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This article was published on May 8, 2014

Lighting the fuse for the in-app advertising explosion

Lighting the fuse for the in-app advertising explosion
Bertrand Schmitt
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Bertrand Schmitt

Bertrand Schmitt is the CEO of App Annie. Bertrand Schmitt is the CEO of App Annie.

Bertrand Schmitt is the CEO of App Annie.

In-app ad revenue across major markets is rising, and will continue to rise as in-app advertising takes more budget from traditional mobile and online display advertising spend.

For app publishers, in-app advertising has emerged as the number one way to monetize their apps. For advertisers, it offers a great way to access and acquire a highly engaged audience of app enthusiasts everywhere they go.

But what we’ve seen so far only scratches the surface—there are still a handful of hurdles that need to be overcome before in-app advertising can reach its full potential. Once these challenges have been addressed, we’ll see just how powerful in-app advertising can be for app publishers and the brands they serve.

Here are five things the industry needs to focus on in order for in-app advertising to reach a tipping point.

1. Cross-platform tracking

Only a small number of mobile apps manage to attract the account logins essential to user-specific tracking across platforms. Device-level tracking is a poor substitute; you can never be sure whom you are really dealing with as entire families can share the same tablet or laptop.

Without a way to track individual users from desktop to mobile, across mobile devices, and back to desktop, marketers are unable to effectively retarget across platforms. For in-app advertising to deliver on its full promise—including unique capabilities like geofencing and proximity-based marketing—we need a way to leverage the individual user’s intent demonstrated on one platform across all the others.

2. Reporting

With so many mobile ad platforms and real-time bidding exchanges in play, marketers and publishers are overwhelmed with dozens of reports to track. For publishers to maximize their ad revenue, and for marketers to allocate their ad spend where it does the most good, they need to be able to aggregate data from every ad platform they use and extract accurate insights.

Today, this is a largely manual, time-consuming and error-prone process. Analytics have made vast strides in other areas of digital marketing, but it remains underdeveloped—and desperately needed—in the in-app ad space.

3. Measurement

In a world of data-driven decisions, it’s hard to justify an increase in mobile ad spend if you can’t clearly demonstrate the impact it will deliver.

Measurement remains a problem throughout the in-app ad space. It’s technically challenging to capture the data needed to gauge the impact of a given in-app ad placement, and also to track the impact of campaigns across platforms to see how your strategy is impacting downloads, rankings and revenue. Publishers with apps on multiple app stores end up with data stuck in multiple dashboards, further obscuring the holistic view they need.

The difficulty assessing ROI for in-app advertising can lead publishers to underspend on it—an ironic twist, given the likelihood that it will equal or exceed the performance of more easily measurable channels.

4. Discoverability

The vast majority of apps are buried deep in Google Play and iOS App Store, while a small handful of superstars capture the lion’s share of ad spend.

We need a better way to aid app discoverability in order to help more publishers gain visibility and realize ad spend revenue. Doing so will also broaden the pool of effective apps for advertisers.

App store optimization (ASO) is now emerging as a way to help publishers show up in the top 10 for various searches on every major discovery channel; for advertisers, it can also mean better alignment of search results with particular consumer interests, impacting the effectiveness of marketing spend.

5. Standardization

Standardized ad formats play an essential role in other online platforms, making it possible for brands to use the same high-quality creative across every site and network they work with. However, formats for in-app ads remain fragmented, as the sizes and aspect ratios of smartphones, tablets and phablets continue to proliferate—not to mention the variety of versions of iOS and Android now in use.

Additionally, the rise of native advertising in mobile poses a challenge for standardizing formats across various types of apps. Marketers either have to deliver kludgy ads with a least-common-denominator user experience across platforms, focus on a single platform and neglect the others, or invest heavily in multiple versions of each ad they create. Ad format standardization is urgently needed to help mainstream the in-app channel.

Clearly, we have work to do in the in-app ad space. But the rewards will make it more than worthwhile, as more mature technologies and best practices enable publishers and brands to capitalize on the explosive potential of this promising channel.