Data Desk: Mobile video ad spend dominating in gaming, still a blue sky opportunity in other verticals
Back in October of 2015, together with our partner AppsFlyer, we did an analysis of mobile video ad spend. At the time, our findings confirmed that mobile video was the fastest growing advertising format (190 percent growth in Q1-Q3 2015) and was 40 percent more effective at user retention than non-video ads.
It’s now time to assess where that remarkable momentum has gotten us. We found that in Q4 2016, video ads accounted for 77 percent of mobile ad spend. In the gaming vertical, video ad spend has eclipsed other formats with a commanding 93 percent. In non-gaming verticals, video ads command the majority of ad spend, but there is still plenty of room for growth.
In terms of retention, video continues to dominate when compared to non-video formats, with iOS apps claiming a slight advantage over Android apps.
Together AppLovin and AppsFlyer have access to hundreds of billions of data points detailing the usage and retention of mobile users.
To get an update on video ad spend, AppLovin examined video ads as a total percentage of advertisers’ spend in 2016. We focused on the last quarter of 2016 to get a general idea of how far we’ve come. AppLovin and AppsFlyer analyzed a dataset with billions of inputs from AppLovin’s own demand side platform and RTB exchanges it works with and from AppsFlyer’s analytics platform, which looks at both gaming and non-gaming apps.
For the period of Q4 2016, we analyzed over 700 million non-organic installs across 5,000 apps (minimum of 2,000 installs per app) and 1.8 billion app opens. We measured the effectiveness of each app install and isolated video ads by comparing them to other formats. In our previous report, we looked at the first three quarters of 2015 to see how video spend was trending; for this update we examined the end of Q4 2016.
Across all verticals, 77 percent of spend was for video ads with the remainder being for graphic and playable ads. The most eye-opening finding in this report is that the video ad format has taken over in the gaming market, currently accounting for 93 percent of mobile ad spend. In non-gaming verticals, 58 percent of spend was for video ads, and 42 percent was for non-video.
Looking at the trends, the growth of video ad spend has started to plateau, which is to be expected given its already dominant position. There is only so much growth it can claim in the realm of gaming.
When we look at the retention metrics associated with video ads, we can see why it is such a popular format. Publishers like its payouts and advertisers like its effectiveness. Users like its opt-in nature (particularly with rewarded video) and are accustomed to the 30-second video format.
Apps that acquired users through video ads had 24 percent better retention than those that did so with other formats. However, there was a noticeable difference between the iOS and Android platforms: on iOS, video ads performed 29 percent better, while on Android, they performed 21 percent better in terms of retention.
The video ad format has proven to be the best format for users, publishers, and advertisers, so it’s no surprise to see its level of dominance in the mobile space. The gaming category, which famously sets trends for other verticals within mobile marketing, has seen the most aggressive growth for video ads up to now, almost to the point of saturation. While gaming is starting to look at what’s next (perhaps the nascent but growing playables category?), it seems that non-gaming apps have yet to fully enjoy the benefits of monetizing with video ads.