In-app ad spend grows but KPIs slow to catch up, study finds

Advertisers are finding value in-app

A survey from PubMatic and Forrester found that advertisers are spending 45% of their budgets on mobile, split evenly between web and in-app.

Budgets are increasing, too, as 92% of firms expect programmatic direct in-app budgets to increase by 1% to 6% over the next 12 months.

Though in-app investment is set to climb, the survey found that most advertisers are still relying on traditional KPIs. Outside of social media advertising, 80% of respondents use cost-per-click, while 76% and 74% of firms use cost-per-action and cost-per-acquisition, respectively.

Paulina Klimenko, senior vice-president of business development and general manager of mobile at PubMatic, told The Drum that advertisers need to focus on viewability and audience verification.

"What we're finding...is a lot of [buyers'] systems and metrics are still tied to the desktop environment. They're still thinking cookies. They're still thinking cost-per-click... We're suggesting that buyers and advertisers need to adjust to the new realities of the app environment and rethink how they measure, adjust their reporting systems and move away from that cookie mentality," said Klimenko.

The survey found that in-app spend is rising because 56% of firms experience better audience targeting with in-app ads and 54% see better customer engagement.

Advertisers also prefer programmatic, either direct or open, over direct buys when it comes to in-app spend. Of those surveyed, 68% said they always include programmatic direct in-app advertising in their digital media plans, while 59% said they often include open exchange in-app advertising in those plans.

“As buyers increasingly embrace programmatic in-app opportunities, transparency and quality are critically important. Brands are leveraging their buying power to make smarter investments in programmatic, and it is imperative that publishers and ad tech providers alike understand buyers’ needs and challenges with regard to in-app environments.

"By focusing and innovating around data capabilities and inventory quality, supply providers can capitalize on the growing opportunities available in-app," said Klimenko.

While there is value in the space, Klimenko did say in-app could be "fertile ground" for fraud compared to other formats given its relative nacensy.

The report found that 52% of brand advertisers are concerned over fraud, while only 36% of their agency partners consider it a key challenge.

Other pain points include viewability, with 48% of agencies saying it's their top concern. Over 50% of media buyers want publishers and technology providers to offer fraud verification, 47% want viewability verification.

Forrester surveyed 336 online respondents and conducted four interviews with media buying and planning decision makers at brands, agencies, and technology providers in the US, Europe and APAC.

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