The rise of in-app advertising: How to target the “Ad whales”

Today’s apps have cracked the code on effective performance marketing. Nowhere is this more obvious than with video, which now captures and keeps user attention long enough that it can be monetized through advertising. And with companies everywhere taking a mobile-first approach, ad revenue has gained momentum as a viable monetization and diversification model for many app publishers.

The industry-standard is based on reporting aggregated and averaged ad revenue data. Yet this stops app publishers from tying back ad revenue data to user acquisition sources or breaking it down to any segmentation level. The data they receive is aggregated across an entire network, so in-app ad revenue is shown as equally distributed among a user base. But the majority is actually generated by a small group of users – known as ‘ad whales’. These ad whales often make up 80 percent of the advertising revenue for mobile apps.

Ad whales behave in a similar manner to paying users, the report notes, and businesses should focus on retaining these users in the same ways. These include deploying engagement strategies such as in-app messaging and sending push notifications. Pulling ad whales back into an app or game increases their exposure to ads, which whales are more likely to engage with. Similarly, app marketers should keep in mind who their ad whales are to improve ad personalization, which can also increase the likelihood of ad engagement.

Targeting ad whales can help companies navigate the fiercely competitive app ecosystem by more effectively squeezing money out of high-value users. This has been difficult for publishers in the past because ad network reports focus on averages, rather than where the majority of the revenue is concentrated. But using better metrics to reach ad whales could boost app ad monetization in two primary ways:

Increase the ROI of ad spend

Prioritizing the 20% of users that generate the bulk of their revenue rather than simply applying ads to the general user population can reduce the advertising costs associated with blanket campaigns.

Increase the average lifetime customer value

The 20% of high-value users in the first month continue to drive 67% of revenue in the subsequent month, equating to roughly six times more revenue than other users.

If marketers can’t find the valuable users who have a huge appetite for ads, they could be chasing minnows, now whales. How can marketers work out who these ad whales are – and serve them the ads they’re likely to find useful?

The solution is the user-level ad revenue tracking - it is the ability to tie back monetization revenue to the source of the user and compare it with the cost of acquiring that same person. For app publishers, it gives them an easy and privacy-compliant way to calculate ARPU and LTV. This data can then be used to calibrate their ad spend more efficiently, and to retarget more effectively.

Read the full article at WYgroup Business Intelligence.