The Preferred Ad Format for Mobile App Monetization?

February 2nd, 2015

The Preferred Ad Format for Mobile App Monetization?
David Quinn

by David Quinn

VP of Strategy & Partnerships at Gummicube, Inc.

Pulling together some of the latest numbers on mobile app monetization trends from various sources - it is clear the gap between mobile usage and ad spend is closing - fast. The "Mary Meeker Report", or the annual "Internet Trends" presentation from KPCB is an industry favorite.

The 2014 report might as well have been called "Holy Smokes! - a look at the explosion of mobile".

Internet Trends 2014 Slide 15 copy

Global Mobile Ad Spend is booming!

eMarketer predicts that in 2015, advertisers will spend $64.3 billion on mobile advertising globally, up 60 percent from 2014. And by 2018, mobile ad spend will reach $159 billion, or 63 percent of global digital ad spend.

eMarketer Predictions copyVideo ads for mobile are booming!

Led by companies including Vungle, Ad Colony and Chartboost, video ads are forecasted to grow at a CAGR of 73% to $4.4b by 2018 in the US alone.

[BI Mobile Ad Revenue forecast copy]

Forecasts 4 years out, predicted for global spend - while interesting - how does it help me now?

The model for many mobile apps is to optimize an app for max LTV, identify and optimize user acquisition channels, and optimize the app listing for max search/organic exposure. Ad revenue made up around 40% of total app revenues across Google Play and the App Store in 2014. As advertising spend moves from TV, Print, Radio and even Web to Mobile, and specifically Mobile Apps - ad revenue stands to become an even more important component of monetizing a mobile app.

Monetizing your app with video ads should be on your radar.

We see an average of $10 eCPMs with 100% fill rates when implementing video ads in our apps. Of course, optimizing the video ad placement is necessary. Any new ad format and ad placement should be evaluated using retention and engagement data/KPIs, and not just ad revenues. But - because mobile video ads monetize so well - you can remove the often ignored banner ads, interstitial ads etc.. One reason adding video ads is growing so quickly is the longer ad format is integrated with unlockable content (virtual currency, customization etc..) as an alternative to an in-app purchase. Video ads open up the opportunity for “incentivized” or “opt-in” ads. Users are able to engage more deeply with an app without purchasing content, which has shown to improve retention and lifetime value.

Game Plan for Mobile App success:

  • develop a monthly ASO plan for organic, relevant installs
  • optimize an app with features the market is searching for
  • optimize the app for retention and monetization
  • so LTV>CPI and you or your client can increase margins and invest in new acquisition channels

The data and projections above should illustrate the opportunity in video ads for your mobile app monetization. Gummicube can help you execute a monthly app optimization strategy, and identify trending feature searches.

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