Mobile In-App Monetisation: Do It Right

Post on April 29, 2020 by Lashanne Phang

Lashanne Phang Associate Director, Publisher Development, APAC

According to 42matters’ 2020 App Market Statistics for Android, there are nearly 60,000 APAC publishers on Google Play.

As digital marketing shifts towards mobile, the opportunity for mobile app publishers and developers is enormous, particularly in Asia. But do they have the right strategies in place to capture the ad dollars pouring into mobile?

In this piece, we’re going to explore some key factors app publishers need to consider when looking to scale their ad monetization.

Mobile app monetisation

Based on a cost model from App Press, developing a mobile app can cost up to $100,000 – so having a robust monetization strategy in place is critical. Publishers commonly monetize via the following:

  • Subscription, paid membership, paid downloads
  • In-app purchases
  • Serving ads

When it comes to monetization via advertising, programmatic offers an efficient way of using technology to both manage the auction of inventory and apply data parameters to target a specific group of users/audience.

Of the different programmatic auction models, header bidding and the waterfall are the most common. We’ll explore those in a little detail.

Header bidding v waterfall

In a waterfall set up, publishers prioritize how their inventory is accessed by creating layers of line items for respective demand sources – the opportunity to bid (ad request) is passed first to one demand source and if they don’t return a bid, onto the next, and so on and so on. Since the ad request is passed in sequence to demand sources, publishers don’t know if there might have been a higher bid further down the chain – a demand source in position five may have bid $5, but if a demand source in position two bids $3, they will win the auction.

In contrast, header bidding gives the publisher access to all demand sources (such as SSPs, DSPs, exchanges and networks) at the same time. All buyers respond to an ad request in tandem and publishers can pick the highest bid as the winner. For this reason, header bidding is also known as advanced bidding/pre-bidding.

In the waterfall setup, when an ad request is not filled by a demand partner, it gets passed back to allow the next demand partner in line to bid on it. This ‘passback’ process takes up part of the limited time there is for a request to be filled. If a request is not filled in time, it times out – so passbacks contribute to lower fill-rates for publishers. Header bidding eliminates the passback requirement and improves fill rates.

Because all buyers bid at the same time, this type of auction set up also increases the competition amongst demand partners, as a result delivering higher yield to publishers. According to AdPushup, publishers typically see a 20% to 50% uplift in yield.

In addition to setting up their programmatic auctions in the most efficient way possible, it is important for publishers to fully understand what buyers are looking for when it comes to programmatic buys.

Understanding buyers’ requirements

In the first part of this series, we touched on how inventory quality and transparency are important factors when it comes to programmatic media buys. Having both app-ads.txt and OM SDK implemented has become a common threshold in media selection.

But what other factors make some app media more attractive to buyers than other media?

The right audience

Media buyers want to find the right target audience for their campaigns. The more user data provided the more accurate the targeting and the better the campaign results. Publishers also benefit – programmatic buys naturally deliver better yield when performance is improved.

Engaging formats

Using the right ad format is important when it comes to engaging with the target audience. Rich media banners are commonly used by media buyers in in-app environments, but interest for in-app video is on the rise. Publishers need to ensure they have a variety of ad formats that allow media buyers to take advantage of this engaging media with a variety of different creative assets.

Media buyers often plan campaigns that span multiple countries and even regions. Having inventory that meets international standards opens up huge opportunities for publishers to monetize beyond their domestic borders.

Taking it global

The Interactive Advertising Bureau (IAB) is the organization that guides the media and marketing industries with a set of standards, guidelines and best practices. These are widely adopted by industry players globally. Publishers should ensure their app inventory is compliant with these standards and guidelines to maximise the potential of cross border revenue opportunities.

To capture global users, publishers should ensure their apps are available in popular global app stores. Google Play and Apple’s App Store are the most commonly used app stores globally.

In some app-heavy markets, like China, there are dozens of local app stores that are well used by domestic consumers (Tencent MyApp, 360 Mobile Assistant and Baidu Mobile Assistant being the three most popular). However this can lead to an over-reliance on local app stores, and not enough exposure on global app stores. According to 42Matters the number of apps from Chinese publishers in the Google Play store is just 2,375, compared with 7,260 apps by Korean publishers and 21, 565 apps by Indian publishers.

Standard ad formats

To secure global campaign budgets, publishers should ensure they create ad inventory that is suitable for audiences beyond their own borders. Global campaigns will often require standard ad inventory, to fit their creative assets.

Previously, we talked about how creative incompatibility was an issue for media buyers. International advertisers often develop creative assets based on formats tried and tested in their home markets, that adhere to IAB guidelines. While alternative formats such as splash in China might be popular with domestic advertisers, it is rarely used elsewhere and will cause problems for international creative assets.

Global SSP partners

Whilst there are undoubtably advantages to working with local SSPs when thinking domestically, when trying to access international demand, working with an SSP with a global footprint is key.

Global SSPs bring publishers worldwide demand in a single platform – something local supply partners cannot do. Most global SSPs have established strong footholds with multiple demand sources including DSPs, networks and exchanges. Some SSPs like PubMatic, also work directly with advertising agencies.

Working with global SSPs saves time and resources for publishers – the SSP does the leg work of testing and identifying which demand sources generate the best yield for a publisher’s inventory.

Different strategies for different markets

Some publishers like ByteDance (owner of popular social media app TikTok) have enjoyed huge success applying different monetization strategies for domestic and global inventory. Given the uniqueness of the China market compard to the rest of the world, it’s a wise approach.

To use the example above again – the splash format is a highly intrusive, but valuable format in China. The ad loads as soon as the app is opened, it takes over the full screen and lingers for 5-10 seconds, often complete with a CTA feature. Naturally advertisers in China pay big bucks for this highly viewable format. But it only works as an ad unit because consumers in China have a higher tolerance for intrusive advertising. Among global users with a lower tolerance for ads, this sort of ad unit would quickly ruin the user experience and earn an app disastrous ratings. So it’s not an appropriate monetisation tool for the international market.

Tencent, the owner of the hugely popular WeChat and PUBG game, is another example of a Chinese publisher that separates out domestic inventory from global and applies different strategies to each. It’s not just publishers in China, we’re seeing more and more large-scale publishers across Asia applying similar strategies – Naver, Kakao and Line to name a few.

In summary – if you’re a publisher or app developer looking to scale your monetisation through programmatic advertising there are three things you need to do:

  • Implement header bidding – it’s going to drive better yield and is more efficient.
  • Understand your buyers and what they expect / need from app inventory.
  • Go global – think beyond your own domestic borders.

Originally published in The Drum