Mobile

Mobile Driving Ad Dollars Towards Apps

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Mobile service and technology providers don’t benefit from mobile online ads; online ads drain data and drag loading times down. They do, however, benefit from apps. Apps are the reason consumers buy expensive smartphones and spend on huge data packages every month. Apps enhance user experience, drive high-end purchases for smartphones and tablets and are even featured in the ads for such devices. So it makes sense for Apple, Google and others to support them. That’s why the appearance of Been Choice, an in-app ad-blocking app, in the Apple App store was such a shock, and why Apple’s removal of the app due to so-called “privacy concerns” was no surprise at all. 

With in-app ads as the primary revenue source for the most popular free apps, including Facebook, mobile companies should be eliminating barriers to app ad-revenue rather than raising them. Fortunately, allowing Web ad blocking is one way for Apple and Android to do just that. So, with PageFair reporting a 48 percent increase in the use of ad-blocking technology in 2015 and $22 billion in losses from desktop computer ad-blocking alone, here are five ways in which online ad-blocking benefits the mobile tech industry. 

1. Less expendable income among Web ad viewers 

The simple fact is those who can’t afford a smartphone also can’t access ad-blocking apps; so they’re stuck with online ads. It’s the more affluent consumers who are using ad-blocking technology and, like most Americans, they only access the Web via desktop 40 percent of the time. As those with the most expendable income become a rarity among the impressions and clicks coming from Web-based ads, marketers will have to turn to apps to reach those high-end customers. In this way, smartphones are becoming a gatekeeper to consumers with more expendable income. 

As a demographic more able to opt out of ads not merely through ad-blocking technology but also by paying for ad-free upgrades, both marketers and app developers will have to work hard to retain their attention. Marketers will have to pay more for ads to desensitize app developers from offering valuable bonus features to their ad-free versions. App developers, in turn, have to make ads both less obtrusive for their users’ sake and more effective for marketers’ sake and deliver higher returns to match that higher cost. Overall, mobile wins as apps offer more free features and generate more revenue to invest in further innovation.

2. Control the youth market 

As mobile online ad blocking continues to evolve, the demographic least likely to be exposed to online ads will be young people. After all, according to a report by comScore, 20 percent of millennials access the Web via mobile exclusively, opting for tablets and phones as opposed to desktops. Young people with smartphones are also more likely to download apps – even ad-blocking ones. So in-app advertising will become the dominant means to access the youth market, making it both expensive and compulsory. App developers, in turn, will do even more to attract young people to download and use mobile apps. 

Some millennials are at peak buying power (home owning 30-somethings with families of their own); and, according to a study by the American Academy of Pediatrics, 97 percent of their children had used a mobile device in their first year. These highly tech-savvy youngsters will likely spend even more time on mobile devices that are even more likely to use ad-blocking technology. They’ll see smartphones and other mobile devices as necessities rather than accessories, and incentivizing the development of youth-oriented apps today will ensure that. 

3. Driving app-ad inflation 

Web ad blocking eliminates competition in the ad space, making it so marketers that want to reach smartphone users have few alternatives other than paying app developers for the privilege. Meanwhile, app developers, their ad space being limited due to design and user-appeal concerns, will inevitably respond to increased demand by increasing their prices – not their ad space. 

Therefore, the bottlenecking of ads into already limited in-app slots also drives up costs, especially for the most popular apps. High costs and limited space among the biggest names also create an overflow of ad revenue into less popular apps willing to take sponsors at a lower cost. Of course, what benefits and enriches apps encourages increased investment and innovation in the app space, thereby enriching the mobile industry overall. 

4. Fostering an app-first launch mentality 

Yelp had over three million reviews, as many as 11 million monthly visitors, and had been around for four years by the time it launched its iPhone app. Criticized for its sluggishness even then, Foursquare gained its foothold due to its wholehearted embrace of mobile compared to the squeamishness of Yelp and others. Now, with the mobile industry increasing the ease of online mobile access to more affluent, younger and tech-savvy mobile consumers at a time when Americans spend most of their time on mobile, Yelp’s questionable move then is approaching the unconscionable now. 

Only a short time after mobile optimization became critical to a website’s marketability and even its Google search rankings, ad-blocking tech is making optimization obsolete compared to launching an app itself. Businesses that want to rely on ads to monetize their offerings will have a hard time deciding whether to launch a website or an app first; as the trend progresses, the Foursquare/Instagram strategy of launching via app first will become a no-brainer. So, in the future, if you want to check out the newly launched startup blowing up on TechCrunch, you’ll need the right smartphone. 

5. The content driven digital economy 

Marketers have another choice besides Web-based or in-app ads: sponsored content/native advertising. Unfortunately for publishers, the style and content of these ads may make it indistinguishable from original content as far as visitors are concerned, but ad-blocking software can sometimes detect and block this kind of advertising as well. 

Since both native and standard ads are at risk, one might argue that mobile makes no distinctions, but it’s more nuanced than that. While smaller publishers often use easily blocked software that pushes these ads to multiple sites, some companies, like BuzzFeed and Forbes, have sponsored ads designed specifically for their sites, which make those ads less vulnerable to blockers. So it’s not sponsored ads that are getting blocked, it’s duplicated generic sponsored ads that risk getting blocked. 

The move is similar to the Google search algorithm update that ended press releases as a viable search engine optimization tactic. Just as Google didn’t want transparent, heavily duplicated content crowding its search results, mobile’s ad-blocking efforts seek to elevate the mobile Web discourse by prioritizing only the highest quality sponsored content possible. After all, better quality content means a better return on investment for mobile phones and their pricey data packages. 

Making the mobile user experience a positive one isn’t about touchscreen versus physical buttons, sleek designs, color options or even data storage. Mobile devices are hunks of silicone redeemed by the content – often third-party content – that these devices access. Improving mobile devices requires that the mobile industry exert what influence it has to promote and incentivize quality content creation. Passively opening the floodgates to third-party ad-blockers is one way smartphone creators are doing that.

Manpreet Singh is co-founder and president of TalkLocal, a next-generation search engine that connects consumers and service professionals. Prior to founding TalkLocal, Manpreet worked as Employee #1 at a startup investment firm for over a decade, growing assets from $20 million to over $2 billion via stints in trading, marketing, research, investing and operations. Follow him on TwitterLinkedIn and Facebook.

 

 

 

 

 

 

 

 

 

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