The app economy is growing rapidly, with over 1.8 million apps in the app store alone. While most app marketers rely on search and social to advertise their apps, depending on only two channels can be risky. In this article, Amit Halperin, VP Global Sales, ironSources, discusses why app marketers should diversify their media mix to improve ad performance.
The app economy is growing at an incredible rate. As of January 2021, there were 1.8 million apps in the app store alone, making it challenging for developers to gain traction and visibility through organic means alone. This quickly transformed the app marketer’s job beyond managing ASO (app store optimization) to one which is focused on building a solid UA (user acquisition) strategy that focuses on acquiring users cost-efficiently. How this is achieved in an increasingly competitive market is the big question. An important way to ensure that is to diversify your UA strategy and media mix.
The Diversification Mantra
The majority of apps outside of gaming, such as travel, music, shopping, and news, traditionally rely on search and social as their predominant sources of traffic, an approach that can drive a lot of success. Yet, while these channels may be able to generate the necessary scale, the reliance on only two distribution channels can leave apps open to risk, for example, if one channel makes an algorithm change. Therefore, it is crucial for apps to diversify their distribution channels and run campaigns on different types of media sources. This is to not only minimize their risk but also to allow them to increase reach, scale, and ROAS (return on ad spend) and optimize towards CPA, be it cost per registration, deposit, or another metric.
When looking to diversify, mobile game inventory can present a compelling case for growth. Games accounted for 40% of app downloads globally in the second quarter of 2020, making it the leading category of apps. To access in-game inventory, advertisers should look to buy through in-app ad networks. Yet, a recent study showed very low adoption rates for in-app ad networks, and therefore gaming inventory, among performance advertisers outside of gaming. Ecommerce can attribute only 0.1% of their installs to ads run on mobile gaming inventory, while music streaming can attribute 0.5%, travel 1%, and news apps 11%.
In short, most advertisers outside of gaming are not sufficiently leveraging additional distribution channels like in-app ad networks to drive growth.
The Benefits of Advertising in in-App Networks
1.Earn a competitive advantage
Social and search are the go-to for every performance advertiser, meaning competition can be high, and traffic is similar to that of every other competitor advertising on the channel. Yet, as we showed above, most apps outside of gaming are only minimally utilizing the inventory on in-app ad networks, which could give them a significant edge over other apps. There is a massive (and currently missed) opportunity to get in front of the varied audience that mobile gaming offers. The average age of a gamer is 36, with a roughly equal gender split. Break this down into a specific genre or geo, and you can most likely find a match for your target audience.
2. Generate larger scale
The impressive reach of social and search channels needs little introduction. What is less well-known is that in-app ad networks can offer a similar reach. Social is not the only channel where potential customers are hanging out. Some will be found on both social and mobile gaming, and others on only one of the two. So, by diversifying your channels, you cannot only catch your users in a place where your competitors might not be as present, but you can also reach a new and broader audience than on your standard channels.
3. Manage costs
Another benefit of advertising in in-app ad networks is that they can offer more cost-efficient growth. They provide multiple sources of inventory due to the sheer scale of mobile apps available. The variety of app categories and subcategories means that advertisers can optimize spends across a range of sources. So, if one source is underperforming, it is easy to optimize the campaign by pausing it, reducing the spend, and/or moving the budget to a different source.
Increase performance and reduce CPA
According to a study, the cost of running campaigns on in-app ad networks is 4-8 times less expensive. This is due to the UA tools available that automate and simplify bid optimization, which saves time, improves bid accuracy, and drives up installs. This automated optimization can help optimize KPIs, such as lowering CPA, improving ROAS, and increasing ARPU. It can also help increase the retention rates, making in-app ad networks a source of highly engaged, high-quality users.
Comparison of retention rates over time
A diversified user acquisition strategy is not only necessary to spread risk, but it can help with scale, reach, and profit. Today, in-app ad networks are still under-utilized by app advertisers outside of the gaming category. They represent an untapped opportunity for savvy advertisers looking to scale their growth cost-efficiently.