As consumer behaviour shifts, brands are resigning expensive ‘spray and pray’ advertising methods to history to fully embrace a sophisticated and targeted approach centred around the ROI that digital can deliver. This evolution in behaviour amongst consumers has led to brands developing marketing strategies that focus more on retaining consumer engagement with highly personalised content. For several years, the direction of travel for ad investment has been more personal platforms such as mobile devices and, particularly, in-app. Now, in-app advertising is enjoying an unprecedented period of innovation and a steep level of growth.
Expect this growth to continue. In-app advertising, catering for an audience of tens of millions of app-hungry mobile phone users, achieves better cut-through and higher click rates due to its visually pleasing and natural nature. Indeed, in Europe, the conversion rate on shopping apps is more than three times higher than on mobile web according to Criteo's Global Commerce Review 2018. Moreover, in-app advertising offers an unparalleled level of segmentation thanks to its geo-targeting capability, ensuring the right ads reach the right people, at the right time. These benefits ensure in-app advertising towers over competing ad formats and is seeing 2019 line up to be a seminal year for the format.
Unrivalled market growth
Last year global app downloads exceeded 194 billion, up 35% from 2016, while time spent on apps increased 50% and global app store consumer spend rocketed 75% to $101 billion, according to App Annie’s State of Mobile 2019 report. These remarkable figures highlight that consumers are extremely willing to download apps, spend money and a lot of time on them. Emerging markets such as India and China, among others, continued to be the engines behind growth in mobile apps. However, interestingly, Japan and the UK were two of three countries in which mobile consumer spend advanced significantly faster than overall GDP, according to App Annie. This was despite the economic uncertainty in both countries, but characteristic of mobile’s ability to drive a resilient market performance, even in challenging macro-economic conditions.
AI, blockchain and more
Advertising follows any route to consumers’ eyeballs, so it isn’t surprising spending on in-app advertising is predicted to triple to $201 billion in 2021, according to App Annie, as consumers spend more and more hours on mobile apps every day. Of course, this investment is occurring because mobile offers a huge audience, sophisticated consumer targeting, accurate measurement and campaign optimisation; but also because of its ubiquitous nature and continual innovation.
One particularly exciting development for in-app advertising is the creative possibilities unlocked by the rise of AR and VR. For example, imagine if a 2D visual ad could be imported into a 3D game and displayed as part of a framed picture, or on one of the characters’ clothing. This type of in-app advertising is quickly becoming a reality and has the potential to cross verticals with its innocuous, yet impactful, style.
The developing role of Artificial Intelligence (AI) is another exciting trend. AI can automatically harvest and analyse data to provide real time insights. Leveraging machine learning, AI can learn over time, and become more effective at the process of collecting and analysing data – to offer more educated insights. This means that the technology could be used to predict human behaviour. For example, it could determine the probability of a positive response to an in-app advertisement – providing guidance around placement. Of course this impacts advertising across all channels but with in-app’s meteoric and consistent growth, the combination stands to have a significant impact on brands.
Another technology that could come to the fore around in-app advertising this year is blockchain – a distributed, decentralised and encrypted digital ledger technology. Traditionally used to accelerate secure payments on shared networks and support infrastructure, blockchain in digital advertising could lead to the development of a more efficient bidding network, among app developers and ad agencies, with reduced fees for transactions. Blockchain’s ability to track the flow of money means it can support clearer KPIs and ad investment tracking. There are clearly practical applications for this within in-app advertising, if advertisers and technology partners collaborate closely.
Apps demand a greater level of commitment from consumers, as time must be taken to download them onto already crowded devices. Everyone has a mobile phone nowadays and this huge, and engaged, audience boasts the potential for huge growth. Moreover, the mobile space offers exciting innovation and a targeted, results driven approach. A lot is expected of in-app advertising and, what’s more, it’s going to deliver.
By Marc Ó Fathaigh, Head of Retail, Criteo
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