There’s no doubt that mobile app usage is growing quickly - Flurry from Yahoo recently reported that overall, app usage grew 76 percent in 2014. While this growth has created an incredible opportunity for mobile developers to turn their apps into successful businesses, developers often struggle to find the right balance between monetization and user experience, fearing that ads will drive users away.
Monetization should complement, not compromise the user experience. App install ads can be a great source of revenue for developers, and we’ve found that introducing engaging, relevant brand video ads into the mix can help keep users in an app, increasing retention and monetization at the same time.
Revenue Growth
If you think that incorporating app-related videos only is the best monetization strategy, you might be surprised to find that in reality, publisher revenue per session grew by 77 percent with brand ads compared to the period with only app-related video ads. Working with brands opens up new doors for developers: brand advertisers are often willing to spend more per completed view than other app developers.
Because brands are interested in raising awareness and/or see higher value per acquired user compared to app developers, who are driven by a cost per install target, brand ads yield a higher eCPM than app ads. Lastly, brand advertisers are more comfortable showing ads at a higher frequency, which can lead to a higher volume than app ads.
Increased User Retention
Many brand advertisements are aiming for awareness building and do not include a post-view call-to-action, which keeps users active in your app. In our research, we’ve found that as brand video ads increased, clicks exiting the app dropped by 45 percent compared to the period with only app-related video ads.
Higher Quality Creative
The thought that all ads are intrusive and annoying is outdated. Beautifully crafted creative that’s designed specifically for mobile can actually improve the user experience in the long run. High-quality and relevant brand video ads can create a positive association of quality with the actual app, and with the increased variety, can offer a refreshing change from the often-repetitive app video ads that run across multiple networks.
Recently, Tango, a leading mobile social messaging app with a global audience of over 285 million registered users, partnered with Yahoo to increase the advertiser quality, fill rates and eCPMs of its native ad units. Through the Yahoo App Publishing platform, Tango optimized its app performance and improved user retention, while staying in control of the user experience.
In-app mobile ad spend will become a $20 billion business by 2015. If you’re thinking you should make the switch to only brand video ads, remember that it’s important to diversify your monetization strategy. While the fast-growing app install ad market can be a lucrative source of revenue, it’s a combination of app and brand video ads that will deliver the optimal user experience and app performance.
With mobile expected to take over desktop in total ad spend by the next year, finding the perfect balance of app and brand video ads will be critical to your success.