From iAd to AOL, developers should be taking notice of the shifting mobile ad market
It's no secret that advertising continues to play a major role in the business plans of most mobile app developers, at least those targeting the consumer market. Indeed, according to a report issued last year by mobile ad company Millennial Media, 85 percent of developers and publishers monetized their apps in some way, up 12 percentage points from the previous year. Further, 82 percent of those developers who monetized their apps did so via in-app advertising -- far outstripping the 34 percent who relied on paid app downloads and the 40 percent who used in-app purchases or the sale of virtual goods to pad their wallets.
Thus, since so many developers rely on advertisements for their livelihood, it's important for developers to know what's happening in the mobile advertising space. And there's a lot that's happening in the space.
The biggest news to hit the scene in recent months was a report that, after six years of trying to gain market share with an end-to-end mobile advertising solution, Apple (NASDAQ: AAPL) will reportedly stop directly selling units of its iAd business.
BuzzFeed reported that the iPhone maker plans to stop being directly involved in the creation, sales and management of iAd units, leaving those responsibilities to publishers. Citing "multiple sources familiar with the company's plans," BuzzFeed said Apple will phase out its sales force completely as early as this week and will update its ad platform to enable publishers to sell through it directly. Publishers will pocket 100 percent of the revenues they generate.
Apple subsequently confirmed the news.
As BuzzFeed pointed out, the shift by Apple likely will result in happier advertisers -- and that likely will trickle down to app developers themselves in the form of more ads and more money from advertising.
Aside from Apple's iAd adventures, there are other signs that the mobile advertising space is evolving. For example, Verizon last year bought both AOL and Millennial Media, two major players in the mobile advertising space. Verizon's purchase of those companies is explicitly an effort by the telecommunications giant to improve its own standing in the space, and pave the way for its own advertising plans, but it also reflects the maturation of the mobile advertising sector in general. And that will likely further entice deep-pocketed advertisers who may have so far shied away from the general tumult in the mobile advertising marketplace.
And who are the other major mobile ad players in the United States? Google, Facebook, Twitter, Yahoo and Apple's iAd rounded out the top five in 2015, according to their respective net revenues from mobile ad sales in the United States.
One more data point on the mobile ad market comes from eMarketer, a major research firm that tracks the digital ad space. "This will be a benchmark year for ad spending in the US, as mobile surpasses desktop spending for the first time, eMarketer predicts. Mobile will account for 51.9% of total digital spending in 2015. That's a higher figure than eMarketer forecast earlier this year," the firm said late last year.
So what does all this mean for mobile app developers? First, it means that technology companies like Apple may no longer be able to dictate the development of the mobile ad market -- as BuzzFeed notes, advertisers often chafed under the strict development guidelines Apple placed onto its iAd business. Secondly, the consolidation in the space, with Verizon snapping up AOL and Millennial Media, likely reflects the segment's maturation, as well as a blurring of the lines between mobile ads, desktop computer ads and video ads. After all, the top mobile ad players today -- from Google to Facebook to Verizon -- all also offer advertising options for tablets, desktops, wearables and other computing devices. Advertisers likely will be more willing to push their ads into mobile apps if their advertising partners are established companies with wide-reaching operations.
But it's eMarketer's statistics that ought to resonate the most with developers: "The shift to mobile ad spending is being driven mainly by consumer demand," the firm said. "eMarketer estimates that US adults are spending 2 hours and 51 minutes a day on nonvoice activities on mobile devices. More than half of that, or 1 hour and 31 minutes, is spent on mobile phones."
More ads and ad dollars are coming to mobile like never before, and those app developers that prepare themselves for the shift likely will benefit. Now may well be the time for mobile app developers to invest in technologies that smoothly and easily display, manage and track mobile ads. --Mike