How Will The Mobile App Advertising Market Evolve in 2020?

The mobile app advertising market grew by leaps and bounds in 2019. In North America, programmatic ad spend coming through InMobi Exchange during the first three months of 2019 was 299% greater than what came through during the same period in 2017. And, throughout the Asia-Pacific region, in-app advertising spending during the second quarter of 2019 was up 33% from the same period in 2018.

Why did mobile advertising spending grow in 2019? There are a few key reasons:

• Growth and evolution of smartphone users: In 2019, the number of smartphone users in the world finally tipped over 3 billion. By 2021, close to half of every person on Earth will likely have a smartphone. In the U.S., 2019 was the year that people spent more time looking at and using mobile devices than they did watching television. And, the vast majority of time spent using smartphones is devoted to a number of apps. So, by necessity, marketers looking to reach their target audiences have to leverage mobile and incorporate apps into their marketing and advertising strategies.
• Increasing effectiveness of mobile-first ad creatives: As Srinivas KC, the VP and GM of InMobi DSP, has previously noted, in-app ads historically have looked an awful lot like desktop ads. This is a shame, as what can be done with mobile app ad creatives far outpaces what’s available in browser-based environments. Examples include native ads with rich media and video ads with interactive ad cards; there’s no way to have this kind of interactivity within browsers.
• Emergence of mobile as an effective down-funnel marketing channel: Thanks to the sheer number of people with phones on hand at any moment today, it is relatively easy to achieve reach and scale through mobile. But, when it goes to objectives that fall further down the marketing funnel, historically in-app advertising hasn’t had much to offer besides app installs. But this is changing, thanks to smarter creatives and CPA (cost per action) buying. As a result, advertisers have more options for achieving any marketing goal regardless of their business. This is also made possible through improved attribution that tracks actions and behavior across touchpoints and devices.
• Maturation of programmatic digital ad buying: As noted in the InMobi 2019 Mobile Programmatic Advertising Trends report, it has become easier, safer and more efficient than ever before to conduct in-app ad spends programmatically.
• Evolution of mobile app monetization: App developers and publishers have a number of monetization options available to them, but there’s a reason why advertising is such a common choice: in-app advertising a relatively easy way for apps to earn revenue. App publishers and developers, however, have become increasingly savvy at balancing ad opportunities with user experience concerns, to ensure they can keep users engaged without losing out on ad revenue.

“Mobile really needs to be front and center of all of our media buying because in the end, the quicker we get in front of you when you're on the go, the quicker you're probably going to think about us when you're about to check out, so a lot more to come in that in 2020,” Vinny Rinaldi told Anne Frisbie, SVP and GM of North America for InMobi, at Advertising Week New York 2019.

But is 2019 the tip of the iceberg? Does it all fall off a cliff in 2020?

Answer: likely not. There’s a reason Grand View Research predicts the in-app mobile ad market to grow by a compound annual rate of more than 19% between 2019 and 2025. The industry is expected to realize tremendous growth in this forecast period owing to changing consumer preferences and increased knowledge among all types of advertisers regarding the myriad benefits of mobile app advertising.

Continued Growth and Maturation of In-App Advertising

It’s hardly surprising to say that in-app advertising is likely to grow in 2020. After all, the space has been growing tremendously for almost a decade now, alongside overall growth in global app markets.

But how will mobile in-app advertising change and evolve in 2020? For starters, Abhay Singhal, Co-Founder of InMobi Group and CEO of InMobi Marketing Cloud, noted that how brands categorize their in-app advertising will likely change dramatically in the new year. The immediacy and evolution of mobile advertising will mean that the top-of-funnel ads of yore will likely fall by the wayside, with marketers expecting more immediate and lasting results from all of their in-app ads.

“The distinction between brand and performance is blurred completely in my view,” Singhal said. “Everything is performance. It all depends upon the right mechanisms to determine what the attribution is and the right mechanism to determine it. What is the ROI that you are looking for?”

Not only will brands think about in-app advertising differently, they will likely also use different creatives and targeting criteria in 2020, according to eMarketer’s Yory Wurmser. He predicts contextual targeting being more prevalent in the new year, and that cutting-edge formats like interactive creatives and ads with augmented reality will be more frequently used.

“For mobile media and gaming companies, you’ll continue to see more sophisticated app install campaigns based on interactive/playable ads and rewarded video,” Yory said. “For non-gaming/media companies, you’ll see a more layered approach, first trying to get people to get engaged on a website (mobile or desktop), email list or chat/messaging, then pushing the app.”

How else will mobile in-app advertising grow and evolve? Expect to see these trends emerge in 2020:

• Demise of the banner as the default creative option: In Q1 2019, only 45% of all mobile programmatic ad spending on InMobi Exchange went to banners in the U.S. This may not seem all that revelatory, but it’s a major shift away from past trends. Banners may have ruled the roost, but expect more mobile programmatic ad spending to go towards video, interstitials and native ad formats, rather than more standard banners, in the future.
• Continued growth of China: The U.S. remains the top market, especially, programmatically, but China is rising fast. China is now the second largest in-app programmatic ad market. Between 2017 and 2018, programmatic ad spending in China rose 102%. This one-two standing will very likely remain in place in 2020.
• More private marketplace deals: In looking at Q2 2019 compared to Q2 2018, global private marketplace spending grew 15%. Expect this growth to continue apace, with risk-averse advertisers further embracing this style of media buys in 2020.
• Increasing investment in mobile-first creative experiences: Almost all InMobi Creative Services work is focused on fullscreen interstitials and video versus banners. In the U.S., 60% of video private marketplace deals take advantage of video end cards, up from 10% a year or so ago. And, approximately 30% of banners and around 40% of all display ads leverage rich media creative experiences. It’s highly likely that these percentages will become even more pronounced throughout 2020.
• Video’s ascendance: Not only is the industry now focused on VAST and an improved end user experience, but advertisers are starting to see the light and understand just how powerful in-app video advertising can be for them. In Q1 2019, U.S. video click-through rates were 10x greater than CTRs for banners on average and 2x greater than the average CTR for native ads. In Q2 2019, InMobi saw, on average, video completion rate of ~80% and viewability of 91% (IAS, Moat, DoubleVerify) via private marketplace deals. This is impressive, but it’s not unfathomable to expect 2020 results to be even greater.
• Rise of specialized DSPs: Consolidation continues to happen among omnichannel demand-side platforms (DSPs). At the same time, the use of highly specialized DSPs is on the rise. For in-app mobile programmatic buying, the fastest growing specialized DSPs deliver on location or app performance (install and remarketing) use cases. And, these “niche” DSPs represent around 20% of the mobile ad programmatic market. In 2020, expect usage to rise.
• The death of the 30-second digital ad: 70% of served video ad impressions in the U.S. via InMobi Exchange are 20 seconds or less. Around 10% of video ads are 6 seconds or less, and that will significantly grow in 2020.
• In-housing is real but more nuanced: In Q2 2019, InMobi saw around 15% of PMP revenue coming from clients who have “in housed,” but those clients still often needed hands-on-keyboard assistance from a partner such as a managed DSP relationship.

Charting 2020’s Top Mobile Advertising and Marketing Trends

How will brands more effectively understand, identify, engage and acquire mobile-first users? What steps will they take to drive real connections with consumers over mobile? Download InMobi’s 2020 trends report today for key insights on the future from the world’s top mobile experts.

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Note: This is the first in a five-part series on the top mobile marketing and advertising trends of 2020. Be sure to stay tuned to the InMobi blog for more predictions.