Publishers Create a Lag In the In-App Ad Market By Ignoring New Standards

Post on April 15, 2020 by Paulina Klimenko

Paulina Klimenko
Paulina Klimenko SVP, Corporate and Business Development

For more than a year now, we have seen trend data that indicates massive mobile in-app programmatic spend growth, with in-app video leading the way. Our own numbers confirm these trends.

This is a seeming slam dunk for app publishers, but many of them are dragging their feet to take advantage of the new revenue opportunity. Notably, they are not implementing quality measures like app-ads.txt or the IAB’s Open Measurement SDK that brands are looking for. Both of these standards benefit publishers as much as they benefit brands and indicate a commitment to quality in-app inventory. It’s important to get out in front and show proactive initiatives as buyers decide with whom to trade and how.

Buyers and the IAB Are Putting Quality First This Time

Major agencies like Publicis and Dentsu tell us that brands are spending most of their in-app money on the very top-tier app developer brands and in walled gardens because they haven’t seen a commitment to in-app inventory transparency and quality from the broader spectrum of publishers. Buyers see the value in spreading the spend further down the long tail as long as publishers put in place quality signals on which brands and agencies can rely.

Brands are embracing IAB in-app standards because they want to avoid the “Wild West” situation that hurt inventory quality in the early years of programmatic desktop trading. After years of brow-beating from top buyers like P&G and Unilever, the desktop market now trades with very little invalid or fraudulent traffic, and buyers are rightly prioritizing quality as they wade into in-app.

The IAB has been proactive with new initiatives to get ahead of the in-app wave, working to increase transparency, third-party verification, and reduce fraud and uncertainty.

App-ads.txt Discourages Fraud In-App

App-ads.txt has major benefits for buyers and sellers. Like ads.txt, app-ads.txt helps brands feel confident that they’re buying what they want to buy and helps them avoid fraudulent traffic. Publishers can also ensure that they actually receive ad spend meant for them.

A recent report from Pixalate shows that app-ads.txt adoption is growing, but not everyone has adopted the standard. PubMatic sees that 38% of apps in the portfolio have app-ads.txt files, and those declared apps represent 81% of app revenue. So while 62% of apps don’t have app-ads.txt files, buyers are gravitating towards the ones that do. We also find that premium but smaller apps down the list have fewer resources and are less likely to adopt this standard quickly and that gaming apps lag behind non-gaming apps in the adoption of this critical transparency initiative.

Premium publishers of any size that want to grow their in-app presence should prioritize app-ads.txt for an easy win. Publishers are often trapped in a circular problem — if in-app isn’t delivering a lot of revenue, it’s hard to justify putting resources towards it. But this is a true “if you build it, they will come” situation. Demand will come to the publishers that make themselves transparent and easy to work with.

Open Measurement SDK Signals Transparency

While app-ads.txt helps reduce fraud, the IAB’s Open Measurement standard feeds information back to brands for increased transparency. The SDK helps third-party verification vendors like MOAT or DoubleVerify measure video completion and viewability, and report back transparently to brand clients. A lot of brands request programmatic direct deals with publishers for transparent inventory that is enabled with the Open Measurement SDK. If publishers don’t have it implemented, they’ll never even see the revenue opportunity.

As noted in an earlier post, Open Measurement is not perfect. However, new updates should help with that, and hopefully increase both DSP demand on the open exchange and encourage more publishers to implement the updated 1.3 version. However, low adoption from publishers, and the fact that some header-bidding technology vendors whose solutions do not currently pass the OM SDK signal to downstream buyers even if an app developer has OM SDK activated, continue to limit scale. Brands still need to buy through a private marketplace (PMP) deal in order to explicitly target inventory that supports it.

Combining the growing demand for quality in-app inventory with the relatively painless implementation processes associated with both IAB standards, publishers should be able to justify taking these steps to increasing their share of in-app revenue.

Originally published in Street Fight Magazine