April Tayson
Oct 17, 2019

Ad whales: what are they, and why they are key to in-app advertising

In-app advertising spend may be on the rise, but the results are stuck in a rut.

Ad whales: what are they, and why they are key to in-app advertising

Ad revenue has gained momentum as a viable monetisation and diversification model for many app publishers. App Annie predicted a 60% increase in in-app advertising in 2019, and Asia-Pacific is the fastest growing region in the world for in-app advertising impressions.

But despite so much money being spent on it, there’s still one issue plaguing in-app advertising: aggregated reporting.

The industry standard for in-app advertising is based on reporting aggregated and averaged ad revenue data. Yet this stops app publishers from connecting ad revenue data to user acquisition sources or segmenting it accurately. The data they receive is aggregated across an entire network, so in-app ad revenue is shown as equally distributed among the entire user base. But the majority is actually generated by a small group of users known as "ad whales". These ad whales often make up 80% of the advertising revenue for mobile apps.

Aggregated reporting also means that marketers are just as blind to the opposite of ad whales: users who are quick to dismiss ads and are likely to churn if they’re being served too many.

This has a domino effect on Average Revenue Per User (ARPU) and Lifetime Value (LTV). These blind spots in your analysis can lead to poor decisions. Chasing the wrong users, or overemphasising campaigns that don’t generate the right returns is a waste of time and money. Moreover, audiences or user segments based on profitability could more likely suffer from accuracy issues.

In-app advertising spend may be on the rise, but the results are stuck in a rut. If marketers can’t find the valuable users who have a huge appetite for ads, they could spend their precious time chasing minnows, not whales. So how can marketers work out who these ad whales are and serve them the ads they’re likely to find useful?

User-level ad revenue is the solution to your problems 

User-level ad revenue tracking allows app marketers to tie monetisation revenue to the source of the user and compare it with the cost of acquiring that same person. It gives app publishers an easy and privacy-compliant way to calculate ARPU and LTV. This data can then be used to calibrate their ad spend more efficiently, and to retarget more effectively.

It’s been difficult for brands to distill user-level ad revenue down to actionable insights on their own — they need the support of their ad mediation platform partners. Fortunately, several have built the capabilities to succeed at user-level ad revenue tracking. Mobile monetization and distribution solutions provider ironSource, for example, has created an API that allows mobile measurement partners (MMPs) to funnel ad revenue data into their systems. Marketers can now also track impression-level ad revenue with Twitter's monetisation platform MoPub.

Marketers agree that this approach works, but it’s not a perfect solution. As Jonathan Winters, head of user acquisition at Miniclip points out, for user-level ad revenue to really gain momentum — and for brands to truly succeed with their in-app advertising — all mediation platforms and partners need to scale this solution. Only then will the ecosystem gain more transparency.

In fact, Winters is beating the drum for networks to do more. In his view, brands should initiate an open and frank discussion about the issue. “The core problem is a lack of transparency when it comes to understanding advertising revenue across multiple networks,” he explains. “The question is not whether advertisers should raise this to the individual networks and monetization partners, but how we can encourage more openness and sharing with mobile measurement partners so that we can track ad revenue in a similar way to how we track in-app revenue.”

Some marketers may see ad revenue tracking as just another KPI to monitor and optimise. But its potential to help us finetune user experience and increase revenue means it’s well worth investing the time and resources into getting it right, right down to the user-level.  


April Tayson is the director of Southeast Asia at Adjust

 

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