In-app ad spending surges on strong marketer demand, study says

Brief:

Native in-app advertising quadrupled in the first half of 2019 from a year earlier on strong demand, while global in-app ad spending rose 27% from a year earlier, per data from ad platform Smaato shared with Mobile Marketer. The findings, based on data from Smaato's platform, show that in-app spending was stronger in the U.S., growing by 33% for the period.
Location data was the most significant driver of ad prices as marketers paid more to target their ads to mobile users. Device ID and age data boosted prices by 27%, while the addition of location and gender data triggered a 117% jump in prices from last year.
Global eCPMs surged 27% from a year earlier — including in mature markets like the U.S., U.K. and Germany — partly because of higher prices for user data. Among in-app ad formats, rewarded video spending surged 245% in the first half from a year earlier, while spending on banner ads rose 92%, per Smaato.

Insight:

Increased in-app ad spending shows that marketers are placing greater value on reaching mobile users, especially when they can be targeted with more specific data such as physical location. Reaching consumers with location-based ads is considered one of the most powerful promotional strategies, underpinning the increased spending on mobile platforms. However, location-based marketing also faces challenges, including concerns about data accuracy and privacy.

Marketers also are seeking higher-quality audiences by placing more ads through private marketplaces (PMPs) that provide greater reassurance that their media spend won't be wasted or lost to fraud. Programmatic ad spending on PMPs surged 250% in the first half from a year earlier, especially among technology, healthcare and food and beverage advertisers, per Smaato's data. The apps with the highest share of ad revenue from PMPs were in real estate, social, dating and sports, the firm said.

Smaato's findings about rewarded video confirm other research that shows viewer receptivity to opt-in video ads. Almost 80% of consumers that watch digital video are willling to watch ads in exchange for free content, according to the Interactive Advertising Bureau (IAB).

Smaato's results support estimates of increased spending on mobile video ads. In the U.S., mobile video ad spending is forecast to jump 56% to $24.8 billion by 2022 from $15.9 billion this year, according to researcher eMarketer. Spending on social video ads will grow 44% from this year to reach $14.9 billion by 2021 as brands seek younger audiences who are more likely to spend time on platforms like YouTube, Facebook, Instagram and Twitter, per a separate eMarketer forecast.