App Growth — 19 May 2021
The Future of Mobile Advertising: Trends & Expert Opinions
Lina Danilchik 
The coronavirus pandemic has changed the way mobile users interact with app and game publishers. Also, the AppTrackingTransparency (ATT) framework introduced by Apple granted users with the right to choose whether to share their personal data or not. All this requires new approaches to mobile advertising and the overall revision of the mobile customer journey. The companies in this saturated market need to stay on top of mobile marketing trends and have an awareness of where mobile ads are moving, since the ad format is something directly related to growth and revenue generation.
Ad spend is simultaneously growing worldwide. According to Forrester Research on Mobile Advertising Trends, mobile ad spend made up 64% of total ad spend in the USA in 2020. And in Europe, according to Statista, mobile ad spend represented 41% of total digital ad spend. This market growth is expected to continue: according to eMarketer, mobile ads are predicted to represent over $117 billion (+ 22%) in the USA by 2024. That’s the numbers part. And what about strategic change? What do users and mobile market players think?
We have talked to mobile industry leaders to help mobile publishers get a clearer understanding of mobile & advertising trends, navigate the new reality and quicker adjust to the changing environment.
The ATT framework is here, which means that now mobile app & game publishers and other market players should justify the request for personal information of users, so that they could feel motivated to entrust mobile companies with their data.
Shweta Pathak, Marketing Manager at Elsner Technologies Pvt. Ltd., says,
“Apple believes that consumers have rights over their data, and it is clear that privacy and data usage is increasingly moving towards a proprietary, non-interoperable framework. Though this update narrows audience reach, [I believe] it will help to build best practices across many online advertising platforms and impact the online marketing community’s overall landscape for good.”
Interactive Advertising Bureau (IAB) in their joint report with PwC on the digital ad ecosystem outlook for 2021, shares that 85% of global consumers say they wish “there were more companies I could trust with my data.” So one of the main publishers’ goals today is to become such a company.
Users no longer want to share their personal information in order to see irrelevant, even irritating ads. Here is what Edward Eugen, Tech and Gadget Reviewer at 10Beasts.com, says.
The ad companies need something that will attract the user to see their ads, without imposing on them. They will need to convince the user to share some information, in exchange for a better experience with the ads.
A few days ago I searched for information on a smartphone I was reading about. After that, most ads I saw showed me smartphones. But I wasn’t shopping for a smartphone, for goodness’ sake! What if I could choose the ads I am willing to see? What if ads were no longer intrusive, but something I could customize according to my current interests?
As a consumer, the ads would finally be useful to me. Let’s hope that Facebook and Google come with solutions that will consider not only their bottom line but also the users’ interest.
Heinrich Long, Privacy Expert at Restore Privacy, shares similar thoughts:
“Apple’s ATT framework will certainly change the way users interact with ads on a daily basis, but I don’t think it’s as black and white as some believe… For myself, I would love to see more ad restrictions imposed on the apps I use everyday. I have worked in cyber security for a long time and understand how important it is to limit shady ad content for users who don’t understand their privacy risks.”
So this innovation requires the attention of publishers towards winning the trust of users and convincing them to share their data via personalization, taking care of customers, building high-quality products, optimizing creatives and working on copy. Tip: pay special attention to the ATT prompt and pre-prompt copy.
Creatives have always been important, but now it is more than ever critical to stand out on the background of competitors, multiple mobile publishers, and catch user attention immediately, inducing them to click on the ad.
To beat the competition for each user, publishers should make the most of creatives not only in terms of app store optimization, but also in terms of paid user acquisition. Creatives become one of the keys to success, so it is worth focusing on experimenting, running mobile A/B tests and finding best options.
Despite the IDFA deprecation, in-app ad revenue will continue to grow. According to Omdia’s App Ecosystems Forecast, in 2021, in-app ad revenue is projected to increase by 6.2% for mobile apps and by 19.1% for mobile games.
At the same time, rewarded videos continue to show high performance: users tend to watch videos that offer some rewards, since they feel they may benefit without spending a penny. Mobile games ad report indicates that this might be one of the most useful and least disruptive ad formats.
So focusing on in-app ads and rewarded videos may become a significant part of mobile ad strategy.
Yonatan Attias, CEO at Sayollo, says:
It’s true, mobile advertisers have been left in a targeting grey zone. How do you target an audience you can’t track, measure, or analyze as accurately as you once did? Much has been said in recent months about the market’s dependence on mobile ad identifiers and the need for creative new solutions that will enable advertisers to optimize their ads again.
Luckily, we in the mobile gaming world have largely dodged this bullet. Mobile gaming has become the buzzword of the day in the advertising world, with expansive demographics that are as diverse as they are desirable, and an audience that’s always eager for new content and in-game experiences. Early adopting brands now view mobile gaming as a new form of social media, in terms of consumer engagement and brand awareness. With an audience that amounts to one-third of the world’s population, split almost equally down the middle gender-wise, and playing for over 8 hours a week, we expect in-game ads to be the next big thing. Looking to target the 18-35 crowd? They’re in-game all day (over 10 times a day, in fact). Women in gaming? 70% of women play mobile games, more frequently, and for longer sessions. Targeting the primary purchasing deciders in the home? That’s 45% of all mobile gamers. In short, with solid, built-in stats that essentially nullify the need for third-party ID data, and demographics that can be found on every marketer’s brief, mobile gaming is the place to be for any and all advertisers.
According to the Nielsen CMO Report, 3 in 4 marketers are not highly confident that they can quantify ROI. So my point is that the whole mobile market is moving from performance-based marketing to outcome-based marketing, namely, towards a unified metric that will enable marketers to measure the effect of mobile ads.
In view of recent developments, when user privacy is finally at the forefront, giving due importance to first-party data is becoming a critical business function for mobile publishers and ad networks.
Here are just a few numbers: according to AdPushup report on ad tech predictions, 42% of US mobile users agree to share their personal data if they clearly understand the benefits of it and 80% of respondents say they’re more likely to purchase from companies they believe protect client personal data.
So businesses in the mobile industry are starting to look for the solutions enabling them to properly manage the first-party data. And this brings me to the next point.
The more user data publishers and ad networks have access to, the more strictly these data should be managed, and carefully considered approaches should be chosen.
Therefore, companies working with the first-party data, will face a strong need for data governance solutions that will enable them to ensure compliance with privacy policies.
This will result in consolidation between various market players – mobile publishers and ad networks. And this is actually what already happens in the industry. Applovin has acquired Adjust, Zynga acquired Chartboost, IronSource launched Supersonic Games
– ad-based game studio.
According to AdPushup Ad Tech predictions, 45% organizations will outsource more in the next 18 months, with 57% citing security risks as a key challenge of managing IT in-house.
Silvija Lazanin, Content Manager at Udonis
If there is something big to talk about in 2021 and the years that follow, then it’s Apple’s changes to IDFA. Over the last years, mobile advertising was all about personalization. This was possible thanks to all sorts of data app publishers got from device identifiers, including Apple’s IDFA.
With the recent changes Apple has rolled out, the whole advertising ecosystem will change. This will have a great impact on all major app ad networks, including Google and Facebook.
Now that IDFA is becoming opt-in, advertisers will need to work around to get the insights they need. If not, they won’t be able to target the right audience. One of the ways they can work around this is to rely on data science. App advertisers will need to figure out new ways to estimate where their users came from, how much they’re worth, etc.
Harrison Weinhold, Digital Marketing Expert & Founder at Capital Media Labs
I think the reality is that these massive companies like Google and Facebook specifically have somewhere in the ballpark of 200,000+ data points on each and everyone of us, so targeting ads at the top level really shouldn’t change all that much. The issue will be retargeting, which will force marketers to focus on a couple of things: first – incentivizing and educating users on the value and importance of opting into targeting with IOS. Second – finding new and creative ways to glean some piece of user info like an email or cell number and then use that to retarget. The other side of this is that Facebook and Google both know this has been coming and will create new ad ecosystems where you’re still able to retarget anonymous segments of users who visited your website. There will be growing pains at first, but marketers will adapt quickly.
Loralie Parrish, VP of Marketing at Bluewater
The new privacy features of iOS 14 that empower users to choose if Facebook or Google can track and collect their digital activity represent simply another everyday challenge for marketers. Personalization based on 1:1 consumer interests just got harder. For years, we have been able to show the omni-channel impact on singular tactics and channels, now we’ll need to go back to relying on directly attributable metrics and work with data analysts to help determine any halo effects across all channels. Additionally, marketers will need to find creative ways to make their ads relevant and get consumers to stop scrolling. Focusing on target segment insights and needs, cultural or societal trends and translating the value of a brand’s USPs to something tangible for known or desired consumers are what it will take to replace the hyper-targeted messages of the past.
Miranda Yan, Co-Founder of VinPit
There will be a choice to assign a budget across the two main mobile operating systems. Earlier, iOS users have been typically viewed as more valuable, but now if iOS14 users are less trackable and targetable, we might see them become much cheaper on a CPM basis. Additionally, Android users could become more desirable so that more budget might flow there. This would further lower iOS14 prices but also escalate Android CPMs.
Eden Cheng, Marketing Director Co-founder of WeInvoice
The new privacy feature brought on by iOS14 was not very well received by advertising platforms such as Facebook and Google and it is for good reason. Both companies handle most of the digital marketing space and will track personalized data and then send it out to third-party brokers. They usually depend on a unique identifier that will tell them whenever a user has clicked on an ad or not. However, the new iOS feature limits this from happening and actually has the potential to nullify the entire digital marketing space, which will be a serious financial threat to the advertising business of companies like Facebook. In this respect, it can be said that this move by Apple could lead to app developers making a switch over to Android instead to try and find a workaround to the issue.
Meanwhile, for advertisers like Facebook, it only means they have to come up with new ways of advertising in the future. An example would be making use of contextual ads to prepare for the new era of mobile advertising. To be more specific, we can expect there to be more relevant and personalized ad placements moving forward. This means that we can no longer expect random ads to be placed on a user’s social media feed, but instead, advertisers will choose to place ads where they are wanted. For instance, fashion websites will only have fashion ads, etc. Considering the fact that such placements look natural and organic, it should help users not feel like their privacy has been compromised. There may also be an increase in ad placements using influencer marketing to help workaround the privacy issue.
Also, we interviewed the leading mobile industry experts and asked them a few questions on the future of mobile advertising. Take a look at their answers and thoughts.
What will happen to Facebook Ads, Google Ads?
I believe Facebook and Google will still assert their dominance in the advertising space but will face increasing competition from other players in the industry. New trends will be emerging and people will change their behavior towards technology and apps’ usage in general. Therefore, I think Facebook and Google will keep evolving and try to keep up with market changes. Moreover, Facebook and Google ads will become more automated, leaving less space for human management. I think these ad giants will leave advertisers with less and less autonomy to choose and will leave algorithms to do the job.
Will the ads on the Apple’s App Store change?
I think at some point the ads in the App Store will change and evolve into something more ‘exciting’ for users (this can also be through personalization, but it will be tricky given the new privacy trends). Perhaps these changes will involve new placements as well as a new type of content that will allow more flexibility in displaying content when advertised (e.g. videos or dynamic content when compared with the current Apple Search Ads).
Overall, how will mobile advertising change in the next few years?
App advertising is here to stay, with forecasts of ad spend on mobile set to increase significantly in the next few years.
Notwithstanding the strong growth, I believe mobile advertising will become increasingly privacy-centric. As a matter of fact, changes like iOS14 can give rise to new perspectives and business opportunities.
As consumers become more aware of how valuable their data is to advertising companies, I expect them to become empowered by this knowledge. I believe this ‘power’ will eventually give rise to many data-holding companies that, with the consent of users, sell data to other companies (while also remunerating users for allowing data collection).
In sum, I expect the industry to change and evolve leaving consumers with more power to decide if and how their data will be used for advertising.
What will happen to Facebook Ads, Google Ads?
I believe that Facebook is especially in store for some rough quarters. Although the iOS 14.5 rollout is quite slow yet, I believe many businesses will cut their spendings as soon as the performance drops, if they are not able to even out the worse targeting with lower CPMs, more branding-oriented campaign goals or shifting to Android. Google on the other hand is in a much better position. They don’t rely heavily on iOS in the first place and can track users much easier through their ecosystem even without IDFA, simply based on Google accounts, Chrome and last but not least Firebase. After all, it’s the same strategy like with FLoC: If Google loses 5% targeting precision that’s still a win, because everyone else will lose substantially more.
Will the ads on the Apple’s App Store change?
I think one thing is for sure: Apple will have to tackle their biggest challenge being scalability. But although we’re seeing all these beta ads on the App Store suggestions or their News and Stock apps, I don’t think this will change much for most apps since there are just not enough placements in their own ecosystem for advertisers to really scale their campaigns. I could well imagine that we’re still in the very early ages of Apple Search Ads and that they will expand far beyond what they are today. Maybe we’re facing an iAd 2.0 or something similar.
To stay on top of what happens in Apple Search Ads and find benchmarks for specific app categories, download Apple Search Ads Benchmarks Report.
Will Google Play also introduce some changes?
I’m 99% sure Google will for two reasons. First, they’ll get another cheap PR stunt like with the cookie ban, and second, to pull even more budget from Facebook, Snapchat, TikTok and all the other networks who are not Apple (and maybe Amazon).
Google watches carefully how Apple and developers/advertisers handle the IDFA situation, learns from their mistakes and then copies it.
What will happen to Facebook Ads, Google Ads?
In the short term, almost all channels may see a drop in advertisers demand, as there is uncertainty around returns, as well as very possibly lower optimization power from the duopoly. I hope the respective drop in CPM can partly compensate for that, and that we’ll see a V-recovery at some point later in the year.
The ATT framework is attacking Facebook & Google’s competitive advantage: their ability to drive performance at scale, thanks largely to the user-level data they’ve been aggregateing through their respective SDK.
In appearance, this is levelling down the playing field, giving other ad networks a more fair chance to compete within the SKAdNetwork environment.
Time will tell, but I’m afraid in the mid-long term, Facebook & Google might end up winning anyway. After all, they always do. .. ATT isn’t affecting first-party data, and Facebook & Google are who have most of it through their own apps (or more exactly, the apps they’ve acquired without legal scrutiny…)
Higher uncertainty, as well as unpredictable conversion threshold, may drive advertisers to concentrate spend where they feel comfortable.
Will the ads on the Apple’s App Store change?
I don’t see a fundamental change in the short term from the platform itself, but demand should intensify.
Apple Search Ads not being measured by SKAdNetwork, but Adservices, is giving the channel a strong advantage and more advertisers are poised to flock to Apple, as performance elsewhere degrades, at least visibly degrades between IDFA attribution & SKAdNetwork.
New inventory (ads in the search tab, for starters) should help scaling a bit, but prices are likely to be high too.
The big question for me is more in the longer term, is Apple will add significantly inventory. But from Apple owned & operated apps, I don’t see a fundamental shift (even if News & Stocks are added, like it’s been tested in beta for over a year). The radical change would happen if Apple adds third-party inventory, much like Facebook Audience Network or Admob, but then I don’t see how this would escape SKAdNetwork measurement. It doesn’t really fit into Apple culture either to run a third-party ad network, but let’s see.
Will Google Play also introduce some changes?
We could imagine they would follow Apple: most of the times, Google replicates Apple’s innovation. Google could also masquerade such a move to give even more attribution privilege to its own ad network which owns a dominant market share on Android.
That said, I’m not sure the GAID will disappear so soon, as it’s so much more beneficial to Google’s model than to the IDFA was to Apple. Being transparent about consent isn’t something we see much on their product either. The GDPR one still isn’t compliant for instance, 3 years after the law was passed…
Overall, how will mobile advertising change in the next few years?
I don’t think it’s the end of app advertising by any way, but definitely a radical shift in how it’s executed (for optimization in particular), and most importantly in the way we see performance, aka measurement.
Everybody is forced to rethink attribution, which was a relative constant for many years. That brings more complexity, more uncertainty, but also the opportunity to revisit assumptions marketers have taken for granted for a long time.
There’s also healthy questions being raised about marketing mix across platforms, better synergies between app & web marketing, and on the user side, better respect for privacy. It’s not ideal, but a change was much needed…
All in all, it’s a huge challenge for marketers, with some severe limitations (for instance on remarketing or creative optimization) but also an exciting opportunity to reshuffle the cards and give a chance to those who adapt faster to the new environment.
What will happen to Facebook Ads, Google Ads?
No major changes In Mobile I guess, both Facebook and Google already have privacy centric solutions driven by in-house development and unbiased MMP providers, the market will adapt to working with new rules, what we see developing is a new trend in predicting users behavior with aggregated data.
Will the ads on the Apple’s App Store change?
For sure, they already did. The new official placement for ads inside the App Store has been live since the end of April. Now UA managers have an opportunity to run CPM campaigns, which is a bit of an unexpected update from the Apple side. And more will come, most probably Apple will push forward Search ads with new features, analytics possibilities.
Will Google Play also introduce some changes?
Google Play always introduces us to something new. But speaking about UAC campaigns or AdMob overall, it didn’t change much for the past couple of years. Speaking about placements/formats – The good thing about Google is that they A/B test a lot and sometimes you may catch these changes on your phone far more in advance. The latest example is the average rating divided by countries – its not official and live as a feature yet, but some Android users from Belarus already caught it.
But speaking about privacy policy, this thing is something Google definitely can not ignore, so in the nearest future they will follow Apple’s steps and introduce a privacy centric solution.
When talking about the enforcement of ATT it is important to differentiate from different points of view. For the user itself a behavior that was already trained on mobile web – clicking away cookie popups – will transition to mobile apps. This will be a bit irritating at the beginning but become a habit quite fast. Obviously, on the advertiser side, a lot changes. But those changes also do not mean a completely new situation, they just mean a backroll to a time where marketing was more reliant on outstanding campaigns with convincing creatives and not to a time where an algorithm could figure out which one of 1000+ variations attracts the most eyeballs. For the majority of ad networks, we will see an increase in ad prices. For sure, there will be 1-2 challenger ad networks, which will try to take over more market share with the most attractive pricing for this new world of limited tracking possibilities.
