More than three-quarters of mobile ads across Asia-Pacific are now delivered via app. This is according to a new report by mobile advertising data company Vpon, whose study reveals that, during the first half of 2017, 77 percent of all mobile ads served in Asia-Pacific were delivered via mobile apps; the remaining 23 percent by mobile web.

In countries like Indonesia and India, in-app adverts account for as much as 90 percent and 86 percent of all mobile ads respectively, indicating that mobile web advertising is losing out to native apps in the region. Greater China (Mainland China, Hong Kong, Macau and Taiwan) did show a slightly higher percentage of mobile web ads - the highest being in Macau (45 percent) - but overall the region is heavily skewed towards in-app advertising.

Why apps make advertisers happier

“Looking at our data, we can see advertisers have a strong demand for in-app ads,” says Victor Wu, CEO at Vpon Big Data Group. “In-app adverts allow for a high-level personalised experience and creativity, which greatly helps on achieving customer engagement.”

Indeed, engagement seems to be a key metric that’s encouraging marketers to spend ad dollars on in-app advertising. A 2016 report by mobile advertising platform AdColony found that mobile users in Asia-Pacific are spending 46 minutes a day in the top 100 apps, 50 percent more than the global average of 30 minutes. The average session length, they found, was 9.6 minutes

AdColony’s report also found that apps offer more value for advertisers. Click-through on apps was found to be between 1.3 to 2 times as high as mobile web click-through. In Singapore and Thailand, app advertising revenue was as much as 13 times higher than mobile web. 

“Looking at AdColony's own sales data, 95 percent of advertising is via apps and only 5 percent is on browser,” says Madhavi Tumkur, marketing director for AdColony, Asia-Pacific.

“Apps offer richer data and better creative solutions - whether it is interstitial or location-based or call-to-action. Browsers quite typically offer fewer, more limited ad formats that are predominantly display,” says Tumkur.

However, despite the wider range of creative solutions that apps offer, Vpon’s latest Mobile Advertising Data Statistics & Trends report found that older formats such as banner ads remained the most widely used across Asia Pacific, accounting for more than half (53 percent) of ads delivered in the first half of the year. Meanwhile, interstitial made up just over a third (36 percent), with native at 7 percent and video at 4 percent. (These figures do not include video ads served on YouTube or Facebook.)

“For ad format, traditional display ads like banner and interstitials are still dominating the market,” says Victor Wu. “But we can see marketers are desperate for new ad formats to impress their customers or to achieve a better ROI. For example, native ads have a higher click-through-rate (CTR) than banner ads in general, and are luring more and more marketers to shift their budget on the new ad format.”

Disney provides one recent example of how a brand used the wider creative solutions available to in-app advertisers. To promote the launch of the fifth installment of the Pirates Of The Caribbean series, Disney leveraged AdColony’s Aurora HD Mobile Video to capture the attention of “mobile-first” audiences in Asia. Mobile video allowed Disney to engage audiences by taking them on a virtual treasure hunt, getting them involved in the plot and taking the traditional trailer to a whole new level in the process.

Disney's 'virtual treasure hunt' app to promote the most recent Pirates of the Caribbean film

The campaign drove record-high campaign results for Disney across 1,000 app publishers and surpassed all industry benchmarks for viewability, completion and engagement rates.

Where to invest for premium returns

In terms of ad format, Smaato’s Global Trends in Mobile Advertising Q2 2017 report found that rewarded video (full-screen video ads that incentivise users to watch by offering a reward) is the most engaging in-app ad format, especially in reaching highly-active mobile gamers. Rewarded video ad impressions increased by 96 percent on the Smaato platform from Q1 to Q2 2017, and rewarded video ads also have a CTR that is higher than any other in-app video ad format.

However, it’s not just the ad format that determines the effectiveness of in-app advertising – the app category can also play a significant role.

Data from AdColony’s 2016 Mobile First Insights report found that gaming and broad-based entertainment app categories (news, arts, music) are today’s ‘must buy premium’ – enabling marketers to reach TV-sized audiences who spend a lot of time here.

The games category has the highest number of ad impressions served on AdColony’s mobile ad platform in Asia-Pacific region. However, the ads on gaming apps do not necessarily have the highest conversion rates nor enjoy the highest click-through rates.

According to the data, which looked at the top 100 apps that use AdColony’s ad platform to monetise their traffic, ads on sports and health & fitness convert better than other categories in most Asia-Pacific countries, except in Australia where ads on shopping convert the best.

However, with app publishers increasingly tapping in-app ads as a monetisation model over in-app purchases and freemium, there is potential for growth across a variety of app categories.

“The content apps are the ones holding the most potential prospects but the winners are the social media applications,” says Emmanuel Ellix, CEO of leading APAC mobile marketing agency Art of Click. “Social media apps represent the best market to invest in for in-app advertisers, in terms of numbers of current and potential future users.”

Vpon’s data points to app categories like “entertainment” and “news” as having generated the most ad requests. In addition, the enormous growth of the eSports industry (competitive video gaming) is likely to stimulate the growth of ad requests on game/entertainment apps.

“For an entertainment loving region (K-pop/Bollywood/Canto pop) with a high population of youth audience, music, entertainment and gaming apps have the best potential to grow,” says Tumker. “This is also a region with a growing population of wealthy middle class. To reach this segment of business professionals, local news apps offer good access.”

Potential challenges for in-app advertisers

Alongside the potential for huge growth – eMarketer predicts in-app mobile ad spend in the US (there are no figures as yet for APAC) will reach USD$45.3 billion in 2017, up $11 billion from last year - what if any challenges are there for marketers getting into app advertising?

“Despite the fact that in-app advertising provides room for ad creativity, the different requirements on the format or coding across different ad platforms would take marketers double or even triple efforts on working the same set of creative,” says Vpon’s Wu. “This could burn a lot of marketers’ resources on time and production cost.”

Wu also points to the limited availability of in-app advertising posing a challenge amid increasing competition. “The number of web domains is far more than the app number, which directly affects the availability of the in-app advertising space.”

There is also the issue of ad-blockers. Flashy banner ads that interject and disrupt user experience on mobiles have triggered many new vendors to implement ad-blocking capabilities.

Picture: virusresearch.org

“Ad-blocking systems are particularly popular in the Southeast Asian region,” says Allix. “59 percent of smartphones users in India were using an ad-blocking system as of December 2016. It’s a very current issue as even Apple has stepped up and will prevent tracking and data collection with the new iOS version.”

That’s why experts believe that being creative with the user experience is more important than ever - and will the key to the future of effective in-app advertising.

“Customers nowadays are tech-savvy and being exposed to too many ads,” says Wu. “Improving experience in the form of ad format, creativity, and/or the smoothness of the entire journey, is one of the key areas that marketers should not neglect.”

"Data is the future of in-app advertising"

But despite the challenges, experts like Wu, Allix and Tumker remain upbeat about the future of in-app advertising.

“Data is the future of in-app advertising, it’s the key to an effective targeting strategy,” says Allix. “In-app advertising offers better attribution capabilities than the mobile web does, as much more data can be collected. In doing so, it offers better targeting possibilities.”

AdColony’s Tumker agrees that the future of in-app advertising and its advanced data insights holds great potential.

“Local publishers are starting to optimise their assets for mobile and launch apps to engage their users. This will bring better consumer experience and better data to advertisers. As apps become smarter – whether it is by sending push notifications or alerts based on user behaviour, preferences and their locations, or integrate more engaging offerings such as augmented or virtual reality and motion sensors, it will keep people more engaged within the app ecosystem.”

“Those who are not afraid of a challenging environment that requires adaptation, training and innovative thinking, will find success in this industry,” says Allix.