Long gone are the days when display ads dominated the digital advertising industry. New formats emerged and advanced throughout recent decades while others remained to be short-lived. One advertising medium grew particularly fast and eventually developed into a self-sufficient system now called mobile marketing. Now, this medium supports a variety of ads including banner ads, text messages, interactive and video ad formats, rich media ad formats, push notifications, in-app, and much more.

Mobile devices are now becoming a key element of digital marketing. According to the IAB advertising and revenue report, over 70% of all time spent online is attributed to mobile devices. So, in a way, mobile ads cover the ever-increasing demand for media-driven by rising mobile usage within the consumer world.

Advertisers are already leveraging this opportunity as in 2019 global mobile ad spending reached $189 million and it is expected to reach almost $200 million by the end of 2020. So what is mobile advertising and why is it so popular? What are the types of mobile advertising and how do they work for mobile ad campaigns? Let’s find out!

mobile advertising stats

What is mobile advertising?

To begin with, let’s review the definition of mobile advertising. According to Google’s definition, a mobile advertisement usually appears in apps and is displayed within mobile devices, such as a phone or a tablet. There are several different types and formats, and they can appear on various mobile platforms and apps. Each type, format, or platform has its own benefits and each is suitable for reaching one or another business goal, such as brand awareness, increased conversions, etc.

Differences between desktop and mobile advertising

Essentially, mobile advertising works similarly to display ads - it involves lots of techniques and data usage. One should still collect data and analyze their target audience persona in order to reach potential customers, just like with any programmatic advertising campaign. However, there is still a significant difference between the two, since the mobile advertising ecosystem is mostly based on mobile apps. And because most apps are downloaded for free or are based on the freemium business model, developers are interested in monetizing them through ads.

Such a landscape leaves lots of free space for marketers to get creative and explore new formats and ad techniques. Besides, ad blockers are not so widely used within mobile digital advertising, so the potential losses from the issue are significantly lower when compared to desktop. Also, many types of ad fraud, which are often becoming such a big problem for desktop publishers, are impossible to perform on mobile devices. For instance, it is harder to impersonate clicks and impressions in a mobile environment.

There is also a significant difference between user intention in mobile and desktop environments. For example, 56% of mobile users search for products, and 52% compare prices weekly, while only 37% and 34% of desktop users perform these actions respectively. Apart from this, 46% of mobile users check product reviews while only 28% do this on desktop. Finally, and most importantly, making a purchase weekly is only typical for 15% of desktop users. In contrast, among mobile and tablet, 35% report shopping weekly. If you want to get the best results while building programmatic ads strategy take these numbers into account.

Advantages of mobile advertising

Undoubtedly, there are numerous occasions that can keep a mobile user glued to their device for hours. In this section, we are going to explore this phenomenon from the advertisers’ point of view. Particularly, what are the benefits that a mobile marketing campaign can bring to your business and why it is getting so popular to advertise on mobile? Here are the 7 biggest reasons for it:

  • Accessibility. As we have already mentioned, people are currently spending tons of time online, especially on mobile. Mobile devices have become a significant part of our lives, as people can use them anywhere. One can always open a mobile app and get the latest updates regarding their interests in real-time. Such accessibility works wonders for advertisers who can now communicate directly to each member of their audience and deliver their message in an instant.
  • Demographics diversity. The number of mobile apps is steadily growing. You can now find users of almost any age or gender, socio-economic background, or ethnicity. Or even with more specific details like time zone, interests, and habits or level of income - the full range of users with all these characteristics can now be found in the mobile digital advertising landscape. So you can address your precise audience in an instant, even if they are living on the other side of the globe!
  • Creative options. Because there are so many formats and channels available for mobile marketing, creative options for your ads are only limited by the imagination. One can advertise on websites, social media, or apps. Each of these options has unique features and opportunities to play with design. Apart from ad creatives, one can also build a native app to represent their business on mobile. For instance, after clicking on an ad a user could be redirected to an app instead of a website.
  • Cost efficiency. Mobile advertising is often regarded as the most budget-friendly option for advertisers who want to reach their potential customers. Why? Because the overall cost of launching a mobile advertising campaign is far smaller than that of radio or TV ads. Apart from this, tracking and optimizing your budget is much easier for mobile campaigns, especially if compared to traditional advertising, which gives you more control over your funds.
  • Personalization. The opportunity to make your messages personalized is one of the biggest benefits of mobile advertising. Due to the fact that one mobile device is usually used by one person, understanding what kind of person is going to see your ad on the other side is now a simple and straightforward task. Since each device has its own ID, consumers’ habits and preferences can be analyzed, thus, you can create a perfect mobile advertising campaign. With global reach and instant delivery, personalization can potentially make your campaigns remarkably efficient.
  • Targeting solutions. Usage of device ID opens a lot of opportunities for personalization and targeting, but this isn’t the only feature that makes targeting on mobile so effective. Most mobile users keep their devices while traveling and most of these devices support location-based services. This provides an impressive amount of user data which can give you lots of insights regarding online and offline habits of your audience. As a result, advertisers can fully leverage the benefits of location-based advertising and combine it with other options, such as behavioral targeting.
  • More engagement. Some mobile formats are similar to display, but others are entirely different and often bring more engagement. This is due to the fact that mobile ads are getting more and more interactive. Users tend to enjoy interactive ads, such as rich media, as they allow them to explore a product from different perspectives and sometimes even try it before making a purchase. Some formats allow offering an incentive for user attention - for instance, rewarded video ad formats that are shown within a mobile app.

The current state and the future of mobile ads

Ever since the very introduction of mobile devices and the appearance of first ads, the mobile advertising industry has been growing with each passing year, sometimes even doubling its global ad spend annually. As the report from Statista shows, in just five years mobile ad spend has grown more than ten times - from $15 million in 2014 to $189 million in 2019.

mobile advertising spendingWe can also observe the evolution of mobile digital advertising by analyzing the related industries, such as gaming. The numbers are quite impressive here as well - from 2015 to 2019 mobile games market revenue surged from 24% to 34%. Both TV, console, and desktop games showed a steady decline within the same time period, leaving no questions about the future of mobile gaming unanswered.

The more recent numbers show that mobile advertising keeps growing even despite the coronavirus outbreak and the following implications for the industry. A newly published update from Emarketer shows that US mobile ad spending is still estimated to surpass $90 billion this year and is expected to rise only slightly slower than it was previously forecasted. It will reach $160 billion in 2024 which is practically the same number that was expected before the outbreak.

The mobile advertising ecosystem

Just like connecting the dots of the programmatic ecosystem, connecting the elements into a working machine might seem complicated at a first glance. However, in practice, a lot of things get immediately clear once you get a basic understanding of general elements and their role in the system.

Programmatic advertising is a process of automated media trading. It utilizes lots of various platforms, such as DSP, SSP, ad networks, etc. These platforms, in turn, work with different types of advertising display and search advertising, social media, video, connected TV, and mobile ads. Let us now review them in more detail:

Demand-side platform (DSP) is a ‘buy-side’ programmatic software that allows advertisers to find the matching inventory and buy impressions from multiple sources for the best price, usually via real-time bidding (RTB) auctions. On the ‘sell-side’, there is a supply-side platform (SSP) - a platform where publishers can sell and optimize their ad placements.

Both sides then meet at the ad exchange - a digital marketplace where selling and purchasing of advertising inventory occurs. The media-trading process can also involve ad networks - companies that gather advertisers and publishers and serve as intermediaries between the two.

There are two main platforms for serving mobile advertising in programmatic:

The Mobile web includes placing ads on browser web pages. Basically mobile web works according to the same principles as desktop. Ads should be optimized to fit the screen sizes of mobile phones and tablets. It usually provides a huge reach. All the usual advertising formats for the desktop web can be displayed within mobile web browsers. Mobile web ads also allow advertisers to choose engaging formats, such as rich media or interstitial ads. In-app environment, meanwhile, supports unique rewarded and playable formats that are considered to be the most interactive as they work as a part of the in-app experience.

In-app includes placing ads within the apps. This ad environment is unique because ads are often integrated straight into the app’s functions. Since most mobile users prefer apps, in-app advertising often brings a wider reach. Plus, the ability to gather various data provides space for more granular personalization. Both platforms support a wide range of formats and can be used by advertisers from any industry and with any budget. In the next section, we are going to discuss these formats and types of mobile advertising in more detail, as well as their pros and cons.

Types of Mobile Advertising

Mobile ad formats are very diverse, you can use one ad or a combination depending on the baseline marketing strategy. The following list includes the most common mobile advertising formats and their main features:

Banner ads. Sometimes also referred to as ‘display ads’, this type of advertising is the oldest and most traditional for both mobile and desktop. These are simple banners that are displayed on websites while the users are browsing the web. Such banners usually include short text and images. Once the users click on an ad, they are directed to the advertisers’ landing page for further conversion. The best display ad examples usually have strong call-to-action and appealing visuals. Even though rich media tends to perform better than traditional banners, banners still remain popular due to simplicity, cost-efficiency, and convenience.

Video ads. This format is currently one of the most powerful tools to showcase your products and get the desired conversions. It allows advertisers to deliver an immersive visual experience that can significantly simplify decision-making for customers. For mobile advertising, video ads are especially valuable since most users prefer to watch videos on their smartphones over other devices. They can appear on social media, within other apps, or as interstitial ads. The best video ads are usually catchy and short since the main goal is to grab and maintain user attention. This format also works specifically well for driving brand awareness since videos are more memorable compared to other ad formats.

Interstitial ads. These are full-screen ads that completely overlay the screen on the user's device. They are often placed at the logical points of interaction with mobile apps. For instance, users can often encounter interstitials within mobile games while waiting for the new levels to load. Similarly to banners, interstitial ads mostly consist of short text and graphics. More sophisticated ones can also include rich media. They also often have the X button so that the users had a choice to skip or close them. An interstitial ad can bring you the highest click-through rate, as they work well for capturing user attention. Still, remember that the rest of the work to get a conversion still depends on the quality of an ad and the overall marketing strategy.

Native ads. Native ad formats often look natural within the app’s environment and are not as direct and loud as other types. Instead, they are treated as sponsored content and usually blend in with the rest of the app’s design. Natives are very convenient both for advertisers and users since they are less interruptive and don’t annoy most users. Moreover, native ads are invincible to ad blockers - yet another benefit of this format. A high-quality native ad usually contains a brand logo or name and a URL, but the rest of the ad design relies mostly on the contextual environment.

Social media ads. Social media mobile advertising is becoming one of the most important formats. Twitter, LinkedIn, Facebook, and Instagram, Snapchat - each platform has its own unique benefits and requires a unique approach. Because of this, advertising on social media might seem like a complicated time-consuming process. Sometimes it can really be so - but with the right choice of the platform and carefully planned strategy, these efforts get totally worth it. Facebook Ads alone can potentially reach over 1 billion people and in combination with other social media apps, you can get even more.

Gamified ads. A rather young but very promising format, gamified (or also called ‘playable’) ads work remarkably well if your goal is to get more engagement. These are mostly based on rich media or interactive video formats. Playable ads are the most interactive ads and they naturally spark more interest compared to other formats. They are also particularly useful when it comes to gathering user data and creating consumer profiles. A good example of a gamified ad - an ad showcasing mobile apps, it lets the user test the new game before making the decision to purchase.

All these formats have their pros and cons considering various business goals and audiences. Each of them requires a slightly different application and some of them can fit your brand more than the others. However, once you carefully study your audience and their online habits, the choice of platform and format shouldn’t be a problem.

Mobile ads bidding options

Most mobile ads are priced similarly to other programmatic advertising formats - the possible options include CPC, PPC, CPM, CPI, CPA, and CPL. But don’t get confused by such a number of abbreviations - let us instead review each of them.

PPC (pay-per-click) which is also known as CPC(cost per click)is a performance-based pricing model where payments are calculated based on the number of clicks on an ad. Such a model is great in terms of budget control and targeted traffic delivery, but can sometimes become expensive, especially when it comes to search advertising and popular keywords.

The most important number for CPC-based campaigns thus is CTR - click-through rate. It is calculated as a percentage of clicks on an ad to an overall number of impressions - for example, if 5 people out of 100 clicked on an ad, its CTR=5%.

CPM (cost-per-mille) is another popular metric and is based on the number of impressions. Its name is derived from the Latin word ‘mille’ that means ‘thousand’, so the payments are calculated per thousand impressions. This model leaves advertisers heavily reliant on ad viewability but works specifically well for campaigns targeted at building brand awareness. CPM is the simplest and most budget-friendly option for most types of campaigns, especially ones with a higher click-through rate.

CPA (cost-per-action) is the most performance-oriented type of pricing. The payment is defined and calculated by the completion of certain actions defined by the advertiser. Such an action can be a click or a conversion - for instance, a purchase, downloading an app, signing up for a newsletter, or requesting a quote. This way, with the CPI model which stands for cost-per-installation, advertisers pay each time a user installs their app.

A more general variation of CPA is CPL (cost-per-lead) which is defined by the number of leads. This model has its benefits, but it is also important to remember that it doesn’t give you any information regarding the customer journey and the touchpoints that led users into conversion.

Mobile advertising campaigns - successful examples

Now that we know everything about mobile ads, their types, and principles of work, we can finally apply this knowledge and get inspired by the most successful examples of mobile advertising campaigns.

1. An immersive experience from “Cosmopolitan”

In 2016 the Las Vegas hotel and casino “Cosmopolitan” launched a unique mobile ads campaign that reached 35 million users and lasted for 4 weeks. It was designed to be an immersive experience about the destination. The ad actually looked more like an illustrated story with a catchy slogan “Just the right amount of wrong”. Combined with appealing visuals such a campaign was bound to succeed. Each user spent 29 seconds on average exploring the ad which resulted in 200 online reservations within 4 weeks.

2. Nissan opens up the power of interactive videos

Back in 2014 when the mobile ads were just on the dawn, Nissan was already well aware of their potential. Their campaign included a 60-second video that featured Nissan SUV. Throughout the video, the car was attacked by an evil snowman which made it dynamic and engaging. Apart from this, users could touch the screen on five specific points to get additional information regarding the car and its features. The brand also highlighted the drivers’ struggles with winter weather and snow safety. The result? A surprising 93 percent engagement rate and a 78 percent completion rate - this is what real power of mobile ads looks like!

3. Location-based mobile advertising with Hiscox

A UK-based insurance company Hiscox presented another impressive result of a mobile advertising campaign. Their campaign perfectly leveraged location-based targeting features which is one of the most effective benefits of mobile ads. In this particular example, the ads were targeted specifically at the residents of Covent Garden - one of the West End districts in London. Once the users entered this area and logged in to a local Wifi hotspot, they received an ad from Hiscox. The results showed 5 times higher click-through rates compared to the company's regular display ads campaigns.

4. Dominos Pizza playable app

The Domino's app is a great example of mobile ads gamification. An app created by the popular brand provides participants with the opportunity to design their own pizza. They can then order this pizza to immediately try it themselves. Such a solution removes a significant amount of friction from the purchase circle and makes the user experience much more engaging and interactive. This campaign brought 3 times more users to an app, as well as 53% of digital sales. It also helped to reduce the cost per click by 50% and resulted in overall sales increase by 63%.

All these examples vividly illustrate that mobile advertising can become a powerful tool for reaching any business goals within various industries from transport to insurance. A huge amount of options provided by this format leaves lots of space for imagination, so creative leveraging of all the opportunities will inevitably lead to successful campaigns.

To sum up

Considering the steady growth of daily usage of smartphones and tablets, it is safe to say that mobile ads are becoming very popular in online marketing. The trend is so hot that it quickly outrun desktop advertising in a quest for user attention and opportunities for advertisers. Display or video, native or playable - one can always find a suitable format for their strategy. Mobile advertising is also very versatile in terms of payment models that give marketers full control over their budgets. Combined with your creativity and inspiration mobile ads can take your advertising strategy to the next level.

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Written by
Irina Kovalenko, CMO of SmartyAds
August 2020