Remember when “mobile advertising” just meant “banner ad”? And banner ads were aimed at no one in particular? Sure, brands could target certain handsets or carriers, but for the most part, mobile advertising strategy went no further than “spray ‘n’ pray” — toss it out there and hope a consumer you want reacts with a click. Ah, those were the days. The wasteful and frustrating days, that is.
Thankfully those days now feel long gone, and at AppLovin, we’ve watched the mobile advertising industry grow up since we launched in 2012. Ad targeting and delivery has become much more strategic, and the ads themselves become more engaging and creative every day. As ads become more effective, and as consumer attention shifts from TV to mobile apps, the mobile advertising opportunity is primed to explode. Brands that ignore the power of mobile advertising do so at their peril.
But with opportunity comes confusion: What’s the best format? “Traditional” banners? Interstitials? Video? And what is this new ‘native’ category?
Here’s a down-and-dirty guide to some of the current (and legacy) formats that both brands and publishers should consider as they pursue mobile advertising.
Exclusively banners — 320 x 50 pixel ads that cluttered the bottom or top of the screen — once ruled mobile advertising. In the Dark Ages of mobile advertising, these ads produced mostly ineffective, accidental clicks. But deployed in the proper context, these days, banner ads can be quite effective. Consider, for example, a turn-based dominoes game in which players play for ten seconds at a time. Because banner ads are more passive and don’t interrupt the user experience, they can be perfect in this context, and they don’t create a frustrating and even alienating imbalance between the amount of time the user engages with the app and views an ad. That said, the success of a banner ad also depends to a large degree on brand recognition. Strong brands like Walgreens or Nike can leverage banner ads because they’re already known and don’t require the context or additional information offered by grander ads.
The graphical interstitial is the banner ad grown up — it takes up the whole screen and allows for more context, clearer call-to-action, and more sophisticated creative. Users generally know what they’re getting into when they click on an a graphical interstitial — they’re catching a glimpse of a game app or a product. An animated interstitial, because it offers that additional context, can generate more valuable users because it tends not to trigger accidental clicks, as banner ads can and that means more valuable engaged users.
Video ads are growing fast and furiously on mobile, keeping up with the trend of mobile video. According to eMarketer, in 2013 ad spend for mobile video was $1.5B, more than double the $720MM in 2014. In general, the rate of engagement with video ads is high, which makes them good for advertising games and well-established brands like Reebok or Fat Tire because they already have decades of experience making 15- or 30-second ads. But then, brand advertisers also have the budget to invest in expensive video ads, while they can be cost-prohibitive for others.
Lately the buzziest of the formats, native is the modern-day banner evolved. Instead of giving publishers ads, platforms like AppLovin give publishers all the components of the ad, and it’s up to them to display it in a format that goes along “natively” with its app. Native ads are similar to banner ads in that they don’t take up the full screen and the users can still engage in the content while viewing the ad, but they’re less of an eyesore and they’re less disruptive of the user’s experience because they’re contextually appropriate. An example of a native ad would be an ad for jeans placed in the middle of a fashion story about denim in a news reader app. Native ads leverage context and relevance, and they make a lot of sense for content such as BuzzFeed or utility apps such as a calculator. Native mobile advertising can be highly effective, but it does require that the publisher determine the display and “natively” pair the ads with its content, compared to other ad formats where the publisher simply leases ad space in their app.
Looking forward, video and native ads are likely the future — or at least the near future — of mobile advertising. We are bound to see more innovation in the industry. And it’s important to remember that as the industry evolves, mobile ad formats won’t die; they’ll just become less shiny as new formats emerge. Given all the different apps publishers make, and all the different advertisers who want to reach varied consumers, there really is a use-case for each format. The trick, for both publishers and developers, is to think about what works best with the user’s experience and go from there.
In the end the key is to make sure you work with partners who can optimize the ad content to be relevant to your consumers. That means you will get a much better response rate and your consumers will associate these ads much more closely with content, rather than the annoying and irrelevant ads they are used to seeing on mobile.
No matter what tack you take with your mobile advertising, never forget that you need to constantly gather data and analyze your app to arrive at — and tinker with — effective mixes of ad format, placement, and frequency. Go for the Goldilocks solution: Not too much, not too little, but just right.
Adam Foroughi is the co-founder and CEO of AppLovin. Adam began his career as a derivatives trader, where he was inspired by scalable high-frequency trading models. Over the next decade, he applied this knowledge to ad tech at three companies he founded: Lifestreet Media, Social Hour, and AppLovin. Today, Adam continues to refine — and demonstrate — his theory that better business results come from smarter algorithms and better data.