enshoo mobile app advertising trends · while this report has focused on app install ads in the...

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Executive Summary and Key Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Top Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Ad Spend and Overall Cost per Install . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cost per Install Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CPM and CPC Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Regional Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Engagement Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Focus On . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Conclusion and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ontentsC

5

CPC Trends

11

Cost per Install Trends

6

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CPM Trends

10

9

Click-through Rate

12

Click-to-Install Rate

13

Ad Spend

6

Gaming

15

Operating System

16

Search

17

Video

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FSpending in Q2 of 2016 on Mobile App Install Ads increased 54% compared to the same period last year .

FSpending and mobile app installs both reveal local peaks at the beginning of the year, likely due to a combination of new app releases and an easing of ad inventory congestion brought on by the Q4 holiday shopping season .

FWider adoption of Carousel Ads for app installs, as well as increased calls to action for Video Ads drove clicks 43% higher versus the previous quarter and 95% versus last year, and had a significant impact on increases in click-through rate and decreases in average cost per click .

FThe premium image of iOS and the combination of maturity and competition in Gaming continue to price mobile app install ads higher than Android and other verticals, both in terms of impressions (CPM) and clicks (CPC) .

Key Metrics

enshoo Mobile App Advertising TrendsKExecutive Summary

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Mobile Apps are simply part of life at this point . We use them for all sorts of endeavors, and this has provided brands with opportunities to engage with us as we embark on this handheld evolution, or even revolution . Because it really is revolutionary, or at least massively disruptive, when you consider all the different tasks or diversions immediately at hand, compared to even just a few years ago .

That delineation of “tasks” and “diversions” continues to be important to how we look at the mobile space, because there has been much digital ink spilled over just how many apps we actually need, and whether or not we already have those apps . This mostly falls into the “task” category, and it speaks to the same phenomenon we saw with the rise of social media in general . Do we really need an app for that? In many cases, yes, but as the app ecosystem matures, we’re going to see more development on the fringes of actual necessity, while bigger players own the core of the space .

In the case of “diversions,” though, anything goes . There, you are only constrained as a developer by your own imagination and creativity, although latent nostalgia for old console games certainly doesn’t hurt .

Sitting across all of this, of course, is how we advertise for these apps . In many ways, this is largely independent of the demand for apps, and one could even make an argument that it could be inversely proportional . The less essential that new app is, the more you have to work to get noticed in an increasingly crowded space . Meanwhile, big gaming apps are getting rolled out like Hollywood blockbusters .

So what does this all mean? How much more are app advertisers spending to rise above the din? And is it paying off? This report, the third installment in Kenshoo’s Mobile App Advertiser Trends series, will dig into these questions and more until your bag is full, and you’ve levelled up as a mobile app trainer.

ntroductionI

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op TrendsT

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The overall trend for mobile app install ad spending shows a slight drop in Q4, but then a strong recovery in Q1 . Compared to Q2 of last year, spending increased by 54% .

This trend reflects an emerging seasonality in the mobile app space . In short, mobile apps take a back seat in Q4, as social spend gets heavily product- and retail-focused . Once the holiday season is over, app spending makes a big splash in Q1, particularly in January .

Ad Spend

$

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Keep in mind that this is the ad spend specifically on Mobile App Install ads, and not the total Facebook and Instagram spend for these advertisers, which leads to the obvious question, “Just how much of the overall social budget goes towards this ad type?”

Overall, the share for Mobile App Install ads is up near 70%, and when you isolate Gaming advertisers—who are typically going to have a much narrower focus on driving app installs—that percentage jumps to over three-quarters of the total, hitting as high as 80% in Q1 .

Ad Spend

$


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When we look at the actual volume of mobile app installs—shown here for Kenshoo Gaming advertisers only—the overall shape is very similar to what we reported for spending . Even with the pullback in spend shown previously in Q4, the volume of installs dropped more, driving Cost Per Install higher during the holiday season, further underscoring the seasonal behavior of the mobile app market .

One other likely outcome of this seasonality is that the new year is likely to also bring new apps, and the subsequent spending blitz that can accompany a new release .


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The “new game adoption” idea can also help interpret the change in Cost per Install (CPI) over time . If we consider the end of the year to be when advertisers are pushing hard for incremental app installs beyond their core audience, those users are likely more hard to find, and it follows that they would be more expensive . A brand new title may also be more expensive to promote right out of the gate, as there is a learning curve for the audience . Once that early phase is complete, the effects of initial branding, word of mouth, and other outreach efforts will make the audience somewhat more receptive, and cheaper to acquire .

This also shines a light on why CPI is really only part of the equation . Lifetime Value (LTV) is a hugely important metric for mobile app advertisers to track, and may very well help distribute the value of app installs more evenly over the costs for a more balanced return on investment .

For example, gaming advertiser SGN partnered with Kenshoo to incorporate internal predictive customer lifetime value (LTV) data into its social campaign optimizations. By doing so, this allowed SGN to make broad optimizations across all campaigns while incorporating LTV into its bidding algorithms in order to bid appropriately based on expected return. By implementing this, the team drove a 29% increase in customer lifetime value.



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CPM Trends

The cost of reaching users with these ads shows that the mobile app market gets increasingly expensive during the fourth quarter, which is consistent with the notion that inventory is getting filled up with holiday ads that drive up prices, and also speaks to the competition for the app shoppers that remain .

Despite the increase in spending in the beginning of the year, the overall price came down as impression volume grew faster, and those impressions jumped even further in the Q2, resulting in CPM dropping $0 .67 compared to the previous quarter .


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CPC Trends

Compared to the price of impressions, the price of clicks for mobile app install ads has decreased somewhat more sharply from Q1 to Q2 of this year, largely the result of a large Quarter-over-Quarter (QoQ) spike in click volume while overall spending decreased slightly . Still, the overall shape of the trend is very similar to that of CPM .

So what does this spike in clicks (and, to a lesser extent, impressions) mean? In a dynamic market environment like mobile apps, the behavior of large-volume advertisers can have a major impact in overall trends, and several advertisers in our sample who may have only dipped their toes in app advertising a year ago have scaled up considerably.

What's more, if you are a large social advertiser entering the mobile app market at scale, your pricing strategy may be much more conservative than an early adopter who has evolved that strategy over time from a smaller budget. What looks on the surface like volatility may actually be a signal of market maturity taking hold.


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Click-through Rate

The sharp increase in clicks in Q2 also contributed to an increase in click-through rate, with reached its highest point in the last five quarters after a fairly stable trend going back to Q3 of 2015 .


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Click-to-Install Rate

The Q2 spike in clicks once again plays a major role in how often users who click on a Mobile App Install ad go on to install the app itself, driving up the denominator in the calculation of this metric and bringing down its value for the quarter . Prior to Q2, we witnessed modest increases up through Q4 of 2015, with a slight drop in Q1 where our hypothesis about new app releases would predict that users may be less enthusiastic about new titles that they aren’t as aware of .


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The predominant industry in our mobile apps analysis continues to be the gaming segment, which comprised 61% of total spend in the second quarter . Gaming advertisers have the majority of spend despite having roughly the same number of impressions as non-gaming advertisers and a smaller volume of overall clicks, and the reason is higher CPM and CPC rates .

Gaming

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Mobile App Install ads on (and for) Android devices made up the majority of impressions and clicks in Q2 2016, but higher CPM and CPC on iOS meant that over 60% of ad spend for the quarter was on Apple devices .

The two operating systems each shared about half of the mobile app installs in the quarter, although the higher prices and greater spend for iOS translates to a higher cost per install on iPhones .

In addition to the overall premium image of Apple in general, ad pricing has shown a tendency to increase somewhat on the platform with each new iPhone release, which widens the gap over Android .Operating System

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Video ads made up 42% of Q2 app install ad spend, but accounted for 58% of mobile app installs . This disparity means that the cost per install for video ads is considerably lower than for other post types, along with CPM, while CPC levels are comparable to other ads .

Video

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While this report has focused on app install ads in the Paid Social channel, Paid Search has been establishing itself as another important channel for promoting mobile apps . Across all Kenshoo search advertisers, spending on app install ads on Google increased 82% QoQ in the second quarter of 2016, and 62% over the same quarter in the previous year .

Search

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This report reflects advertisers on the Kenshoo Gaming and Kenshoo Social platforms who spent on Mobile App Install ad types between

April 1, 2015 and June 30, 2016 . For the top 50% of advertisers (by overall spend), five consecutive quarters of total paid social spending

was required . All advertisers below the 50% threshold were included . The resulting sample includes over 25 billion impressions, over 250

million clicks, and over $100 million in total paid social spend, spanning 28 countries and 15 industry categories . .

Mobile App Installs were tracked for the Kenshoo Gaming advertisers only . Please note that counting methodology for Mobile App Installs

has been modified since previous versions of this report, so results may not match earlier analysis .

onclusionC

ethodologyM

Is it possible to say a market space is both dynamic and mature? We are starting to see some core patterns emerge in Mobile App advertising around spending and seasonality, while at the same time, there is still plenty of growth and change. It sounds odd to talk about “traditional digital advertisers,” but the newer players in this particular game seem to be just that, with big volume in terms of eyeballs and engagement coupled with a lower-priced strategy that looks to be either a function of their scale, or at least of an opening, lower-risk gambit. And while focusing on this specific of an ad type does obscure at least some of the big changes in the overall paid social ecosystem, new and emerging ad units like multi-link ads and video are still having a major impact on the behavior of advertisers and the experience of advertisees. Whether it’s seeking efficiency in everyday tasks, killing time with your social contacts or obsessing over new games, there is still a growing audience for mobile apps, and it’s up to the agile marketer to catch ‘em all!

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enshoo mobile app advertising trends · while this report has focused on app install ads in the...

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