Increasing ENGAGEMENT WITH In-app ADVERTISING

How a more interactive approach to in-app advertising can improve click-throughrates, conversions and user engagement

MobileMarketingIn Association with

In any revolution, there’s usually a tipping point that takes a movement from a niche, majority interest, into something for the mainstream. In the mobile advertis-ing market, that moment, arguably, arrived with the launch of Apple’s App Store in July 2008, the year after the company launched its iconic iPhone handset.

Almost overnight, apps became a mainstream phe-nomenon, as those consumers who had invested in the iPhone realized that the App Store was the desti-nation for all the great content that their shiny new handset was built for. And so consumers began down-loading apps in droves, with 1.5 billion apps download-ed from the Apple App Store in its first year.

The app boom created a whole new market sector, for in-app advertising. Developers readily turned to in-app ads as a new source of revenues, and advertisers turned to them as a new source of eyeballs. While this was welcome news for both developers and advertis-ers, the fact remained that the only options for advertis-ers looking to place ads within apps was the standard banner. And while these typically generated better returns than web banners, it was still a pretty one-di-mensional, unengaging approach, and the returns for both advertisers and publishers/developers were nothing to shout about.

Introduction

Since the launch of the first in-app ad units, however, the market has changed consider-ably. We’ve seen the rise and rise of Android, the only platform to offer any sort of challenge to the dominance of Apple’s iOS. We’ve also seen the decline of RIM and Nokia, though many believe that the Microsoft/Nokia alliance may yet bear fruit. And, of course, the rise and rise of Samsung. We have also seen the evolution of the ad units themselves. With the advances in technology in the native environment, the increas-ingly dynamic nature of apps, and the subsequent increase in consumer engagement time with apps, in-app advertising has moved beyond static banners, towards more advanced ad units,

employing images, animations and video, plus multiple calls to action, such as click-to-map/Twit-ter/Facebook/call/calendar entry/play trailer etc. And given the dynamism of this market-place, there is every reason to believe that the pace of change will only accelerate. As a result of these develop-ments, the in-app advertising market has gone from strength to strength. The analyst, Juniper Research, estimated that total spend on in-app advertising was worth $2.4 billion in 2012, and would rise to $10.4 billion by 2017. (Source: Mobile Advertising – Messaging, In-app and Mobile Internet Strategies 2012 – 2017, Juniper Research). Yet, while the ad units have

THE EVOLUTION OF

IN-APP ADVERTISINGevolved in one sense, in another, they have barely changed at all. Because the vast majority of in-app advertising is still focused on banners. The banners are, in many instances, more animated, more engaging and more likely to attract a user’s attention than the static banners of old. But they are still banners. And by relying solely on banners for in-app advertising, advertisers are unlikely to maximize the return on their investment.

There has been much written over the past 12 months about the death of interruption advertising such as TV ads and banner ads. Already the televi-sion industry is responding, although very slowly, to consumers moving away from mainstream broad-casting to real-time streaming (or other methods). They have woken up to the fact that consumers want advancements in technology to improve their leisure experience – not the other way around. So broadcasters are streaming shows, within minutes of their airtime, with fewer ads etc.

Regardless of whether you believe some of the hype about interruption advertising, there is no question that consumers are asking for a different,

MOVING BEYOND

INTERRUPTION ADVERTISINGbetter experience. In the case of mobile advertising, it is about recognising that there is in fact a consumer journey when interacting with apps, and that this journey will differ, depending on the app.

Kumar Mettu, Founder & CEO of the app develop-ment company Dexati says: “Our success with regards to advertising came when we acknowledged that consumers go through different stages with their app. We changed our approach to get consumers to interact with our advertisers during each of these stages in different ways. Our consumers become more engaged, their user experience was improved and advertisers got better responses.”

EXITPOINT

The different stages of app engagement can be logically broken into three phases. These phases are often referred to, in the term as coined by Leadbolt as the App Usage Cycle. The first stage is the Entry Point. This is when the user first opens the app after installation to engage with it for the first time. Excitement about the app is at its peak, and as such, the user may be very receptive to advertising, so if all they see is a banner ad, this represents a huge missed oppor-tunity.

The second phase of the App Usage Cycle is when users are actively using the app – the “Engagement” phase. This is where advertising is currently the most prolific, as the user is fully entrenched in the app, and highly motivated to continue to interact

with it. This means advertising will continue to be extremely effective here. However, recent trends indicate that consumers are being put off by advertising that greatly affects their app experience. Ads that are highly distracting or interrupt “game play” run the risk of pushing against this trend. The challenge is maximizing the user engagement while also maximiz-ing the return for advertisers and developers.

The third phase is the Exit Point. This is where the user is not currently engaged with the app, but the app is still installed on the handset. For most users, this represents the majority of apps on their mobile device and there-fore provide advertisers a huge opportunity if they can tap into this underutilized opportunity.

The Stages of

App Engagement ENTRY POINT

OPTIMUM EXCITEMENT

ENGAGEMENT

PROLIFIC ADVERTISING

One company that has seen the benefits of this Entry-Engage-Exit approach first hand is Fetch, one of the leading mobile marketing agencies, that has developed and implemented campaigns for the likes of ebay, Hotels.com and Krispy Kreme. They have been utilizing alternative ad formats through innova-tive ad networks such as LeadBolt. Utilizing App Walls (a full screen’s worth of graphic links to other apps or offers from a network’s catalogue) during the Entry and Engagement phases they have been able to generate incredible response rates.

Clément Boutignon, Operations Manager at Fetch, says: “Interruption marketing is just not working in the way it should do. Low click-through rates mean that you need enormous volumes to get to where you want to be.

IMPLEMENTING

ENGAGING ADVERTISING“Using a non-incentivised App Wall is a really good approach, because the people who land in this part of the app are there because they want to be, so the click-through rates are much higher; it’s a much better qualified lead at the end of the day. 2012 [was] the year when people really began to move from trying to drive downloads to trying to drive active users and the App Wall concept had a big part to play in this process.”

It’s all a long way from the early days of in-app advertising, and LeadBolt, which entered the in-app advertising space in 2011, is playing a big part in this change. Founder and CEO, Dale Carr, had been involved in digital advertising for the better part of a decade. Reacting to the common complaint from publishers

of diminishing returns, he set about developing a solution where display advertising would be more engaging for the end user, leading to higher click-throughs and, therefore, increased revenues for the content developer, and higher quality leads for advertisers. Carr began testing the LeadBolt adver-tising platform in 2010 and shortly after, as he, like others, foresaw the explosion of mobile apps, he launched the LeadBolt mobile ad-serving platform. “At the time of our launch, although the mobile web was also beginning to build up a head of steam, we made a conscious decision to focus on apps as we felt app consumers were more engaged than on mobile web,” says Carr. “It’s because of this, we felt it important that the advertising they see reflects

their level of engagement, rather than simply serv-ing up banners constantly.“We focused on building good relationships with app developers, and developing one unified SDK, containing multiple ad units that developers could incorporate within their apps. These multiple ad units, we feel, are the key to successful in-app advertising, enabling developers to engage in the most appropriate manner with consumers at each stage of their journey through the app.

“This attitude informed the development of the LeadBolt mobile advertising network from day one, and it’s one of the reasons why we have been able to deliver more engaged audiences.”

One company that has seen the benefits of this Entry-Engage-Exit approach first hand is Fetch, one of the leading mobile marketing agencies, that has developed and implemented campaigns for the likes of ebay, Hotels.com and Krispy Kreme. They have been utilizing alternative ad formats through innova-tive ad networks such as LeadBolt. Utilizing App Walls (a full screen’s worth of graphic links to other apps or offers from a network’s catalogue) during the Entry and Engagement phases they have been able to generate incredible response rates.

Clément Boutignon, Operations Manager at Fetch, says: “Interruption marketing is just not working in the way it should do. Low click-through rates mean that you need enormous volumes to get to where you want to be.

“Using a non-incentivised App Wall is a really good approach, because the people who land in this part of the app are there because they want to be, so the click-through rates are much higher; it’s a much better qualified lead at the end of the day. 2012 [was] the year when people really began to move from trying to drive downloads to trying to drive active users and the App Wall concept had a big part to play in this process.”

It’s all a long way from the early days of in-app advertising, and LeadBolt, which entered the in-app advertising space in 2011, is playing a big part in this change. Founder and CEO, Dale Carr, had been involved in digital advertising for the better part of a decade. Reacting to the common complaint from publishers

of diminishing returns, he set about developing a solution where display advertising would be more engaging for the end user, leading to higher click-throughs and, therefore, increased revenues for the content developer, and higher quality leads for advertisers. Carr began testing the LeadBolt adver-tising platform in 2010 and shortly after, as he, like others, foresaw the explosion of mobile apps, he launched the LeadBolt mobile ad-serving platform. “At the time of our launch, although the mobile web was also beginning to build up a head of steam, we made a conscious decision to focus on apps as we felt app consumers were more engaged than on mobile web,” says Carr. “It’s because of this, we felt it important that the advertising they see reflects

their level of engagement, rather than simply serv-ing up banners constantly.“We focused on building good relationships with app developers, and developing one unified SDK, containing multiple ad units that developers could incorporate within their apps. These multiple ad units, we feel, are the key to successful in-app advertising, enabling developers to engage in the most appropriate manner with consumers at each stage of their journey through the app.

“This attitude informed the development of the LeadBolt mobile advertising network from day one, and it’s one of the reasons why we have been able to deliver more engaged audiences.”

LeadBolt is one of the few mobile advertising networks at the forefront of innovation in mobile advertising formats. With multiple ad types, they claim to offer the largest range of ad types in the industry. These ad types can all be used to different effect at different stages of the App Usage Cycle.

“Banners can be used to good effect while the user is engaged in the app, but it also makes sense to target users with more sophisticated ad units, including video ads, Interstitials, App Walls, Audio Ads and In-App alerts. If users are presented with an App Wall showing apps from a developer while they are enjoying an app in a similar genre, the chances are greatly increased that they will click through and download an additional app or apps,” says Carr.

“For a gaming app, for example, an advertiser can target consumers with an In-App Alert or an Audio Ad during a break between levels, before they go on to the next level. The ad serves to capture the moment where the user feels a sense of achievement, but may also be ready to take a break from the game before continuing. What better way to do so than to click on an ad that is targeted to his or her interests.”

Research backs this up. A Harris Interactive study carried out on behalf of MediaBrix found that 61% of smartphone owners prefer free mobile apps, and of those, 88% prefer to keep apps relatively ad-free, with relevant advertising that appears during natural breaks in the game or app.

THE EXPLOSION OF

ADVERTISINGOPTIONS

Consumers have raised concerns regarding apps using advertising at the Exit Phase. The use of these types of ads allow advertisers to engage with users even when they are not in an app, either to remind them to revisit an app, or to encourage them to download another. Apps that only use banner advertising or other engagement phase apps can do nothing to engage with the user at this stage of the App Usage Cycle. But the use of ad formats such as Notifications and App Icons have received some bad press of late and are viewed by some as ‘spammy’. Notifications are text-based advertise-ments in the notification bar of a smartphone. Icon Ads work by appearing on a user's smartphone when a user purchases an app or downloads an app for free. A user touching the icon opens a

THE

EXIT PHASEwebpage or application designed to help the user obtain the advertised product.

But statistics tell an alternate story. As these ad formats are not interrupting the game play, response rates are very high and are therefore generating the highest returns to both developers and advertisers, perhaps because consumers know they can view them when they want, and delete them, if they wish to do so.

LeadBolt says that some developers have achieved eCPMs as high as $100 on premium offers. Although returns of this order are very rare, eCPMs of $30 are not uncommon. Figures like that tell their own story.

Privacy has become a major issue for the mobile advertising industry. Anyone serving ads within mobile applications has access to a lot of data, and can also target consumers in ways they are not used to. This clearly raises some privacy issues, especially in an industry that is still largely unregulat-ed. The large app marketplaces have implemented rules to tighten up privacy by requiring all apps to disclose what information the app or any third party service integrated into the app, such as an ad serving platform, is gleaning from users. Additional-ly, industry associations such as the IAB and Truste have also responded to these concerns and have implemented a number of certification programs that are getting increasingly more take-up.Some ad networks have recognised that their

Privacyimportance in the industry puts them in a very important position and are making positive moves to help regulate the industry and differentiate them-selves from the less legitimate players. LeadBolt is working with various parties, including the University of Technology in Sydney, to develop a mobile com-merce standard that will ensure that consumer privacy is protected while protecting the free app economy and ensuring app developers can still earn an income from advertising. They have also imple-mented User Agreements for their app developers to ensure they comply with the requirements of the market places. “Our aim is to lead the industry’s mobile privacy initiatives, in order to ensure the continued growth of the free, ad-supported mobile app industry,” says Carr.

Some have argued, and with some conviction, that apps are a passing fad, and that with the move to HTML5 mobile web development, the future is all about the mobile web. While most advertising networks support HTML ad units that can be applied to a mobile website or HTML5 apps, for the foresee-able future at least, it’s all about apps, because the technology available in the native environment of smartphones is leaps ahead of anything that HTML and HTML5 can offer. Apps offer a deeper, richer and more engaging experience than the mobile web and, will continue to do so for some time yet.

If you need more convincing, you only have to look

THE

FUTUREat the numbers. 46 million apps are downloaded from Apple’s App Store everyday. In 2011, a total of 31 billion apps were downloaded from all app stores, and this figure is expected to increase to 98 billion by 2015. And when you consider that 96% of all app downloads are free apps, it’s clear that developers are going to require alternative moneti-zation solutions going forward. In-app advertising offers the simplest, most effective way for app developers to monetise their apps, and using a variety of ad units at different stages of the app lifecycle helps advertisers – including app develop-ers looking to publicize their own apps through in-app advertising - to increase response rates.

The key to effective in-app advertising is to recognise the significance of the App Usage Cycle and use it to target the right ad to the right user at the right time. Advertisers should be engaging with mobile users with at least the same degree of sophistication as they do on the internet. As consumers are more engaged with their mobile than any other device in the history of technology, the industry needs to recognise this fact and respond appropriately. As the number of apps available to users increases exponentially, the need for an in-app advertising solution that targets users with ads in the most relevant and effective manner possible has never been greater. A greater choice of ad units results in greater user engagement, and by increasing the relevance of the ad to the app user, both in timing and delivery, developers can deliver more effective advertising, increase click-through rates, and in turn, increase ROI for the advertisers. That has to be good for the industry.

Conclusion

For more information about LeadBolt visit:www.leadbolt.comor call +1 (855) 599 LEAD (5323)