Retailers Are Spending More In-App Than Any Other Vertical

We all know that in-app spending is on the rise and most would think that is related to gaming, an app-driven vertical, or some kind of CPA campaign. But you might be surprised. In a recent analysis of Smaato data, we discovered that spending from the retail vertical has never been stronger. In fact, retailers spend more in-app advertising dollars than any other vertical.

Today, we see 49 cents of every dollar spent coming from retail. Part of this is because of in-app’s ability to target parameters such as device ID and location. However, in some cases, a media buyer might not realize that they are buying in-app when they set up campaigns in their respective DSPs. They are setting parameters and seeing strong performance that is working for them, so they continue to buy. In these cases, retailers would benefit greatly by getting closer to the supply side in order to optimize according to in-app’s strengths.

Appreciating in-app’s unique advantages

There is an opportunity for retailers to grow and improve their share of voice, efficiency, and effectiveness with in-app advertising as traditional desktop and mobile web buying evolve away from cookie-based targeting. In-app formats have a major advantage over websites. While advertising on mobile websites is reliant on cookies — which decay within 24 hours and are now being blocked by some of the biggest browsers — device IDs used by mobile apps last an average of 21 months and offer stronger targeting options, such as location and language targeting. It is also important to note that a device ID is tied to a person, whereas a cookie is tied to a browser.

A retail media buyer’s main goal is to get in front of users, and users today are on apps on their mobile devices. This is where retailers need to be, regardless of whether the retailer operates via brick-and-mortar locations or solely through e-commerce. And of course, these lines continue to blur. Retailers today are placing a deeper emphasis on omnichannel strategies that can drive sales both in-store and online. Meanwhile, some of the world’s biggest ecommerce retailers are expanding into physical spaces.

Despite this evolution, we’re still seeing some key differences when it comes to retail in-app advertising. When analyzing total spend across ad impressions on the Smaato platform for the Q4 2018 holiday season, we noted interesting variances in how brick-and-mortar retailers focus their campaign dollars compared to ecommerce retailers. The most noticeable difference we saw was based on ad format.

Outstream video: This is hands down the most popular format among retailers. Outstream video ads, which take the form of pre-roll and mid-roll, are those that appear in non-video environments, such as social media feeds and news articles. Brick-and-mortar retailers are currently 71% more likely to spend on outstream video compared to ecommerce retailers.

Rewarded video: This is an emerging format, not only for gamers, but for brands as well. We have seen that e-commerce retailers favor rewarded video formats, in which viewers are incentivized to watch with in-app points, prizes, discounts, or even deals that can be used offline. Ecommerce retailers are 37% more likely to spend on rewarded video ads than brick-and-mortar retailers. They know their message has been seen, and they value that impression.

Interstitial video: This format is typically a full-screen ad that pops up during points of natural transition within an app. As with outstream, brick-and-mortar retailers spend 31 percent more than their e-commerce counterparts in the category.

Banners ads: As video formats continue to see tremendous growth in the in-app space, both brick-and-mortar and ecommerce retailers continue to invest in display ads as well. When it comes to brick-and-mortar and ecommerce within in-app, we do see a difference in investment when it comes to size. Brick-and-mortar retailers are 31% more likely to spend on the smaller 320×50 mobile display banners, while e-commerce retailers are twice as likely to spend on the larger 320×480 medium rectangle.

What does this all mean?

Brick-and-mortar and ecommerce retailers often hold their in-app campaigns to different success measures, leveraging different formats based on performance. But in the end, they are all in-app formats.

Media buyers need to ensure they’re not thinking one-dimensionally when it comes to in-app advertising. With the data available, retailers have the power to get very specific with their targeting. Don’t just target by a single parameter like gender, age, or income. By utilizing data related to demographics, location, categories, and device ID, retailers can be as specific as they want when promoting a store or product. They can also take advantage of ad formats they know will get the advertiser in front of the eyeballs they seek.

Retail is already the prominent vertical deploying in-app advertising on the Smaato platform, and all signs point to even more growth. By getting closer to the supply side, understanding how in-app is different compared to websites, and making better use of the targeting and ad formats available, advertisers will be empowered to take their in-app campaigns to the next level. The right creatives, combined with targeted data, have the potential to drive serious sales for both ecommerce and brick-and-mortar retailers.

Eventually, as with everything in digital marketing, retail media buyers will become more informed and strategic with how they buy in-app. Based on the latest spending figures, it would appear that time is now.

Sean Tinnelly, VP, Demand, Americas at Smaato