Why it’s Time to Invest in In-App Advertising

You might have noticed that we mention mobile marketing a lot, like here, here and here. Research companies are constantly reporting on rising mobile usage, video viewership, marketing budgets, expected returns, etc. So it’s no wonder that people are citing in-app marketing as the next big advertising channel brands have to conquer.

Over the next few years, brands and marketers are expected to invest billions of dollars in in-app marketing. Juniper Research predicts that spending will reach $17 billion by 2018, a dramatic increase from the $3.5 billion spent in 2013.

In-app advertising is the fastest growing sector of the mobile advertising market, which Juniper predicts will grow over 300% to $40 billion over the next five years. Revenue from in-app advertising is also expected to increase rapidly. Research from Parks Associates predicts in-app advertising revenue to exceed $5.6 billion by 2017.

“The mobile app market is a huge, fast-growing market with over 1 million apps, $26 billion in revenue and 102 billion downloads in an industry that didn’t even exist five years ago,” said Marc Parrish, an advisor at Appboy, New York. “Any marketer who is not looking to increase spend in reaching this channel has his head in the sand.”

Take into account that only 25% of smartphone users and 21% of tablet users would rather pay for an app instead of seeing ads. Not only are in-app ads deliverable to a huge target market, but they are also incredibly effective. App ad company MediaBrix found that in-app ads can yield 20% engagement and a 2,000% higher click-through rate.

When it comes to mobile apps, Facebook and Google boast expected success stories. Facebook, whose mobile app revenue was almost non-existent, now has 41% of its total revenue coming from mobile apps. A third of Google’s paid clicks are now on mobile devices.

With its ever-increasing popularity among connected audiences, online video is expected to drive the significant increase in in-app ad revenue. Forty-four percent of tablet owners and 32% of smartphone users have increased their video consumption on these mobile platforms compared to 12 months ago. In response, spending on mobile video is expected to grow 81.2% this year, according to eMarketer.

To capitalize on this trend, Rovio’s Angry Birds, with two billion downloads and over 200 million monthly users, will soon introduce in-game digital video ads.  Michele Tobin, Rovio’s head of advertising, notes that the company’s games provide premium inventory for video advertising from brands.

“We’re rolling out new video products in Q2 that will be built into the gameplay of a number of games,” Tobin said. “In the mobile video space, there’s a lack of publishers who provide real scale and premium environments with total transparency.”

Mobile users are flocking to apps. According to ComScore, 80% of time spent in key mobile media properties was in apps as opposed to browsers. Mobile consumers are fast becoming a necessary target audience for brands looking to maximize exposure and engagement for ad content.  To fully take advantage of mobile markets, companies will need to incorporate in-app advertising into their promotional strategies.

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