Study: Video ads see 7.5X higher CTR than display

Brief:

The average click-through rates (CTR) of video ads in mobile apps are 7.5 times higher than for display ads, per a study that ad platform Smaato and app marketing firm Liftoff shared with Mobile Marketer. In addition, rewarded video ads cost as much as 86% less than video ads, despite similar conversion rates across key performance indicators.
Interstitial display ad eCPMs are 4.6 times greater than banner ads, while interstitials saw an average CTR that was 18 times higher than for banners. Interstitial, native and banner display ads offer very similar cost per actions, such as install, registration and purchase.
Apple's iOS devices have higher costs and better conversion rates than Android devices among all ad formats. The study is based on 3 trillion ad requests on Smaato's platform in Q1 2019 and more than 80 billion ad impressions from Liftoff.

Insight:

Mobile marketers need to consider the trade-offs between spending more money on video ads and the possibility of generating higher CTRs than for display ads. Smaato and Liftoff's report suggests that rewarded video ads, which urge viewers to watch an ad in exchange for in-app rewards, can be a cost-efficient way to reach app users while they're engaged in app content like games.

The findings confirm other research that shows viewer receptivity to opt-in video ads. Almost 80% of consumers that watch digital video are agreeable to ads in exchange for free content, according to the Interactive Advertising Bureau (IAB). More than half of these viewers revealed a preference for contextual video ads, and 37% said they're more receptive to ads when they are targeted around their personal interests.

Video ads on mobile devices are key to reaching tech-savvy, on-the-go consumers. Digital video ad revenue surged 37% to $16.3 billion in 2018 from $11.9 billion a year earlier, surpassing the growth of all other formats, according to the IAB. Almost two-thirds (63%) of video revenue came from mobile, up from 52% in the prior year, and a similar number (62%) of video starts occurred on mobile. Furthermore, mobile video ad spending in the U.S. is forecast to rise 56% to $24.8 billion by 2022 from $15.9 billion this year, according to researcher eMarketer. Spending on social video ads will grow 44% from this year to reach $14.9 billion by 2021 as brands aim to reach younger audiences who spend time on platforms like YouTube, Facebook, Instagram and Twitter, per a separate eMarketer forecast.

Tech giants like Amazon, Facebook and Google are supporting the growth of mobile video ads in a variety of ways. Amazon is making a stronger pitch for video ads this year, according to materials cited by Business Insider, as the e-commerce giant seeks to fuel its fast-growing ad sales business. Google — which commands an estimated 37% of the U.S. digital ad market but faces slowing revenue growth — is responding to Amazon's threat by introducing shoppable recommendations in YouTube videos, making six-second bumper ads easier to create and rolling out video ad formats that are more transactional. Facebook is supporting video growth with premium video ad sales, an updated video-ranking system to help drive viewership of videos and its "Thumbstoppers" initiative in India, a key growth market for the social network, to challenge ad agencies to create compelling 10-second ads tailored for mobile viewing.

The rising number of smartphone users and time spent watching mobile video will underpin that growth, especially as high-speed 5G networks expand nationwide to deliver richer content in a snap. The average U.S. adult will spend about three hours and 43 minutes a day with mobile devices this year, excluding voice, while about 80% of that time will be spent with apps, eMarketer forecast. Cellular carriers like Verizon, AT&T, Sprint and T-Mobile are gradually expanding 5G service across the U.S. over the next few years and debuting high-speed mobile devices to match.