the other hand, are served on a display ad unit and do not require a video player.
So, which one is right for you? It depends on your goals, budget, and available video content inventory. If you want to drive more revenue with high eCPMs and improved click-through rates, then in-stream video ads may be a good option. Outstream ads may be a better choice if you want guaranteed viewability and enhanced user engagement for the app users.
How to pick the right ad format type for your app?
Not all apps are equal, so they all need a different ad format depending on the app’s design and niche. For example, native ads fit best for an app like Instagram, where users can slide past an ad in their feed without disrupting their user experience. At the same time, rewarded ads work best for gaming apps because they incentivize users to stick around for an ad or two to get a reward that will enhance their game experience.
Figuring out what kind of ad formats give you the highest conversion rate can take time. Obviously, we believe that partnering with an ad monetization platform will help enormously. (For example, this can help you easily A/B test your app inventory to see which ad format works best.)
However, if you’re looking to optimize ad revenue in-house, here’s a table we created that’s based on rigorous testing of billions of ad impressions across hundreds of apps. It’ll give you a headstart.
Niche
Best ad format
Gaming
Rewarded
E-commerce
Native
Social media
Native
Fitness
Interstitial
Travel (bookings, information)
Sticky
On-demand service apps
Native/Interstitial
Video streaming
Instream
News/Blogging
Outstream + Sticky
Final thoughts
In-app advertising is one of the most effective ways to reach mobile audiences. Given that people spend more time on mobile apps than on the web, in-app advertising offers publishers an excellent opportunity to improve ad engagement and performance. In-app ads will continue to grow in popularity in 2023, but they are only effective if they don’t disrupt the user experience too much. Thus, publishers must do their research and due diligence to create a scalable strategy. Above all, prioritize the user experience and find a balance between revenue and returning users.
About the author
Kean Graham is the CEO and Founder of MonetizeMore, a leading ad monetization partner for web publishers and app developers. Under his leadership and guidance, the company has scaled to 15B+ monthly impressions for over 1000+ publishers worldwide.
To paraphrase L.L. Cool J, “Don’t call it a comeback. Contextual advertising has been here for years.” However, more recently behavioral targeting has been hogging the spotlight because it allowed marketers to hyperfocus their targeting and track individual users across the web — no matter where they went.
As the industry now swings toward a privacy-centric model, publishers have a chance to double down on the value they bring to contextual advertising. Of course, this isn’t news to publishers. But what may be surprising is that, for the foreseeable future, the real goldmine is in contextual ads on mobile and in video.
Contextual advertising: Why now?
Google has been heralding the end of cookies for years, while putting off the actual implementation — which is currently slated for the second half of 2023. More recently, though, Google announced that it is expanding its Privacy Sandbox to Android. While this implementation is years away, Apple has been taking more decisive steps to protect user privacy. Not only did it deprecate IDFA in 2021 — changing the way mobile marketers track attribution and optimize campaigns on iOS — but it also allows users to turn private browsing on in Safari on all devices.
Apple’s shift to a more privacy-centric model has already led mobile marketers to shift spend to Android. But we can expect to see spending shift on Google’s platforms as well.
Mobile marketers — and digital marketers in general — will need to reckon with the changing industry. Publishers have a chance to step in and remind marketers that contextual advertising is a great way to reach potential customers. They also need to let them know that advertisers who have already shifted away from mobile ad spending on iOS have an opportunity to contextually target iOS users in publisher apps.
Publishers and advertisers prepare for the contextual revival
“Publishers are expecting a year of rising demand — and advertiser spend — in the area of contextual targeting,” says the report. “Among our respondents, 84% expect advertiser spend to sustain current levels or grow — and on the growth front, 61% expect to see an increase in buy-side budgeting for contextual-based campaigns.”
This isn’t just wishful thinking on publishers’ parts. The report also surveyed marketers at brands and agencies, finding that 96% of respondents said they would spend as much or more on contextual advertising that year. And 65% of advertisers will be adding to their contextual-based budgets.
So how do publishers win those contextual ad dollars?
The mobile opportunity
Much of the conversation about the resurgence of contextual advertising revolves around cookie deprecation. While we continue to wait for that to go into full effect, there is a hole that needs to be filled for mobile advertisers who still want to reach the estimated 1 billion people who use iPhones around the globe.
The rich data available to apps — especially those with a subscription model — presents marketers with a special opportunity. Forget basic, third-party demographic information, apps that require people to enter actual location data or other granular first-party data give marketers the ability to market to users based on real-time context, like weather conditions, or personally supplied information about their interests.
Publishers who can capitalize on this mobile opportunity now have the ability to build trust and solve problems for mobile advertisers who still need to reach iOS users. For instance, Sheri Bachstein, CEO of The Weather Company and GM of IBM Watson Advertising, says, “By helping mobile marketers drive forward their audience engagement efforts with addressable, performant data sources, we’re confident that this powerful data signal can be a solution for brands trying to solve the identity crisis and ensure consumers derive a more relevant experience across the mobile web and app ecosystem.”
Contextual video is on the rise
When we talk about ad trends, video seems to be a perennial list-topper. And it’s no different when it comes to contextual advertising. Digiday reported that “A number of publishers, ranging from Tastemade and Crackle, have added contextual targeting capabilities for their OTT and CTV inventory.”
Additionally, Xandr — a data-enabled technology platform powering a global marketplace for premium advertising — “launched a contextual targeting capability for CTV inventory, as part of a bid to maintain the momentum behind the video side of its business, which now represents 35% of the spend on Xandr’s DSP.” And at the time of the reporting, Iris.tv, which provides a contextual targeting marketplace, “has been growing 25% per month since the start of 2021 and now handles 28 billion ad requests per month, according to a spokesperson.”
Contextual and connected
CTV — and online video content in general — presents many opportunities for publishers, and, ironically, harkens back to the glory days of television advertising when soap companies advertised on daytime TV giving rise to soap operas. The ability to pinpoint this kind of targeting has only increased with CTV, and opens up opportunities for more interactive experiences that also allow for better tracking.
“I think one of the really powerful arenas, where contextual data will be pivotal, is CTV and more and more people are shifting to an addressable approach with their linear television as well,” Katie Price, programmatic media lead at the agency PMG, said in the Digiday Connatix report. “As contextual data gets more powerful from a digital buying perspective, we will be able to mesh together the efficiencies of programmatic buying and digital buying with that contextual relevance that has been such an advantage for TV advertisers and linear advertising in general.”
The report found that 44% of publishers were already using context-based video ad tools or were working with a third-party partner on a solution. Nearly a quarter of respondents were planning to work with contextual video in the year ahead.
That’s an opportunity The Weather Company is poised to capitalize on. According to Bachstein, “The advanced TV market is a huge growth area for us in 2022, and we’re excited to push deeper into this space. After hearing directly from our brand customers, we know that the market craves solutions that deliver personalization and drive action in this rapidly scaling medium. We’re continuing to improve our offerings to remain flexible across a multitude of platforms.”
Integral Ad Science (IAS) has already recognized and invested in the opportunities for CTV and contextual advertising. As AdExchanger reports, “Most of IAS’s growth currently lies in programmatic, and its biggest driver of that revenue line is a product it calls Context Control, which helps shift ad dollars into brand safe environments.” Through strategic acquisitions, IAS can now analyze video in addition to text. IAS creates contextual segments based on video analysis — detecting everything from language to emotions.
That’s a lot of context!
Mobile video: The perfect storm
If mobile and video present opportunities, then it only stands to reason that mobile video is a perfect storm of opportunity for publishers — and the numbers back it up. Google says three out of four adults report watching YouTube at home on their mobile devices. TikTok is predicted to have 1 billion users by January of 2022 built squarely on the popularity of mobile video.
Platforms that combine the convenience of mobile with the engaging nature of video are rewarded with vast audiences. However, marketers looking for controlled, brand-safe environments may be more likely to turn to trusted media outlets. Publishers who can capitalize on the power of mobile video and combine it with contextual ads will stand out from competitors.
The added benefits of contextual targeting
Consumers have, frankly, had it up to here with intrusive ad experiences — and that includes ads that follow them around the web. Audiences are primed for a contextually relevant, yet unobtrusive experience that provides them more control while still delivering a level of personalization. Publishers can seize that opportunity by embracing, and perfecting, the art of contextual advertising.
Contextual is not new. But these days, there are many good reasons to give it another look. Of course these include increased consumer concerns around tracking, privacy regulation, and big tech’s response.
However there’s more to it: contextual ads are smarter than ever. Natural language processing (NLP) allows marketers a deeper understanding of not only the context but the sentiment of each page, and increasingly, video on the web. With the help of machine learning, advertisers and publishers can go beyond keywords and whitelists to find the most relevant content possible.
Mobile internet usage continues to climb and 90% of mobile internet usage is spent in apps. This trend is only accelerating due to the global pandemic, which forced consumers to stay home and find new sources of entertainment. In parallel, ad spending continues to grow in the mobile environment, reaching $240 billion last year.
Given the current state of play, mobile publishers continue to require innovative tools and technologies that enable them to connect their audiences with marketer demand. But this isn’t without its challenges, especially given new restrictions handed down by device manufacturers, like Apple.
Privacy enforcement
At their 2020 Worldwide Developer Conference (WWDC), Apple unveiled a new framework dedicated to enhancing consumer privacy—the AppTrackingTransparency (ATT) framework. ATT will apply to iOS 14, iPadOS 14, and tvOS 14. It represents a fundamental shift in how app publishers engage with consumers.
When Apple requires implementation of ATT, expected in early spring of 2021, app publishers will need to request permission to use app-collected data for tracking and accessing device identifiers. This includes Apple’s mobile ID, the Identifier for Advertisers (IDFA). Publishers can only ask for permission once. It is persistent thereafter, until the app is uninstalled or the user changes their permissions
Put simply: Advertisers will no longer be able to target users by default, unless users explicitly opt-in.
What’s at risk
Once complete, this profound shift will have far-reaching implications. Unfortunately, only a small percentage of users are expected to opt in to share their IDFA. Without users opting in, the majority will suddenly become unrecognizable. Mobile publishers will be left with a proverbial—and unappealing—black box.
This will affect targeting, suppression, and measurement. Advertiser interest in in-app advertising will likely wane, and with it, the resources mobile publishers require to reinvest in building new products and acquiring new users. These changes may result in fewer free mobile apps, which could dampen the consumer experience and reduce industry competition.
Although ATT is designed with consumer privacy in mind, we need to focus on more than privacy. We must do more to evangelize transparency. Transparency allows the industry as a whole to preserve the consumer experience and consumer privacy in a way that limiting access to free apps does not.
Mobile monetization must-haves
How do we do this? Here are three strategies that will equip the mobile publishers to monetize by delivering transparency:
User Authentication
Users will provide login information (i.e., authentications) and share ATT consent in order to gain a closer relationship with the content they love. We need to champion authentications as a mechanism for transparency. An added benefit is that authentications are people-based and not device based. Therefore, they drive higher revenue.
Additionally, new authentication strategies allow mobile app developers to reach the right end user and increase ATT consent rates. By authenticating themselves, individuals gain access to valuable content, brands are able to deliver better experiences, and publishers can develop closer, trusted relationships with consumers while protecting ad revenue.
Frictionless Demand
Understanding user session times, engagement and in-app purchases at the person level helps publishers hold on to as many unique audiences as possible. This allows them to activate against accurate data to achieve more ad revenue and efficiency. Publishers need frictionless demand pipes in order to seamlessly work with a partner that has strong demand-side connections.
Privacy and Security
Upholding consumer privacy, control and choice is imperative. Mobile publishers must find a way to improve the customer experience while maintaining compliance adhering to global regulations and app store requirements. This is the only way to continue to deliver key workflows necessary for business growth.
The time is now
The impact of ATT and other near-term privacy shifts is nothing short of seismic for the mobile app industry. The stakes are high. App publishers may lose their ability to monetize valuable ad inventory. However, they may also lose also direct relationships with consumers who value the fun, exciting experiences they provide—especially during the ongoing pandemic.
These three strategies are imperative to act on now. They are the foundation upon which app makers can start to build direct connections to audiences seeking trust and transparency in a time when few authentically provide it.
There’s a saying that what’s good for the scorpion is bad for the frog. For a long time in digital publishing, the same was true about advertising. What was good for advertising was bad for the reader.
By flashing auto-play ads, full interstitials, and full-screen scroll over ads, publishers could earn big revenue from ads that demand all of the reader’s attention. But we know that readers hate them. These ad types were also named and shamed in the Better Ads Standards “least preferred ad experiences.”
These ads don’t come without a price. Users may see the ads and they may even get duped into clicking them. However, the power of consumer choice kicks in later down the line. Unhappy users will simply leave these sites and find content elsewhere. By prioritizing pennies in the short term, a lot of publishers cost themselves dollars in reader loyalty and longer-term ad revenue.
The final straw
Either knowingly or not, publishers found the tipping point where the success of a short-term strategy has a worse effect on their long-term prospects. The cost is readers for revenue.
We have measured the effect of this “tipping point” for years. In order to get the balance right between the user experience and monetization, our platform measured 275M sessions over 23 publishers to land on a UI/UX specialized and optimized for digital content. We found that, by analyzing user behavior, you can find the exact point where mobile publishers’ monetization and engagement strategies start to damage your bottom line, even if your superficial metrics, such as CPMs, are going up.
There’s a simple philosophy that works. It’s better that a user reads two stories and sees two ads, rather than reads one story with two ads. This approach increases long-term user engagement as well as loyalty. We’ve distilled some of the tactics from our Publisher’s guide to ad-supported UX design to help media leaders balance readership and revenue in order to fine tune their individual strategies.
If users hate all ads, they really hate mobile ads
First and foremost, we need to understand that no reader likes mobile ads. A Blockthrough report shows us that readers block twice as many ads on mobile as on desktop. Hubspot research says that users find mobile ads annoying or intrusive, and that they slow the page down and disrupt the reader experience.
We know from years of print media, TV, and online content that users will accept ads. When done right, they even love them (wassssup?). This is all because these mediums found the method and message that consumers will accept when it comes to balancing an experience with adverts. For mobile publishers to monetize for long term growth, they need to find the optimum point where users consider their experience a worthy trade-off for the advertising they serve.
More content is the best way to serve more ads
If you take away one thing from this article, it should be that the reader, not the advertiser, comes first. Happy, engaged readers read more content. And they’re more receptive to the ads that accompany that content. Over-exposed bombarded readers are not forced to stay: they can leave the page, find alternative content, or simply block the ads.
By optimizing your ad density, lazy loading ad impressions, and sticking to approved ad formats, advertising won’t overshadow the content. Adding recirculation and re-engagement features such as swipe navigation and push notifications will guide your users onto more content. By looking at metrics such as recurrency, scroll depth, and page views per user, rather than ad request volume, you can isolate techniques that keep your readers engaged.
Don’t ruin a good story with a terrible ad
There’s a good reason premium magazines get away with so many ad pages, even before the content begins. The ads form part of the experience. These top publishers incorporate the highest quality creatives and hyper-target them to their audience.
The same needs to be true of mobile publishers. It may seem intuitive to use as many ad networks as possible and prioritize high-volume networks that deliver inventory. However, publishers that want to keep their readership should stick to premium networks.
Don’t let bad creatives pull your reader out of the story and drag your brand reputation down by featuring low-quality products or services. By appearing in your publications, ads get a tacit endorsement from you. By limiting this to premium networks, you keep your reader immersed in a high-quality environment. You won’t turn them away for the sake of a higher volume of impressions. Measuring the Average Revenue Per User (ARPU), rather than just page CPMs will show the effect a more premium ad experience has on your long term revenue.
Every action you take as a publisher has an effect on your readers and your revenue. Adapting best practices and using new metrics to see the effects of individual changes helps publishers walk the most profitable line between readers and revenue.
Mobile is as personal as it gets. That’s why people feel annoyed when mobile ads delivered to their devices and apps are a mismatch with their desires and expectations. To cut out unwanted noise and shut out ads that deliver a poor user experience, consumers are reaching in record numbers to mobile ad-blocking technology. Unfortunately, bad ad experiences don’t only alienate and frustrate consumers; they also deprive publishers of an important chance to monetize their assets and audiences.
So, what is a bad ad experience? Unsurprisingly, ads that disrupt or distort content people are trying to read or enjoy lead the list of most “hated” annoyances, according to research from Nieman Norman Group. Pop-up ads, auto-playing video with sound, interstitial ads that must be viewed before content can be viewed, and postitial ads that obscure the content or just breaking the browsing flow are ad approaches and formats that people want to avoid.
Naturally, in the Age of Personalization—marked by milestone studies that reveal 78% of consumers said they would be happy to receive mobile advertising that is relevant to their interests—mobile ads that are out of sync with people’s interests and context are also a “fail.” However, this doesn’t appear to deter publishers and brand marketers from plowing huge amounts of money into mobile ads that people ignore.
It’s a dynamic that threatens to bankrupt the entire digital ecosystem. At one level, mobile ad spend is rising into the stratosphere. Research firm eMarketer reckons ad spend in the U.S. alone, which accounted for 66% of all digital ad spend in 2017, will increase to 72% (or $65.8 billion) in 2019. At the other end of the spectrum, the vast majority of brands and publishers are wasting budget ads that fail to inspire or influence consumer behavior.
Dangerous Disconnect
New research based on internal data from Verve, a location-based mobile marketing platform that connects advertisers with consumers, puts this dangerous disconnect into perspective. Over half (56%) of respondents surveyed in the U.K. think most ads they see on their mobile phones are “boring or dull.” As a result, the average person in the U.K. ignores 7 mobile ads each day. When looking at the national population, this figure translates to a massive 20 million. “In their current state,” Verve reports, “mobile ads are not making the cut.”
Only one in ten respondents (11%) believed their mobile ads were genuinely helpful. This figure increased significantly with the quality of the mobile ad experience. While just 17% said they were “likely” or “very likely” to interact with a generic ad on their phones, over twice that number (38%) said they would do so it the ad was related to their interests or hobbie. And 34% said they would engage if the ad was related to where they were at that particular time.
Lack of relevancy is part of the problem, lack of imagination is the other. A 2017 survey of 100 advertisers and 1,000 consumers regarding their recent experiences and preferences toward mobile ads conducted by Forrester Consulting and commissioned by digital advertising creative management platform Celtra found that poor creatives may be at the core of bad ad experiences.
The study revealed that more than two-thirds of advertisers believe at least half of their mobile advertising budget is wasted, sunk into the development and deployment of mobile ads that can even harm their brand image. In fact, a whopping 73% of all mobile ads seen in a typical day fail to create a positive user experience. “The overall digital content experience is littered with creatively uninspired ads, irrelevant ads, and intrusive ads with slow load times,” the report states. “The consumer experience has gone terribly wrong.”
The solution is more engaging ad creatives. Companies that crack the code, using creatives that are more relevant and less disruptive are sure to see improved customer response rates and higher brand recognition, the report concludes. As Mihael Mikek, Celtra founder and CEO, put it in a press release at the time: “Smart advertisers have a significant market opportunity to drive high levels of customer engagement and sustained competitive advantage by leveraging strong creative in their mobile ad campaigns.”
Vendor spin aside, the data suggests positive mobile ad experiences promote positive consumer perceptions and influence actions. The findings also support my personal view that the ability to craft and evaluate effective mobile ad and in-app creatives is at the core of what marketers must learn and master to ensure their campaigns move the needle, not miss the mark.
Inspirational and Relatable
Effective marketers follow the data to determine what works. “But it’s not just about amassing Big Data,” Haydon Young, Director of User Acquisition at Dots, writes in an insightful post. “It’s about creating a Big Picture view of your users by blending what you know about them in the digital world of mobile and apps with what you observe about them in the “real world”.
He recalls how a re-think of ad creatives rocketed conversion rates for Covet Fashion – an app for fashionistas and the shopping obsessed. Observing shoppers in real-life, at malls and shops, helped his team architect an ad experience catered to its unique audience demographics (“moms, daughters, sisters, aunts, grandmothers, and everything in-between”). It allowed them to align with their aspirations (“a vast and diverse group of races and body types united by the singular desire to be a part of the fashion and beauty world”). Rather than use ad creatives that depicted super-models, he removed the faces altogether. This encouraged users to picture themselves in the clothes and look they wanted most. The creatives worked because they spoke to the audience ambition to be and look amazing.
The takeaway: Ad creatives succeed when they address audience demographics and desires and encourage people to unlock their real potential. It’s no coincidence that brand creatives “rooted in real life” are crushing it, according to the Global Marketing 2018 Trends study from Freedman International. From fashion brand ASO that refused to photoshop models in its ads to Fitbit that has switched from using professional athletes to showcasing average people working out, companies are winning audiences with imagery that portrays the real world as it really is.
Test for Success
Authenticity is a must across the entire ad experience. Be upfront about what your app offers and choose mobile ad creatives that are descriptive, not deceptive.
“The most important thing to do creatively [in the ad] is to show users what the experience is within the app,” observes Helene Trompeter, Media Manager at The Weather Company and a Mobile Hero recognized for her app marketing accomplishments. “Being straightforward and visualizing the benefit of your app capabilities [in the ad creative] almost always outperforms lifestyle imagery.”
Even the coolest creatives won’t appeal to everyone in your customer base. So, use data to develop effective segmentation and targeting strategies. “Ad copy and images may perform differently depending on user demographics, operating systems, and interests,” Trompeter explains. Choosing the right creative for the right audience is an ongoing task that requires the discipline to test and the courage to innovate. It can be a daunting task, but Trompeter tells me there are some shortcuts. Dynamic ads and creative templates can remove a lot of the heavy-lifting, making it easy for marketers to mix and match hundreds of creative variations to ensure mobile ads are fresh, relevant and engaging.
Trompeter achieves this by applying what she calls the “80/20 rule.” In practice, she runs “about 80% of budget toward historical performers and 20% toward testing.” It’s a smart approach that recognizes the hard truth about effective advertising. Marketers have to focus ad spend on what is proven to work. However, they also need to experiment with ideas and ad elements that take them outside their comfort zone.
Push the Boundaries
Verve Foundry can use part of the screen or all of it to create an animated experience.
Meaningful and effective mobile ads follow the data and demographics to appeal to the target audience. But using the right ad format can also make a huge difference. Walter T. Geer III, VP and Creative Director at Verve, tells me new ad formats that build on existing ways people interact with the mobile Web and apps on their devices are boosting audience engagement. “Scroll, pinch, swipe—it’s all about delivering the best possible ad experience with ad formats that let consumers use their fingers and put them in control.”
The days of using the consumer’s mobile device as a “launching pad” for ads that disrupt and annoy are over, Geer says. “The future is about creating an opportunity that is cohesive to the device and using the data to ensure mobile ads deliver the right opportunity and one that is relevant to the individual.” This is also where ad formats that “augment and enhance user activities” play a major role, enabling a positive brand experience and driving closer customer connection.
A prime example is Canopy Onscroll, a new ad format developed by Verve that combines two engaging experiences into one without interrupting the consumer’s core app experience. Animation beyond the banner activates when scrolling. “It’s one of our highest engaging ad units and a great example of how giving users choices. In this case, showing subtle animation completely activated by scrolling—is capturing people’s attention with advertising that is effective, not intrusive.”
Effective and emotive mobile ad creatives are a huge departure from the annoying screen-takeovers and one-size-fits-all ad experiences that characterized the early days of digital marketing. Stronger creatives, real-life imagery, and innovative formats that push the envelope point the way to positive ad experiences that will engage, motivate, and activate consumers.
Mobile is changing the way we consume video online. No, this doesn’t just mean that they are watching more video on mobile. Mobile viewing behavior is impacting a lot more than you might imagine. In fact, MediaBrix ran an experiment which found that less than 30% of people turn their phone to view horizontal video ads, and when they do, they only watch 14% of the ad.
So how are publishers reacting to this? In our own study, we found that many have shifted their focus to vertical video. They’re realizing that this method is more user-friendly, and better accommodates the way people take in video on smartphones and tablets. Here’s a full overview of what we discovered.
More than 100 Media Properties Ran Vertical Video.
For publishers, vertical video ads have become more prominent than ever before. In Q1 of 2017, 112 mainstream and mobile websites ran vertical video advertisements. While still low compared to the entire media landscape, it’s a new industry-high. This is the result of barriers to entry. Those running vertical video tend to be more sophisticated, with enough financial resources to fund innovation. This includes divisions at Hearst, Conde Nast, and Time Inc., as well as Vox Media, AOL, Business Insider, and NBC Universal, according to our data.
Most Vertical Video Ads are 15-Second Spots.
Per our analysis, roughly 70% of vertical videos are 15 seconds in duration. As with many new formats, there’s a lot of testing in video duration. For example, MFS Investment Management is running this 90-second ad, while others are staying short at 5 seconds, such as this avant-garde ad by CHANEL. The majority, however, are running 15-second spots. This is interesting since Snapchat, a vertical video leader, has a current max of 10 seconds.
Entertainment Leads the Charge.
Movies and TV programming represent nearly 40% of all vertical video ads online. In second and third place – though far behind – are apparel at 9% and retail at 7%. Marketing for TV programming and film has adopted vertical video the most aggressively, with dozens of examples, ranging from Patriots Day to Taboo. This lopsided adoption indicates that there is massive potential for this format. Our report shows that vertical video ads are steadily becoming more popular among publishers as consumption and mobile usage increases. It will be fascinating to see how publishers’ use of vertical video evolves in the second half of the year and beyond.
News UK, whose brands include The Times, The Sunday Times, and The Sun newspapers as well as social video ad platform Unruly, has opened the doors of its new vertical video studio. The new V-Studio, which sits in News UK’s commercial division The Bridge, is a bid to boost the amount and quality of video on News UK-owned properties and elsewhere on the Web.
Naturally, V-Studio will both create vertical video advertising for its clients to distribute via its owned properties and platforms. However, it will also allow those same clients (for a fee) to distribute the mobile optimized videos across the Web.
The approach has raised concerns the vertical video studio aims to take on full-service digital agencies. However, while V-Studio certainly has the capabilities to do so, Milton Elias, head of mobile and video at News UK, says the strategy is to create, not compete. It’s all about producing “better video, better inventory and better engagement” to monetize an audience that has become “by default mobile-first,” he explains. Data that shows 91% of readers accessed The Sun newspaper on their mobile device in April, compared with 82% for The Times News UK. What’s more, The Sun also counted 8.7 million video views in the same month.
“Monetizing audiences and delivering a great user experience requires mobile video that has been created for mobile. That means thinking vertically,” Elias says. Easier said than done in a market where many brands somehow believe they can simply squeeze TV ads and assets onto a smaller screen, regardless of the user experience. “Effective mobile advertising needs video that was created for consumption on that device and fit for that purpose,” he adds.
This is where V-Studio comes in “offering clients and brands a canvas they can use to create vertical video assets seamlessly,” he explains. Less than a week after launch, Elias says the studio already boasts a “well-known luxry brand” as its first client, with more in the pipeline.
The top priority is to drive better results through higher engagement. The goal will be to enhance, rather than interrupt, the user experience. The seven video formats currently produced by the studio sit in the mobile scrolling flow, where users can choose to click on videos, or simply scroll past them.
Another focus of the V-Studio launch is harnessing News UK first party-data and touch points around content users engage with. This will allow marketers order to hone audience targeting and advertising relevancy . “In the beginning we’re selling them [ads] on a direct buy basis and we’re hoping to make that available on a programmatic guaranteed basis,” Elias says.
As he points out, the industry has seen a fundamental shift in how people consume media, particularly via mobile channels. Given that so much of today’s high impact ads are created for consumption on large horizontal screens, News UK wants to lead the charge in optimizing marketing messages for mobile engagement on its sites, and across the web.
Peggy Anne Salz is the Content Marketing Strategist and Chief Analyst of Mobile Groove, a top 50 influential technology site providing custom research to the global mobile industry and consulting to tech startups. Full disclosure: She is a frequent contributor to Forbes on the topic of mobile marketing, engagement and apps. Her work also regularly appears in a range of publications from Venture Beat to Harvard Business Review. Peggy is a top 30 Mobile Marketing influencer and a nine-time author based in Europe. Follow her @peggyanne.
When Apple announced last year that it would offer mobile ad blocking on iOS 9, and Google stated it would crack down on interstitial ads on mobile websites, publishers went immediately to sky-is-falling mode, predicting that these moves would undermine their chances for mobile ad revenues. But so far the panic has been overblown, especially in the U.S.
What appears to be a burgeoning trend in Asia is still in its infancy here. This gives publishers a bit of time to readjust their advertising formats to meet consumers halfway.
That said, Google, with its own vested interests, has just announced a new offering that will definitely push publishers: A new ad blocker. Thetech giant prefers to call an “ad filter” which will be integrated into its widely popular Chrome browser. It’s a move that’s likely to shake the entire advertising industry. Then again, it may just help to thwart the dreaded rise of further third-party ad blockers.
But Apple announced its own Safari ad-blocker in the new High Sierra operating system for desktops. This one would block auto-play videos as well as ad tracking across the Internet. While Google is taking a more collaborative approach with publishers, Apple is “taking a harder line,” as Undertone’s Eric Franchi told Adweek.
Mobile Ad-Blocking Uneven
The 2016 report from Pageview, a company in the business of trying to get publishers to reevaluate their advertising models, caused a stir among some circles for its analysis of global ad blocking. Ad blocking increased by 30% last year. And among the 615 million devices blocking ads, more than half — 308 million, to be precise — were blocking on mobile. Taken in another light, that’s 16% of all smartphone users in the entire world.
Yet 94% of all that mobile ad blocking took place in the Asia-Pacific region — in countries where Internet penetration is increasingly mobile-first, and where data prices are too high for most users to want to tolerate video and other data-heavy ads. North America and Europe, meanwhile, were much calmer in comparison, no doubt thanks to more affordable data packages.
A sampling of some of these global figures show what’s exactly at stake:
In India, mobile ad blocking is at 28%, whereas desktop ad blocking is a mere one percent.
In Indonesia, 58% of users block on mobile, while just 8% do so on desktop.
In the U.S., one percent of users block on mobile, whereas 18% do so on desktop.
In the U.K., content compensation platform Sourcepointreports ad blocking is at about 18%. The figure is slightly higher in France and Germany. However, data suggests that these rates are stabilizing due to more effective communication between users and publishers.
The Underlying Concerns
It’s pretty obvious why ad blocking on mobile is increasing: Users don’t like the ad experience, and publishers aren’t effectively communicating to readers about why their use of an ad blocker is detrimental to their business.
A fair number of users don’t want to see ads at all. However, users aren’t simply hating on the content of ads. Among the reasons people chose to use an ad blocker were privacy concerns and irritation at interruptions. Users who block ads tend to be highly educated and aware of the ecosystem they’re involved in.
That being said, of course publishers feel threatened. The West may be slow to block on mobile, but the world’s next billion Internet users are going to be mobile-first.
Still, it’s not an apocalypse. In the current climate, publishers need to be more transparent to users about what’s at stake — and how they can make a difference.
Google, Apple Making Moves in Browsers
In an environment like this, it’s no surprise Google has announced what it’s hinted at for some time: A new ad blocker for its Chrome browser. The new browser will create a higher bar for the kinds of ads that appear on the web by filtering out the more annoying ones, like auto-playing video ads. The goal of the blocker, which is slated to come out in 2018, is to create a better user experience. The Coalition for Better Ads, an industry group Google belongs to, is creating the standard for permissible ads.
The tech giant is signaling its collaborative intent by giving publishers six months to prepare for the ad blocker’s release, and to adjust their advertisements accordingly. It will then essentially grade publishers on the kind of advertising they’re offering. Google is also launching a feature called “funding choices.” This will let publishers charge users per page view if they’re already using an ad blocker.
Apple, meanwhile, announced new features for Safari in its glitzy announcements at the Apple Worldwide Developers Conference recently. While they might not have been as sexy as the new HomePod speaker system or multi-tasking iPads, the default setting in Safari to block ad tracking and auto-play video will make a huge difference for publishers. (Irony alert: The link above to Apple’s website listing its new products does include — gasp! — an auto-play video ad.)
While it’s discomforting that Google and Apple wield such dominance, the companies are at least taking leadership positions where others haven’t. And they’re doing so while mobile ad blocking is still on peoples’ minds, but before it’s become unstoppable. The time is right for publishers to get their advertising house in order.
Mary Meeker’s annual Internet Trends Report is often referred to as the state of the union for the media and technology industry. In it, Meeker—a partner at venture capital firm Kleiner Perkins Caufield and Byers (KPCB)—highlights the biggest internet developments for the coming year. Her report provides insights on digital adoption, identifies which interfaces are resonating, and examines the dynamics of ecommerce.
Some key takeaways from her presentation:
Mobile dominates digital usage. U.S. adults now spend 5.6 hours a day using digital media, 3.1 hours (from 2.8 in 2015) via mobile devices and 2.2 hours on desktop and laptop.
The ad spend on mobile is not proportionate to the share of time spent on mobile. While consumers spend 28% of their time on mobile, only 21% of the digital ad dollars is spent on mobile media. This is expected to correct itself in the second half of this year.
As internet advertising continues to increase, the growth is concentrated in Google and Facebook, the internet duopoly. Meeker’s report notes that Google and Facebook control 85% of online ad growth. Google’s ad revenue grew 20% and Facebook 62% in 2016. For everyone else, the growth was less than 10% year over year.
Internet users are concerned about their privacy and security online. Consumers report being concerned with how their data is being collected, used and stored. Consistency and self-regulation of privacy policies are important steps in the monitoring the Internet ecosystem.
Where Meeker’s insights meet opportunity:
Voice recognition software and devices such as the Amazon Echo and Google Home are reshaping the consumer digital experience. In fact, Amazon Echo is now installed in 11 million households in the U.S. Further, 20% of all mobile searches are now voice activated.
Gaming goes mainstream. There are now 2.6 billion gamers today compared to a 100 million in 1995. In fact, viewing time for eSports, professional video gaming live-events and tournament, increased by 40% compared to a year ago. The gaming revenue concentration remains in Asia, with 47% of 2016’s $100 billion global market. Meeker believes video gaming’s socially engaging features will offer new businesses opportunities and sporting events.
Streaming music helps revives the music industry. Spotify, the marketplace leader, exceeded physical music sales, adding to the first revenue growth in the music industry in the last 16 years. Free trials are also driving sampling and subscription sign-ups.
Healthcare data is flowing with approximately 25% of U.S. consumers owning a wearable device, up 12% from a year ago. Further, 6 in 10 people report they are willing to share with health information with Google. Collecting and analyzing healthcare data has huge implications for the medical and healthcare sector from aiding clinical trials to identifying geographical and environmental healthcare concerns.
The marketplace is rapidly advancing and continues to grow in importance. According to Meeker, the top 20 Internet companies—many of which were not around before 1995—have a market value of nearly $3 trillion. New media platforms and information technologies are transforming new market economies. Yet it is important to note that Meeker sees new opportunities across multiple platforms to connect and add value for consumers.
About a year ago, Josh Benton of Harvard’s Nieman Journalism Lab asked me how concerned I was about ad blocking on a scale of 1-10. I answered “eight or nine.” And one year later, the situation has not improved: As of today it’s still a nine.
In the spirit of transparency, I thought the time was right to look at where we are in terms of ad blocking, if for no other reason than I don’t want my silence on the topic to suggest that the issue is less dire than it was during the flurry of discussion around it in 2015. Since then, DCN has conducted research on the ad blocking ecosystem – some of which has been released only to our member companies. We have also posed many questions about Google, the ad tech ecosystem and the actual flow of the monies.
The state of ad blocking today
Unfortunately, the ecosystem remains every bit as murky. The ambitions and fate of those profiting and suffering from ad blocking (including Google) have not yet been fully revealed. But one thing is crystal clear: The companies that create original content are being hurt the most by ad blocking because it prevents them from monetizing the audiences they attract. And the two companies, now known as the “duopoly” are likely hurt the least.
As predicted, the adoption of ad blockers continues to grow linearly according to PageFair’s latest Ad Block Report. While the sky is not falling, the U.S. desktop penetration did grow from 15% to 18% last year and this number matters … a lot. Despite this growth, the IAB oddly recently claimed victory over ad blockers “rendering them toothless” and suggesting the risk of “network-level ad-blocking has virtually disappeared.” This kind of thinking is where things get dangerous.
We have won neither the battle nor the war. In fact, PageFair’s report—which we have every reason to believe—clearly points to the contrary. Frankly, it’s for this reason that I’m writing now in parallel to our continued participation and support with other organizations on the new Coalition for Better Ads.
The danger is real
Here are three reasons we need to remain focused on ad blocking in order to maintain our ability to monetize audiences attracted by high-quality content:
The companies in the ad tech ecosystem—where many of the ad blocking issues are forged—have very little incentive to be concerned about ad blocking. Their collective migration to the latest ad tech craze, header bidding, has increased their inventory and revenue access by an order of magnitude. It’s also widely recognized to have increased latency, data leakage and other vulnerabilities. So potentially good for revenues, arguably bad for consumers. The additional inventory dwarfs any modest increase in ad blocking so the ad tech companies’ incentives are in many ways at odds with consumers and content creators.
Consumers are shifting to mobile, where ad blocking penetration is estimated at an immaterial 1% in the U.S. However, the value proposition of a mobile ad blocker is significantly higher (heightened concerns for security, user experience, data charges, privacy). So it’s risky to expect penetration to stay at 1% given that it’s currently 60% in parts of Asia, where ad blocking is built into the browser. The same functionality is already available in the States (through the Brave and Opera browsers). And not incidentally: In China, mobile users know how to change the proxy servers on their phones, so I’d expect Generation Z may soon be doing the same, in droves. And this is just one of the numerous ways in which ad blocking may rapidly impact mobile apps.
Network-level ad blocking concerns will likely grow. The number one goal of the new administration’s FCC is to throw out the net neutrality rules. Yes, there is a rational argument against the current regulation. However, nearly 100% of the public wants something in place that protects the neutrality of the Internet against blocking, throttling and other nefarious practices. I’m pretty sure it is not a good idea to fight the Internet. To the point of ad blocking, if the FCC rules are thrown out and not properly replaced by Congress, there is nothing to prevent a carrier (why hello there T-Mobile!) from launching its own ad blocking plan. Meanwhile, the most powerful trade bodies in our industry have yet to take a stand in support of net neutrality (other than DCN, which is not conflicted on the issue).
Burning questions
So now that we’ve established that victory has not yet been achieved against ad blockers, here are some of the questions keeping me up at night:
The financial impact of ad blocking trails its penetration mostly because advertising supply greatly outweighs demand. As long as there is considerably more desktop inventory than demand, then the financial impact is mitigated. But what happens when it doesn’t?
The largest advertising company in the world, Google, is virtually untouched by ad blocking. Google has avoided most of the impact by paying to be whitelisted – as they’ve publicly disclosed – giving them a privileged position that, as far as I know, none of the nearly 80 companies inside of DCN have. Let that sink in. When a monopoly gets to set the rules…
Privacy continues to be the third rail in the industry. The CMO of the largest advertiser in the world, Procter& Gamble, clearly expressed this concern a few weeks ago. The Chairman of the largest media buyer in the world, GroupM, has also called out this same concern. Meanwhile, the industry is aggressively pushing to keep the bar as low as possible, while cloaking the rapidly increasing level of tracking in darkness. This is happening through policy, as much of industry pushes to remove the FCC privacy rules on ISPs. It’s also happening through technology, as tracking has moved into digital fingerprinting and server to server sharing of browsing history. I know many people want to ignore it, but what if data leakage in the ad tech ecosystem is actually the common thread across the performance, security, transparency and consumer privacy issues that have resulted in a loss of consumer trust and rising ad block usage? There are both industry advocates and executives who make this argument.
Facebook has opted to engage in a tech arms race against the very same engineers who are paid by the ad block whitelisting program. Facebook continues to fight a desktop war against ad blockers by circumventing the technology. Almost all of Facebook’s ad revenue growth on desktop came as a result of this tech hacking, according to their CFO during their earnings call. In mobile, Facebook is aggressively shifting content experiences away from the open web, reportedly even ignoring their browser experience, so that they can keep consumers in their app and fight back against ad blockers. Who is monitoring this?
Who owns the number two blocker, Ad Block? At the very least, it’s dubious that a company with undisclosed ownership can block this much advertising. At the worst, it’s a clear-cut antitrust or national security issue to have that much control in the hands of an unknown actor. Can no one solve this riddle?
In the face of this uncertainty and looming unanswered questions, industry leaders need to refocus on meeting the underlying consumer needs. Yes, many articles have been written and many committees created. However, I challenge the industry to work with us, to dig deeper into the dynamics of ad blocking. As much as you might want to believe ad blocking to be a 2015 meme that’s now under control, that is entirely incorrect. Sitting idle while one company, whether it be Ad Block Plus or Google, controls much of the current future ecosystem could be the most dangerous failure of the Internet yet.
Ad blocking continues to be a serious threat to digital media. A new report by PageFair estimates that more than 600 million devices are now blocking ads worldwide. Ad blocking usage grew by 108 million to 380 million mobile devices and by 34 million to 236 million active desktops from December 2015 to December 2016. Interestingly, ad block usage on desktop browsers continues to grow despite the decline in overall desktop usage. Year-over-year global growth for all devices now represents 30%.
Two of the top reasons for consumers installing ad blocking software include virus/malware concerns (30%) and interruptive ad formats (29%). It is important to note that over 70% of users chose more than one reason as “most important” in their choice to use ad block software.
How are consumers learning about ad blocking?
Word of mouth still leads in overall ad block conversions. Just less than one-third (32%) of ad block users report they learned about the software from a friend, colleague, or family member. An additional 28% learned about ad block software from the internet, news, or media.
Who’s blocking ads?
Ad blocking usage is the U.S is becoming more mainstream. Usage still skews male with 20% of U.S. males using ad blocking software compared to 15% of females.
Across all age groups, bachelor’s degree attainment was 45% among ad block users surveyed, versus 30% per the US Census. Ad block users in the US are 1.5x as likely to have a bachelor’s degree than the average American adult.
How do consumers react to ad block walls?
Nine in 10 ad block users report they have encountered an ad block wall (site will not allow access unless the ad blocking tool is disable) while using the internet. A full 74% of ad block users stated that they leave a website(s) after they encounter an ad block wall. It appears that ad block walls do not persuade users to turn off their ad blocker, even if only for brief time. However it is possible websites with highly unique and valued content that is not easily obtainable elsewhere may see a benefit to the use of ad block walls.
What are the most annoying ad formats?
Overall, over three-quarter (77%) of ad block users reported that they found some ads acceptable. Over half (52%) of ad blockers users preferred static banner while 35% prefer skippable video ads. In terms of most disliked ads, both non-skippable video ads (31%) and auto-play ads (23%) ranked highest.
Consumers are no longer passive and have taken control of their browsers and—wherever possible—their online experience. Across the board, forecasts are consistent with PageFair’s findings and show ad blocking will continue to grow in the U.S, particularly if ad-blocking software is preinstalled on devices in the marketplace.
If a mobile ad is displayed, but not viewed by a human or simply not rendered properly, does the advertiser pay? The answer is yes, but two top advertising trade groups are working to establish a standard that will address this wastage and ad fraud through a uniform means of tracking whether ads can be seen in mobile apps.
Viewability is a huge headache on mobile – where the variety of ad formats and the way consumers interact with them (scrolling in a newsfeed, not clicking individual banners, for example) makes it a difficult one to call. To complicate matters, both Flash and cookies – URL referrers and trackers that are ubiquitous across all major desktop browsers – are completely absent from mobile.
Moreover, the mobile ad ecosystem of buyers and sellers is, in itself, a bottleneck. While ad buyers insist on purchasing only mobile ads that people can actually see, many publishers are less eager to lift the lid on this data. Their reluctance can be linked to that fact that impressions (CPMs) not click-throughs (CTRs) are the measurement that defines their business and their bottom line.
Currently, tracking ad viewability on mobile apps is a complicated process as app developers and publishers must integrate software from multiple third party providers. It’s a process that costs resources and – more importantly – can slow down the app. This is critical as a recent HP- sponsored study by Dimensional Research shows that most consumers quickly lose patience, and will even delete, apps that take longer than 2 seconds to load and perform its actions. The result is a trade-off between viewability (for the advertiser) and usability (for the consumer).
Source: Failing to Meet Mobile App User Expectations: A Mobile User Survey
To strike a needed balance the American Association of Advertising Agencies (the 4A’s) and the Interactive Advertising Bureau (IAB) have thrown their support behind an open source initiative aimed at standardizing viewability measurement for mobile apps. The goal is to jointly develop a single code base that mobile publishers can plug into their apps, letting advertisers pull data on viewability in a standard fashion, Joe Barone, managing partner of digital ad operations for GroupM and chairman of the 4A’s Digital Operations & Technology Committee, told the WSJ.
The organizations will oversee efforts to develop a standard tracking code, with the input of various constituencies from across the ecosystem. “This will be a very regimented, very democratic process,” Alanna Gombert, general manager of the IAB Tech Lab, told the WSJ.
The initiative comes at a time when concerns about ad viewability and accountability in the industry are high, magnified by a string of serious miscalculations by Facebook. The mobile ad giant has publicly admitted to overstating or understating the metrics that publishers and advertisers use to measure ad effectiveness on the platform and the value of Facebook ads.
It’s important to have Facebook and Google, which account for 85 cents of every new ad dollar spent on digital, on board, but it remains to be seen if thy will adopt and implement third-party tracking code of any kind.
While there is growing need for a consensus on viewability tracking, and a single code to enable it, change may come slower than we think. Many ad buyers and publishers prefer to work with their preferred vendors to track and calculate ad effectiveness. Moreover, the vendors behind these technology solutions worry an open source approach would effectively replace their proprietary tracking code and potentially devalue their companies.
Peggy Anne Salz is the Content Marketing Strategist and Chief Analyst of Mobile Groove, a top 50 influential technology site providing custom research to the global mobile industry and consulting to tech startups. She is a frequent contributor to Forbes on the topic of mobile marketing, engagement and apps. Her work also regularly appears in a range of publications from Venture Beat to Harvard Business Review. Peggy is a top 30 Mobile Marketing influencer and a nine-time author based in Europe. Follow her @peggyanne.
What are the most annoying ad formats?
