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What’s Next in Mobile: Programmatic, Retargeting and Less Mess-DKs

Posted by Zain Jaffer on January 24th, 2014 at 10:00 am

2013 was a breakout year for advertising -- Twitter acquired MoPub to strengthen ad revenue before filing for IPO, and Facebook finally launched video ads.  At Vungle, we deal with a massive number of mobile advertisements—every second, more than 250 people worldwide see one of our ads—which has given us unique insight into how people behave on mobile. Here are the most surprising facts we learned about mobile advertising last year, and what we expect for 2014.

Smartphones are the new cigarettes

Over the past year, we’ve seen that people are 76 percent more likely to click to download new apps between 6 AM and noon than the rest of the day. Since these are work hours, we believe this directly correlates to the decline in the popularity of smoking. Here’s why:

In the past, when people needed a spontaneous break from work, they would slip outside for a quick smoke. However, during the time that mobile phones have risen in popularity, more and more people have become aware of the health risks of smoking, and now we think they’re substituting an unhealthy activity (smoking) for a healthier one (trying out new mobile games). The connection hasn’t been fully proven, but there’s already evidence that mobile gamers and smokers engage in their respective activities for the same reasons: to reduce stress, procrastinate at work, socialize, and pass the time. Maybe your smartphone is more addictive than you think!

Save Data, use Wi-Fi

With the price of data on the rise and the impending death of unlimited data plans, we’ve seen more and more people opting to save cellular data by viewing content via Wi-Fi, which has become increasingly more accessible in countries like China that provide free wifi access in most public spaces.  We saw Wi-Fi traffic jump from 62 percent in the first quarter to 77 percent in the fourth, with about 85 percent of people in the Middle East and Eastern Europe viewing almost all content on Wi-Fi. This could also be directly related to the fact that low average income in these areas—eg. ~$4,500 in Jordan, ~$5,000 in China, and ~$14,000 in Poland.

Despite the fact that we’ve seen significantly more people view video ads in the U.S. and Europe, click through rates are much higher in the Middle East and Asia. For example, the download rate for advertisements in China is 16 percent higher than in Great Britain.

The reason relates back to free Wi-Fi access.  Countries like China have significantly more free Wi-Fi access than much of the Western World. Trains, buses, railway stations, restaurants, bars and even public plazas—like the Yuyuan Garden in Shanghai—all provide free access to Wi-Fi. Widespread access to free Wi-Fi encourages people to interact more with their phones throughout the day without having to worry about using up all the data on their plan.   The result -- people are watching more ads while connected to Wi-Fi than ever before.

Predictions for 2014

In-app advertising has exploded over the last 12 months, and is the fastest growing sector of mobile advertising, but vendors need to continue to demonstrate their value to developers if they’re going to stay relevant. Only about five percent of users spend money on in-app purchases, and it is our goal to deliver in-app ads that don’t detract from the experience, to allow developers to monetize the other 95 percent of users, and guarantee their product is profitable. Here are a couple things that advertisers will need to do over the next year to help developers monetize.

Retargeting and re-engagement

Retargeting will continue to improve over the year, as being able to track and analyze people’s interactions with their mobile devices becomes the norm. Targeting past downloads and understanding consumer behavior in each channel—mobile, online, social—will greatly improve in 2014.

Re-engagement will be especially important, as it is significantly more expensive to attract new users than it is to maintain existing ones. Deep linking will be an essential way to get someone using an app again.  For example, the market has been saturated with a particular game, but over time DAU’s have faded; rather than running ads that link users to the app-store, ads will use deep links that redirect users directly to the play screen of the game, which is already on their phone.

Mobile Video Will Start Going Programmatic

We're going to see a significant shift in premium mobile inventory availability to the programmatic space. RTB buying is expected to account for more than 20% of all digital ad spend in 2014 and publishers are going to realize that they can more effectively market and value their inventory in a programmatic environment than through other conventional sales methods..  Not only do publishers benefit from the added controls programmatic brings, but buyers prosper from data transparency and measurable impact on audiences.  These new metrics, previously not available with such accuracy in the TV space, along with the engagement factor of video formats, will lead to budgets shifting from traditional ad networks into programmatic exchanges.

Less Mess-DKs

Developers often try to limit the number of SDKs they implement, so that they can spend a minimum amount of time configuring, QAing, and maintaining third-party code, and concentrate on delivering great app experiences….Which means that SDK consolidation will be a huge opportunity for mobile gaming vendors in 2014.

There will always be room for SDKs that really help developers turn their apps into sustainable businesses, but vendors that don’t offer tangible revenue benefits will be pushed out.

Although mobile video ads have been around for years, video is the natural medium for mobile, and advertisers need to make ads as seamless and unobtrusive as possible. The majority of time spent on mobile is in apps, with the user actively engaged with their device. For this reason, advertisers need to focus on how they’re placing in-app ads to create the best possible user experience, and ultimately improve monetization.

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