In-app advertising is still struggling with issues that have largely been solved in other formats, such as ads that don’t render properly, fraud and measurement. Despite these flaws, however, advertisers continue to spend on in-app ads, because that’s where their targets are: Consumers spend an average of three hours per day on mobile, and GenZ spends 20 percent more time on mobile apps than the rest of the population, according to AppAnnie.
“A lot of things solved for mobile were first solved on desktop; now it is the same type of issues being solved for apps,” says Amir Ghodrati, director of market insights at App Annie. “People are finally realizing the value of in-app advertising, but the industry has been slow to realize the change.”
Getting it right is important because the stakes are huge. Worldwide mobile ad spend, which includes both in-app ads and web, is estimated to hit $190 billion this year, according to AppAnnie data. Consumer spend within mobile apps, meanwhile, will reach $120 billion this year, up from $101 billion in 2018, AppAnnie says.
The problem(s)
One hurdle marketers face is integrating in-app advertising into their overall marketing mix. “Marketers and brands are looking to engage their audiences in a mobile-first world, and apps—branded experiences on the most personal device with unique and rich functionalities—are to date the best way of doing just that,” says Brian Quinn, president and general manager of mobile analytics and attribution company AppsFlyer U.S. “But for many brands and agencies, incorporating a mobile app into the larger context of their marketing strategy is not an easy feat.”
Quinn says that mobile apps are too often seen as an additional channel, rather than a destination or engagement tool. He says that the fragmented mobile ecosystem has resulted in a siloed marketing mix that should, in fact, work together.
“Connecting the dots between different consumer touchpoints is technically difficult, and marketing teams are usually not set up to tackle omnichannel marketing holistically,” Quinn says, adding that making sense of data coming from so many different verticals is challenging.
“App marketing is maniacally performance-focused,” says Gadi Eliashiv, CEO of marketing intelligence company Singular. “Marketers live and die by the ROI of their campaigns, pretty much like sales reps live and die by quota. So the biggest challenge is finding and exploiting pockets of profitable growth in a sea of thousands of ad networks, dozens of channels, hundreds of marketing partners and enough promises from all of them to pave a path to the moon—and that’s before you’ve even dealt with outright fraud, which is rampant.”
App fraud is estimated to cost marketers nearly $13 billion this year, according to Scalarr, up from $7.3 billion in 2018.
One solution to thwart ad fraud is app.ads.txt, which the IAB Tech Lab initially developed for the open web as simply ads.txt. However, few app publishers are adopting the format. Ghodrati believes most app publishers aren’t signing on because it adds another layer of complexity.
The solution(s)
AppsFlyer’s Quinn argues that marketers need a complete picture of all consumer touchpoints, regardless of where their activities take place. “This is ultimately what the people-based attribution solutions that are now coming into the market are aiming to do,” he says. “They see highly measurable mobile apps as the centerpiece in a holistic customer engagement strategy, and connect various other channels—OTT, mobile web, desktop—into a detailed customer journey.”
But making sense of all the data can sometimes seem impossible. Marketing teams will spend millions on dozens of campaigns with countless creative across a variety of different channels, all with different vendors. “Somewhere inside that noisy haystack of data are the needles of insight you desperately need,” Elisahiv says, adding that advertisers lack “a system that unifies all your marketing data around intelligent insights of growth.”
Getting in-app ads such as video to display correctly—i.e. in both vertical and landscape—is another challenge. But the number of platforms marketers are using—some of which provide the ability to display the correct ad format for in-app ads—is growing, from six in 2017 to eight in 2018, AppAnnie reports.
And, as ad dollars continue to flow to in-app advertising, more companies are entering the space to combat bad actors. “Anytime there is an ability to make money, there is always opportunity for fraud,” Ghodrati says. “Fraud becomes more sophisticated, so you can’t rely on location of downloads and time spent in apps, but more companies are starting to enter this space to combat fraud.”
Looking forward
Measurement will play a critical role for in-app advertising both today and the near future, Quinn says. “The defining problem of digital marketing over the next few years is how to balance measurement that informs marketers on what’s working,” he says. “A couple years ago it was GDPR,” which limited data collection. “Now app marketers need to start thinking about what will happen if the app’s advertising identifier goes away.” That identifier allows marketers to track user activity, though on a very limited basis.
Adds Quinn: “A more holistic view of the customer journey across touchpoints will create a need to rethink how campaigns are being created, implemented and optimized across channels. How will brand messaging evolve when the ad you see in a news app is optimized based on a TV spot you watched a week ago, and the promotional email you received this morning? Instead of working in traditional marketing disciplines, marketing teams will have to be set up to orchestrate campaigns more holistically.”
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