The mobile app economy has never been hotter. In 2018, people spent over $71 billion on apps, and downloaded apps 113 billion times worldwide.
On the monetization front, in-app advertising remains ascendant. Not only will mobile ad spending overtake spending on all other media by next year, but App Annie has found 60% growth in apps that make money through in-app advertising.
And yet, all is not rosy on the monetization front. According to InMobi’s 2018 Header Bidding Research Report, 53% of app publishers polled said that ad revenues had remained stagnant or decreased in the previous 12 months.
While mobile in-app advertising is growing, not everyone is cashing in. So what can app publishers and developers do differently to better monetize their apps?
For more, we turned to Chas Castell for sage advice. Chas is the founder of PubRev+, a premier independent global consultative agency providing commercial optimization and strategic revenue creation for app publishers. He is a giant in the mobile ads industry (not just because he is 7 foot tall) and has previously worked for premium properties such as Warner Brothers, Scopely and TextNow.
Q: What are the biggest monetization problems that app publishers face today?
There are a few. Interestingly enough the biggest challenge we see across the board that publishers face is resourcing. Often publishers know they should be monetizing with advertising, or they have a feeling that they are leaving money on the table with their current ads setup. The problem they have is they either don’t know how to improve their ads monetization, or that it’s too costly to find and hire AdOps personnel when they are not sure of the outcome (good AdOps people are hard to find). It becomes a Catch 22. They can’t hire because they are not sure of the outcome, and they are not sure of the outcome because they can’t get a quick and easy answer to the question “how much money can I make with advertising?” The irony is that a good AdOps resource will make a lot more money than they would cost and frees the publisher financially to invest more into growing their app. CEOs are going to bed at night with a feeling in their gut that they could be making more money with ads, but they’re not sure what to do about it.
Q: Is making money from advertising harder now than it used to be?
The mobile app advertising industry is cyclic. At the moment we are reacting to concern about fraud and privacy. On the commercial side there is consolidation of ad networks and increasing server costs. These aren’t great for the publisher. On the plus side, there are more mediation companies entering the space and in-app header bidding is starting to show great results.
Breaking this down, in the brand advertising world, the larger agencies have been adding more boxes on their IO’s for ad networks to tick, and demanding viewability and anti-fraud technology. A number of publishers who were doing things they probably weren’t supposed to be doing have been weeded out, but a lot of good publishers have also been caught in the net for no other reason than the technology used either doesn’t work or is overzealous. We’re starting to see a response from the industry, finally, but I certainly wish publishers had more of a say when it came to these technologies. Low cost remnant demand is also on the way out – because of the concern over server costs. This pushes the smarter publishers to optimize towards LTV vs. impression volume (if they hadn’t been already), which is generally a good best practice to set across the industry anyway.
Cheaper and more intuitive technology generally is making life easier for publishers, whether it’s for setting up A/B testing ad frameworks, header bidding or digital marketing funnels for e-commerce.
However, the real money is still made by people talking to people, building trust and relationships. I don’t think that’s going to go away anytime soon.
Q: How much can apps make from mobile advertising?
Good question… the key to effective monetization is putting your users first. That sounds strange, right? That AdOps people would care about users.
The thing is, without users’ implicit consent to see advertising, ads monetization doesn’t work. If you imagine one side of the coin is the value you drive from one impression – that’s the easy bit – the other side of that coin is what, how and when you can advertise to your users, and designing the ad experience to be as enjoyable as possible.
If done right, you will be very happy with the revenue you generate from mobile advertising.
Q: Can any app successfully monetize using advertising?
Q: How can publishers make sure they are seeing demand from top advertisers?
That is the tricky part. Adding an SDK here and there and then ‘setting and forgetting’ doesn’t work. Good ad operations is about working your relationships, QA-ing and optimizing every day.
AdOps is as much technical, business development, sales and product as it is straight operations.
Q: How can publishers and developers make their apps more appealing to top advertisers?
Advertising agencies want to show their clients how great their campaigns have been, and will always talk about click-through rates.
Generally, the longer a user sees an ad the higher the click-through rate. Also, the higher up the waterfall that advertiser sits, the more chance the user will see and click on their ad.
That said, you have to balance this against other variables. Is the creative interesting, or even professional looking? Does it fit with your audience? How many impressions are you sacrificing to keep the ad unrefreshed for that length of time?
These are all questions that need to be tested, so you can find the sweet spot to create a win for the advertiser, a win for the publisher and, most importantly, a win for the user.
There are some general housekeeping tips we would advise that most buyers utilize. These include layering certain data into your ad requests. If possible, working with a DMP to segment your audience will attract larger agencies if you are pitching agency sales. Unfortunately, that world is still messy on mobile.
Q: What ad formats should app publishers support?
I would suggest at least testing all the major IAB formats.
Q: How should publishers start their ads monetization journey?
Hire us to evaluate your revenue opportunity of course!
Assuming you have tested a few placements and know they work well – and assuming you are comfortable with the AdOps resources you have – I always start monetization with the technical. Lots and lots of adflow QA. Things can always be improved.
Then, business development and relationships.
Then, when you have the best partners and the best prices for your ad inventory, it’s a virtuous cycle of optimization, leveraging relationships, testing and QA-ing new partners.
That’s when you get into the fun part: improving the user journey and adding placements. That’s still my favorite bit, in addition to the yummy dinners with ad networks.
Q: Should publishers have a mediation solution in place?
Q: What are the biggest mistakes that app publishers and developers make in terms of monetization?
Non-AdOps business development people are more likely to sign not great deals because they don’t know the partners or what to push for, which ends up being very costly in engineering and operations time. Non-AdOps technical people very often won’t know how to QA properly or what broken html looks like. The list goes on.
Publishers can make a lot of money while they sleep from advertising, so the opportunity cost of things like focusing on the wrong initiative, or tying up resources to fix a newly integrated buggy SDK is the biggest cost. AdOps people will save you from those concerns because they are equipped to judiciously choose the best initiatives for the publisher to work on in that moment. So many things can break in your app already, why create more problems?
Q: What are some easy things that app publishers can do today to increase ad revenue?
I already said, hire us….
Before anything else, I would take an honest look at the AdOps resources currently in place. Do you have AdOps professionals, or do you have engineers and business development people filling in because no one else wants the job?
Do you have, or have you seen, a mobile advertising roadmap for how your ads revenue is going to increase this year? Do you know how big the opportunity is? What is your monetization strategy? What are the initiatives you want to pursue?
It may seem like short-term pain, but the first step to starting a process that can transform your company - such as ads monetization - is really understanding where you are. Once you can honestly say ‘I am here,’ then you can see how much you need to do to get to where you want to be.
Q: How will app monetization change in the future, and how can publishers prepare themselves accordingly?
A lot more machine learning, which is making an impact in the desktop world, will come over to mobile. I’m not sure how well that’s going to do, though. Mobile is a lot more messy and fragmented than desktop and you need experts to navigate the tech and the buyers out there.
There’s always going to be a push and pull between fraud and overzealous tech that takes budgets away from publishers. We have found that strong business relationships and industry knowledge are the best way to stay ahead of these issues.
I think we’ll see a wave of smaller demand platforms emerge over the next few years. That always seems to happen after a splurge of acquisitions.
Publishers should be experimenting with more technology, testing user flows and digital marketing funnels, A/B testing ad experiences, getting user feedback on ads and segmenting their waterfalls….the list goes on and on. The tools that are at publishers’ disposal now - often for free - allow for real in-depth testing and optimization.
The California Consumer Privacy Act will come into effect on January 1, 2020, and will apply to businesses across the U.S. if they meet certain requirements. At the federal level, the U.S. House of Representatives is going to be looking at protecting privacy very closely in the wake of the 2016 election. I don’t think anyone quite knows what will happen once the CCPA comes into effect, but it will give consumers the chance to opt out of having their data being shared with third parties, just like GDPR.
Realistically, I think advertisers will pause budgets for a few months before remembering that the U.S. is still the most mature advertising industry with the largest consumer market in the world.
Have any additional questions for Chas, or want additional insights on app monetization? Let us know! You can reach Chas at chas at pubrevplus dot com.