In-app ads fastest growing sector of mobile advertising

Someday we may live in a world where ads aren’t pesky, interruptive distractions.

Spending on in-app advertising is expected to reach $17 billion by 2018, according to a report by Juniper Research. This amount is up dramatically from the $3.5 billion spent in 2013, and makes in-app advertising the fastest growing sector of the mobile advertising market.

Mobile advertising, to put it simply, is where the money is.

Juniper predicted in October that mobile advertising will grow over 300 percent to $40 billion over the next five years. Facebook went from almost no mobile revenue, to a whopping 41 percent of its revenue coming from mobile apps, and a third of Google’s paid clicks are now on mobile devices. 

Within the world of mobile advertising, experts view in-app advertising as the future. App ad company MediaBrix found that in-app ads can yield 20 percent engagement and 2,000% higher click-through. Consumers would rather see ads than pay for apps, however banner ads are easy to ignore, and interruptive ads are irritating.

In-app advertising is [ideally] more effective because it enables advertisers to target people with the right ad at the right time — capturing their attention without being annoying, encouraging interaction, giving them greater control over the situation.

As VentureBeat’s John Koetsier put it, we like ads don’t suck, fit into our current context, and give us something we want. Shocking.

Juniper said advancements in “rich media ads” (meaning ads that expand when users click or roll over them, and provide interactive content) have contributed to the growth of in-app ads. Rich media ad spend is expected to surpass display ad spend by 2018.

Another factor here is improved targeting capabilities.

The report’s author Sian Rowlands said that there is a clear trend towards “utilizing location-based advertising to drive greater relevance.” Advertisers and ad networks now have the ability to collect and process large amounts of consumer data, and quickly leverage that information into a targeted ad.

Finally, Juniper argues that tablets will “propel” spending on in-app ads. According to the report, smartphones currently account for around 70% of in-app adspend. CPMs (cost per 1,000 impressions) are higher with tablets than smartphones, particularly for rich media ads, and by 2018, the tablet/smartphone adspend split will be 50/50.

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