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In the early days of the Internet, publishers made the transition from selling their inventory — allowing brands to wrap advertising around articles, pictures, and videos — to the far more lucrative business of selling the data they collected about the people browsing their sites. Fast forward, and mobile app publishers are at a similar crossroads.
The good news: App developers are waking up to the opportunities around their user data at the same time mobile advertising models are evolving and expanding to offer app publishers new ways to monetize their unique view of the consumer based on what they do with and within mobile apps.
What’s more, last week’s tie-up between Adsquare, a Berlin-based startup that offers an audience management platform for mobile programmatic advertising, and San Francisco’s Smaato, a global real-time advertising platform for mobile publishers and app developers, is a serious move that paves the way for app publishers to potentially extract more value — in the form of higher eCPMs — from their data.
For now the partnership, which sees Adsquare enriching publishers’ bid requests with a variety of high-quality data sources, immediately benefits more than 90,000 mobile publishers and app developers on the Smaato advertising platform. What they stand to gain is detailed in Smaato’s Global Trends in Mobile Programmatic 1H 2015 report.
Findings confirm that advertisers are paying significantly more for targeted ads that reach the right consumer and reveals that geolocation data alone boosted eCPMs by an impressive 238 percent. Data related to age and gender drove eCPMs into the stratosphere, yielding an increase of 385 percent compared to results when no data was passed.
No doubt eCPMs will get a further boost with Adsquare getting in on the action. Taking on the role of what it calls a “data orchestrator,” Adsquare brings together data from a variety of quality data partners, CRM databases, and other sources to enrich advertising and bridge the digital realm and the physical world.
On the demand side, Adsquare clients include AppNexus, The Trade Desk, and Bydd, as well as agencies and their trading desks at GroupM, Omnicom and Havas. On the supply side, Adsquare works with data providers and their publishers. It’s a fair bet that the partnership with Smaato, a supply-side platform (SSP), will move Adsquare’s strategy of aligning with major SSPs to a new level.
As Tom Laband, Adsquare CEO, put it: “The outcome is one that will benefit both the supply and demand side. On the one hand, publishers benefit from a higher eCPM and, on the other hand, the pieces are in place to meet global demand for precise data at global scale, data that is essential to power more holistic advertising that drives positive results for companies and consumers.”
Meantime, Garrett McGrath, Smaato VP of product strategy, stressed that “with the proper privacy systems in place, mobile location and context data provide valuable insights into Smaato’s user base.” All this combines to allow Smaato to “deliver greater value for our advertising partners, and ultimately help our publisher partners to most effectively monetize their apps or mobile websites.”
Any vendor spin aside, the Smaato report drives home the point that the additional data app publishers have about their users is like money in the bank. And let’s not forget the value created for everyone in the ecosystem when consumers receive advertising that is truly personal and genuinely useful.
It’s why music discovery platform Shazam, which now counts over 120 million active users, is grasping with both hands the opportunity to leverage its vast audience data. The company maintains quality by having its own systems to segment its users and has developed its own programmatic strategy to ensure it manages this process successfully.
In this scenario Shazam creates a private marketplace that allows clients, such as Netflix, to deliver the right ad to the right user in the right context. To make an even better match, Shazam also works with a number of third parties that provide additional consumer data and insights from where they sit in the customer journey.
Josh Partridge, Shazam VP of EMEA and Canada, sees two distinct use cases emerging, “provided app developers respect their audience, their privacy and their relationship to the data.”
First, Shazam benefits because tapping into how people use the music discovery service can result in a much more relevant content experience that is both personal and literally in tune with the music content people access and enjoy. Second, there is a clear advantage in harnessing user data people freely provide in their news feed, for example, to ensure a much more relevant advertising experience. After all, Partridge points out, a news feed in Shazam can speak volumes about the user, revealing obvious clues around personal preference and profile.
“Data about our audience is very relevant to brands, and insights into the music genres and artists users are ‘shazaming’ is very interesting to record labels and management companies as it allows them to understand how their new single , for example, is performing,” Partridge explained.
What’s more, efforts to enrich audience information — which now include the Adsquare-Smaato partnership — cover the bases to boost the value of inventory yet again. As Partridge put it: “If advertising is targeting the people sure to interact with a brand or buy the product, then it’s going to perform better and mobile publishers can charge more for it.”
Shazam has seen campaign metrics that exceeded expectations on several counts. In the case of consumers using Shazam to interact with 30-second TV commercials, engagement rates have seen a massive boost, with some users interacting with the brand for as long as 3 minutes in a single session. At the other end of the spectrum, eCPMs for some campaigns have increased by more than 4x.
The advance of more mechanisms and marketplaces where app publishers can plug in their inventory and so unlock the value of their user audience data to power more relevant mobile advertising will no doubt unleash more opportunities for more app publishers to ride the wave. “Someday soon it won’t matter how big or small an app publisher is,” Partridge said, “they will be able to monetize in a scalable fashion.”
But some observers worry the result could be more like a data tsunami, amounting to new and greater challenges for brands that seek to turn big data into smart data and smarter advertising.
“Effective marketing is enriching advertising with audience data. It’s a huge opportunity, but it’s also hugely complex,” noted Mark Waechter, mobile industry veteran and author of the new book Mobile Strategy: Brand and Business Transformation in the Mobile Tsunami (in German).
The first wave of interest is upon us because we have “reached a tipping point in the app industry where the demand by marketers and advertisers for ‘smart data’ is on the rise just as app publishers are using approaches and platforms to unlock the value of their app user data for precisely this purpose,” Waechter explained.
The second wave, he said, will come with the full-scale arrival of the Internet of Things and the apps and data that will add a whole new layer of relevancy and complexity. “It will present opportunities for app developers to monetize their user data, but it will also require systems to analyze and enrich it to deliver highly-targeted, hyper-relevant advertising,” Waechter said.
And amid the increased opportunity for more app publishers and developers to achieve higher eCPMs (and ultimately make more money from their app data) is the increased requirement for players and mechanisms to ensure quality, protect people’s privacy, and provide advertisers more control over the outcome.
Peggy Anne Salz is the Content Marketing Strategist and Chief Analyst of Mobile Groove, providing analysis, custom research, and strategic content marketing to the global mobile industry, and mentoring and consulting to tech startups. She has written nine books about mobile, including The Everything Guide to Mobile Apps (F+W Media, Inc).
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