For Mobile App Ads, Innovative Formats Work Better

The mobile app development industry is alive and well, according to an inMobi survey from earlier in the year, and despite the roller coaster ride in advertising, it’s still the most popular way for developers to monetize their inventory. However, the average developer worldwide makes almost nothing on a single app, and only 15% have crossed the 1000 download threshhold. If this is true, why do people continue to develop apps?

We think developers can do better, but they have to use some more innovative formats.

App development is a young industry, and most of the people in it have been doing it for less than four years. Only a third of app developers have been in the industry for three years. Most of the mobile app dev firms are small, and many are making apps for other businesses, rather than trying to monetize their own apps. In fact, 47% of mobile app developers are solo-preneurs. Many of them told inMobi that they were developing apps for fun, rather than for fortune. No wonder games and entertainment constitute over 70% of the apps developed. And no wonder they are not as savvy about advertising as they need to be.

When you get up to 1-3 apps in either the Play Store or the IOS App Store, if you play your cards correctly, revenue can increase. It probably isn’t surprising to find that 42% of the respondents had 1-3 apps in the Google Play store, while only 28% had apps in IOS. In the US, we often forget that Apple is such a small piece of the global overall device market, because it has an outsized influence locally. Android is also a better place to learn how to develop an app than IOS.

Making money is the biggest issue for application developers, as it is for all web publishers. 55% of developers make $1000 per month, and monthly average mobile app revenue globally is under $6K. There’s new research that shows a decline in app downloads around the world, and the average phone user interacts daily with no more than a dozen apps.The average monthly per-app revenue is in the range of $5k to $11k depending on the platform. Windows Phone is the highest money-maker at $11.4k per month per app, although it is only used by 21% of developers. North American developers lead in both downloads and revenue over both APAC and Europe.

Advertising is the most bankable app business revenue model;  7 out of 10 app developers use mobile advertising to monetize their apps currently and 18% of them plan to use mobile advertising in future. Used correctly, it can generate good revenue, but we believe too many developers are naive about advertising and choose either the wrong ad network or the wrong ad formats.

For example, banner ads and interstitials are still preferred by app developers despite the the fact that consumers do not like them. Response to banners has gone down steadily, and interstitials are under pressure from consumers who now have the capacity to run ad blockers on mobile. Video, however, has taken off, and video advertising such as our inArticle format, works well. Our SwipeUp for mobile, an innovative new format we came up with this year, has also taken off.

If you are an app developer, it’s worth talking to a platform that knows how best to connect you with advertisers who can get you the revenue you desire.

 

 

New Opportunities for Digital Publishers

If you sit around listening to some industry insiders whine, you’d think there’s no hope for the digital media business. However, people continue to be attracted to it as a business and as a calling, and if you look at the numbers, many publications aren’t doing badly. Even Gawker, forced into bankruptcy and out of business by Peter Thiel’s lawsuits, says its business was up 7 or 8% this year. Business, said beleaguered Nick Denton, is good. Gawker.com may be gone, but its 6 sister sites are doing fine under Univision. Other niche publications, like Thrillist, are also doing well.

According to Thrillist founder and VC Ben Lerer, who appeared on the Digiday podcast, there are many short term threats facing digital content companies. The keyword here is short term, which is how Lerer looks at ad blocking, the decline of effective display advertising, and the hegemony of Facebook. He swipes those common industry concerns away with a flick of the wrist, preferring to focus on what he calls “the massive change in distribution” that has happened because of online media, which he thinks is already making some people rich even as others suffer.

It’s like the 1980s when cable TV first started, he says. Cable TV allowed finer audience targeting than network TV, and provided gigantic opportunities for content creators who understood the needs of their niche audiences.

“The pipes are different,” he said. “It’s not as clean and easy a story, but it’s similar to where there was a large handful of companies that figured out how to make content for those pipes, there’s now an opportunity to make content for these new distributed pipes. The traditional TV companies, who you’d think would be are fundamentally not built to be the guys who win today because of the sheer infrastructure they’ve built to do something that’s not what they need to do in the future. It’s created an opportunity for a new breed of media company. There’s no question there’s a decline coming to television. Those companies are not built for shrinking.”

Lerer thinks the greatest changes in digital media aren’t coming on the publisher side, but on the agency side, where traditional agencies have built a cost structure based on shooting expensive 30-second spots for TV that will now be replaced by native ads on mobile. Those ads will be made by the publishers themselves, perhaps using their existing editorial staffs or through in-house agencies operating with a Chinese wall.

Lerer is not the only publisher who thinks good content will win the new distribution game, whether on Facebook, Snapchat or a publishers’ own site. Brian Lam, founder of tech review site “The Wirecutter” and former writer for Wired says that media companies without a mission will crash and burn.

Of his proposed expansion into the fashion vertical, Lam says “we’re not going to do it because it’s a business opportunity. We’re going to do it because we think we can be helpful, and there’s also a business opportunity. The business serves what we’re trying to build.”

SwipeUp is a Window into the New ZEDO

Our new SwipeUp mobile web format has begun to roll out in test campaigns. The ZINC team is selling it, and the ads are running on our premium publisher network.  It’s pretty ingenious, and because its so innovative it generates more than the usual engagement from mobile phone readers. When a user opens a web page that runs this ad, the ad tag loads on first touch. When the advertiser tag response is received, or after an interval that can be determined, 20% of the ad swipes up from the bottom of the page. The ad moves up or down on the next swipe, and the user can either engage with the ad or swipe out of it. Most significant, the user is always in control; the ad never “takes over” the page. (SwipeUp does, however, expand to fill the screen.)

These attributes have become very important as the industry tries to restore the trust of the consumer after the Wild West of desktop display advertising, which alienated such a large portion of the population, especially the all-important Millennials, that a fair number of them have opted to block ads entirely, especially on mobile.

Now the industry can keep investing in more and more sophisticated technology to block the blockers, but that would ultimately be self-defeating, because the users will just begin to despise all of us, advertisers and publishers. It’s much better to do what we’ve been trying to do: separate ourselves from fraudulent traffic, beef up our security, and be the change we want to see in the industry.

Although that has meant a re-alignment in our customer base on the publisher side, we can now be certain that there aren’t any more adult sites in our network, nor any malware on our platform. We are moving to a completely premium network. Many other industry partners have done the same, being proactive to stop the erosion of trust that peaked last year.

On the ZINC side, our Innovation Suite, led by our inArticle video format, and accompanied by inView, is landing us better and better campaigns, and we’re up over 300% year over year in revenue. We’re being used by every agency trading desk, and many major brands.

We’re building a trust network for the supply side to reach the demand side, and for the demand side to get greater ROI on its campaigns. It’s a pretty exciting time for us, almost like a rebirth into a different position in the industry. It will take a while for people to grasp how much we have evolved, but expect some further innovation from us this year.

 

 

 

Computers Enter the Living Room — by Phone

We saw our first prediction of computers coming to the living room at the Consumer Electronics Show in 1996. Microsoft and Intel thought that the way to get the PC into every home was to make it a media server, and they collaborated on Windows Media Center on Pentium chip boxes. The vision: everyone would have a computer in the living room hooked up to the big screen, and that’s how we would view media in the future.

That vision was roundly resisted by ordinary people who saw the beige and gray PC boxes and towers as too ugly for the living room. And besides, computers were still much slower than the TV, which came on instantly and never crashed.

Nearly 20 years later, that vision has totally skipped the living room and  morphed into “TV anywhere,” a state in which viewers watch TV in the living room, all right, but it is increasingly being cast from mobile phones and tablets via Chromecast or Airplay. Being near a big screen isn’t essential to viewing content, and if we turn on the TV at all it’s often just to take images off our phones and look at them on a larger screen. We don’t care about TV schedules, nor do we think of the TV as the source of our only content. Increasingly, people are  watching TV either time-shifted or with the TV serving as a dumb display for the content from the mobile phone.

Much of today’s TV watching is “Over the Top,” streamed from online by people who have never connected to cable or satellite in the first place or who have “cut the cord.” This creates an interesting conundrum for advertisers. If viewers fast forward through ads using a DVR or watch something else on a mobile device while the ads play, what does this mean for TV advertising, which was for many years the most effective way to reach people?

About five years ago we predicted that rich media advertising could make online advertising as effective as TV advertising, and we set out to develop the products to do that. Admittedly we haven’t been alone, but if you think about it, our “outstream” format (which we had named inArticle before the industry landed on the term “outstream”) and our high impact formats have been instrumental in moving ad dollars from TV to online and now to mobile.

So in this season of making predictions, we think it’s safe to predict that with all the emphasis on data and metrics accompanying the shift from TV to mobile, we will soon be completely convinced by data that video advertising beats TV for marketers.

 

 

 

Ten Top Trends in Digital Advertising for 2016

It’s fun at the end of every year to predict what will happen the following year, especially in an industry so prone to change as the online media industry. But this year, because consumers have announced that they’ll have a say in next year’s trends by turning on their ad blockers, some upcoming changes are less difficult to predict correctly than usual.  Assuming the publishing industry isn’t suicidal, for example:

1)publishers will take seriously the wishes of consumers to have less intrusive advertising by planning more native content campaigns with brands and selling fewer display ads at higher CPMS;

2)the creative department (or agency) will assume more importance than it has had in the past decade, because media buyers are coming to the conclusion that it’s not only a numbers game — it really matters what message is delivered to which customers. The most sophisticated brands are doing very customized creative based on information gleaned from their own databases so customers don’t receive irrelevant ads. Example: if you live in Florida, you won’t get the ad about how the car handles in ice and snow; you’ll get the one about its powerful air conditioning system;

3)Brands will expend more energy and money producing content consumers might actually want to watch and engage with, rather than just buying impressions for reach and frequency.  In fact, frequency caps will probably go down, as advertisers strive not to irritate consumers, and reach will be deeper, and not as wide;

4)Autoplay video with the audio turned on will probably go away, as will non-skippable preroll and other formats that irritate consumers such as pop- unders and interstitials. Advertising that blocks content from a site visitor will also go away;

5)Millennials and IT professionals, the most tech savvy segments of the online audience, will have to be reached with native advertising, in-app advertising, and direct mail, because these consumers are the heaviest users of ad blockers and will probably not willingly turn them off once they’re on;

6) As a result, native formats and contextual targeting will be the “new new thing,” which means the one thing that can’t go away is data. Both publishers and brands should invest heavily in their own databases, because trackers are also being blocked along with ads. Cookies have fallen out of favor;

7)As an industry, we shot ourselves in the foot over the past five years seeking scale, scale, scale. That meant we made many more consumers angry than those whose needs we satisfied. In 2016,  in order to wean consumers off their ad blockers, we’re going to have to make the user experience of the mobile web  better.  By better, we mean faster page load times for mobile browsing, which means using technologies like Google’s new AMP framework. It means buying ads on premium sites that have reduced their inventory to make their pages deliver a better user experience, and paying more per CPM. And it means reaching more of the RIGHT people, although fewer people overall;

8) In 2016, we will probably see a true supply and demand market, in which the supply is no longer infinite as advertisers refuse to pay for traffic generated by bots and publishers streamline their pages. Group M’s dictum that it will only pay for ads in which the experience is initiated by the user and the “chosen” ad is 100% in view, 50% completed, with the audio on for the entire time will take hold. This is a tough standard to meet, but MediaCom’s Steve Carbone argues that anything less than 100% viewable in any other medium would be considered a “make good.”

9) Ad exchanges will continue to struggle as agencies leave them for private marketplaces.

10) A plethora of working groups and industry committees will be convened to flesh out the new standards.

Happy Holidays and Happy Ever-changing New Year.

 

For Mobile Apps, Video is the Only Viable Format

Given the problems most mobile app developers have getting their apps noticed in the App stores, it’s no wonder that they are trying to figure out other ways to monetize than advertising. More likely than not, they’re considering a form of m-commerce. Even Snapchat, which certainly has a large enough user base to draw the big advertisers, is experimenting with charging people to re-play a snap.

Much of mobile advertising up to now has been display-based download advertising — trying to get a user to download a specific app. With this formula for monetization through  advertising, the more popular apps would help the newbies get found, and the newbies would be a revenue stream for the big boys. But now, because of a shift from apps with lots of features to “thin” apps, combined with limited screen real estate, there’s just not much room for mobile advertising, and it isn’t working particularly well. If my futurist friends are correct, apps will continue to be thin for a while, driven by smart watches and Apple’s new tvOS, which doesn’t download an app to the set top box until it is needed.

The need to find alternative means of making money is why most of the chat apps already make it possible for you to send someone money, make a VOIP call, order food, or get customer service from a merchant right inside the app. Apps like WeChat and Facebook Messenger are already about taking transaction fees from commerce streams. And this despite the fact that Facebook turns out to be the company that has done the best at figuring out mobile: 78% of its ad revenues came from mobile this year, and its revenues are up.

The big companies are at different stages in figuring this out. Foursquare and Facebook split their apps last year, and are now re-inflating their new offerings with more tightly integrated  features. Amazon, however, is a little behind this power curve: today alone I had to download Amazon Prime Now to get 1-hour deliver, and another app, Amazon video, to stream the pilot episode of a TV show.

It’s difficult to see how brands are going to capitalize on this new app strategy, unless they’re Facebook, Google, Amazon or TenCent.

Fortunately, most of this doom and gloom for mobile applies only to display. Video ads, inserted in stream, are still highly effective and well-tolerated. In fact, apps that are not video services will have to adopt formats like our inArticle, whose usage grows exponentially month over month, just to stay in the ball game.

 

 

 

Formats Become Important in Native Advertising

As an industry, we’re still having trouble figuring out how to define native advertising, although we all know that it is trending and we all want to grab the most revenue we can from this trend. However, hopping on this trend requires almost an about face on the part of publishers. At first, publishers thought native was the same thing as “advertorial,” — advertising formatted and dressed up to look like editorial. They hated it and looked down on it, and fought for the Chinese wall between the advertising side and the publishing side. But ads you cannot tell apart from editorial is only part of native.

It’s the most familiar part, however, so let’s dispense with it first.  In this context, native can  be sponsored content, which is usually written by the editorial staff of the publication and paid for by a brand, or branded content, which is actually produced by the brand itself or its agency.   Many publications, including the New York Times, Forbes, and Vice, have developed or acquired in-house agencies to produce branded or sponsored content.

This is a huge opportunity for publishers. Now they can be more than creators of content, they can be the creators of ads that support their other content. Which gives them more editorial control than if they simply accepted ads submitted by brands or their outside agencies. It can raise the quality of the creative that appears on their sites, and be more acceptable to their visitors. In June, AOL opened Partner Studio, an in-house creative shop, and Huffpo, owned my AOL, has had one of its own for a while. Rather than being dismissed, native ads created by the in-house agencies of publishers are now being seen as desirable.

Thus a market shifts under our very noses. And here’s why:

Advertisers in the U.S. are expected to spend $4.3 billion this year on so-called “native” ads that emphasize an ad’s editorial-like content and, in some cases, disguise the spots to look like unpaid placements, according to eMarketer. That’s a 34% increase from what brands are projected to have spent on native ads last year.

But there’s another part of native, and it one that applies mostly to mobile. In this definition, “native” is a non-interruptive ad that follows the same format as the site whose feed the visitor is reading. In the future, this will become the most important element of native, because it has to be acceptable to a user on a mobile device. These native ads will appear not only on publisher sites, but on platforms like Facebook, SnapChat and Twitter — platforms where users are accustomed to seeing a certain kind of content, for example photos, videos, or disappearing content and don’t want to be interrupted by an ad in a non-native format.

We think the definition of native as a matter of format as well as content will become more and more important as advertising shifts primarily to mobile devices. We’re developing and experimenting with mobile native formats on an almost weekly basis to test what’s acceptable to visitors and get the best response for advertisers and rising CPMs for publishers.

Notifications : The Post App World Revealed

Hold on to your seats. Digital advertising is going to change again, as another consequence of the consumer shift to mobile.. I’ve just begun to watch the videos from the recent Notifications Summit held last month at BetaWorks in New York, and I can already see what this will mean for forward-thinking publishers.

Notifications are the things you get on your smartphone that can be useful, distracting, and finally annoying. Usually apps default to setting certain notifications to “on;” to get rid of them a user must make a change, similar to ad blocking, in a settings section three screens down from the home screen. New smartphone owners take a while to learn how to turn noisy notifications off, but eventually they make decisions about which to leave on and off.  There is just too much clutter coming to the home screen, and consumers don’t want to see it.

The conveners of this summit postulated that we are changing from an app environment (the phone owner downloads the app and must open it to interact with the publisher) to a notifications environment where information will be pushed to the consumer without her going to an app. Certain notifications require a user to open the app to read the rest of the content, but others do not. Some sites, like Nuzzel, are designed to be pretty self-contained. Eventually, most apps will not require users to open them to receive information.

The move to notifications has been hastened by the uptake of wearables; there isn’t much more than a notification that can fit comfortably on a watch face. So we see notification streams all day long, much as we used to see Facebook and Twitter streams.

But most important, the move to notifications empowers the consumer even more than mobile did, and even more than ad blocking does.

We can foresee a day when the consumer could really be in charge of all the information that comes to her by learning to use notifications and learning how to filter out the distractions and the noise and receive only the most important information.

Part of this will entail  a shift in advertising to permission-based advertising:  asking the consumer whether she wants to see an ad — which would be asking her if she wants to receive information — for a particular brand at the current time. The consumer will have the choice: yes, I’m in the supermarket and I want to see the weekly specials; or no, I’m driving and I only want to receive breaking news that’s relevant to my family. She would no longer be forced to page through or scroll through irrelevant ads to reach what she needs.

Smart publishers have already begun the shift to native ads, in which content creators are paired with brands. We expect this to continue in the future. All publishers should prepare for a day when the consumer is in full control of what she sees.

 

Top Mobile News Apps

Trying to figure out which news apps are the most popular with mobile users is a daunting task. Like all measurements, these change according to who is measuring and how the measurements are being taken. If one measures just unique visitors, dedicated news sites don’t fare very well.For example, below is a list of top mobile apps in the US. This is year-old data, but the most reputable we have until Comscore counts again. Unsurprisingly, there’s not a traditional news app in the top 25. And if you ask consumers where they are getting news, they’ll tell you Facebook , YouTube and Twitter, except for specific news that comes from Yahoo Stocks, the Yahoo Weather Widget, and the Weather Channel. The news sites are posting their content to these top sites to capture their traffic.

ZEDO Top Sites 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

But now look down at this list of the top  US news apps from the Google Play store. These are “real,” or pure new sites, and the typical news sites, are there — Yahoo, CNN, Fox, Buzzfeed, NBC, BBC, and the Guardian. Notice the absence of the New York Times here. Because Android controls the mobile market in sheer numbers, and because these apps are free, we can guesstimate that these apps have some popularity outside the US as well. It would be safe to extrapolate the IOS picture from these apps, with the possible exception of the Google sites.

Screen Shot 2015-07-12 at 11.39.36 AM

 

 

 

 

 

 

 

 

 

 

 

A third count shows the top smartphone apps at the beginning of 2015. Once again, not a traditional news app in the bunch. We again draw the conclusion that people are getting their news from Facebook, YouTube, Instagram and Twitter, with a bit of Google +, which is very popular outside the US, thrown in.

Our determination is that traditional news publishers are behind the power curve, and that publishing articles to Facebook and links to Twitter, Instagram and YouTube is catching on. Nevertheless, it’s not time for publishers to throw in the towel on their own sites just yet. What they must do is place the emphasis on shareable content that can live on and off the social streams. It’s important that Facebook’s walled garden not be the only news source on the internet, especially in countries where it is either banned or not widely used.

ZEDO Top news apps 2015

 

Good-bye :30 Spots, Hello Digital Video Creative

Seriously? Digital  is now the second biggest advertising market and we’re still using 30-second spots? Has anyone really thought this through?

The research on whether people will watch video online, and for how long, is in. While we used to think two minutes was the outer limit, we now know that it’s over five for a good story, especially on a tablet. Younger people have moved from TV to digital in large numbers, and even little kids reach for the tablet before the TV. In theory, this could change the delivery of advertising, allowing for both longer and shorter ads, and unleashing new powers from creatives.

To keep up with their customers, brand advertisers are shifting their metrics from CTRs to completion rates. Completion rates are not a function of time; they’re a function of good story telling. A good story keeps people engaged and produces more brand recall than any 3o-second spot ever did. If we get away from the limitations caused by time, we’ll be a lot better off. Without the temporal limits of TV, we can tell different kinds of stories.

Mobile is a great place for video ads. Buzzfeed founder Jonah Peretti once said that his site was for the bored at work, bored in line audience, and those are the people who will watch a video that tells a good story, even if it’s conceived and even executed by a brand. In fact, IAB just did a study of video watching on mobile devices:

 many respondents said that they’re watching more video on mobile devices than they were a year ago, including 50 percent of those surveyed in the United States, and 42 percent in Canada, New Zealand and South Africa.

They’re not watching 30-second clips, either. In fact, 36 percent of respondents said they watch videos that are five minutes or longer on a daily basis. (That’s not a majority, but it’s more than just a tiny sliver of the audience.)

The IAB says that viewers in China are particularly open to watching movies and TV episodes on their phones. In addition, 37 percent of respondents in China and 35 percent in Singapore said they’re watching less TV due to watching more mobile video.

We suspect that next year publishers will be seeing many new in-app and in stream formats that don’t look like 30-second spots.