Mobile App and Brand Spend – The new power couple?

Driven by the rapid shift of video viewing to app, the prevalence of mobile gaming and social media and the availability of cheap handsets and data plans, consumers in APAC are spending more time in app environments than ever before.

In 2021, Android users across APAC spent more time in mobile apps than in previous years – on average 5.4 hours in Indonesia, 5.0 hours in Korea, 4.7 hours in India, 4.5 hours in Singapore, and 3.2 hours in China. In fact three of these countries are in the global top five for total time spent with apps – in China, Android users spent a staggering 1,118 billion hours in app environments in 2021.

Where consumers go….

As consumers in APAC spend more time on mobile apps, it’s no surprise that advertisers have also turned their attention to the format. Our recent study, The State Of In-App Advertising In APAC, which we commissioned from Forrester, found that mobile in-app advertising will secure the highest percentage of budget allocation from media buyers over the next 12 months – 20% versus 17% for mobile web, 16% for connected TV (CTV) and 15% for desktop.

More than just performance

Mobile app has traditionally been the domain of performance advertisers, but increasingly the format is being used by brand advertisers to drive upper funnel metrics like brand alignment and customer engagement.

According to the study, APAC advertisers reported their top reasons to invest in programmatic in-app are:
• To extend reach – 74%
• Better customer engagement – 73%
• Advertising buying efficiency – 73%
• Brand alignment – 72%

So far, so good. But…

Don’t miss the opportunity

Despite this increased interest from brand advertisers, many app publishers have an unwelcoming monetisation environment for brand spend.

Brand advertisers typically look to spend their dollars programmatically – our study found that 80% of APAC advertisers and media buyers use programmatic in-app advertising in digital media plans frequently or every time.

But app publishers haven’t rushed to adopt this technology… why? There are a few reasons.

Firstly, unlike websites, that often focus the majority of their revenue plan on advertising, in mobile apps advertising is often seen as additive to another revenue strategy like in-game purchases or subscriptions.

Secondly, many app publishers have entrenched relationships with advertising networks and demand providers, which are often set up in a waterfall structure that doesn’t make it easy for brands to bid on individual impressions on a specific app (which they want to do.) And, it could cause latency.

And, while websites largely moved to header bidding (or unified auctions) to rectify obvious issues that were occurring with page load speed, apps don’t actually have a header, and often cache ads for a duration of time, and so the original solution that created a push for web owners wasn’t present for app developers.

But things are changing

App publishers are facing a changing and uncertain world where technology and consumer behaviour are evolving rapidly and the need to engage and retain audiences is harder than ever. App publishers must balance the need to grow their user base and revenue at the same time, while ensuring they do not have all their eggs in one basket and diversify through multiple demand channels.

As they look to diversify, brand spend as a revenue stream is a win / win for app publishers.

Perhaps the biggest advantage of brand spend is user experience. Brand spend has the advantage of not taking users away from the app – so app publishers can grow revenue without cannibalising their user base. Increasing brand-based advertising on site decreases the number of times an app user clicks on an ad and leaves. Most brand ads don’t have strong calls to action, and can be integrated more contextually with the app environment, improving user experience.

And while the demise of IDFA for ad targeting hasn’t had quite the impact in APAC it has in other markets, Google’s latest announcement regarding the testing of privacy sandbox features on Android has signalled to the industry that Android AdID is on borrowed time. Meaning the smallest screen will no longer be as friendly for targeted conversion-based and click-based campaigns, bringing publishers the impetus and opportunity to look more closely at brand spending.

It’s not just about technology

To make the most of the brand spend opportunity, mobile app publishers must take steps now to ensure that they are creating environments that invite brand spend. In addition to adopting programmatic technology, app publishers also need to be thinking about implementing the global standards brands expect from their programmatic buys.

Brands have already experienced enough pain with quality control on the web, and ads.txt solved for many of their headaches. As a result, brands are big fans of app-ads.txt for mobile apps. Yet, a lot of app publishers haven’t gone through and implemented it. They’re literally missing out on bids because they’re not authorised sellers.

A big enough incentive

Brand advertisers have high quality standards and want control over their bids. Only programmatic , combined with app-ads.txt, can provide the scale and reach to help app publishers attract brand-based demand.

After so long hanging on to familiar, but underwhelming ad setups, perhaps app developers may finally have enough of a reason to make the upgrade. It’s time for mobile app publishers to re-evaluate their monetisation strategies and adopt the technology and solutions that invite brand spend or they risk being left behind.

Sources – eMarketer

About the author:

Emily Yri, Senior Marketing Director – APAC, Pubmatic