Scott Weller is the co-founder and CTO of SessionM, a Boston-based mobile monetisation company.
We are still at the beginning of the mobile revolution.
Consumers are just starting to engage with mobile devices to such an extent that mobile apps are becoming a meaningful part of their lives.
Monetising mobile apps through advertising has been challenging and there are many competing options for a developer's attention. That said, successfully monetising an app through mobile advertising doesn't need to be quite as challenging as many make it out to be.
Amplifying an app's ad-based revenue depends deeply on identifying who your core audience is, understanding their usage behaviour, and employing retention techniques to foster a more loyal user base.
Here are a few key steps we've seen work successfully:
1) Understand your users
Before a developer can confidently monetise through in-app advertising, they must first understand who their users are and how they engage with the app.
This approach requires a deeper look at user data to gain insights into who is downloading their apps, how often they come back, and what they're engaging with during each app session.
Though understanding an app's general audience is a great first step, the real value lies with its most frequent users. At SessionM, we call these users the 'Mobile Power Users', or specifically the 33 percent most active mobile users in an app.
Because of their app loyalty, these Power Users are the people who advertisers want to reach; the more insights developers can obtain on these mobile users, the better.
This data must also go beyond vanity metrics, like the number of downloads. Developers need to understand how these users in particular are interacting with content and social features, and the factors that encourage them to engage with various aspects of the app.
These insights can shed some light on what the right type of advertising experience needs to look like in order to attract and convert regular inactive users into loyal, engaged ones.
2) Understand format and flow
Once you have a grasp on the make-up of your audience and how they use your app, the next step is to understand how an ad will best fit within your app flow.
In a 2012 Millward Brown Ad Reaction study, the findings illustrated that advertisers must achieve tangible value for consumers, defined as three things: being useful, entertaining and worth their time.
Ads that clearly deliver this tangible value not only get noticed, but get results. Results for mobile ads mean continued investment in that app.
But herein lies the first real problem for app developers: ad format. Banner ads have been the traditional approach to monetising apps, but based on this research, it's clear this approach is outdated and, for the most part, ineffective.
A mobile user won't easily recognise those three variables in this virtually antiquated ad format.
This brings to light Dr. Robert Cialdini's Rule of Reciprocity: when you get clear value, you want to repay that value. This is a good rule to live by when considering mobile ads as the means to monetising your app. The consumer who feels rewarded will give a reward of attention and loyalty.
Earlier this year, Millward Brown and SessionM teamed up to dig into those initial Millward Brown AdReaction results with an 'Exploring the Role of Value in Mobile Advertising' study, and discovered a few things about ad format and flow:
Seventy five percent of consumers say their favourability toward a mobile ad depends on how the ad was presented to them. Putting an ad in a natural break in the app flow is the difference between being seen as a friend or a foe.
Offering users the option to engage is a huge bonus; mobile users tend to be more receptive to mobile ads when they aren't forced to participate. Worth noting - 45 percent of respondents stated that not providing a way of opting out would damage their opinion of a brand.
For a mobile ad to feel like a natural, welcome part if the user experience, it must be consistent with the flow and delivered in a format that respects your app community.
3) Understand the value-exchange: Rewards
Consumers are strapped for time, so they must see clear value before they'll engage with mobile content, otherwise they'll just ignore it.
In the Millward Brown/SessionM report, research showed that rewards can actually provide the universal value that gives any consumer the assurance they need to engage with a brand because they know it will be worth their time.
But it is crucial to remember that not all rewards are created equal. As evidenced by the data below, SessionM and Millward Brown also found that reward-based ads succeed only when they are timely, relevant and chosen by the consumer:
Ninety two percent of consumers say they want to choose the type of reward they receive. It's not a 'reward' if it's not something they want.
Sixty eight percent of consumers prefer to know for certain they'll get a reward, rather than be surprised.
Mobile audiences prefer tangible rewards. In fact, gift cards are the types of rewards that are most frequently preferred, with coupons/discounts of your choosing following close behind.
4) Integrating the right ads with the right rewards
A final factor to consider in creating a real value exchange within an app through mobile ads is to consider the ad content.
It doesn't make sense for an app that caters to the 20-something male demographic to display women's perfume ads. Nor does it make sense for an app that reaches across all demographics across the US to feature ads about events in California.
Relevance draws the audience into the ad experience, and demonstrates to them that you value their time. Delivering the right ad, in the right format, at the right time is all part of the successful app monetisation mix.
In the end, developing an app experience must focus entirely around encouraging users to stay and engage. This is where the value lies for developers, advertisers and publishers. App monetisation will be more successful when users are receiving greater value from the experience.
For more information on SessionM, take a look at the company's website. Or, for more from Scott Weller, you can follow him on Twitter.
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