The popularity of mobile devices has boomed in the past few years. Our smartphones have almost become extensions of our own bodies and virtually everyone has experienced that little panic attack you get when you can’t find your phone. Mobile apps are the integral part of the experience that makes our phones so irreplaceable in this day and age.
Many of those apps are free because, well, people like free things and the competition is fierce. A steady income from a free app (or even additional income from a premium app) can be achieved in various ways with the most popular being through placing advertisements, or ad monetization.
Ad monetization can simply be defined as the process of generating profit by placing ads in an app, website, blog, you name it. There are many kinds of ads that you can use to this end. The most common are interstitial ads, videos, offer walls, banners, push notifications, and playable ads.
However, today we’re not going to discuss various advertisement types. Instead, we’re going to take a look at where the whole ad monetization business is going and where it will be a year from now.
Stats and predictions
Let’s examine the current situation in mobile ad monetization. At the moment, mobile accounts for two-thirds of digital ad spend, showing a 30% annual growth. In 2018, mobile ad spending worldwide amounted to $147.6 billion. The expectations are that in 2019 the global ad spending will reach over $160 billion worldwide, over $186 billion in 2020, and as much as $231.3 billion in 2021.
By 2022, mobile’s share in total media ad spending will increase to 41.9 percent. The predictions say that, in that same year, less than 25 percent of all ad spending will go to TV, whereas almost half will be devoted to mobile.
Unified auctions vs. waterfalls
Until recently, the waterfall has been the most popular method in mobile ad mediation and widely accepted as the most efficient one. When multiple ad networks participate in advertising in one app, the waterfall ensures that if one of them doesn’t have an ad to place in it, another one will step in and place its own ad instead.
However, the unified auction approach is bound to replace the soon to be obsolete waterfall system and not without reason. Specifically, in a unified auction, each ad impression from the same publisher inventory is simultaneously offered and sold to the highest bidder from among any type of demand source. Unlike waterfall, which is more like a hierarchy often preventing advertisers from reaching the highest position, a unified auction allows equal competition for ad impressions, increasing the opportunities to maximize profit.
A more transparent, efficient and fair system than the waterfall, it ensures publishers get the best prices for their ads, and advertisers to get fairer opportunities to compete. Moreover, a unified auction allows real-time bidding with no delays, which is essential to a programmatic advertising ecosystem.
Video to remain the preferred ad format
Many marketers have recently recognized the value of video in capturing their audience’s attention. The same goes for marketing in mobile apps. In fact, in the first three months of 2018, advertisers worldwide devoted 20 percent of their total in-app budgets to video. In the US alone, this percentage was between 28 and 34 during the same period.
Given the current situation on the ground, mobile video ad spend in the US alone is projected to grow by 22.6% by the end of 2019, reaching $15.93 billion. By the end of 2020, it could reach a staggering $19.30 billion.
Advertisers can choose to either play videos to mobile users at certain transition points in apps or offer rewarded videos – watching a video to earn anything from premium features, in-game currency, extra lives, discounts, and more. Video has proven to be the most effective ad format, with CTR rates as much as 56 percent higher than with banners, in addition to higher CPM.
Video will continue to be the king among ad formats in the future period as more app publishers realize that increasingly more people are comfortable with watching video ads on their devices. With the development of new and the advancement of existing technologies, marketers will find ways to increase the quality of these types of ads.
Influence of AI and ML
Artificial intelligence (AI) and machine learning (ML) are growing fast and changing our lives as we speak. As a matter of fact, investments in AI and ML are predicted to reach $232 billion by 2025.
We have our smart assistants on our phones and computers, and it seems like every household has at least one smart speaker. It is already obvious that AI and ML are going to affect ad monetization industry as well.
They will enable the gathering of more insights about individual users, providing more accurate information about the LTV of each user. On top of that, these young technologies will allow publishers to get better-tailored prices for all ad spots as they will be able to determine the best eCPM for every impression every time, consequently improving ad revenues.
5G will pave way for AR/VR ads
This year’s Mobile World Congress has witnessed an explosion in devices that support the use of the new 5G technology, while the 5G mobile network infrastructure is sprouting all over the world. This means the market will soon be filled with mobile phones that support faster and more stable connectivity, and that advertising strategies will follow suit.
The dawn of faster wireless Internet means that users will now be able to watch (and expect to see) better-quality videos, including video ads, on their phones. Coupled with the advent of AR and VR technologies, this opens a world of possibilities for publishers and advertisers to amaze their audience, improve user experience, and increase engagement.
The times they are a-changin’
The changes are inevitable, especially so in the ever-growing business of ad monetization which has to keep up with all the new developments, be it new technologies or improved strategies. Those mobile publishers and advertisers that fail to follow the trends risk missing out on many opportunities for growth and profit. Furthermore, they risk being swept away by those who simply paid attention and applied changes to their business early.
Adapting to these changes may seem like a daunting task, but it doesn’t have to be with the right monetization partner at your side. SOOMLA’s platform allows you to track ad revenue per user, segment, cohort, and traffic source, and eight of the top 50 mobile game publishers have already chosen us as their partner.