Key App Monetization Trends to Look out for in 2019
2018 has been a remarkable year for the app industry, thanks to the dominant role played by mobile apps in most industries, the rise in time spent by consumers in-app which is more than four hours a day in emerging markets and the surge in digital ad spends toward in-apps advertisements pegged at $20 billion, all fostering the app economy to flourish and generate $92.1 billion revenue.
While new advancements and emerging technologies continue to bolster the app landscape, let’s inspect some of the key trends likely to steer the future of app industry in 2019.
IAP and In-App advertising will be offered under a single revenue management platform
In-app advertising (IAA) and in-app purchases (IAP) are the most lucrative models of app monetization. While studies indicate that rewarded video ads boost IAP, it’s difficult for developers to use both the models together. The problem is that there are different vendors for IAA and IAP, which makes it difficult for the developer working with multiple partners to cohesively understand his app audience and to collectively optimize both.
The need to employ both the methods harmoniously will soon lead to consolidation where companies providing IAA will also start offering IAP (and vice versa). This will enable developers to unify revenue management and get a single, in-depth insight on each user to maximize monetization effectively.
AI and ML will be critical for app development & monetization
Artificial Intelligence (AI) creates tailored made user experiences and has radicalized app development.
Imagine picking up groceries and walking out the same way you walked.At Amazon Go the high-tech retail store you check out by simply swiping items on your smartphone without standing in queues. This creates the most user-friendly shopping experience.
On the monetization front, AI & Machine Learning (ML) provide deep insights about each user, which enables the developer to track revenue expectation from an individual. This revenue generation happens over in-app advertising and IAP. Having a fair idea of the lifetime value of a user puts the developer in control of his monetization models.
With the power of AI & ML, publishers also receive fair prices for all their ad spots. These technologies are capable of determining the best eCPM for every impression each time, improving ad revenues.
Hyper Casual and Hard Core Action games will drive monetization
According to gaming research firm Newzoo, 76 per cent of mobile app revenue in 2018 was taken away by mobile gaming. The worldwide revenue charts were dominated by hyper casual and action games like Candy Crush Saga, Fortnite, Clash of Clans, Puzzle & Dragons and PUBG Mobile.
Our analysis of top 1000+ publishers and 1700+ free apps across Google Play and iOS store,indicates that in-app advertising is the most effective monetization method for gaming apps. Breaking it down by genre: Action (32 per cent), Arcade (22 per cent) and Casual (9 per cent) contribute the maximum to in-game ad revenues.
In-app advertising is driving revenues and contributing more than 50 per cent in most genres. For Hyper casual and Action games, ad monetization has been the most sustainable business model. While it’s the huge scale in terms of downloads that favors ad monetization for hyper casual games. We found it’s the players who prefer rewarded video ads (75 per cent) over IAP (63 per cent) for action games, watching an ad in return for an additional life or in-game reward (super-power/ weapon) is a highly valued proposition.
AR & VR powered ads will grab a significant share of the market
Augmented reality (AR) and virtual reality (VR) powered ads fit perfectly in the app environment and enhance a user’s gaming experience. While shopping apps are using AR powered ads to show shoppers how virtual sunglasses and makeup would look on their face, gaming apps are customizing player’s experience by allowing them to incorporate their own face in gameplay.
AR and VR technology ads utilize real-time data based on user preference to dynamically affect messaging, avatars, timing and placement. While it’s no news that advertisers are spending record amounts on video advertising, it will be AR and VR powered video ads that will help advertisers tighten the loop to drive interactions and engagement.
Waterfall models will decline to pave the way for programmatic unified auction
Although publishers have wholeheartedly accepted advertising as the most efficient business model, they are missing out the opportunity to maximize revenue. To achieve ad revenue profitability publishers will have to let go of the antiquated waterfall method and adopt mediation. The waterfall approach refrains publishers from reaching the highest spender, conversely, ad mediation boosts competition and optimizes yield.
Ad mediation with unified auction brings to table benefits like zero latency and real-time bidding, which are key ingredients of programmatic advertising ecosystem.