Mobile video ad spending triples in 2015, and that’s just the beginning

Mobile video has tons of momentum. It more than doubled from 2013 ($720 million) to 2014 ($1.5 billion) and is predicted to reach $6 billion by 2018, which would put it at about half of all online video spending. Those are huge figures, and what’s amazing is that they may be way too conservative. A new study by AppLovin and AppsFlyer, mobile marketing and mobile attribution companies, examines data from over one billion devices worldwide and found spending on mobile video ads has actually grown from 23 percent of mobile ad spending to a whopping 66 percent of total ad spend. That’s a 190 percent increase in just a few quarters.

There are plenty of factors contributing to why 5-inch videos are becoming so popular, such as explosive mobile device usage and better broadband coverage. There’s also the fact that users spend around 86 percent of their time in applications, which gives marketing and attribution partners like AppLovin and AppsFlyer critical data to serve up more contextual advertisements.

According to Ran Avrahamy, AppsFlyer’s head of marketing, “Videos ads are able to demonstrate what an app is truly like way more effectively than a text ad or a static display ad. It gives the user a chance to see the app in action and get a good sense of its graphical movements, its gameplay, or whatever its best features are. So when a user chooses to install an app after watching its video trailer, they’ve already decided that they’re interested in it and the chances are pretty good they’ll like it once they start using it. With other types of ads, the user has to take more of a leap of faith that the app is something they might like.”

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However, in this case, the drivers aren’t as important as the massive opportunity this growth presents for mobile marketers. Avrahamy explained, “Most marketers already realize that videos are growing fast because they’re the ones shifting their budgets toward video. If they aren’t yet, they should be. App publishers or developers can capitalize on this trend by making sure to integrate more video ad placements into their apps. Any innovation will come mostly from how publishers choose to integrate video. We are already seeing things like new native placements which offer a far more engaging and seamless way to engage with the content, in addition to direct-play videos, and video-like features such as animated gifs, motion-driven ads. As more developers integrate video ads into their apps in unique and contextually relevant ways, the performance of these ads will only get better.”

There were some other interesting findings in the study, like that gaming advertisers — who are generally on the cutting edge of mobile marketing — saw global spend on video rise from 20 percent of ad spend in Q1 to an amazing 71 percent of total mobile ad spend in Q3.

AppLovin and AppsFlyer have access to hundreds of billions of data points detailing the usage and retention of mobile users. AppLovin’s platform provides marketing automation and analytics for brands who want to reach their customers on mobile. The company does attribution, targeting, and user acquisition. In the mobile ad space, many firms offer one or two of those but not all three. We’ve studied the solution in detail — and while Facebook is responsible for about 50 percent of mobile video ad spending, AppLovin is a significant player in the space, on track to about $200 million in revenue in 2015, with huge customers like Disney, Uber, Pandora, and others. In fact, the company is one of four user acquisition partners (out of probably a dozen) with a known scale of over 2 billion impressions monthly, besides Google’s AdMob (the others being Vungle, Chartboost, and AdColony).

AppsFlyer, on the other hand, specializes in mobile attribution. In our research on the mobile advertising space, we consider these companies as sort of ‘digital cops’ in your mobile advertising stack. Companies such as Mobile Majority, Telemetry, White Ops, GeoEdge, Kochava, Integral Ad Science, and DoubleVerify are right in the mix as well. But pure attribution partners like Tune, Apsalar, and AppsFlyer can also help, since they identify where you’re actually generating tangible results with your ad spending.

Obviously, it’s a crowded, overlapping space for marketers and publishers. But the data shows that there’s a huge opportunity on its way, provided that, as a marketer, you’re armed with the knowledge to tap these tools to your advantage.