Brief:

• More than three quarters (77%) of brands have asked their media agencies to buy in-app ad placements due to their favorable metrics, according to a Sapio Research survey commissioned by Fyber and shared with Mobile Marketer. In-app ads can improve campaign ROI by an average of 41%, the survey found.
• Almost all (93%) media agencies and 86% of brands and advertisers said they plan to place ads in gaming apps because they have highly engaged users. In-app inventory will account for 43% of overall digital advertising budgets within the next five years, up from 34% currently, per the survey.
• Young adults ages 18 to 24 are more likely to engage with in-app ads than those on the mobile web, while 25- to 34-year-olds are more likely to engage with a mobile web campaign, the survey found.

Insight:

The study commissioned by Fyber suggests that in-app advertising is likely to grow as younger consumers continue to drive the shift in mobile-first media. Agencies and buyers consider in-app ads to be the best way to reach and engage on-the-go audiences, and in-app ads are more reliable than mobile web browser advertising. But the mobile web currently has a bigger share of the U.S. media budgets at 47%, compared to 29% for in-app advertising. As brands ask their agencies to buy in-app ads, these percentages are likely to shift, the survey suggests.

Among geographic regions, U.S. media buyers are leading the shift toward in-app ads. About a third (32%) of U.S.-based buyers spend 50% or more of their ad budgets on in-app advertising, 10 percentage points higher than U.K. buyers who are the second-highest spenders among the countries surveyed. In addition, 39% of U.S. media buyers include in-app ads in their media plans at least half of the time, the survey found.

For app developers, in-app ads will likely become a more important source of revenue. Many apps need to overcome monetization challenges by maximizing revenue from purchases, subscriptions, in-app purchases and in-app ads, a separate study from measurement platform AppsFlyer suggests. Revenue from app marketing has surged 80% since 2016, but developers still face challenges in boosting user loyalty, retention and profitability. Less than 4% of gamers make in-app purchases, though that group of people are a key target for gaming app advertisers, which is likely why Facebook and Google this year have expanded ad opportunities in mobile games on their platforms.