Mobile video advertising more than doubled in 2014, making it the fastest-growing category in all of advertising. But in talking to the people involved in making the segment work, you get the distinct impression that the hyper growth for mobile video ads—both as a way to monetize mobile apps and as a way to promote a product or service—has only just begun.
Here are several reasons why mobile video advertising is primed to explode:
1) Videos are among the easiest and most user-friendly rewarded ad formats
Rewarded ads—the type that offer consumers premium content or virtual currency in exchange for their engagement—have become extremely popular in mobile apps as freemium developers realize that rewarded ads not only monetize a greater proportion of their user base but also help provide a better overall user experience. By offering a free way to access premium content to those users who don’t necessarily want to pay for it, rewarded ads enable users to engage more deeply in freemium apps than they’d be able to otherwise. And while all rewarded ads add value to the app experience, videos are among the most popular type of rewarded ads because they require very little time or effort to complete and because they also provide entertainment value, especially when they are targeted to match the audience’s interests. All of which means we’ll be seeing a lot more rewarded video ads in 2015.
2) Developers are smarter about when and where to integrate video ads
Not only are videos a more user-friendly format than most types of ads, but as developers become more sophisticated about when and where to integrate them into their apps, they are becoming more relevant to the in-app context as well. Video ads work best when they are integrated into the app in a seamless, non-intrusive way, and developers are learning to deliver videos at specific moments that provide the perfect context. Say a gamer lost their last “life” in an action game and wanted to extend their gameplay. The developer could offer them the chance to watch a quick video in order to earn an extra life. Another user might want to access a premium feature but doesn’t want to pay for it. They could watch a video or two and gain access to the locked content. The technology is now available to let developers deliver contextually relevant, well-timed rewarded video ads, which helps them monetize more users. It also enables brands to be seen as heroes. Everybody wins!
3) Brands are shifting their ad dollars from TV to mobile
The titanic shift that advertising pundits have predicted for years has finally begun. With many big brands catching on to the fact that consumers now spend more time on their mobile devices than watching TV, they are beginning to shift their ad budgets accordingly. The IAB polled 5,000 senior advertising execs and found that 75 percent plan to shift their budgets from television to digital video ads, while eMarketer (News - Alert) predicts that by 2018, spending on digital video advertising will eclipse television spending for the first time. At least half of those ad dollars will go towards mobile, which means that 2015 will see more brands like Disney (News - Alert), Banana Republic, Lancome, Clorox, Samsung and others dedicating a greater percentage of their budgets to mobile video ads.
4) App trailer videos are becoming the best way to drive high-value installs
Many app marketers have shifted their focus from quantity to quality, and they have discovered that video trailers are perhaps the best way to drive high-value new installs—from users that tend to stick around longer, engage deeper and monetize more effectively. A good trailer video not only shows off an app’s gameplay and mechanics way better than any static banner or text ad ever could, but it also allows the viewer to make a more informed decision on whether or not the app suits their tastes. With more app developers marketing their apps with trailer videos, the increased inventory and bid rates will lead to more revenue for the app publishers promoting those trailers.
5) The broadband 4G LTE infrastructure is ready
Wireless carriers such as Verizon, AT&T (News - Alert), Sprint and T-Mobile are all aggressively deploying 4G LTE networks throughout the world. At the 4G World/Tower and Small Cell Summit last September, it was reported that there were 280 million LTE (News - Alert) subscribers across 320 commercial networks operating in 111 countries. 4G LTE—“4G” standing for “fourth generation” and “LTE” for Long Term Evolution”—is shorthand for a technical process that enables wireless users to download content at speeds four to five times faster than 3G networks. That’s pretty close to the speed of many home broadband connections. With a large-spread 4G LTE infrastructure in place, hundreds of millions of consumers are now able to download apps, surf the mobile web, and, yes, stream video ads much faster and more efficiently than ever before.
6) Back-end tools are making video advertising more effective
As ad-tech platforms become increasingly sophisticated, the overall monetization and conversion performance of video ads is becoming more effective. Better targeting options are available to make sure users are shown ads most likely to be of interest. Frequency capping options guarantee that no single user is shown the same ad too many times. More powerful analytics tools enable developers to measure the impact of video ads and make important adjustments accordingly, and mobile marketing automation tools enable marketers to achieve one-to-one marketing at scale across their entire user bases. With these and other tools now on the market, we can be confident that video ads are reaching the right users at the right time and in the right ways.
According to eMarketer, mobile video advertising is projected to more than double again by 2018. To see that kind of growth come to fruition, developers, advertisers and technology providers will have to continue pushing for the type of innovation that the sector has delivered so far. But as long as the six trends outlined above continue, we are well on our way.
Steve Wadsworth has been an influential senior executive and leader in the Internet and interactive digital media industry since 1995.
Steve has service on the Tapjoy Board since 2011, and prior to that he was president of Disney Interactive Media Group, where he was a pioneer for the company’s digital media and technology business including more than 11 years as Disney’s chief Internet and digital media executive.
Steve is a frequent spokesperson on Internet and digital media issues and guest speaker at Internet industry forums.