The State of Programmatic Advertising: Why Mobile In-App Programmatic will be Really Different in 2020

What is the current state of mobile programmatic advertising, and how will it likely evolve in 2020? To answer these questions, we reviewed data on billions of transactions that have occurred on our exchange since the beginning of 2017, as part of InMobi’s newly released 2019 Mobile Programmatic Advertising Trends Report.

Setting the Programmatic Benchmarks

In-app mobile programmatic spending skyrocketed from 2017 to 2018. The fastest growth rate was in the largest market, the U.S. with a significant amount of the growth coming from private marketplace deals. By the end of 2018, China was the second largest mobile in-app programmatic market to the U.S.

The Continued Ascendance of Mobile

A large contributor to the overall growth of mobile programmatic advertising is the growth of mobile device consumption and usage. To illustrate this phenomenon, we reviewed InMobi Pulse data, our 32-million-person mobile consumer insights panel, on U.S. net new mobile app installs (installs minus uninstalls) of five top OTT apps (Netflix, Amazon Prime Video, Hulu, Starz and HBO). We found that between October 2018 and June 2019, net new app installs for OTT video services increased by 400%.

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Programmatic Buying Breakdown

In looking at Q2 2019 compared to Q2 2018, global open exchange spending grew 58% and private marketplace spending grew 15%. What’s interesting is the 2019 growth rate is being driven by open exchange spending. This indicates that in-app programmatic buying is being adopted more widely by buyers.

It’s great to see more participation from open exchange buyers this year than last year. Many open exchange buyers were not set up well to reach consumers in-app, as much of their audience and attribution solutions were cookie and web based. The growth in open exchange spending shows that both DSPs and buyers have been able to overcome those blocks through more cross device targeting and attribution, as well as increasing support for in-app specific technologies.

It’s also interesting to see how different verticals are approaching in-app programmatic media buying. For the most part, we’re seeing virtually all industries investing in both open exchange buying and private marketplace deals. However, more direct response-oriented categories, including retail, tech, travel and gaming heavily leveraged open exchange buying. Buyers in telecom, CPG, entertainment, finance/insurance and QSR generally preferred buying via private marketplaces.

Shifting Standards on Format

In Q1 2019, 45% of all mobile programmatic ad spending went to banners in the U.S. However, a majority of in-app mobile programmatic spending is being directed toward high-impact mobile advertising including full-screen video placements, full-screen interstitials and native placements rather than standard banners. And, even standard banners are increasingly using rich media capabilities. This is a critical takeaway for buyers.

Implications of Our Findings

We have seen buyers’ use of mobile-first creative experiences increase significantly from last year. A year ago, I was disheartened by where we were as an industry (after 10 years of the Year of Mobile). This year, I am blown away by the increased focus, investment and understanding that buyers have of mobile creative experiences. A majority of our mobile video private marketplace buyers now use video end cards after their full-screen video placements, and they run highly engaging rich media creatives for their full-screen placements.

In Q2 2019, we found that 30% of all banners including the interstitials are using rich media capabilities.

Mobile video continues to drive significant performance for buyers with 10x higher CTRs than banners, but only 2x higher than native. Native is also driving high levels of user engagement compared to banners. Additionally, mobile video is delivering 80% video completion rates and 91% viewability – so it is certainly a very high impact opportunity.  We expect to see continued growth around mobile video due to its high performance.

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PMP and Open Exchange: How Do Buyers Determine What’s Right for Their Campaigns?

While brand safety is important to all buyers, PMP buyers are even more concerned about brand safety and use PMP buying as an additional layer of protection. Beyond that, creative, data and/or KPI guarantees are the three biggest reasons that buyers may choose to leverage PMP buying over open exchange buying.

A vast majority of our PMP buyers (89% of them) leverage InMobi Audiences for some or all of their in-app programmatic buying. Key audiences leveraged include geotargeting, Nielsen DAR-verified demo targeting, hispanic targeting or custom mobile audiences targeting built from InMobi Pulse mobile data such as conquesting or life stages.

Creative support is another reason buyers choose to execute PMP versus open exchange buys. They want a mobile partner to be able to run vertical video, 6-second video ads, video end cards and fully build out rich media executions. Additionally, buyers may use PMP versus open exchange if they want their media partner to help deliver against KPIs such as providing a guarantee against viewability or ensuring to hit audience benchmarks.

OX buyers may buy more standard banners, use their own audience targeting and own full responsibility for KPI delivery, although these lines are not always clear cut. Many buyers use a combination, though some are open exchange only and some are PMP only.

Looking into the Future

What does the future of programmatic advertising hold?

Let’s peer into our crystal ball:

  1. Mobile will be a critical driver toward the death of the 30-second digital video ad. We already see that 70% of our served video ads are 20 seconds or less and generally use a 15 second video creative, with close to 10% of ads being 6 second video ads.
  2. Whatever we know about consumer data and privacy today will pale in comparison to what we know by the end of 2020. Make sure you have time set aside to work on data RFIs and data agreements with clients because we are already seeing an increased amount of scrutiny and that will only increase in 2020.
  3. By 2020, buyers will have a much clearer view of the supply landscape for in-app media. There will be clear winners (and losers) from a supply side standpoint, and buyers may find that their best exchange partners excel in one or two particular types of media rather than serving them as omni-ad format supply partners.

Next year is poised to be an interesting year for programmatic advertising. Ultimately, what we see today and what we expect to see in the future is the desire and need for brands to drive real connections with their consumers. We believe mobile in-app programmatic advertising is an ideal way for brands to better understand, identify, engage and acquire today’s mobile-first consumers.

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