“Ads should be more native to the app experience, contribute, and add value to it, so much so that users will choose to opt-in to receiving them and consent to using their PII data to even enhance the experience.â€
Offer Yehudai serves as president of Fyber. Prior to his tenure at Fyber, Yehudai served as an officer in the Israeli military and later dropped out of the Technion (Israel’s MIT) to co-found Inneractive in 2007. Inneractive, one of the first real-time bidding exchanges for the mobile app environment, was acquired by Fyber in 2016. At Fyber, Yehudai oversees product development, marketing, business strategy, and strategic partnerships.
In this edition of MarTalk Buzz, Yehudai discusses how the phasing out of cookies has sparked conversations around privacy updates and in-app advertisingOpens a new window . He addresses what app developers can do to safeguard revenue spends and prepare for the potential of stricter in-app privacy rules. Yehudai also opens about how brands can shift their focus to taking advertising budgets from traditional media to in-app, what ad formats they should work with for in-app advertising, and how brands and advertisers can measure the effectiveness of in-app advertising.
Key takeaways on the in-app advertising spaceOpens a new window in a cookie-less world:
- Innovate and look at weaving the advertising experience with the user experience and the general economy of the app or game.
- Opt-in ad formats in the mobile gaming environment Opens a new window such as offer wall and rewarded video are great examples of a truly value-adding ad experience.
- Explore working closely with brand advertisers, who rely less on install and post-install data, as well as context-based packaging of their inventory.
Here’s the edited transcript from our exclusive interview with Offer Yehudai:
1. The phasing out of cookies has sparked conversations around privacy updates and in-app advertising. What are the actionable insights that marketers, advertisers, and app developers need to learn and be prepared for amidst this change?
Is it fair to compare third-party cookies and Mobile Advertising IDs (MAID)? The former was used uncontrollably and was traded by different parties with no direct value for the consumer. Publishers can still use first-party cookies to enhance personalization and track user experience.
Apple deprecated the unique disability ID (UDID) back in 2013, because it was used in the same way third-party cookies were. With the introduction of identifier for advertisers (IDFA) and identifier for vendors (IDFV), consumers have control and can easily reset or deactivate their IDFA and IDFV.
So, why do MAIDs matter? Take performance advertising, for example, which is based on the ability to not only calculate the lifetime value (LTV) of users so you can set up a target cost for acquiring such users (customer acquisition cost or CAC), but also to identify conversation events to help you figure out the return on ad spend (ROAS).
The removal of such identifiers hurts our ability to calculate the different variables of this equation, in addition to other limitations on other important capabilities in our ecosystem such as attribution, re-engagement activities, granular targeting options, and the ability to test and optimize ad creatives.
This will, no doubt, introduce friction to the in-app advertising ecosystem as app developers need to figure out the effect this will have on their function as monetizers (who seek to optimize for LTV and ARPU or average revenue per user) as well as advertisers (who want to optimize for CAC and ROAS).
2. Amid lockdowns and the coronavirus pandemic, in-app consumer spending witnessed a surge in the last couple of months. What can app developers do to safeguard revenue spends and prepare for the potential of stricter in-app privacy rules?
Mobile games were on the rise before COVID-19 hit us, and we have seen around 65% growth in time spent in-app since the lockdown. Game developers enjoyed increased revenue coming from existing users spending more time in-app, as well as new users discovering the world of games for the first time.
To safeguard revenue, I would advise publishers to know exactly who their ad partners are. There were recent cases of fraud where partners mal-present publishers’ traffic as someone else’s and arbitraged the difference.
I encourage publishers to review their app-ads.txt file and make sure they know the partners listed there and think twice before adding a line item with a name you have never seen before. They all present a privacy and monetary risk.
Learn More: 7 Fundamentals of Mobile Programmatic AdvertisingOpens a new window
3. Which top 3 approaches can app developers and advertisers follow to negate the effect of a cookie-less ecosystem?
Publishers with profitable unit economics should invest more in user acquisition now that consumer price index (CPIs) are going down, securing a strong user base for the day after the lockdown. As said, there is a new audience of users currently available that otherwise would be expensive or unavailable.
As mentioned, I believe that app developers should diversify when it comes to their different revenue streams. The two main revenue streams in our industry are in-app purchase (IAP) and in-app advertising (IAA). In the last few years, more gaming developers embraced IAA and are now seeing it as complementary to their IAP efforts.
Due to the coronavirus pandemic, most people spent more of their time in quarantine, and we saw an uptick in both new users and in existing user engagement since the outbreak. That naturally led to more consumer spend in the app and to more ads being served, viewed, and engaged with by users.
At some point, and I hope it to be sooner than later, we will all return to some version of normality and I believe that people will spend less time at home and, as a result, people will be less engaged with mobile games. I also believe that, with many people losing their jobs, we might see IAP spend decrease, and this is why it is important to complement it with advertising, especially with opt-in formats such as rewarded video and playable as well as offer walls, as users will probably look for ways to remain involved in the game economy without necessarily taking their wallet out.       Â
4. How can advertisers and app developers collaborate to prepare for a stricter in-app advertising ecosystem?
The increase in global privacy regulations influences the in-app publishing ecosystem. For example, EU’s GDPR regulation wasn’t just a one-off kerfuffle for 2018, but a sign of things to come; and due (at least in part) to a low level of education around requirements, a huge human and legal resource was needed to follow the letter of the law. As even the largest app publishers keep headcount relatively low, access to legal counsel can be rare or expensive, and so it can be easy to miss new regulations and so slip into non-compliance.
Even if we put aside the monstrous fines associated with non-compliance, app publishers can miss out on large revenue opportunities as big DSPs and other types of buyers simply won’t buy ads from publishers who did not prove that they fully comply with regulations.
Many regulations also target Google, Facebook, and Amazon, and so indirectly force them to inflict stricter self-measures in their own app store environments. Then if, for example, these changes compel publishers to identify younger users, the lack of internal resources in governing regulation may mean that such publishers must cut that age group out of the app entirely. This can result in the loss of huge swathes of ad revenue from brands that wanted to target that demographic.
For advertisers and app developers, this will introduce challenges but also be a great catalyst to think out-of-the-box, innovate, and look at weaving the advertising experience with the user experience and the general economy of the app or game. Ads should be more native to the app experience, contribute and add value to it, so much so that users will choose to opt-in to receiving them and consent to using their PII data to even enhance the experience. Opt-in ad formats in the mobile gaming environment such as offer wall and rewarded video are great examples of a truly value adding ad experience. We’ll touch more on that later. Â
Learn More: HOpens a new window ow to Effectively Use Mobile Advertising: Inspiring Examples from Innovative BrandsOpens a new window
5. What best practices should advertisers adopt when looking for an alternative to cookies to ensure ad allocation delivers RoI?
In such a reality, advertisers will need to rely on alternative identifier and tracking solutions, which will be inferior to the current IDFA and Google Advertising ID (GAID) solutions, and/or take a more macro approach over a channel-level attribution approach, to assess the performance of marketing budgets. On the monetization front, I believe that app developers should diversify their revenue streams beyond advertising. Within advertising, developers should also explore working closely with brand advertisers, who rely less on install and post-install data, as well as context-based packaging of their inventory.
I feel that when Apple decided to deprecate its IDFA (and even if it would offer its own walled-garden substitute solutions), such a move will significantly hurt its in-app ecosystem, sending many developers and advertisers to Android.
6. How can brands shift their focus to taking advertising budgets from traditional media to in-app? What ad formats work particularly well on in-app ads, and what formats are best suited to other platforms?
Well, users spend most of their time in apps. 2019 was the first year in which users spent more time on their smartphones than on watching television. Advertisers, of all kinds, need to follow the users. They need to tell their stories through the most relevant channels and the in-app environment is the most relevant channel right now.  Â
The in-app environment is a great canvas for maximizing user attention. Due to the smaller screen of smartphones and the ‘premium’ feel of the in-app environment (vs. the mobile web environment), users are more engaged with the ads, which, in turn, increases their effect. In addition, unlike traditional media, in-app advertising allows for incentivized ad formats such as rewarded videos. These adverts typically appear between levels and give the users the option to watch an ad in exchange for in-game perks or other additional content. It is an opt-in advertising technique that is wholly initiated by the user, which is incredibly distinctive. Today, consumers expect something for their time and attention. Innovative ad formats such as rewarded videos are a great value exchange for the modern user.
The challenges for brands and agencies with shifting budgets to the app space were mostly the perception of in-app inventory and ad formats such as opt-in ads as less ‘premium’, and the lack of tools to measure and track the effectiveness of their buys in this environment, such as viewability measurements and audience targeting and validation standards. We saw a significant improvement in these areas in the last 18 months and, prior to the coronavirus pandemic, we started seeing more brand budgets slowly trickling to our environment. Â
Learn More: It’s Time to Focus on Retargeting and Re-EngagementOpens a new window
7. How can brands and advertisers measure the effectiveness of in-app advertising since the in-app space has faced challenges with integrating the lead measurement providers?
When brand advertisers and agencies buy web inventory, they can leverage certain viewability, targeting and audience validation tools to ensure their ads are served and viewed by the audience they choose to target. This is where the in-app space lags. However, despite the in-app market not being as mature, we are seeing big changes with measuring viewability, detecting, and blocking fraud, analyzing audience data quality, and maximizing transparency. We are seeing the results of this progress in our environment.
8. What are the key trends that will shape the in-app ad space in this post pandemic world in 2020 and beyond?Â
- Increased privacy may lead to age gates, ensuring proper audience age.
- Introduction of “sign in with Appleâ€, like Google’s to verify identity
- Increase in mCommerce and delivery to lead to higher UA budgets for this vertical
- The 3-6 months of increased revenue for game companies may lead to some new unicorns or big hits
About Offer Yehudai:Opens a new window
Offer Yehudai serves as President of Fyber. He co-founded Inneractive in 2007. He brings deep industry knowledge and thought leadership in mobile, ad tech, and media. Offer oversees product development, marketing, business strategy, and strategic partnerships for the group.
About FyberOpens a new window :
Fyber is a global technology company, developing a next-generation monetization platform for mobile app publishers. Fyber combines proprietary technologies and expertise in mediation, programmatic and video advertising to create holistic solutions that shape the future of the app economy. Fyber has seven global offices in San Francisco, New York, London, Berlin, Tel Aviv, Seoul, and Beijing. It is publicly traded on the Frankfurt Stock Exchange under the symbol FBEN.
About MarTalk Buzz:
MarTalk Buzz is an interview series where marketing leaders and marketing technology companies that are making a difference, connect with us and share their stories. Join us as we talk to them about their product journeys, insights on the categories they serve, what works for them, and some bonus pro-tips.
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