advertising i trends - kenshoo...f advertising spend by mobile app developers has almost quadrupled...

ADVERTISING TRENDSQ2 2015

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Publication Date: September, 2015

© 2015 Kenshoo Ltd. | CO-04-0004-EN 2 2© 2015 Kenshoo Ltd. | CO-04-0004-EN

Executive Summary and Key Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Top Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Ad Spend and Overall Cost per Install . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cost per Install Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CPM and CPC Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Regional Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Engagement Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Marketer Imperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ontentsC

Ad Spend and Overall Cost per Install

Cost per Install Trends

CPM Trends

CPC Trends Regional Trends Engagement Trends

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Executive Summary

F Advertising spend by mobile app developers has almost quadrupled year-over-year (YOY) .

F The growth of app installs has outpaced spend, increasing +346% since Q2 of 2014 .

F While click-through rate is down YOY, the click-to-install rate has increased +32% .

F While the cost per click for mobile app install ads has increased YOY and the CPM has been flat, the cost per app install has dropped 12%, which will become more relevant as Facebook changes bidding models to consider conversions over reach or clicks .

F The gap in cost per install between iOS and Android devices has narrowed considerably in 2015 as more developers enter the market, implying that there is less of a premium on iOS users than there has been in the past .

enshoo Mobile App Advertising Trends

PERCENT CHANGE YOY (Q2 2015 VS. Q2 2014)

Source: Kenshoo Mobile App Advertising Trends© 2015 Kenshoo Ltd., All Rights Reserved.

-1%+295% +237% +293% +346% -12% +16%

Impressions Clicks Ad Spend Mobile App Installs

Cost per Install (CPI)

Click-to-Install Rate

Cost per Thousand

(CPM)Cost per Click

(CPC)Click-through

Rate (CTR)

-15% +32%

Key Metrics

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© 2015 Kenshoo Ltd. | CO-04-0004-EN 4

Mobile has gone mainstream, with everything from songs to Super Bowl ads touting the latest and greatest apps and games . App developers are jumping into digital marketing with both feet .

Why? Because that’s where customers are spending the most time . The number of mobile app users in the United States is projected to break 200 million in 2016¹ , while mobile apps comprised the majority of time spent with digital media as of last June² . In response, mobile ad budgets are estimated to comprise more than half of total digital spending this year, marking a 59% increase over 2014³ .

For consumers, the mobile and app experience is a highly personal one . Mobile devices represent a curated individual world: Which apps do we install, and which ones grab our attention and become embedded? Whose content do we invite into our lives, and whose do we block?

For the marketer, the challenge remains to get consumers to discover, download, install and ultimately, to buy-in to the experience and continue to engage beyond that first moment .

Given this, Kenshoo released its first report on this subject in Q1 2015 to help app marketers ensure that they are optimizing campaigns to drive user acquisition and retention most effectively and getting the most out of their budgets .

As this space continues to evolve and mature, Kenshoo will continue to provide benchmarks on key mobile app metrics to paint the picture of this changing landscape and the emerging trends .

1 "Mobile Apps vs . Mobile Browsers: How Usage, Ad Spending and Mobile Commerce Sales Differ by Channel," eMarketer .com, February 11, 20152 "The U .S . Mobile App Report," comScore .com, August 21, 2014

³ "Mobile to Account for More than Half of Digital Ad Spending in 2015," eMarketer .com, September 1, 2015

ntroductionI


With the increasing attention on mobile app marketing via social media, it is not surprising that the industry has seen considerable growth . The combination of new entrants to the space, and increasing budgets have driven overall spending up nearly 4 times what it was one year ago . By comparison, Kenshoo reported overall paid social growth across all advertiser types (including, but not limited to mobile app advertisers) for Q2 at +114%⁴ .

Kenshoo is tracking twice as many individual mobile app titles as of Q2 2015 in this index, compared to a year ago .


AD SPEND AND OVERALL COST PER INSTALL TRENDS

IND

EXED

AD

SPE

ND

COST PER IN

STALL (CPI)

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q20.00

0.50

1.00

1.50

2.00

2.50

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

3.00

3.50

4.00

4.50

CPIAd Spend (Q2 2014 = 1.00)

op TrendsT

Ad Spend and Overall Cost per Install

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⁴ "Digital Marketing Snapshot: Q2 2015," Kenshoo .com, July 22, 2015

6© 2015 Kenshoo Ltd. | CO-04-0004-EN


CPI BY OPERATING SYSTEM

Android iOS

$0.00

$0.40

$0.80$1.00$1.20

$1.60$1.40

$2.00$1.80

$0.60

$0.20


CPI BY TYPE

Consumer Gaming

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Other


COST PER INSTALL TREND BY OPERATING SYSTEM

OverallAndroid iOS

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Cost per Install continues to carry a premium when targeted at iOS devices, although the influx of new advertisers and new apps has narrowed that gap considerably and driven overall CPI down starting in Q1 of this year . General Consumer apps—such as finance or transportation apps—cost less per install than Gaming and other app types .

Cost per Install Trends

7© 2015 Kenshoo Ltd. | CO-04-0004-EN


CPM BY OPERATING SYSTEM

Android iOS

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00


CPM BY TYPE

Consumer eCommerce Gaming

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00


COST PER THOUSAND TREND BY OPERATING SYSTEM

OveralliOSAndroid

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

While the social channel is moving towards bidding based on conversions rather than reach or clicks, the more familiar pricing metrics can still provide valuable context for marketers . On a per thousand impression basis, the cost of mobile app advertisements on paid social media is down just 1% from Q2 of the previous year and has retreated from its peak in Q4 . Android-targeted campaigns and Consumer apps show lower prices here as well .

CPM Trends

8© 2015 Kenshoo Ltd. | CO-04-0004-EN


COST PER CLICK TREND BY OPERATING SYSTEM

OveralliOSAndroid

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

As an emerging market, mobile app advertising can be affected by new entrants with large budgets and specific strategies . In this case, we see a handful of advertisers entering the mobile-social market in a big way, but with a focus on lower-priced clicks, impressions and, ultimately, installs . The shape of the curves for CPI, CPM and CPC are very similar in this regard, although we see the CPC for Gaming apps outpacing Consumer and other app types . For all of these metrics, campaigns targeting iOS devices cost more over the past five quarters, although that difference is getting smaller as of this calendar year .


CPC BY OPERATING SYSTEM

Android iOS

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70


CPC BY TYPE

Consumer Gaming Other

CPC Trends

9© 2015 Kenshoo Ltd. | CO-04-0004-EN

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20


AD SPEND AND CPC BY COUNTRY TARGETED

AVER

AGE

CPC

IND

EXED

AD

SPE

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(US

= 1.0

0)

US UK Canada

Spend Volume (indexed to US = 1.00)

Australia France Germany

0.00

0.20

0.40

0.60

0.80

CPC per Country Overall CPC

1.00

1.20

Looking at the amount of spend that is targeted at specific countries, the United States still accounts for the largest portion of targeted spend, and English-speaking countries make up the top four . Note that advertisers may target multiple countries, so these volumes are not additive .

The “big four” of English-speaking countries also cost more per ad click than the next two largest countries in terms of total targeted ad spend .

Regional Trends

10© 2015 Kenshoo Ltd. | CO-04-0004-EN


CTR BY OPERATING SYSTEM

Android iOS

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%


CTR BY TYPE


0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

The CTR gap between Android- and iOS-targeted ads has narrowed in 2015, but Android still holds a slight edge when it comes to high-level engagement . The wider appeal of Consumer apps may drive the higher CTR than Gaming and other app types .


CLICK-THROUGH RATE TREND BY OPERATING SYSTEM

OveralliOSAndroid

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

Engagement Trends

11© 2015 Kenshoo Ltd. | CO-04-0004-EN


CLICK-TO-INSTALL BY TYPE


0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%


CLICK-TO-INSTALL BY OPERATING SYSTEM

Android iOS0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%


CLICK-TO-INSTALL RATE TREND BY OPERATING SYSTEM

OveralliOSAndroid

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

Once a user has clicked on a social ad for a mobile app, just under 1 in 3 of those clicks turn into an actual app install . Android and iOS have similar results in three of the five quarters described by the index, with Android holding the overall edge based on the other two quarters, which may have seen specifically compelling Android titles . The CTR advantage for Consumer over Gaming apps here is reversed, implying that the broad appeal of Consumer apps gives way to higher intent for Gaming .

Engagement Trends

© 2015 Kenshoo Ltd. | CO-04-0004-EN 12

The growth of mobile app advertising spend speaks to both an increase in the number of advertisers and increased spending from those advertisers . This puts pressure on the agile marketer to respond to both competition and scalability, while still being able to quickly engage with the mobile audience . The switch from reach- or click-based bidding to algorithms that are based on conversions (installs) reflects all of these dimensions, and should encourage continued investment as marketers become better equipped to draw a more direct line from their investment to the value of, and flowing from, the apps themselves .

Targeting can be a way to combat both increased competition and rising costs . Strategies include creating nested lookalikes and testing match types from most similar (top 1%) vs greater reach (top 5%) . If you are looking to drive response rates, the narrower audience of the former strategy will likely provide the most performance improvement, albeit at lower volumes . Anecdotally, lookalike audiences have performed better than those based on stated behaviors or affinities in the social space .

Clearly, there are differences in behaviors based on device type, so tailoring your approach to iOS and Android is vastly preferable to a one-size-fits-all approach, and both your goals and your creative should reflect the device you are targeting .

As with any marketing program, understand what is best for you . Much depends on properly defining your KPIs, understanding which bid types are most successful for you and creating internal strategies for each discrete audience that you are going after . Consider broader goals like lifetime value (LTV), late-funnel activities, and both monetary and non-monetary metrics .

Another thing to keep in mind is that new sources of inventory are emerging regularly in the mobile app space, and the agile marketer is the one who is able to translate their existing campaigns to these new channels and publishers . Google Search App Ads, Google Play Search Ads, Instagram, Mobile Display, Yahoo! Gemini and Admob all provide opportunities for expanded reach and interaction with your audience .

To help you along your journey, Kenshoo plans to continue to expand the scope of our reporting to include these avenues as they gain traction and volume .

The report includes five quarters of data from April 2014 through June 2015, and reflects an aggregation of advertisers using the Adquant by Kenshoo platform that are Mobile-only and have defined a Mobile App Installation as a conversion . The resulting data set comprises over $40 million (USD) in advertiser spend, and over 25 million app installs, targeted across over 100 countries worldwide .

arketer ImperativesM

ethodologyM

12© 2015 Kenshoo Ltd. | CO-04-0004-EN

advertising i trends - kenshoo...f advertising spend by mobile app developers has almost quadrupled...

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