In-app mobile advertising is expected to jump significantly between now and 2018, according to new figures from Juniper Research. Ad spend in this category will reach US$16.9 billion by 2018, up from $3.5 billion last year, the consulting group found.
Smartphones currently account for approximately 70 percent of in-app ad spend, Juniper said, but that ratio is expected to change over time as tablet use claims a bigger portion of the mobile ecosystem.
By 2018, the tablet/smartphone adspend split will be almost 50/50, Juniper predicted.
Growth of in-app advertising will be driven by several factors, including improved targeting capabilities and the development of more effective interactive rich media ads, the report found.
There is another reason for the growth, Doug Rozen, senior vice present and general manager of MXM, told CRM Buyer.
In-app ad spending will increase over the next few years for the simple reason that consumers are spending more time accessing content in-app compared to other digital channels.
“More time spent in-app means more opportunity for advertising,” Rozen said.
Changing Definition of ‘App’
The very definition of an “app” is rapidly changing to include software developed for wearables like smartwatches and Google Glass, as well as cars outfitted with Android and iOS and smart home appliances from retailers like Sony and Samsung.
“This means more useful content for consumers to engage with — the necessary element of any good ad placement — and ultimately more opportunity for marketers,” Rozen said.
In the near term, though, marketers will be focusing on formats for in-app ads running on smartphones and tablets.
Still, the range of choices and decisions already is wide, said John Milinovich, CEO of URX.
For example, there is a lot of interest in new native ad formats, he said, which boast higher conversion rates and competitive prices, although reach is still relatively small.
“Standard in-app banner ads, on the other hand, are still popular because they have the most reach, costs are relatively low, and conversion rates can be substantial if used correctly,” said Milinovich.
There are also the offerings from Facebook to consider. These perform “incredibly well on mobile for both cost-per-install and cost-per-engagement, and remain popular with mobile marketers,” he pointed out.
A New Thought Process
Advertisers are approaching in-app advertising in new and more thoughtful ways, Milinovich observed.
“Developing mobile marketing campaigns requires a sensitivity to the form factor that is often missed by brands who’ve just taken their desktop strategy and applied it to mobile,” he explained.
Companies are beginning to understand that mobile apps are incredibly effective points of sale, said Milinovich. They provide a direct way for consumers to make purchases at the point of need.
“Mobile deeplinking creates the opportunity to drive users into the middle of apps to specific points of purchase,” he noted, “cutting out several steps from the process.”
All of this comes with a caveat, said MXM’s Rozen. Five years is a very long time for a rapidly evolving industry.
“Just think, this time five years ago, we had just been introduced to the 3G iPhone, and iPads wouldn’t debut until later in the year,” he recalled. “We cannot predict a future that has not been fully invented.”