M A O B I P P ADVERTISING TRENDS Publication Date: March 2016 L E
C ontents Executive Summary and Key Metrics............................................................ 3 Introduction........................................................................... 4 Top Trends............................................................................ 5 Ad Spend and Overall Cost per Install........................................................ 5 5 6 7 Cost per Install Trends................................................................. 6 CPM and CPC Trends.................................................................. 7 Ad Spend and Overall Cost per Install CPM Trends Regional Trends.. Cost... per... Install.................. Trends........................................... 9 5 6 7 Engagement Trends.................................................................. 10 8 9 9 10 CPC Trends 8 Click-through Rate 8 Click-to-Install Rate 8 Focus On.............................................................................11 11 12 13 Operating System Gaming Instagram Conclusion and Methodology................................................................ 14 2016 Kenshoo 2015 Ltd. Kenshoo CO-04-0004-EN Ltd. CO-04-0004-EN 2 2
K enshoo Mobile App Advertising Trends Executive Summary F Total spending increased +155% over Q4 of 2014, while the volume of mobile app installs increased by +196%. This resulted in an overall decrease in the cost per install year-over-year (YoY). F Several key trends showed little variation through the end of 2015, indicating that the app install market is not subject to the same seasonal effects as other areas within digital marketing. F We don t see evidence of ad price inflation as a result of the competition in the app install market. In fact, the cost basis for app install ads has remained fairly stable for the last three quarters of 2015, and prices are actually down overall compared to Q4 of 2014. F We continue to see lower click-through rates for gaming apps than other types, but these apps then have a higher likelihood of being installed after clicking on an ad. F App install ads on Instagram already comprise over 20% of all paid social app install ad clicks in Q4, despite being a newer, and therefore smaller, ad platform. While Instagram app install ads have a lower level of engagement than the rest of paid social, they do provide a lower acquisition cost for marketers. Key Metrics PERCENT CHANGE YOY ( VS. Q4 2014) Spend Impressions Clicks Mobile App Installs Cost per Install (CPI) Cost per Thousand (CPM) Cost per Click (CPC) Click-through Rate (CTR) +155% +187% +280% +196% -14% -11% -33% +32% 2016 Kenshoo 2015 Ltd. Kenshoo CO-04-0004-EN Ltd. CO-04-0004-EN 3 3
I ntroduction As mobile apps become more and more ubiquitous, the advertising ecosystem surrounding them continues to grow, with app install ads taking on a critical role for app developers to gain more visibility in a crowded market. To further punctuate this, Business Insider predicts that mobile app install ad revenue will hit $5.4 Billion in the US in 2016. As social media publishers, new ad types, optimization strategies, and audience targeting capabilities are introduced at a rapid clip, successful advertisers are adopting these innovations into their marketing programs in order to seamlessly meet the needs of today s super-connected consumer and make the most of the advertising opportunity. Since early 2015, Kenshoo has been tracking the performance of these agile marketers' mobile apps within social advertising in our Mobile App Trends series to better understand the trends and developments in this new and exciting market. With this release, Kenshoo has broadened the scope of our research. Previous reports looked at all social ad spending from advertisers who exist primarily, or even solely, to sell and market mobile applications on what is now known as the Kenshoo Gaming platform (formerly Adquant). Now, we will be looking at all paid social ad spend on mobile app install and carousel app install ad types across both the Kenshoo Gaming and the Kenshoo Social platforms. 4
T op Trends $ Ad Spend and Overall Cost per Install Spending on mobile app ads in social media continues to grow at a steady pace. The fourth quarter of 2015 more than doubled the spending of the fourth quarter in 2014, increasing by 155%. Compared to the previous quarter, spending was up 7%. While Q4 of this past year was the peak period over the last five quarters, the increase in spending from Q4 2014 to Q2 2015 demonstrates that this growth likely has more to do with the organic growth of the channel than any seasonal trends. The volume of app installs tracks fairly closely with the spending trend, with an almost linear increase from Q4 to Q2 before leveling out through the second half of the year. We can look at the overall efficacy of mobile app ad spending by seeing just how many apps were installed per advertising dollar. Here, the trend had been mostly flat for three quarters before rising 20% in Q4, but compared to the previous year, cost per install actually declined by 14% as the volume of app installs grew faster than spending. AD SPEND AND OVERALL COST PER INSTALL TRENDS INDEXED VOLUME (2014 Q4=1.00) 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2014 Q1 2015 Q2 2015 Q3 2015 Q4 $2.50 $1.50 $0.50 COST PER INSTALL (CPI) Indexed Ad Spend Indexed Mobile App Installs Cost per Install (CPI) 2016 Kenshoo 2015 Ltd. Kenshoo CO-04-0004-EN Ltd. CO-04-0004-EN 5 5
Cost per Install Trends COST PER INSTALL TREND $2.50 $1.50 $0.50 2014 Q1 2015 Q2 2015 Q3 2015 Q4 Cost per install is down 14% from 2014, but is slightly up after three quarters of very little change. This overall rise was driven primarily by increases for ios and consumer apps, which in turn helped both ios and consumer apps maintain a higher CPI than Android and gaming apps in the quarter, respectively. CPI BY OPERATING SYSTEM CPI BY TYPE $2.50 $1.50 $0.50 Android ios $3.00 $2.50 $1.50 $0.50 Consumer Gaming 6
CPM Trends COST PER THOUSAND TREND $6.00 $5.00 $4.00 $3.00 2014 Q1 2015 Q2 2015 Q3 2015 Q4 The overall trend for CPM is similar to what we saw for CPI, with a Q4 increase after a period of stability, but a decrease from the previous year. App Install ads for ios carried about a one dollar premium over Android apps in Q4, while gaming apps were priced higher per 1000 impressions than their consumer counterparts. CPM BY OPERATING SYSTEM CPM BY TYPE $6.00 $5.00 $8.00 $4.00 $6.00 $3.00 Android ios $4.00 Consumer Gaming 7
CPC Trends COST PER CLICK TREND $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 2014 Q1 2015 Q2 2015 Q3 2015 Q3 The volume of clicks saw a much bigger increase from Q4 of 2014 to Q1 of 2015 than both the increases in spend and impressions over the same period, which dropped the cost of those clicks below $0.50 for all of 2015 and bent the curve for CPC more than that of CPM. Once again, ios and gaming apps maintain a price premium when compared to Android and consumer apps. CPC BY OPERATING SYSTEM CPC BY TYPE $0.60 $0.80 $0.50 $0.60 $0.40 $0.30 $0.40 $0.20 $0.20 $0.10 Android ios Consumer Gaming 8
Click-through Rate CLICK-THROUGH RATE TREND 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2014 Q1 2015 Q2 2015 Q3 2015 Q4 Overall, click-through rate has been fairly stable for the past three quarters after engagement levels with app install ads increased for the first half of the reporting period. The heavy competition in gaming apps may be one factor in that app type showing lower initial engagement. CTR BY OPERATING SYSTEM CTR BY TYPE 1.2% 1.2% 1.0% 1.0% 0.8% 0.8% 0.6% 0.6% 0.4% 0.4% 0.2% 0.2% 0.0% 0.0% Android ios Consumer Gaming 9
Click-to-Install Rate CLICK-TO-INSTALL RATE TREND 35% 30% 25% 20% 15% 10% 5% 0% 2014 Q1 2015 Q2 2015 Q3 2015 Q4 We can calculate a more app-based conversion rate for mobile app advertisers by looking at the rate by which apps are installed, relative to the total number of clicks on those app ads. Android and ios apps show little difference when viewed this way, and while we have seen that getting gaming apps from impression to click is a bit more difficult than for consumer apps, once consumers have clicked on a gaming app ad, they are much more likely to install. CLICK-TO-INSTALL BY OPERATING SYSTEM CLICK-TO-INSTALL BY TYPE 25% 20% 15% 10% 5% 0% Android ios 50% 40% 30% 20% 10% 0% Consumer Gaming 10
F ocus On... Operating System Android had greater increases in both QoQ and YoY spend, but ios is growing at comparable, if somewhat smaller rates, and still comprises nearly ² ₃ of mobile app ad spend. ios also brought clicks and app installs more into alignment with that share of spending, areas where Android had more parity at the same point last year. SHARE OF VOLUME BY OPERATING SYSTEM 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2014 Q4 Impressions 2014 Q4 Clicks 2014 Q4 Speed 2014 Q4 App Install Android ios Across the board, ios commands a price premium over Android whether on the basis of app installs, impressions, or clicks. On the engagement side, Android is at least as good or better, with a comparable click-to-install rate and a slightly higher CTR. 11
Gaming As we build out our analysis to include more non-gaming apps, the particular behavior of those gaming apps becomes more clear. Specifically, the higher rate gaming app advertisers pay for both impressions and clicks speaks to the value placed on both eyeballs and ad clicks, and this value is borne out by the fact that gaming apps convert to app installs at a much greater rate than regular consumer apps. This results in gaming apps actually have a lower CPI than consumer apps, which goes a long way to negate any sticker shock associated with those higher prices. PRICE METRICS BY TYPE CLICK-TO-INSTALL RATE BY TYPE $7.00 $6.00 50% $5.00 40% $4.00 30% $3.00 20% 10% Cost Per Install CPM CPC 0% Consumer Gaming Click-to-install Rate is really the tip of the iceberg for proving out the return on ad spend in the mobile app ecosystem, as mobile app engagement, in-app advertising, and in-app purchases all play large roles in establishing lifetime value for this class of mobile app. 12
Instagram.nstagram is proving to be an effective ad unit for app advertisers, with the share of both clicks and app installs exceeding share of total ad spend. All three metrics have shown considerable growth over the first two quarters since this publisher became more widely available via API. 25% INSTAGRAM GROWTH: Q3 TO Q4 20% 15% 10% 5% 0% % of Ad Spend % of Ad Clicks % of Mobile App Install All Other Placements Instagram From a pricing standpoint, Instagram ads are consistently lower in price than other Facebook ad placements, but despite their rapid growth, they are also somewhat less effective at driving app installs. Click-through rate versus other placements is almost identical. The net result of all of these factors is that cost per install on Instagram is actually less than the rest of paid social. INSTAGRAM PRICE METRICS COMPARISON INSTAGRAM INSTALL RATE COMPARISON $7.00 $6.00 $5.00 $4.00 $3.00 Cost Per Install CPM CPC 40% 35% 25% 20% 15% 10% 5% 0% All other Placements Instagram All Other Placements Instagram 13
C onclusion As the ecosystem around mobile apps continues to evolve, the only thing the agile marketer can really count on is change. More ad types, more publishers, and more ways to reach audiences are being released at a regular clip. By focusing on some of the primary cost and engagement metrics, marketers can start to achieve a greater understanding of how the pieces fit together in this fragmented world. For marketers, the key takeaways from these latest findings include: App install ads have not seen notable price inflation, so the risk of starting, continuing or expanding app advertising campaigns remains low. ios and Android apps are moving towards parity in terms of share across multiple metrics, although ios still holds an advantage. If the ios audience is somewhat larger in this view, that does come at a premium for impressions and clicks. Instagram provides an opportunity for app advertisers to acquire new customers at a lower cost than other social ads. For the gaming segment, don t be deterred by CPM and CPC rates, as the target market for these apps have a high propensity to follow through to actual installation. The trends presented here hope to unlock a greater understanding of this space, but as we have emphasized previously, your mileage may vary. Incorporating additional elements of the app experience like in-app engagement and lifetime value (LTV) are other ways to optimize app campaigns to your specific goals and maximize the app opportunity. An apportunity, perhaps? M ethodology The report includes five quarters of data from October 2014 through December 2015, and reflects spending and performance specifically on the Mobile App Install ad type from advertisers across the Kenshoo Gaming (formerly Adquant) and Kenshoo Social platforms on the Facebook Audience Network. The resulting data set comprises over $85 million (USD) in advertiser spend, and over 45 million app installs, targeted across over 100 countries worldwide. 2016 2016 Kenshoo Kenshoo Ltd. Ltd. CO-04-0004-EN 14