As per a new research by eMarketer, the global mobile advertising market will exceed $100 billion in spends in 2016, a 430% jump from 2013. And by 2019, this number is expected to hit the $200 billion mark. In India itself, mobile ad spend is due to hit $1 billion by 2018. However, while mobile marketing budgets of companies increase exponentially year-on-year, marketers are plagued with the age-old problem: How to get more bang for the buck, and this is one of the reasons that has directed the focus onto performance advertising: to see the direct impact of app advertising.
With the innovation in technology in digital and later mobile advertising, marketers have invented different approaches to optimise every penny spent on advertising. Initially, advertising was bought by placement of the ads on websites on a weekly basis, which was highly translucent and inefficient. There were no parameters to review the return on investment (ROI) for advertisers. A few years later, digital advertising started being accounted on impression basis (cost per mille, CPM), which gave birth to ‘performance advertising’ for the first time, and later on a click basis (cost per click, CPC). Through this, publishers were paid on the basis of the number of impressions/views, or clicks, on the website. But this system was also deemed inefficient for advertisers, as they kept on bearing the conversion risk.
Today, the latest model for ensuring performance advertising on mobile is cost per install (CPI). With CPI, advertisers only pay for the installs they receive and therefore do not carry the conversion risk. However, many studies have shown that a majority of users stop using apps the day after they install it, many installs being therefore useless. CPI doesn’t solve the purpose of the advertisers as it doesn’t guarantee any action (i.e., conducting purchases, etc.) in the app after the install. Also, with the boom in the smartphone industry and the number of apps getting launched everyday, apps are quickly getting redundant. Many a time, users download the app and don’t use it. Hence, what happens after installs is one of the toughest question for app advertisers. It’s one of the most challenging tasks for mobile advertisers to generate action on the apps; which is the ultimate goal of the app advertisers.
Today, it is possible to track the performance of publishers in terms of post-install activity, in order to determine whether the traffic generated is valuable to advertisers. It is, for instance, possible to track virtual or physical purchases through apps. This provides a huge opportunity to the marketers to understand the user behaviour and customise the campaign accordingly to engage and re-engage the user. The most reliable model of app advertising used by marketers today remains CPI, but it is backed by the technology to track post install events; leading to quality and relevant installs, engaging the customer and ultimately increasing the LTV (Life Time Value) of the app users.
Also, sometimes the first actual purchase (the monetisation event, either virtual or physical) does not happen before a few weeks, which is too late to optimise the campaigns. Here again, what advertisers can do is track post-install, so-called ‘proxy’ events that will give them clues about the quality of the traffic. These events can be in the field of retention (3-day retention rate), engagement (for instance, tutorial completion for a game, article page visits for an m-commerce app), or vitality (percentage of Facebook shares). By measuring those proxies, advertisers, through their advertising technology solution, can understand which sources of traffic, as well as which segments of the users are most valuable for their business. They can then act on it to optimise their campaigns: cut bad segments/traffic sources, bid more on good ones.
With so many apps available, it’s challenging to stand out in the crowd, even if the users take action to install the app in the first place. Marketers today are emphasising on the post-install user engagement. Mobile re-engagement ads help ensure that the app always remains on top of the mind. Not to mention, re-engagement provides a higher ROI on the initial cost per acquisition. On mobile, the notion of performance advertising has shifted from one which meant putting less risk on advertisers through a more favourable billing system, to one where performance means understanding user behaviour in order to optimise campaigns in real time.
Today we can say that the future of mobile advertising lies in ‘real time advertising’. Through this, the users would be able to see relevant apps on the basis of their location, action, search on online/offline medium, etc. This sounds really simple, but a lot of complex technology, algorithms and analytics go into it.
The author is managing director, AppLift India