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Marketers still overlook in-app ads, despite consumer behavior

As consumers spend more time within mobile applications, marketers are beginning to understand the opportunity of in-app advertising and throwing more money behind the channel, but experts believe marketers are still behind in the game.

According to a report from Maz, consumers spend 40 percent more time reading content in apps than on Web sites, but marketers are still hesitant to ramp up in-app ad spend. At the same time, Juniper Research just put out a report that predicts that in-app advertising spend will grow to almost $17 billion by 2018, so that reality may be changing in the near future.

?The mobile app market is a huge, fast-growing market with over 1 million apps, $26 billion in revenue and 102 billion downloads in an industry that didn?t even exist five years ago,? said Marc Parrish, an advisor at Appboy, New York. ?Any marketer who is not looking to increase spend in reaching this channel has his head in the sand. 

?Most marketers don't even know that in-app ads exist as a format,? he said. ?Facebook is the forcing function, educating the marketing that there is money to be made in mobile ads.

?Facebook's mobile monthly average users increased 45 percent in just a year, from 604 million monthly average users in the second quarter of 2012 to 874 million monthly average users in the third quarter of 2013. That's serious growth.?

Consumer behavior
When it comes to advertising, marketers should always respond to consumer behavior in order to reach consumers where they are.

In this case, consumers are clearly spending more time within apps.

According to Maz, a company that powers more than 600 apps in Apple's App Store, Google Play and Amazon Appstore, consumers spend 40 percent more time reading content in apps than on Web sites. Consumers spend the most time with entertainment publications, at an average of 38 minutes per issue, with sports coming in next at 23 minutes per issue.

Apps such as American Media-owned Star Magazine, Country Weekly and Soap Opera Digest are seeing consumers return to an app for up to 12 sessions per weekly issue. The entertainment app average is seven sessions per issue.

?In general I think people are spending more time on mobile devices, and most of the time is spent within apps,? said Shouvik Paul, vice president of business development at Maz, New York. ?It?s not very often that you open up your browser on your phone and type in, you just go to the Facebook app or Twitter app.

?Another big feature of apps in general are push notifications, specifically on a lot of the Apple devices,? he said. ?If I have the app, it notifies me when there?s breaking news, so I don?t have to remember to go to it.?

Ad spend
If consumers are spending more time reading in apps than Web sites, it makes more sense for brands to be investing on a higher level on apps to get in front of those consumers.

According to Juniper, marketers will begin to understand this opportunity in the next few years.

A new report from the research firm predicts that in-app mobile ad spend will reach $16.9 billion by 2018, up from $3.5 billion last year. The report expects that in-app ad spend will grow at a higher rate than mobile Internet, messaging and ringback tone ad spend.

A number of brands have already begun tapping into this opportunity. For instance, Starbucks recently launched a new campaign that mixes sponsored content and full-page ads into the Flipboard mobile application (see story).

Dating site AYI has also seen success with in-app ads. The company saw more than a 200 percent increase in application downloads since leveraging mobile app install ads on Facebook (see story).

However, Mr. Paul thinks that marketers are not yet doing enough when it comes to in-app advertising.

?There?s huge room for improvement in apps,? Mr. Paul said. ?The app world in general is still in its infancy. If you think about the early days of the Web, advertising then was pretty terrible. Nobody really knew what they were doing. And that?s what we?re seeing now in the app world.

?We work with a lot of magazines like Forbes or Us Weekly, all these magazines have a lot of ads,? he said. ?They expect users to see that Gucci ad in a magazine and tap on it. If you tap on it, it can play a video or open the advertiser?s Web site in the app. The problem is there?s no real call-to-action.

?The technology exists where you can have someone transact right within the app, yet marketers are using it much like they do with standard print magazines where it?s just about the branding. There?s a lot more they can do in terms of tap here to go purchase this pair of boots you?re seeing on this model.?

Final Take
Rebecca Borison is editorial assistant on Mobile Marketer, New York