More companies are investing in mobile video ads, now that cellular broadband networks can handle the content demands, and it’s only going to grow. A December 2014 Business Insider Intelligence report estimates that mobile video ad revenue in the U.S. will reach over $4.4 billion by 2018, which shows an increase over a five-year CAGR of 73 percent reported in 2013. Business Insider Intelligence also estimated that mobile video would grow five times faster than desktop video ads.Even if you go with eMarketer’s more conservative estimate of mobile video revenue will grow three times faster than desktop ads throughout 2020 (detailed in a June 2015 study), there’s no denying the momentum of video based advertising.
With that in mind, AppsFlyer and AppLovin have teamed to together and created a report that shows the full impact of mobile video ads.
The two companies measured data from over one billion devices worldwide, taking a close look at the growth of mobile video and data regarding app retention globally and across multiple platforms. Retention is crucial to publishers and marketers alike, mainly because of an app’s “stickiness” in terms of people using it more regularly.
The report also found that mobile video seems to be the fastest growing advertising format, with a 190% increase over the first three quarters of 2015. More importantly, video ads are 40 percent more effective for creating user retention than non-video ad formats. However, iOS video ads have a greater retention statistics than on Android.
Charts indicate that video ad spending jumped quite a bit between the first and third quarters, going from just over 30 percent to 65 percent in 2015.
Global ad spend on video increased with non-gaming advertisers, going from 16 percent to 46 percent within the same time period. Meanwhile, those within the gaming market rose even higher, going from 20 percent to 71 percent from Q1 to Q3, as indicated in the chart below.
As for retention, AppsFlyer emphasizes its importance, since the average Android app on Google Play manages to lose around 77 percent of daily active users within three days of its install. Video ad formats can normalize retention over non-video ads by about 34 percent. “If a player downloads a game after seeing a video ad, they are a third more likely to stick around than if they downloaded the game after seeing a non-video format ad,” says the report.
iOS outperforms Android in normalized retention, with 40 percent and 30 percent, respectively.
“Specifically, in regards to retention, mobile video ads let consumers know what to expect from an app or game, so they know what they are getting into before they download,” the report states. “It makes sense then that this self-selecting sample (those who watched the video then chose to download it) would stick around longer.
“In the early days of mobile advertising, video ads were impractical. Most phones couldn’t handle displaying them, and cellular networks certainly couldn’t either. But as this report suggests, the conditions right now are perfect for the success of mobile video ads.”
To add further input to this report, Ran Avrahamy, AppsFlyer’s head of marketing, answered a few questions regarding the effectiveness of mobile video ads and retention.
What is it about video ads that make them so effective at creating app retention?
Video ads show a user what an app is truly like way more effectively than any text ad or even any static display ad ever could, so the user has a pretty good sense of what to expect from the app before they install it. If a user gets to watch the app in motion and has the chance to actually see its graphical movements, its gameplay, or whatever its best features are in action, and then they choose to install it, it’s because they’ve already decided that they’re interested in the app and the chances are pretty good they’ll like it once they start using it. With other types of ads, the user is taking a bit more of a leap of faith that the app is something they might like, and once they start using it they might discover that it’s not quite what they thought it would be.
The report mentions that video ads on iOS outperform those on Android by 10 percent in terms of retention. What do you think accounts for the difference?
That’s a great question. One theory is that there are slightly more apps available on Google Play than the App Store (about 1.6 million to 1.5 million, respectively), so Android users have more options to choose from. In addition, iPhone users are a different demographic — younger and more affluent — than Android users and therefore use apps differently. Lastly, the variance of Android devices – some top of the line but others not – means the whole experience of watching videos may be impacted. iPhones are, on average, better devices than the average Android device, whether in relation to performance, sound, video quality, resolution etc. so an iOS user is more likely to expreinence the full potential of a video ad unit, leading to better engagement and ultimately driving action.
The report also notes that Android apps lose an average of 77 percent of its daily users within three days of install. Do video ads appear to make a significant impact in changing this trend?
Yes. The data in the report looks at retention on Days 1, 7 and 30 as these are the most common milestones measured by mobile marketers. Our data for Android video retention shows a drop of nearly 60% by Day 7, which is still far less than the 77 percent drop that occurred as early as Day 3.
What kind of difference in retention did you see between the best performing app that used a video ad compared to the best non-video ad app?
Most apps — especially the top performing ones that are highly savvy — always use a variety of ads, video and non video so it’s not really possible to isolate this kind of data. What we can say is that when looking at the top performing Android apps, video ads on Android had a nearly 38 percent higher retention than non-video ads.
Is average retention using video ads the same across both gaming and non-gaming apps, or is there a significant difference between the two?
Yes. It is well known that mobile video is a huge hit among gaming developers as it can best capture game play and cool graphics. So on Android we see a 33 percent higher retention on gaming apps using video ads, while on iOS the gap is even bigger reaching 47 percent.