For mobile developers with scale, performance-based advertising has been a massive revenue opportunity. Performance pricing now accounts for 65% of all ad revenue achieved in digital, including desktop and mobile. Advertisers and marketers understand the obvious benefits of cost per install (CPI) campaigns, for example, which comprise more than 25% of today's total US mobile ad revenue. Formats like this - which result in installs, coupon redemption, phone calls, store visits, and more - provide instant and measurable ROI. Mobile developers have rightfully taken advantage of the push, selling their ad inventory to performance marketers at a premium.
But should mobile developers only consider performance-based campaigns? What about brand advertising and the benefits of a more diverse mobile strategy? There is real value to the latter. Consider the following.
Brand marketers have traditionally used high-touch platforms like linear television, print, and radio to drive top-line visibility and interest among audiences over time. Increasingly, however, brand dollars are shifting to digital - and mobile, specifically. According to a December 2016 study by Gartner, nearly two-thirds of today's marketing executives will increase spending on digital advertising this year. This is driven by mobile, with nearly half of advertisers increasing ad spend there by at least 25%. Advertisers are funding these increases by shifting more and more money away from traditional brand ad channels.
As the shift occurs, mobile developers are well-positioned to see big increases in brand dollars that were previously unavailable. The doors to new demand sources have opened; they're not siloed off to premium broadcast networks anymore. And mobile, with programmatic delivering advanced capabilities for audience targeting and data measurement, brand marketers have more of an opportunity to find and "buy" specific audiences across mobile apps and services than with other mediums. This has created a dynamic where Words with Friends or Kim Kardashian Hollywood is as valuable as linear TV programming. But to take advantage, developers need to be actively seeking these dollars by choosing the right ad tech partners. An all-performance ad strategy limits their ability to do that and leaves money on the table.
Any ad, when done the right way - incorporating rich media, interesting creative, and personalization - can deliver real value to consumers. However, even quality experiences can have negative or zero value if there is perceived redundancy. Keep in mind, US mobile users now spend five hours per day on their devices. If mobile developers are featuring repetitive ad experiences during that period, from the copy to the creative, end-users do not respond in kind. Ad fatigue is a real phenomenon, and dependency on a single approach will cause it, driving down overall performance.
For this reason, it's critical to diversify a mobile ad strategy. Having multiple ad experiences on a mobile site or within a mobile app, while more challenging to navigate logistically, is more effective over the long term. It will deliver a more varied service to end-users, boosting metrics across the board. A varied, hybrid mix of formats makes all boats rise. And CPM-based advertising in particular offers a range of interesting and unique creative formats - from gamification to rewarded video - that can break up the uniformity.
At the end of the day, performance ads in mobile are table stakes for today's developers. But brand campaigns must also be considered when developing an effective ad monetization strategy. Not only because more brand budgets are shifting to mobile, but because a multitude of mobile experiences will lead to healthier metrics, whether CPM, CPC, or CPI.
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