ABSTRACT:
The online ad publishing industry has undergone a seismic shift in recent times with the increased adoption and use of smart mobile devices and applications. With the rise in the number of mobile app users and their presence on mobile platforms, in-app advertising has become a popular choice among advertisers. In-app advertising not only provides app creators with a revenue stream for their free-served apps, but it also allows marketers a great venue to advertise their products and services.
The changing shopping habits post 2019 pandemic have added to the growing trend towards in-app advertising. Marketers also use sophisticated data collection and contextual targeting mechanisms with the help of AI, and machine learning to target relevant users with in-app ads precisely. However, there are also concerns regarding user perception of these ads as being intrusive and annoying. Marketers need to come up with more poignant solutions to make these ads more useful and relevant for users.
GoodFirms’ survey ‘In-App Advertising: Trends, User Perception, and Challenges’, attempts to study the current trends of the in-app advertising market. The survey also aims to gather information about user perception and challenges regarding the adoption of the advertising format.
Table of Contents:
Introduction
Overview of In-App Advertising
- What is In-app Advertising?
- In-app Advertising Market Size
- The Growing Number of Mobile Apps
- App Monetization Strategies
Various Formats of In-app Advertising
In-App Advertising Pricing Model
Benefits of In-app Advertising
Challenges of In-App Advertising
User Perception
Top Trends in In-app Advertising
- #1 Increased Personalization
- #2 Prioritizing Privacy
- #3 A Rise in Native Ads
- #4 Implementation of AR/VR
- #5 Incorporation of Artificial Intelligence
- #6 Fast In-App Adverts
- #7 Shift from Google Ply Store to Apple Store
- #8 In-App Bidding
- #9 Video is Surpassing all Content Formats
- #10 Rise in In-app Spending
Introduction
With the proliferation of smartphones and increase in online shopping, in-app advertising has seen tremendous growth over the years. As opposed to the mobile web, mobile apps provide a better platform for advertisers to create direct links with their audience. This offers a more exciting, interactive, and efficient way for marketers to attract their consumers' attention and motivate them to watch and interact with the marketing ads. The technology has evolved with time and has added to the advantages of in-app advertising for app publishers and advertisers alike.
Free-to-download apps have in-app advertising as a crucial revenue-generating medium. However, due to the intrusive nature of some of the ad formats, in-app ads can sometimes be termed annoying by app users. Also, the tracking of user data with the help of device ID can be a potential threat to user data security.
GoodFirms’ survey ‘In-app Advertising: Trends, User Perception, and Challenges’ is an attempt to identify and analyze the current trends in the In-app advertising market. The survey also aims to gather information about user perception of this marketing technology. It also sheds light on the challenges associated with the in-app marketing format.
Overview of In-App Advertising
What is In-app Advertising?
In-app advertising is a facility where ads appear within the applications targeting consumers or end-users. These ads have the ability to generate revenue for the app developers and promote the brand for the advertiser. Advertisements within apps are a method by which free apps earn income. App owners integrate adverts in the app to generate profits. Also, apart from in-app ads, app makers can earn by adding in-app purchases of tokens for users.
The in-app advertising world has two major stakeholders.
- Ad Purchasers: The individuals or organizations that purchase the ads, like app developers and agencies.
- Ad Sellers: The owners of the apps that offer ad space. In-app advertising functions by displaying ads to users while they are using an app.
Apps provide an interactive atmosphere to smoothly incorporate ads with the in-app content.
In-app advertising is a marketing and revenue generation method that works by displaying ads to mobile application users. In-app advertising is an effective way to promote a product or service on a mobile application. The growth of this marketing strategy is driven by increased smartphone application usage. Based on the application type and target audience, advertisers have to decide on the type of suitable ad format that can reap maximum benefits. In-app ads enable free apps to earn revenue.
In-app Advertising Market Size
The global in-app advertising market was valued at USD 110.9 billion in the year 2021. The market is expected to reach a value of USD 343.5 billion by the year 2027, exhibiting a CAGR of 20.79% between the years 2022 to 2027.(1)
The increasing use of smartphones and the rise in the number of mobile applications are major reasons driving the growth of the in-app advertising market. The growing e-commerce sector and increasing importance of online advertising further add to the rise of the in-app advertising market.
North America as a region that dominates the market due to factors like high disposable income, better internet facilities, and higher adoption of smartphones and tablets.(2)
While the in-app advertising market is bifurcated into the Android and iOS platforms, the Android segment is predicted to be growing faster among the two. The global in-app marketing industry is still maturing, and there are several giants active in the market. Some of the major players in the industry include Google Admob, Apple Inc., ESOL Co. Ltd., Microsoft Corporation, Facebook Inc., Amobee Inc., Tapjoy Inc., Flurry Inc., Tune Inc., and Glispa GmbH, to name a few.(3)
GoodFirms’ In-app Advertising Survey 2023: GoodFirms surveyed 660 selected participants comprising app users and marketers regarding their perception, interaction and deployment of in-app advertising to gain insights into the various aspects of the industry.
The Growing Number of Mobile Apps
Smartphone users are spending large amounts of time on mobile applications. Mobile apps are convenient to use over mobile websites, which makes them a go-to option for Internet users.
“People spend an inordinate amount of time on their mobile devices these days, and apps have become a ubiquitous part of our daily routines,” says Chris Looney, Chief Executive Office at SporesMD.
In the year 2022, around 142.6 billion apps and games were downloaded. Out of the total downloads, Google Play was responsible for 110.1 billion, and iOS added to 32.6 billion apps.(4)
GoodFirms surveyed users regarding the apps they spend most of their screen time on.
82.6% of smartphone users spent their maximum screen time on social media apps. The more the use of these apps, the better opportunity is available for the app publishers to generate revenue. Based on the use cases of the app, the developers can decide on what monetization strategy they can implement.
While 65.2% of survey respondents use music and entertainment apps more frequently, 52.4% of the respondents spend the majority of their screen time on gaming apps. Payment apps are the most used apps for 47.8% of smartphone users, whereas 39.1% of users use news apps.
34.8% of users assert that shopping apps are their maximum screen time apps as they are more convenient to be used when compared to mobile websites. Around 30.5% of smartphone users assert that most of their screen time is occupied with utility apps.
26.1% of mobile users’ screen time consists of productivity apps, whereas health apps form a major screen time portion for 21.7% of smartphone users.
App Monetization Strategies
According to a report by Statista, around 97% of the apps in the Google Play Store are freely available, while 95.5% of apps are free on Apple App Store.(5) A large number of users are accustomed to using free apps and hesitate to download paid apps. When the apps are free, developers opt for certain app monetization strategies that can generate revenue for them.
Following are the three most popular app monetization models:
In-App Purchase
In-App Purchasing is the buying of digital products or services within the app. The app developers provide the basic application for free.
In-app purchasing involves upgrading to an advanced version of the application at a certain price. Unlocking some extra features of the app, extra life in a gaming app, or unlocking further levels are some examples of in-app purchases.
For example, the dating app Tinder can be downloaded free of charge. However, there is a limit on the number of interactions users can have in a certain amount of time. Users can make unlimited interactions with an in-app purchase.
Subscription Models
Subscription-based app models are becoming increasingly popular. In these models, the basic version of the app is generally free. In these models, users have to pay a recurring amount to enjoy premium content and the advanced features of the app.
In some cases, the subscription gets automatically renewed after the subscription period ends. Also, subscription models eliminate ads from apps.
Netflix, Spotify, and Disney+ are some of the major brands with successful subscription-based models. These brands, however, have a challenge to continually provide unique content to retain customers.
In-app Ads
In-app ads are another app monetization strategy where developers allow advertisers to display ads within their mobile applications. This approach provides a revenue stream for app developers while offering marketers a platform to reach target audiences effectively. Users interact with these ads as they engage with the app, generating impressions and clicks that translate to income for the developer.
In-app advertising can take various forms, such as banners, interstitials, native ads, or rewarded videos, depending on the app's user experience and the advertiser's goals.
Various Formats of In-app Advertising
In-app advertising is a vast segment of digital marketing. There are various formats of in-app advertising that are used by marketers to create an efficient marketing strategy. These ad formats are suitable for various mobile apps. GoodFirms’ survey tries to find out what ad formats are encountered by users frequently.
Instream Video Ad
Around 85.2% of survey participants come across Instream ads in between a video that are skippable after a few seconds, while 52.4% of users encounter in-stream ads that are non-skippable.
Instream video ads are the most common form of video advertisement that is played along with other video content. These ads appear in either of three forms, pre-roll, mid-roll, or post-roll. They are either skippable or non-skippable.
Pre-roll
Pre-rolls are the most common form of instream video ads. As the name suggests, they appear at the beginning of a video and may be either skippable or non-skippable. The length of these ads maybe 15, 30, or 60 seconds. It is necessary to create an impactful pre-roll ad to grab attention even if the user chooses to skip the ad. Pre-roll ads are a great way to improve brand awareness and purchase consideration.
Mid-roll
Mid-roll ads are displayed in the middle of video content. These ads tend to be shorter than the pre-roll ads. Mid-rolls are generally characterized by higher completion rates as the user who is watching the content or playing a game has reached the middle level owing to his/her interest in the content/game and is more likely to keep continuing the app usage to complete the content or game level. Therefore, they are a good option for businesses that want users to watch the entire ad.
Post-roll
Post-roll ads are played at the end of a video, and opting for this ad format may seem unreasonable as users are more likely to close the ad. However, these ads can be part of the right strategy. These ads are the least commonly used ad formats. They are particularly beneficial for adverts with a clear CTA.
Interstitial Ad
39.1% of users said that they mostly encounter interstitial ads
Interstitial ads are similar to pop-up ads except for the fact that they occupy the entire screen of the hosting app. They are one of the most popular in-app advertising formats. These ads come in several ways, including text, images, videos, and rich media. Users can either click on the ad or close the ad to return to the destination app.
Native Ad
23.9% of app users come across content recommendation ads more frequently, while 19.5% of users encounter native ads in the form of story feeds while scrolling through news feeds
Native ads are curated to match the look and feel of the mobile app where the ad is being published. These ads appear conveniently in an app without disrupting the user experience.
Unlike traditional banner ads, native ads are less intrusive in nature. They provide a good opportunity for advertisers to communicate with the users and are capable of offering higher click-through rates.
Native ads come in various formats, which include in-feed ad units, search ads, recommendation widgets, and promoted listings:
- In-Feed ads appear similar to social media posts and are encountered when scrolling through news feeds.
- Search ads are present right at the top of search engine results and are displayed similarly to the results.
- Recommendation Widgets are the content recommendations that users come across while reading articles or some other content.
- Promoted Listings are sponsored product suggestions, usually on eCommerce websites.
Rewarded Video Ad
Rewarded video ads are the most frequently encountered in-app ads for 18.6% of app users
Rewarded video ads are in-app ads that the users can opt to interact with in exchange for some kind of reward or incentive. These ads mostly come up when the user is in need of the reward and will most likely continue watching the video advertisement.
The rewards provided are in the form of extra life in a gaming app, a hint in some puzzle games, an extended trial period, etc. Gaming apps are the most common apps that feature a rewarded video ad. Rewarded video ads have the capability to increase user engagement to a great extent and generate impressive numbers in terms of in-app purchases.
Programmatic Advertising
Programmatic advertising is the technology used to automate the process of buying and selling ad space to display ads curated for end users. The emergence of programmatic advertising assisted in simplifying the ad-buying process and helped businesses reach their target audiences more effectively.
Mobile programmatic advertising deals with the buying and selling of ad spaces specifically for mobile devices. The process uses AI-powered algorithms to determine the target audience and bid on the most significant ad space for the ad to be displayed. The entire process is automated and takes place in real time.(6)
The working of programmatic advertising involves the functioning of a Demand Side Platform (DSP), an Ad Exchange, and a Supply Side Platform (SSP). Mobile apps are designed to have pre-defined slots to display ads. The publisher calls for an ad when the app is opened by the user. The DSP is supposed to place this ad request or call. The ad request is simultaneously sent to several Ad Exchanges and SSPs.
When the SSPs conduct an auction for all DSPs to bid for the available slot, the DSP with the maximum placed bid gets to display their ad in the app.
In-App Advertising Pricing Model
In-app advertising has become a critical revenue-generating option for app developers. Since these ads target the potential audience with precision, it has become a necessary marketing medium for businesses.
There are varied pricing models associated with in-app advertising. Following are the various in-app advertising pricing models:
Cost Per Mille (CPM)
Cost per mille (CPM) is defined as the cost paid by the advertiser for every 1000 impressions of the ad shown. CPM is the most common pricing model opted for. It is the most suitable model for marketers aiming to improve their brand visibility. It is one of the cheapest pricing models for advertisers. The only drawback of this model is that displaying an ad does not guarantee conversion or clicks.
Cost Per Click (CPC)
Cost per click(CPC) refers to the amount paid per click. Advertisers have to pay only when users click on their ad in this model. This pricing model proves to be cost-efficient for advertisers. The CPC model is a good option if advertisers are looking to increase traffic to their websites.
Cost Per Action (CPA)
Cost per action (CPA) is the pricing model that is ideal for advertisers who are focused on achieving a particular result. In this mode, the publishers are paid when the users perform a certain action like registration or a sale transaction. CPA is a low-risk model for advertisers as they have to pay only when there are chances of conversion.
Benefits of In-app Advertising
In-app advertising is an efficient marketing strategy due to the many benefits it offers. Mobile apps have diverse reasons that empower them over web advertising. These apps are engaging, effective, and dynamic, which makes them an effective platform for promoting brands.
GoodFirms’ survey gains insights into the various benefits provided by in-app advertising.
Enhanced Targeting
Thanks to the GPS and other tracking features of mobile apps, as the advertising publishers can gain information about the geographic location of the user. Also, the mobile device ID associated with each smartphone provides details like the age, gender, and search history of the app user.
Kay Velik, Director of Content Strategy at Nine Peaks Media, says, “In-app advertising allows marketers to target specific audiences based on their interests, demographics, and behaviors.”
Moreover, a significant amount of time of smartphone users is spent on mobile apps as compared to mobile websites. When the target audience for a business spends most of their time on mobile applications, it is easier to convey the message to them through in-app adverts.
Better Click-through Rates
A marketing term that is used to describe the effectiveness of a mobile advertisement is termed click-through rate. Calculated by comparing the number of clicks on the ad and the number of views of the ad, CTR is a critical way to determine the efficiency of the ad campaign. A good CTR is highly required for the ad campaign to be successful, while failure to target the appropriate audience might lead to a low CTR.
Due to the personalization of ads and their engaging nature, they can generate higher click-through rates. In-app advertising significantly shows a better click-through rate when compared with ads on mobile websites. The CTR for in-app ads is 0.56% globally compared to 0.23% for mobile web ads.(7)
Boosts User Engagement
The time users spend on mobile apps is considerably high, which makes in-app advertising an efficient marketing platform. This makes it possible for marketers to reach out to their target audience.
Jim Liu, CEO of SEO Vendor, says, “Marketers are leveraging data-driven strategies, including personalization and retargeting, to tailor their in-app advertising campaigns to specific user segments, resulting in higher engagement and conversion rates.”
An ad that blends well with the content of the app is capable of creating a better and more engaging experience for the user, convincing them to click on the ad. The personalized and data-driven approach while creating the ad boosts user engagement and can also improve customer retention.
Promotes Revenue Growth
In-app advertising offers a great way to generate revenue for both app publishers and advertisers. In-app ads, being engaging and powered by insightful data, are capable of drawing users’ attention.
Andrei Vasilescu, CEO and Founder of DontPayFull points out that “In-app ads are more effective at driving conversions than traditional static ads due to their ability to capture user attention for extended periods.”
GoodFirms’ survey reveals that around 42.6% of smartphone users have ended up buying products after clicking in-app ads.
These statistics indicate a high conversion rate which promotes revenue growth for the advertisers. Not just buying products, but the in-app ads can also assist in increasing app downloads.
56.5% of app users admitted to downloading apps recommended through an in-app ad.
Increases in In-App Purchase Revenue
It is often contemplated if in-app advertisements can hamper in-app purchases. However, in-app advertisements, especially the types like rewarded ads, can improve in-app purchase revenue.
Rewarded video ads are generally displayed on gaming apps, where watching these ads opens a new level of the game or offers an extra chance as a reward to the player. Users often opt to watch these ads. It is observed that users who opt to watch rewarded ads often head to carry out in-app purchases, increasing revenue.
The apps that depend on in-app purchases for revenue can maximize their revenue by adding in-app advertising to their marketing budget.
Challenges of In-App Advertising
Despite the many benefits of in-app advertising for both publishers and marketers, in-app advertising comes with its own set of challenges. The survey by GoodFirms sheds light on the prominent challenges faced in in-app adverts.
Viewability and Fraud
Ad viewability is a marketing metric that defines the number of ad impressions that are actually viewed by the app users. If a certain ad is not viewable it is of no use to the advertiser. The ads must meet the criteria described by the MRC (Media Rating Council) for the ad to be considered viewable.
It is necessary for advertisers to design ads that meet the viewability criteria to leverage the maximum benefits of their advertising efforts. Attaining higher ad viewability is a task for advertisers and publishers. It depends on several factors, including the actual size and aspect ratio of the ad. Another factor that must be considered is ad speed. Lower ad speed can lead to failing to display the ad before the user gets engaged, which reduces the viewability rating.
Another major concern when considering in-app advertising is fraud. Ad fraud can be anything ranging from impressions, clicks, or even downloads created fraudulently to generate revenue.
“In order to ensure that their ads are being viewed by genuine users in viewable positions, advertisers must employ reliable partners and ad verification solutions to prevent viewability and fraud. Additionally, they should employ ad fraud protection and detection software to identify and stop fraudulent activity.” says Jeff Mains, CEO of Champion Leadership Group LLC
Increased Use of Ad Blockers
Ad blockers are the applications or software that, when installed, can block ads on a mobile device. There are several reasons that can encourage users to install ad blockers ranging from a bad experience with an ad to protecting data privacy.
Among the participants of GoodFirms’ survey, 42.3% of the users opt for ad blockers, while 30.1% of the smartphone users do not know how to use ad blockers.
There are several ad blocker software present that users can opt for. These ad blockers eliminate the ads while apps are being used. However, there are users who do not opt for them since they are costly enough. Also, the usage of these blockers is not recommended since they might be malicious and can cause data security risks.
27.6% of the survey respondents do not use ad blockers as they pose data security risks.
Delivering the Message in a Short-Time
Instream video ads are one of the common types of in-app advertising. As video ads are a great way to deliver a brand’s message to the target audience they are widely used by marketers. However, these ads are often skippable after a certain time frame. It is, therefore, necessary for marketers to engage the user in a short time.
Rhett Stubbendeck, CEO of LeverageRx says, “I think the most important goal of in-app advertising is to deliver your message completely in a very short amount of time, as most users are just waiting to skip the ad. Therefore, it is important to make the ad worth waiting for and captivating.”
Delivering a good quality ad in a short time and engaging the customer is quite challenging. Marketers must come up with creative ways to increase the click-through rate of an ad.
Data Privacy
Marketers focus on creating targeted ads for app users for better results. These ads are created by collecting users' data based on their digital footprints. Mobile apps are engineered to track user data like age, gender, location, and browsing history. Gathering this information may lead to data privacy issues.
According to Christopher Williams, Founder of Balanced News Summary, “The gathering and use of user data for tailored advertising may give rise to privacy issues as well as problems with regulatory compliance.”
Around 53.2% of the survey participants see in-app ads as a data privacy threat.
Implementation of laws like the GDPR (General Data Protection Regulation) can further add to the challenges of marketers to protect user data privacy. It is, therefore, essential for marketers to figure out ways to create targeted ads without breaching user privacy.
Increasing Competition
In-app advertising has gained a lot of popularity in recent years owing to the shift in user preferences during the pandemic. This has led to a tremendous number of companies opting for in-app advertising in their marketing campaigns.
The rising number of marketers showing interest in in-app advertising has made the platform competitive and expensive. With a lot of content present on the web and a huge number of apps, marketers need to have expertise in the field to strategize an effective campaign.
Ryan Mckenzie, Co-founder and CMO at Tru Earth says, “The main challenge of in-app advertising is reaching the right audience at the right time. With so many apps competing for user attention, it is difficult to stand out from the crowd and reach the most relevant people with your message.”
User Perception of In-app Advertising
The growth of any industry depends on how consumers perceive the industry. The success of in-app advertising depends on what the viewers of the ads think about them. GoodFirms’ survey presents a picture of the experiences regarding in-app ads.
Positive Perception
In-app advertising has been around for several years now. Mobile app users have now become used to seeing these ads.
The small size of banner ads does not consume much of the screen space. These ads, therefore, do not cause a distraction to the user.
The curation of in-app ads is data-driven. These ads are highly personalized and targeted based on the behavioral data collected using the mobile id and digital footprints of the users. These ads are generally related to the products the users are in search of.
When users are shown the content they are looking for, these ads prove to be useful for them.
52.8% of app users find in-app advertisements useful. This indicates potential high conversion rates.
Around 56.7% of mobile app users consider in-app ads informative.
Retargeting is a powerful tool for marketers to retain customers. Retargeting involves displaying ads to consumers who have previously shown interest in a particular product or service. In-app ads are an efficient way to retarget consumers. These ads also make users aware of the available discounts on the products. With useful suggestions and discounts displayed in in-app ads, users can consider them informative.
Negative Perception
In-app ads, although offer several benefits, they can still be perceived negatively by users. With a high number of ads present in various apps, these ads can seem to be unwanted for users.
There are chances that users accidentally click on the ads due to the small screen space. Also, users may not want to see ads related to a particular product.
In-App Advertising can be Annoying
With the increasing competition to display their ads, marketers sometimes increase the frequency of displaying ads. The high frequency and inappropriate placement of ads can annoy users. Ad formats like instream videos or interstitial ads can be interrupting and annoying to users.
Around 70% of mobile users reported coming across irrelevant ads and are often spammed at least once a month.(8) The urge to display their ad to maximum app users can result in inaccurate targeting and reduce the relevancy of the ads to the user.
According to Timothy Mcknight, CEO of Multitechverse, “The biggest challenge of in-app advertising is that it can be intrusive and annoying to users. This can lead to users opting out of the ads or uninstalling the app altogether. To combat this, marketers must ensure that their ads are relevant to the user and are not overly intrusive. Additionally, marketers must ensure that their ads are not too frequent, as this can also lead to users opting out.”
Bombarding users with irrelevant ads and high frequency of the ads lead to an annoying experience for the users. Marketers have to focus on a highly targeted audience and work on the appropriate timing and placement to display the ads to increase user engagement.
Marketers and app publishers must also understand that displaying ads to users is not always enough. Some app users opt to watch in-app ads only because of the price associated with the ad-free versions of the apps.
Around 53.9% of app users opt for watching ads only because the ad-free version of the app incurs a cost.
Kyle MacDonald, Director of Operations at Force by Mojio suggests, “The key is to balance ubiquity with obtrusiveness. While apps designed to annoy people into paying for an ad-free version can afford to splash ads everywhere, those relying on the ads for revenue need to develop a product that can carry enough ads to be profitable while staying usable in the long term. Contextual ads are a great choice here, especially if they're relatively unobtrusive and text-based. The more data you can use to target your ads, the more you can charge for them, so connecting users to accounts through services like Facebook or Google can add a lot more value.”
Top Trends in In-app Advertising
#1 Increased Personalization
With the positive impact of personalization in advertising, the focus on increasing personalization has gained importance. Personalizing their buying journeys can help brands retain customers.
Based on the digital footprints of the users, advertisers can target potential customers by showing them relevant ads. In-app advertising is also greatly used for retargeting customers who have considered a particular product or service earlier. This makes the ads useful for consumers.
#2 Prioritizing Privacy
Recent years have seen an increased concern over the privacy and security of user data. The growing awareness among users has pushed publishers to prioritize data security. The advent of technologies like Apple’s ATT (App Tracking Transparency) has shifted the control of sharing user data into the users’ hands. This technology enables users to prohibit third-party data usage.
Consumers will further try to find ways to restrict data sharing with third parties. Advertisers and publishers will have to work to find ways to target the appropriate audience without compromising data privacy. Privacy will, therefore, rule the trends in in-app advertising.
#3 A Rise in Native Ads
One of the biggest challenges of in-app advertising is making them non-intrusive for users. To prevent a bad user experience, advertisers should opt for highly non-disruptive and engaging ad formats.
Native ads are the best option to be introduced in the advertising campaign. These ads blend with the app content seamlessly. Native ads match the look and feel of the app to make them non-intrusive.
Rajesh Namase, Co-founder and Tech Blogger at TechRT says, “Native ads, which are designed to blend in with the app's content, are becoming more popular as they are less intrusive and more engaging.”
While these ads mostly appear as suggestions with content that users are interested in, there are higher chances that users will click on them.
#4 Implementation of AR/VR
Technologies like AR and VR have created a disruption in the digital marketing industry in recent years. The trend of using AR/VR continues in the in-app marketing segment as well.
Implementation of these technologies can make the ads even more engaging and immersive. Ads that are enriched with AR have the capability to produce an emotional connection with the users and create a better impact on the user.(9)
The higher engagement rates increase the conversions for the brand. One of the benefits of augmented reality in advertising is that it can be utilized to improve involvement and produce original experiences with the product.
According to Rakhi Oswal, Founder of Edrio, “One trend that has emerged is the use of interactive and engaging ads, such as playable ads or AR/VR experiences, which provide a more immersive advertising experience for users.”
#5 Incorporation of Artificial Intelligence
Artificial intelligence marketing is a growing trend in the marketing sector. In-app advertising strategies can also benefit from the application of artificial intelligence and machine learning. AI can enable advertisers to leverage the vast amount of user data gathered to design robust marketing campaigns.
AI-based in-app advertising solutions are beneficial for creating a personalized user experience. Artificial intelligence-backed in-app advertising makes targeting easier and more accurate. Also, they can be used for dynamic pricing based on user interests. The implementation of AI can also be in the form of introducing chatbots.
#6 Fast In-App Adverts
Fast advertising is an emerging marketing strategy that leverages real-time cultural and social trends. These adverts are relevant because of the rapid adoption of current social and cultural trends.
Although advertisements have always been influenced by cultural trends, fast in-app adverts are characterized by rapid sensing and responding to the available opportunities.
These ads are more engaging and catch user attention in a better way. There are several leading brands opting for fast adverts. Brands like Audi, The Lincoln Project, and Nestle, have already opted for fast ads in their marketing campaigns.(10)
Around 47.8% of survey respondents embrace and support in-app adverts, which shows greater adoption of the trend. The future may see growth in the number of advertising campaigns with these ads.
#7 Shift from Google Play Store to Apple Store
Google has indicated that it will deprecate GAIDs on Android devices by the end of 2024.(11) Google Advertising ID (GAID) is an identifier created by Android for a device, which is employed for advertising objectives. From evaluating the success of marketing (e.g., attribution) to tailoring and personalizing advertisements based on users’ activities and preferences, GAID has multiple uses. If Google deprecates the identifier, it will negatively impact advertisers and they will move to the Apple store for advertising purposes.
#8 In-App Bidding
The mobile advertising landscape has diverged from the waterfall approach and moved towards in-app bidding. In-app bidding enables mobile publishers to place their ad inventory in an auction with all possible advertisers taking part in a level playing field in order to obtain the ad space.
#9 Video is Surpassing all Content Formats
Mobile video promotions have become one of the most sought-after promotional methods for advertisers. Creative media outlets are replacing conventional mobile ad formats, such as banners, with videos. Not only are they incredibly appealing, but they are also tailored to the consumer habit of today and are resistant to advertisement scams. This has made it possible for larger companies to invest more heavily in mobile. Popular types of in-app video ads are :
- Rewarding Video Ads:
- Outstream Video Ads
- Full-Screen Video Ads
- In-stream Pre-roll Video Ads
#10 Rise in In-app Spending
The in-app advertising trends point toward an increase in in-app spending by consumers. This is a positive development for the in-app advertising world. According to an estimation from SensorTower, the world's expenditure on apps is projected to reach an impressive $233 billion by 2026.(12) This estimation is based on the money spent on premium apps, in-app purchases, and subscriptions.
Key Findings
- App developers opt for app monetization strategies to generate revenue when the apps are free to download.
- In-app advertising is an effective way to generate revenue for app developers.
- Marketers can leverage the benefits of in-app advertising to promote their products.
- The growth in the number of smartphones and mobile applications are the driving factors for the growth of in-app advertising.
- Around 85.2% of smartphone users mostly encounter in-stream video ads.
- In-stream video ads are classified as pre-roll, mid-roll, and post-roll based on the timing of the appearance of the ads.
- Banner ads are the most frequently encountered ads by around 68.7% of survey respondents.
- Programmatic Advertising is the technology that automates the process of buying and selling ad space to display ads.
- In-app advertising offers varied pricing models, including cost per mile (CPM), cost per click (CPC), and cost per action (CPA).
- The increased use of ad blockers is a major hurdle to the growth of in-app advertising
- Maintaining data privacy is a critical issue that app publishers have to consider.
- 56.7% of smartphone users consider in-app advertising to be informative.
- 46.3% of survey respondents mentioned in-app advertising to be unwanted.
- Increased personalization is one of the top trends in in-app advertising.
- 42.8% of survey respondents find in-app advertising useful as it is based on the search history of the user.
- Prioritizing privacy is an important trend in in-app advertising.
- The ability of native ads to blend seamlessly with the app content has made them popular amongst marketers.
- In-app advertising is characterized by better click-through rates and better user engagement
- Introduction to in-app ads can improve in-app purchase revenue for an app.
Conclusion
The huge number of apps used by smartphone users leads to a high probability of users viewing the displayed apps. With the tremendous amount of time users spend on mobile apps, it has become a preferred platform for marketers to advertise their products and services.
Introducing ads that can blend with the app content increases user engagement and leads to more chances of conversions. In-app advertising is an efficient marketing platform owing to the appropriate targeting achieved. The app demographics and details like the browsing history of the user help marketers better determine the target audience. The flexible pricing models for implementing in-app advertising in their marketing strategies can prove beneficial for companies and app publishers alike.
The growing market size of the industry might grab the attention of new businesses. However, marketers must understand that the balance of the frequency and placement of the advertisements must be maintained. Also, the changing policies regarding data privacy and controlling fraudulent activities are also important aspects to be considered for the growth of the industry.
We sincerely thank our Research Partners for their valuable insights.
References:
- https://www.imarcgroup.com/in-app-advertising-market
- https://www.marketresearchfuture.com/reports/in-app-advertising-market-6005
- https://www.grandviewresearch.com/industry-analysis/in-app-advertising-market
- https://www.businessofapps.com/data/app-statistics/
- https://www.statista.com/statistics/263797/number-of-applications-for-mobile-phones/
- https://revx.io/essential-guide-mobile-programmatic/#:~:text=Mobile%20advertising%20is%20a%20powerful,them%20as%20time%20goes%20on.
- https://siteefy.com/mobile-marketing-statistics/
- https://www.adweek.com/programmatic/70-of-people-receive-irrelevant-ads-from-brands-at-least-once-a-month-report-finds/
- https://www.zappar.com/blog/how-augmented-reality-affects-brain/
- https://www.fastadvertising.io/
- https://trackier.com/blog/everything-you-need-to-know-about-gaid/#:~:text=Google%20announced%20in%20March%20that,an%20ID%20created%20by%20Android
- https://sensortower.com/blog/app-revenue-and-downloads-1h-2022
