Monday, December 08, 2014

Zappos' Holiday Pop-Up

Zappos is shaking things up this holiday season with the opening of its first pop-up store.

The pop-up opened November 21st and will be open through December 31st. It's 20,000 square feet and just like Zappos.com, the store will be open 24 hours a day, 7 days a week! Though Zappos is known for its shoe selection, the pop-up focuses more on its clothing merchandise.

The space is being run in partnership with start-up OrderWithMe. The startup (which just raised $28 million) pairs large online retailers with smaller physical retailers, with the smaller retailers serving as shipping nodes with product in back rooms to help online retailers execute on a same-day delivery promise. The large online retailers benefit by having a partner in the complicated logistics of executing same-day delivery, and the smaller retailers win because the alliance provides them with an additional source of revenue.

Though their partnership with Zappos is of a somewhat different nature, the project is serving to drum up a lot of publicity for both partners as eyes look to see if Zappos' physical store will be a success (and lead to new locations) and a whole new audience is being introduced to a new player that may significantly change the retail landscape.

Source: http://venturebeat.com/2014/11/19/a-zappos-pop-up-shop-becomes-a-test-to-change-the-nature-of-mom-and-pop-retail/


Good Disruptors Disrupt Themselves

In the age of digital and disruption, we can get hung up on worrying about what the next trend is that may disrupt established players or even growing players as industries change and move more rapidly than ever before. To brands everywhere: take a page out of Amazon's playbook and not be afraid to disrupt yourself. Amazon has been intentionally cannibalizing its products to draw retailers into its ecosystem with its next big disruption--drug and grocery. It has been building up this side of its business quietly for awhile, but now it is truly getting aggressive. Amazon isn't afraid to take new trends head on even if it means hurting their current strengths. They aren't afraid to pivot. Netflix is another great example... a business that completely disrupted video and film to the point of putting Blockbuster out of business to disrupting its own core offering that dethroned the giant blue-and-yellow brand by offering streaming footage instead of just its DVD delivery service. Great disruptors are not afraid to disrupt themselves when there is disruption going on around them.

Digital Advertising Spend Catching up with TV advertising



Throughout the semester we have discussed the plethora of forms of digital marketing, and tools used by advertisers to reach consumers. The increasing dominance of mobile has sent advertisers through the loop, increasing their digital spends, and now figures have come out to show that for the first time digital will equal the powerhouse of TV as the most revenue generating advertising form.

According to an article released today by Bloomberg, in 2019 thanks to increases in spending on mobile and social media, the increased spend is projected to equal the outlays for television. This equaling is occurring much sooner than many experts had expected, and is driven almost entirely by the smartphone. Users continue to become more and more attached and engaged with their smartphone, spending more time looking at its small portable screen, than the TV screen.

We have seen the transition from desktop to mobile advertising, so it will be interesting to see mobile continue to rise and dominant the advertising landscape, surpassing television. Advertisers faced challenges transitioning from the size of the desktop screen to the small mobile screen. That said transitioning from a TV screen, and keeping consistent messaging and quality on the mobile screen will provide some hurdles, but companies that are smart will begin innovating and testing these strategies now.

Next up, one has to wonder what will be the digital equivalent of the SuperBowl? Advertisers prepare to whip out your checkbooks…

Mobile Takeover of Total Spend = a Question of When

According to Shop.org executive director Vicki Cantrell, “Retailers have to continue to invest to make sure they get their mobile offerings right, or will increasingly risk alienating customers and leaving significant money on the table.”  Regarding online purchases, the following breakdown shows shoppers making at least one purchase online in Q2 2013:

69% of desktop shoppers
34% of tablet shoppers
21% of smartphone shoppers

The top reason consumers visit sites is to price compare and look for any online discounts. The comScore mobile commerce report also shows that smartphone users use it for the following:

35% for store location
24% to find coupons and deals
19% to look up product availability

In terms of categories, apparel and accessories (37%) and event tickets (25%) were among the top products of smartphone shoppers.

The big difference in between time spent and sales is that smartphones are used for research still. Tablet shoppers spend 18% more. Conversion rate is also lower in for smartphone shoppers 0.92% vs. tablet shoppers. Nevertheless, desktop search will be declining (Google spend will drop to 66% from 76%) as Google mobile paid clicks will soon take over (rise to 1/3 of all spend).  eMarketer estimates that desktop search ad spending will fall to $1.4 billion in 2014, a drop of 9.4% from last year. Mobile search, however, will increase 82% with total mobile search up to $9 billion (vs. desktop search of $14bn).  Key contributors to this growth include Enhanced Campaigns and Product Listing Ads (PLAs), both of which contributed to increased click share on mobile throughout 2013 and will continue to grow.

As more consumers spend time on mobile phones and tablets, advertisers are quickly to adjust as well. They are playing catchup with new consumer habits and user behaviors to boost up the current average low single digit mobile spend budgets. Soon the advertisers will be expected to shift the majority of their spending and search dollars toward mobile. It’s just a question of how soon. 


Here's How GM Uses Social Data to Improve Cars

Brands employ Twitter and Facebook feedback in new ways

When owners of the new Chevrolet Trax drive off lots in January, they will comment on everything from its built-in WiFi to its trunk space on Facebook, Twitter and auto blogs. Like all marketers, General Motors will keep an eye out for recurring complaints about features; but unlike most, the carmaker will troubleshoot and make alterations at its factory in real time.

Brands increasingly are taking social sentiment seriously, and GM is among those closing the loop between customer feedback and its engineers.

 

After GM’s latest Cadillac Escalade hit the market in September, the passenger-side backseat’s cooling-ventilation system was actually heating up the seat directly in front of it. And in no time, Drake and her team of 20 could see on their Oracle-powered data dashboard that a wave of owners were posting about the flaw via social sites. She alerted the engineers, and repairs were made on the Escalades that were shipped to dealerships a few weeks later.
Similarly, the latest Chevy Silverado drew the ire of owners in southern states because the steering wheel had been designed with metal. "It got warm to the touch," Drake explained. "So the team was able to feed that information back to product development, which looked at it and then [nixed] that steering wheel as an option."
The retail sector is also improving customer service thanks to real-time pushback.

And Five Guys is currently testing milkshakes thanks to fans clamoring for frozen treats; the move came after data-driven decisions this year to add a smaller fry option to the menu and add more Coke "freestyle" soda machines. While working with tech firm NewBrandAnalytics, the burger chain observed that the freestyle machines boosted positive social sentiment by 20 percent. Additionally, Facebook and Twitter posts have led to fine-tuning Five Guys' soundtrack.

Of course, these data-based decisions are more about gross revenue than grunge riffs. So do they make cash registers ring? GM's Drake thinks so. "That social relationship proves valuable for sales consideration and retention," she said.

 

Despite Popularity, Content Marketing Is a Fraction of 2015 Budgets

Despite Popularity, Content Marketing Is a Fraction of 2015 Budgets

Content marketing refers to articles, blogs, videos, pictures and other items generated by brands in order to engage audiences in the same way that a media company does. Content marketing purpose is to increase consumers' interaction and bonding with brands, while providing relevant information that is organic to the digital channels. Content marketing is among the hottest topics in the marketing a media. Nevertheless, a recent report from eMarketers encountered that 52% of marketers said one-quarter or less of their 2015 marketing budget is dedicated to content. Therefore, budget destinated to content marketing don't seem to have caught up with the hype yet.


Read the complete article: Despite Surging Popularity, Content Marketing Is a Fraction of 2015 Budgets
Source: Sebastian, S. (December 3, 2014) Ad Age. Despite Surging Popularity, Content Marketing Is a Fraction of 2015 Budgets

DLC, season passes, and expansion packs: It all comes down to how we play

Downloadable contents ('DLC's) have become a central part of how game publishers earn an additional revenue stream on top of title sales today. Basic concept of DLC is to introduce new costumes, items and extra stages/movie clips either by purchasing or accessing download section within the games that users purchased. They've even gone as far as to offer different packages for different types of consoles or PCs, and even selling these contents before the actual game itself is sold. This is bringing a bit of controversy in gaming communities, as the publishers are criticized for taking advantage of the heavy users. Then again, for publishers of games that are not charging users on a monthly basis, DLC is one way to monetize on their short-lived shelf life.
Attached is an article from Venturebeat regarding DLCs. Hope you find this article as interesting as I did.
http://venturebeat.com/community/2014/09/16/why-sason-passes-make-sense-console-vs-pc-post-launch-content/
Announcing downloadable content packs and season passes before a game is even out gives a lot of people the feeling that the game released on Day 1 is incomplete. They believe that the “extra content” is a ploy to charge more for the complete game. Some people just wait until Game of the Year editions come out so they can have all the content on the disc.
When you think about it, a season pass is really just an expansion pack you pay for at release and get later in pieces. Traditionally on PC, though, expansion packs aren’t even announced until after the base game is out. Why get people to pay for future expansions upfront instead of just selling them expansion packs later on?
How people interact with console games changes how publishers think they need to sell extra content. Basically, most console games see their player bases drop off dramatically pretty soon after launch, so publishers need to sell as much extra content as possible as early as possible. I think Microsoft even used to suggest that publishers release DLC less than 30 days after a game’s release.
It’s impossible to get any DLC out in that time unless it’s developed almost concurrently with the game, thus fueling the perception that the initial release is an incomplete product. Thus, season passes get people to pay for DLC immediately so developers can put more time into it. Nintendo has a policy of not starting DLC development until the base game ships, so that idea works perfectly for it.
PC-centric developers, however, can keep announcing and releasing expansion packs for games that are months or years old because players on PC tend to keep playing their games for longer. Firaxis was able to release an expansion pack for Civilization V almost three years after the base game’s launch because it’s still one of the most played games on Steam. Then, of course, you have the 7-year-old Team Fortress 2 and its hundreds of updates since 2007.
Console game publishers don’t often see that kind of player attachment, but I think a few do. It’s true most console games aren’t played for as long as most PC games are, with some exceptions. Ubisoft announced and released Far Cry 3: Blood Dragon months after Far Cry 3’s launch, and the company later reported that the expansion increased sales of the base game. What made that work? Street Fighter IV is the only recent console game I know of that can sustain expansions released for it six years after launch. I imagine other supremely popular multiplayer console games could allow the same treatment to work if publishers believed it. Activision repeats the base game, season pass, and DLC cycle roughly every 12 months with Call of Duty, but each of those games remains popular for years. Then again, Activision already gets so many people to pay $60-plus every year.
For this mentality to change, we would probably have to see a change in how long console players hang on to their games. We would have to see more games that actually sustain lasting communities on consoles the way Street Fighter IV has. I’m not sure if this would require an initiative from publishers or consumers.
Should players be less eager to trade in their discs after completing games? Or should publishers try to make games with more replay value and support them with DLC over longer periods of time, leading to fewer full sequels and annualized franchises?

Saturday, December 06, 2014

Cyber Monday online and mobile results

Holiday shopping on the Web rose 17 percent to a record $2.04 billion on Cyber Monday, researcher ComScore Inc. said, as consumers took advantage of online deals.

Monday December 1st known as Cyber Monday because of a surge in online retail sales — remains the busiest Internet shopping day so far this year, topping Black Friday’s $1.51 billion in desktop Web sales. Still, growth on the Monday after Thanksgiving is slowing as consumers spread out their purchases to other days. On the same day last year, online retail sales on desktop computers rose 18 percent.

Shoppers have been responding to earlier promotions at e- commerce websites such as Amazon.com Inc., which kicked off its holiday deals a week before Black Friday. As consumers’ spending creeps earlier in the month and includes Thanksgiving Day, the Cyber Monday peak is becoming less pronounced.

ComScore measures online retail sales from desktop computers, so its numbers exclude mobile purchases. Shopping on smartphones and tablets accounted for 22 percent of all online sales on Cyber Monday, according to International Business Machines Corp.

Online spending on Thanksgiving Day jumped 32 percent to reach $1 billion for the first time, and Black Friday spending increased 26 percent, according to ComScore. Online spending from Nov. 1 through Cyber Monday totaled $26.7 billion, up 16 percent from the same period last year, ComScore said. That compares with last year’s growth rate of 8 percent.

Online retailers have an advantage over those that combine e-commerce and brick-and-mortar stores, which have had a disappointing start to the holidays because of slow foot traffic at physical locations. Total retail spending fell 11 percent from a year earlier to $50.9 billion in the four-day period from Thanksgiving to Sunday, the National Retail Federation said. It was the second year in a row that sales declined during the post-Thanksgiving weekend. The NRF had predicted a 4.1 percent sales gain for November and December — the best performance since 2011.

Sales at online clothing retailer JackThreads, which targets the millennial male, were up 43 percent on Cyber Monday, said Ryan McIntyre, executive vice president of marketing. Shoppers are snapping up inexpensive suits that start at $100, as well as jackets and boots to prepare for winter.

Amazon and other online retailers offered deals before Black Friday, when stores traditionally began offering holiday discounts. Brick-and-mortar retailers like Wal-Mart Stores Inc. and Target Corp. also started their deals earlier this year, both online and in stores.
Seattle-based Amazon’s sales for the five-day period through Cyber Monday increased 23.8 percent, higher than the broader e-commerce industry’s growth of 20.6 percent, according to ChannelAdvisor Corp., which works with merchants to increase sales. EBay Inc.’s sales for the same period grew 20.5 percent.
Amazon benefited from early promotions, with its largest sales increase on Saturday. EBay, based in San Jose, California, saw its biggest sales gain — 32.3 percent — on Cyber Monday, helped by limited inventory of in-demand toys like the Zoomer Interactive Puppy and some gaming consoles, said Scot Wingo, chief executive officer of ChannelAdvisor.
Source: http://www.businessoffashion.com/2014/12/cyber-monday online-sales-rose-17-2-billion-comscore-says.html

Yahoo is going to pass Twitter in U.S. mobile ad share

Yahoo Chief Executive Marissa Mayer has made mobile advertising the centerpiece of her turnaround efforts. Next year, Mayer is poised for some mobile ad bragging rights.
Yahoo is set to pass Twitter in share of the U.S. mobile ad market by 2015, according to research firm eMarketer. Yahoo’s mobile ad revenue will make up 3.74% of the U.S. mobile ad market next year, edging past Twitter, which will hold a 3.69% share, eMarketer predicts.
To be sure, both Yahoo and Twitter are nowhere near the top two market leaders. Google and Facebook will make up 35.17% and 16.68% of the U.S. mobile ad market in 2015, respectively.
Yahoo in October said the company generated third quarter mobile sales of $200 million, or about 17% of the company’s overall revenue. Yahoo has invested heavily in mobile, and this summer acquired mobile ad network Flurry in an effort to better compete with Twitter, Facebook, and Google, which operate similar products.
Yahoo’s mobile display advertising will grow faster than its mobile search business, where it currently holds a stronger position, according to eMarketer.
As big Web companies jockey for position, the overall mobile ad market is set to grow 50% in 2015, reaching $28.5 billion, the research firm estimates. Mobile advertising has been a red-hot growth story as of late, and this year ad spending on smartphones and tablets surpassed traditional categories like newspapers, magazines, and radio.
Source: http://blogs.wsj.com/digits/2014/12/05/yahoo-twitter-mobile-ad-revenue-emarketer/?mod=ST1

Friday, December 05, 2014

This week in digital marketing...

Here are this week's 10 most interesting stats from the digital marketing space, including a few early holiday season returns and some intriguing numbers around Facebook ads. Check them out below.
1. File this under "not shocking but still compelling:" The Exchange Lab, a programmatic digital media company with cross-client aggregated data, said that e-commerce conversion rates on Black Friday were up 60 percent compared to the previous Friday (Nov. 21). And the company noted that online advertisers on Cyber Monday got a 20 percent lift in conversions when contrasted against the previous Monday (Nov. 24).
2. Tech vendor MarketLive's analytics showed that retail sales from smartphones and tablets increased an average of 141 percent during the weekend following Thanksgiving through Cyber Monday.
3. The peak hour for Cyber Monday email was 7 a.m. ET, when 10 percent of messages flooded inboxes, according to MarketLive.
4. Heineken thinks Facebook's nascent auto-play video ads can take a chunk out of YouTube's business. Here's why: While pushing Heineken Light to 21 to 34 year olds in the United States in October, the brand's digital spots—in three days—were exposed to the newsfeeds of 35 million Facebook users, producing 5.5 million views, according to brewer. That means 16 percent of the people reached watched the spot.
5. Another interesting case study this week featured Five Star, the school supplies seller. The company employed video ads via various mobile apps, along with "brand ambassador" posts from Keegan Allen of ABC Family's Pretty Little Liars on Facebook, Twitter and Instagram. According to its marketing services provider, ROI Influencer Media, the effort allowed Five Star to reach 54 percent of people between 13 and 21 years old who used a mobile phone or computer during Back to School time in August.
6. Turkish Airlines' spot with global fútbol stars Lionel Messi and Didier Drogba has garnered a ridiculous number of YouTube views. It has been watched 60 million times since being uploaded on Nov. 14.
7. Victoria's Secret picked up 138,000 Instagram likes and comments during the week of Nov. 24 by putting 20 supermodels on a plane to London and posting a 15-second video of them. That's far above average for the lingerie brand on the social media platform. Read more about how social and aircraft cabins just seem to work well together here
8. During the third quarter this year, Nielsen said that Americans increased their digital video viewing by four hours a month compared to 2013.
9. The same Nielsen report said the average daily time spent watching live TV decreased 12 minutes in Q3 compared to the same period last year. Conversely, the time that consumers spent daily viewing a smartphone increased 23 minutes, from 1 hour and 10 minutes to 1 hour and 33 minutes.
10. 223,000. That's the impressive number of Instagram followers married creatives Carli and John Kiene have attracted. While they are seemingly virtuosos, a lot of their work is in the food category.

Source: http://www.adweek.com/news/technology/10-must-see-digital-marketing-stats-week-dec-1-5-161813

Thursday, December 04, 2014

App Annie launched an improved version of its audience intelligence service

App Annie is a player in the app analytics and market intelligence industry. It is one of the largest players in this industry and it sees over 640'000 apps and 60'000 publishers and very large companies like BMW, Samsung or Tesco rely on it. The current version of the app allows app developers to better understand their user’s demographics and preferences. App Annie tracks trends across the total app market and notices all the downloads. It can for instance say that 2/3 of iOS "travel apps" were downloaded by men during the last year and of that category, 2/5 of the downloads came from men aged 35 or higher.

App Annie recently announced that it is extending its services with a launch of a new Audience Intelligence service. This new service will not only be able to track downloads for age and gender, but will newly be able to provide a full demographics list like country of origin, income level, level of education, kids and marital status. This adds an amazing additional benefits for marketers, investors and others, as it allows to be much more effective in tailoring the app to the targeted customer group. If and how App Annie will monetize this new service is still pending.

Facebook, Google, And Twitter’s War For App Install Ads

An unexpected consequence of our love of apps is that now there’s just too damn many of them. The app stores are overcrowded, leaving developers desperate for a way to get their games and utilities discovered. That is why the app install ad has become the lifeblood of the mobile platform business.
Big brands aren’t the only ones to suck up to anymore. No one buys a car or Coca-Cola on their phone, at least not yet, so proving the return on investment of mobile ads to these businesses is tough. There is one thing people will instantly plop down a few bucks for on the small screen, though: Apps.
Lured by billions in app install ad spend per quarter and hoping to grow that pie, Facebook, Twitter, and Google have stepped up. But to win those dollars, they have to buddy up to developers.
Facebook and Twitter really have Apple and Google to thank. The critical need for app install ads stems from their negligence around app discovery. The App Store and Google Play provide search engines and Top 10 charts, but little in the way of personalized, social-proofed browsing or discovery. Basically the only way to get a hit app is to score enough downloads to break into the charts, and let the added visibility keep you there. That’s a struggle unless your app is inherently viral, kooky, or great enough to inspire word of mouth, or you win the favor of the app store editors who choose who to feature.
But then there were app install ads.

Rise Of The Install Ad

Ad network app install banner ad on Songza begs people to download a mobile game 
Before the big platforms redefined their roadmaps to pry open developers’ wallets, a slew of independent ad networks ruled the space.
AdMob, InMobi, Jumptap and Millennial Media flourished in the early mobile era. These let developers buy ads to promote their apps on mobile websites and other apps, or host them to earn money. The little pop-up banners and interstitials hawking games and shopping portals were inarguably annoying, but they worked to a degree even if they lacked advanced targeting data. Without a sales force or much know-how, developers could monetize their apps by selling ad space or buy growth for their products.
Google saw the potential of mobile advertising and bought the big dog AdMob in 2009 fro $750 million, while Apple acquired Quattro Wireless and launched its own ad network iAd in 2010. Both ran app install ads, but those weren’t their sole focus. It wasn’t until 2012 when the real landslide shift from desktop usage to mobile happened that Facebook wised up.
Mark Zuckerberg’s company was in a bad place. Freshly IPO’d with no revenue on mobile as its users moved there, Facebook’s share price was getting crushed. While it had owned a popular web platform for gaming where it earned a 30% tax on in-app purchases, it didn’t own one on mobile after its HTML5 mobile web platform fizzled out. All the taxes were flowing to Apple’s iOS and Google’s Android stores, even though apps were relying on Facebook’s free social login, friend finding, and sharing features.
What Facebook did have was relationships with developers, deep ad targeting data, and a steady influx of tons of mobile eyeballs.
Facebook’s mobile monetization platform strategy had been a bit far-fetched: Hook developers up with social sharing APIs, and hope users pushed their content from Facebook-connected apps back to the web or mobile News Feed to where Facebook shows ads.
Facebook’s first app install ads were ugly and vague, but proved developers would pay it for downloads 
The social network’s relationship with developers had become strained, though, after years of whiplash product and API changes. Even its garishly-named “Operation Developer Love” program to warn app makers of impending changes couldn’t shake the stigma. Viral channels opened and closed, functionality appeared and disappeared, and developers became weary of investing in developing on an unstable platform.
But app install ads let Facebook use its consistent mobile app traffic to turn things around. In August 2012, Facebook announced it would make app install ads its first ad unit not triggered by an action of a friend. By October they were rolling out, and I described Facebook’s strategy as “making a big bet on the app economy…to be the top source of discovery outside of the app stores.”
The ad units looked downright ugly compared to later versions, but early reports from advertisers were positive. Twitter had already seen developers experimenting with ads to drive app installs since at least 2012. With the formal launch of its app install Cards that could be amplified with Promoted Tweet ads in April 2013, it let developers turn a download of their app into the buzz at the global water cooler.
The battlelines were drawn. Facebook with its in-feed app install ads, Twitter’s promotable app install cards, and Google’s AdMob. Each has its own strength. Facebook knows a lot about who you are, Twitter knows what you talk about and are interested in, and Google deeply understands what you do on the Internet plus had a head start in the market. The next few years would see them turn app install ads from an ATM bolted onto the outside of their business to a full-fledged bank built on the ground-floor of their platform strategies.

Why App Install Ads Work

The web’s decline is dragging the banner ad towards its grave. On mobile, there’s no room for a shotgun approach of riddling the small screen with tiny, low-quality, poorly targeted marketing messages.
Instead, mobile ads are often shown one at a time. That means better targeting goes a long way. This has allowed platforms like Google, Facebook, and Twitter to outcompete the independent ad networks like Millenial Media by combining powerful personal data with native app install ad formats that blend into their content
While many would like to see banners ads die a painful death, app install ads are some of the only banners that can succeed on mobile. That’s because app install ads have two big advantages on mobile compared to traditional brand ads:
  • Apps Are Easy To Buy – Most iOS and Android users already have their credit card connected to their operating system’s app store. Users don’t need to clumsily input their payment details anywhere. Apps provide instant gratification since there’s no delay waiting for a physical object to ship, their low price means they can bought as impulse purchases without extra research necessary, and the diversity of apps means they appeal to a very wide demographic.
  • Installs Are Easy To Track – Conversions for app install ads are straightforward to measure, compared to mobile ads promoting products bought offline. Advertisers demand to see proof of return on investment on their ads to keep spending. This is difficult for traditional brand advertisers on mobile, as it’s difficult to tell if an ad for Honda or Coke actually led to conversions. It’s possible, but even then it’s unclear how much the mobile ads contributed to the purchase decision.But through software development kits (SDKs) and mobile tracking partners, FacebookTwitter, and Googlecan all clearly measure when an app install ad leads directly to an actual install. As long as these installs produce users with lifetime values higher than the ad price, they’re ROI positive and developers will keep buying them.
With the app stores just getting more cluttered, developers began pouring cash into the ad format. By the end of April 2013, I suggested app install ads could become Facebook’s “growing cash calf” and wrote that “While brand advertising was the rock of Facebook’s desktop ads business, app install ads could form the base of the mobile ad business its future depends on.”
When Facebook revealed its earnings for that quarter, it noted that developers, including 40% of the top 100 on iOS and Android, had already bought 25 million installs. The ads contributed “real revenue” to its bottom line said Mark Zuckerberg, and helped total ad revenue from mobile jumped from 23% to 30%. Meanwhile, app install ads had helped Twitter file to IPO with over 65% of ad revenue coming from mobile. By late 2013, the world had proof that app install ads were poised to become a giant business.

PlAdform Strategy

Simply selling ads would have been a missed opportunity, though. Driving installs is so important to developers that, lacking operating systems, Facebook and Twitter built their mobile platform strategies around app ads. The goal: provide high-quality services and tools to developers in order to form relationships that lead to ad buys.

Facebook + Parse

That’s why Facebook bought Parse, a mobile-backend-as-a-service that takes some of the development work out of building and hosting apps. It would form the base of Facebook’s Build-Grow-Monetize strategy.
Essentially, Facebook offers solid, affordable development tools and SDKs for managing and testing apps through Parse, or adding social login and sharing to News Feed. These also aids ad targeting by letting Facebook know who has installed an app with its SDK. Once it has its hooks in, Facebook can then coax these developers to grow by buying its app install ads.
The last part, “monetize,” was a little hazy until recently. The expectation was that thanks to Facebook’s development and growth assistance, apps could make money on their own by hosting ads, virtual goods, or ecommerce. But Facebook wasn’t getting a cut of that until April 2014 when it launched the Facebook Audience Network, an ad network that lets advertisers target ads they buy in third-party apps be targeted using Facebook’s extensive personal data treasure trove. Suddenly, Facebook could pay developers by getting them to host its ads…which very well might be app install ads from other developers.
It’s a feedback loop where Facebook helps apps get built until they pay it to grow until they’re big enough that it pays them to help others grow. And it’s a lucrative one. Facebook earned $1.95 billion in Q3 2014 on mobile ads alone, and is suspected that a sizable chunk of that comes from app installs.

Twitter + MoPub

It knew it was the little guy in the fight, with less traffic to its own ad-serving properties than Facebook’s feed or Google’s search pages plus AdMob. It also watched Facebook IPO, only to have its share price battered due to a lack of mobile ad revenue. So in October 2013 just before its IPO, Twitter wisely ponied up $350 million in stock to acquire MoPub, a leading ad exchange that let developers get the most install bang for their buck across top ad networks with units spread across other mobile sites and apps.
To make an irresistible pitch to developers and win the hearts of Wall Street during its IPO, it needed MoPub’s reach. Twitter went on to acquire TapCommerce to boost its app re-engagement ad targeting prowess eight months later.
But it wasn’t until October 2014 that Twitter’s strategy came into focus at its Flight conference when it launched Fabric. It’s a suite of developer tools that includes Crashlytics for squashing bugs, enhanced login and tweet composer options for upping an app’s organic virality, a quick way to build login via phone number called Digits, and MoPub for making money by hosting ads.
What Twitter cunningly leaves out is the with each Fabric tool a dev uses, they get closer to Twitter and are probably more likely to buy its app install ads. And just this week, Twitter announced it would start tracking all the apps on a user’s phone to improve the targeting of its ads, and its app install ads that will get the most benefit. First off, you won’t see ads for apps you already have, and it could know to show you travel or sports app ads because those are the kinds of apps you already have.
Along with more traditional brand ads, app install ads helped Twitter bring in 75% of its ad revenue from mobile for a whopping $272 million in Q3 2014. Now that its plot to endear developers is revving up, expect app install ads to be an even bigger part of its revenues next quarter.

Google + AdMob

All the while, it appeared Google was resting on its laurels, satisfied to enjoy the gains from its prescient acquisition of AdMob. But it finally saw how hard others were chasing the market, and invested more resources. It had less reason to rush than Facebook and Twitter, as its ownership of Android gives it a steady income from taxes on in-app purchases. While they scrambled, Google calmly kept improving AdMob’s targeting and conversion tracking.
By April 2014, Google was ready to wrestle for the limelight, launching enhanced app install ads on AdMob that leverage the giant’s data on what apps people download, use, and spend money in. Beyond installs, it would join Facebook and Twitter in offering app re-engagement ads built on deeplinks that get users back into apps they’ve already downloaded, and straight to relevant purchase pages like HotelTonight listings for a city they just arrived in.
After a messy year for Google+ spent working on its login platform for third-party apps, Google finally brought its app install ads to mobile search and YouTube in August. That’s a full two years after Facebook put them in its mobile feed.
Though Google’s mobile search traffic keeps it far in first place for total mobile ad share, its piece of the pie is expected to shrink while Facebook’s grows. eMarketer believes Google will fall to 44.6% of mobile ad market share by the end of 2014 from above 50% two years ago, while it projects Facebook will grow to 20.4% from a mere 5.4% in 2012, and Twitter is expected to grow from 2.25% in 2013 to 2.64% in 2014. That’s why Google’s CFO said on its recent earnings call that “Our focus [is] on helping developers generate app downloads.”

Where’s Apple?

Beyond its iAd ad network, Apple’s largely been silent regarding the app install ad business even though it’s a huge reason it exists. Mainstream iPhone users rely on Apple’s top charts and editors’ picks to discover apps. Despite acquiring app discovery site Chomp in 2012, the experience of digging great apps out the million in the store hasn’t gotten much better.
If developers don’t have the clout or virality to get on the charts, they have to buy their way there. That’s led some to like Hunter Walk to wonder if Apple could barge into the marketwith app install ads on the App Store itself or elsewhere on iPhones and iPads. iOS 8 can offer location-based recommendations for apps other people nearby frequently download, such as the Starbucks app when you’re in one the cafes. It’s sensible to assume it could sell these recommendation slots.
For now, though, it seems dead-focused on its high-margin hardware business, ceding the opportunity to the other platforms.

Deciding A Winner

With the app store overpopulation problem getting worse at an accelerating pace, app install ads will only grow in importance. They could take on new forms, though.
As apps evolve to be more vivid, so might their ads. Facebook is deeply investing in video advertising with its recent acquisition of LiveRail. It could combine LiveRail’s video ad inventory across the web with its targeting and developer connections to sell video app install ads that really show how fun or useful an app can be.
Developers are also experimenting with Twitter’s Vine video sharing social network. They get Vine creators with huge followings to make sketches about their apps or name-drop them by commissioning the stars through content monetization networks like Niche [Disclosure: Niche was founded by my cousin Darren Lachtman]. Some devs then pay again to promote tweets containing the Vines that shill their apps.
Contextual home screens that replace Android’s default launcher app navigation and folders with dynamic suggestions of apps you might need at the moment could also host app install ads. Popular home screen Everything.me already sells its app recommendation slots. There are also pre-install deals with carriers and manufacturers where devs might pay upfront or a cut of future earnings to have their app come with a phone.
[Update: After app install ads, it will be the rise of the app engagement ads. Overtly promotional push notifications are banned on iOS, and they risk getting an app’s lifeline muted if annoyed users turn off push. Ads can be the only way to get someone to open an app buried in a back screen folder.
Sophisticated retargeting by adtech startups like URX and Nanigans will help developers pull dormant existing users back into apps, or trigger whales to make purchases. These ads could remind people to check out the new clothing line in a fashion app, buy access to extra game levels, or check out must-see content that could rope them back into a social network.
As more brands and businesses make the shift to mobile and start building userbases for their apps, partly through install ads, they’ll look to squeeze more lifetime value out of their initial investments with reengagement ads.]
Ultimately, it is the balance sheet that will decide the winner of the app ad war, though is likely to be more of an ongoing turf war than one with an uncontested conqueror. Which platform has the best targeting and ad formats that can deliver the best conversion rates at scale and can prove the highest lifetime value per user for the lowest ad prices?
If either Facebook, Twitter, or Google can supply the highest return for app ad spend, developers will come running. And not only will the victor get the spoils as developers thrust open their wallets, they’ll become the gate-keeper to success in the new app economy.
Source: http://techcrunch.com/2014/11/30/like-advertising-a-needle-in-a-haystack/?ncid=tcdaily