4 Powerful App Advertising key Forces Will Transform in 2020
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The Forces that Will Transform In-App Advertising in 2020

app advertising in 2020

Guest Contribution by Glenn Fishback, Chief Revenue Officer, Smaato

In-app advertising remains one of the fastest-growing and most dynamic sectors of the digital ecosystem. Although in-app time spent represents a core and increasingly large portion of the consumer path to purchase, the wholly unique technological reality of in-app environments, not to mention the personal nature of consumer behavior in-app, means that the larger forces at play in the digital landscape tend to manifest in unique ways when it comes to in-app advertising. Let’s take a look at how a few key forces will play out in this space over the coming year.

The Rise of In-App Spending

Mobile users are downloading more apps and spending more money in-app than ever before. In the first half of 2019, competition among advertisers to reach engaged mobile app users led to a 27 percent global increase in eCPMs[1]. As people spend more time in-app, we’ve also seen a rapid rise in mobile ad requests in many markets worldwide.

The fast growth within the app space—represented by an influx of users, advertisers, and publishers alike—has put pressure on the industry to accelerate the development and adoption of more-sophisticated tools for ad serving and buying. While publishers and advertisers crave solutions that align with well-understood tools in the desktop space, the technical nuances of the in-app environment require special consideration in many cases—and this includes header bidding.

Header Bidding Comes to Fruition

Header bidding took the digital advertising and publishing landscape by storm as a much-needed programmatic solution that increased transparency and boosted publisher revenues by completely flattening the waterfall. And so, of course, as more digital dollars have moved in-app, advertisers and publishers have desired those same benefits within the app ecosystem. However, because the in-app environment is entirely different than that of a browser, header bidding has been harder to implement in-app from an operational standpoint.

To date, most of what has been described as “header bidding” in apps has actually been represented by mediated auctions, in which only the winning bids within DSPs and ad networks are able to compete at the exchange level. True in-app header bidding enables all bids to compete at the exchange level—in real-time and transparently. In 2020, we’re finally going to see real header bidding become a reality in the world of in-app advertising[2], giving greater control and higher revenues to publishers while delivering greater transparency and better results to all parties.

Privacy Regulations Reshape Opportunities

Of course, alongside every story of growing opportunity within the digital advertising space comes this caveat: Privacy regulations are taking effect in a big way in 2020. While the GDPR has already made its mark in Europe, the California Consumer Privacy Act (CCPA) is set to reshape the privacy and consent landscape in the U.S. starting on January 1, 2020.

Meanwhile, the IAB Europe and IAB Tech Lab have unveiled the second iteration of the IAB’s Transparency and Consent Framework (TCF 2.0), which is the IAB’s effort to standardize the media industry’s GDPR compliance. Google has announced its intent to integrate with TCF 2.0 in early 2020, which is expected to spark greater integration among vendors going forward.

But there is still more to do and more to plan for. Privacy regulations won’t stop with the GDPR or the CCPA. In fact, new laws are being drafted, others are being amended, and many more are ready to go into effect around the world in 2020. Additionally, while TCF 2.0 has been designed for desktop and in-app environments, the industry and the IAB will need to find additional solutions for connected TV (CTV).

CTV Goes Programmatic

Finally, while there’s been no shortage of discussion of the rise of connected TV opportunities for advertisers in 2020, not a lot of attention has yet been given to the underlying buying and selling of what essentially equates to in-app inventory on a much larger screen. But next year, in-app thinking is going to pivot to the big screen in a meaningful way.

To date, CTV ad buying has been a highly fractured and relationship-based process for advertisers and content providers alike. As you might imagine, that’s not a state that the market will bear for long. In 2020, we’re going to see industry players moving fast to create setups that allow for the widespread adoption of real-time bidding for CTV inventory.

In 2020, in-app advertising will take strides forward in a number of key areas, and its growth will have implications for the broader marketing mix. For those marketers looking to align themselves with the natural current of consumer behavior—much of which is flowing deeper into the app space—the above shifts will warrant close observation.

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