In-App Advertising: Defining The Market And Its Unique Dynamics

The leading in-app advertising formats can empower advertisers, publishers, and app developers to meet their most significant objectives. Read on to find out how.

The public is consuming media like never before, and their media habits, activities, and preferences change rapidly. Today’s consumer is increasingly mobile-first, is spending more time in-app, is watching a significant amount of digital video, and is more open to viewing contextually relevant advertising, especially in exchange for content and access.

Given an abundance of media seeking to capitalize on these changing dynamics and attract consumer attention, marketers and publishers must adapt and evolve their media strategies to elevate their advertising messages and engage consumers. This is particularly true for mobile. According to eMarketer and featured prominently in market trend presentations, mobile devices now account for 51% of consumers’ total time spent with digital media, representing almost three hours per day.

As consumers spend more time on mobile devices, marketers and advertisers seek to reach their ideal customers where they reside. In doing so, advertisers and publishers face a number of new challenges, including the fact that desktop methods and formats for delivering content do not translate directly to mobile. Few marketers, publishers, agencies, and providers have cracked the code on how to deliver data-driven targeted solutions on mobile; and, while not exclusive to mobile, marketers and publishers are hurt by corruption and ad fraud.

As solution providers recognize these challenges, pain points are increasingly being mitigated through the development of ad formats that capitalize on changes in consumer media consumption as well as advertiser and publisher demand. One format is in-app advertising.

According to comScore, smartphone users are spending approximately 88% of their phone time in-app, a significant amount more time than in mobile browsers. As app developers seek to monetize their apps and consumers spend more time in-app and increasingly embrace an advertising-for-access value exchange, marketers and publishers are turning to in-app advertising. The highly effective forms of in-app advertising, such as reward-based or opt-in video, go beyond traditional banners and desktop display formats; they are highly engaging, aligned to the changing consumption habits of today’s consumer, and uniquely positioned to combat ad fraud.

The leading in-app advertising formats can empower advertisers, publishers, and app developers to meet their most significant objectives:

• Advertisers can deliver content, capture audience data, generate insights, and target consumers with new content that provokes engagement and supports branding, awareness, acquisition, and loyalty.
• Publishers can drive traffic, acquire consumers, and get them actively engaged with digital content.
• App developers can monetize their applications with high-value CPMs and quality brands that are aligned to the app and user.

The increasing use of in-app formats and solutions to distribute content sits at the intersection of critical trends related to consumer content consumption and how developers create experiences that engage app users. It is the synergy of interests between these stakeholder groups and a focus on content distribution, engagement, and performance that has created a marketplace for delivery of content in-app. This makes the leading formats an attractive medium for advertisers, publishers, and app developers, with very high growth potential. The evolution of the format—and subsequently the providers that support it—will be marked by a number of key elements:

• In-app solutions will become increasingly reward-focused. For the most part, consumers acknowledge that advertising is necessary in free mobile apps. Realizing they need to see advertising to support continued usage, 84% of consumers believe that rewards-based ads are very acceptable or somewhat acceptable in a mobile app, according to IPG Media Labs and Kiip.

• Given providers’ ability to capture first-party consumer app usage trends and subsequently develop insights to fuel engagement, in-app advertising solutions will develop more advanced audience targeting.

• As consumers increase app use and engagement with in-app advertising formats, there is potential for increased brand budget to flow into specific ad formats, alongside the current performance-based budget.

• Given enhanced audience insights, targeting and engagement, as well as decreased fraud potential, there will be a shift away from programmatic buying of mobile pre-roll video content, with budget being redirected to in-app formats.

• In-app video based pricing models will evolve beyond the CPM to more advanced CPE and CPCV models. This will take work on the part of the agency to educate clients on pricing models beyond those they are traditionally accustomed to.

• With increased budget flowing to in-app marketing solutions, advertisers and publishers will look to—and prioritize—solution providers that have robust analytics and reporting and can accurately determine in-app ROI.

To find out more about what’s driving the growth of in-app advertising, as well as information on its formats, use cases, and where the market is going, download the Winterberry Group report, developed in partnership with Jun Group, here.