4 Reasons Why Now Is The Time for In-App Header Bidding

Post on March 6, 2017 by Kelvin Pichardo

Kelvin Pichardo Senior Director, Product Marketing

Just in time for Mobile World Congress, the largest event of the year for the mobile industry, we introduced the latest addition to our ad decisioning family: mobile in-app header bidding. A response to the convergence of a number of factors in mobile specifically, and the digital media industry at large, our in-app header bidding solution is designed to give mobile app developers access to all of the header bidding benefits that desktop and mobile web publishers already enjoy.

As consumers continue to spend most of their time on mobile in apps, more publishers are trying to take advantage of this opportunity to connect with this highly engaged audience by developing their own “premium” apps. This, in turn, is driving an increase in the amount of mobile app inventory available outside of social media platforms like Facebook—which has garnered the majority of mobile programmatic ad spend to date—and making more mobile programmatic dollars available to app publishers.

At the same time, the amount of mobile ad spend allocated to programmatic channels continues to rise, and advances in cross-device targeting technology are introducing new tools that programmatic buyers can use to identify consumers via first- and third-party data. As all of these factors converge, demand for more advanced programmatic tools for mobile apps is increasing, and at PubMatic we are meeting this demand by introducing ad decisioning tools that will allow mobile app developers to maximize the programmatic ad dollars flowing into apps—specifically with the launch of in-app header bidding.

In order to understand why mobile app represents such a significant opportunity for publishers this year, let’s take an individual look at each of the trends that are aligning to make this happen:

  1. Consumers continue to spend most of their time on mobile in apps.
    Mobile apps will account for 86 percent of U.S. adults’ (non-voice) smartphone use this year, compared to just 14 percent for mobile web, according to eMarketer[1]. As Anne Frisbie, Senior Vice President of Global Brand and Programmatic at InMobi, told eMarketer in an interview last year, “Marketers need to understand not only how much they’re spending in mobile, but how much are they spending in mobile web vs. in-app ad experiences. Getting in-app advertising right is critical to success.”In fact, analysis from our recently released Q4 2016 Quarterly Mobile Index found that mobile app paid impression volume on the PubMatic platform increased 21% in the fourth quarter of 2016 alone[2], a strong indication that premium publishers are beginning to take advantage of the mobile app ecosystem.
  1. Facebook’s strangle hold on in-app ad spend is weakening.
    Last year, Facebook commanded more than half of overall U.S. mobile programmatic display dollars, according to eMarketer, but this spending pattern is expected to change in this year as more publishers begin to monetize their app inventory over programmatic channels[3] and ad decisioning tools like header bidding are introduced to the mobile app ecosystem.
    By the end of 2017, the amount of mobile programmatic spend flowing to Facebook is expected to decrease to just 47%.[4] Although not a dramatic shift, this change remains a meaningful one in contrast to the spending patterns of previous years, and a strong indication of the impact mobile app monetization will have in driving overall mobile programmatic spend over the course of the next year.
  1. Advances in device graph technology are providing programmatic buyers with better identification solutions.Recent advances in cross-device graphs—the technology that connects desktop web cookies with mobile IDs as consumers switch from desktop devices to mobile and back again—are giving programmatic buyers new and more accurate ways to identify more consumers in mobile, in turn driving even greater brand spend to programmatic mobile channels.
    As Jon Espejo, Vice President of Optimization at Accordant Media, told eMarketer in a recent interview, “As more users become known to various programmatic buyers through [device graph] technology, the business logic used for bidding on individual users gets better and advertisers are willing to bid more.”[5] In fact, more than a third of US marketers polled in 2016 said they bought mobile app inventory programmatically in 2015, an increase from just 20% to say the same in 2014, and a trend we expect to continue to grow significantly in 2017.[6]
  1. Ad decisioning tools are driving increased mobile monetization.To date, mobile app inventory has largely been left out of the header bidding trend that upended monetization across desktop and mobile web over the past eighteen months, but that is the case no longer. By bringing this technology to mobile apps, companies like PubMatic are giving mobile app developers greater visibility into market price for their inventory and allowing them to leverage its true value outside of traditional monetization options like the waterfall, which often obscured the true value of publishers’ inventory.
    Our recent Q4 2016 Quarterly Mobile Index found that mobile monetized header bidding impressions on the PubMatic platform alone grew 50X year-over-year in Q4—an increase of 4,800% in global mobile impressions monetized via header bidding technology in 2016[7]. During the same period, publishers that adopted header bidding for their mobile web inventory saw on average a 45% increase in mobile eCPMs. With mobile app inventory already garnering a 59% premium over mobile web, the opportunity for app developers is a significant one[8].As Espejo also told eMarketer: “There’s a vast difference in the CPMs of header-bidding vs. non-header-bidding publishers […] There can be a 20% to 60% increase in CPMs for those who are implementing header tags.”

Clearly, the untapped potential of in-app inventory will soon be realized—and as this trend unfolds, we’re already developing mobile in-app wrappers so we can stay one step ahead of the needs of mobile app publishers.

[1] eMarketer, “Smartphone Apps Crushing Mobile Web Time.” 20 Sep. 2016.

[2] PubMatic, “Q4 2016 Quarterly Mobile Index.” 21 Feb. 2017.

[3] eMarketer, “App Inventory: Programmatic’s Diamond in the Rough.” 8 Jul. 2016.

[4] Ibid.

[5] eMarketer, “Header Bidding and Cross-Device Technology Are Driving Display CPMs Higher.” 21 Jun. 2016.

[6] eMarketer, “App Inventory: Programmatic’s Diamond in the Rough.” 8 Jul. 2016.

[7] PubMatic, “Q4 2016 Quarterly Mobile Index.” 21 Feb. 2017.

[8] Ibid.