Will The Last App Advertiser Please Turn Off The Lights?

Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Marc Guldimann, CEO at Parsec Media.

A few months ago, I was asked to share a surprising or counterintuitive perspective I held on the digital ad landscape.

So, I uncorked the big one: Apps are a dead end. Advertisers should forget apps, I said, and focus on the mobile web instead.

It was as though I had suggested that “The Godfather” was overrated or that Ringo was the most talented Beatle.

The response: Did I know how many billions of dollars of development – and how much conventional wisdom – I was betting against?

There are certain ideas about the internet that are so widely believed that they may as well be carved into a mountain in Palo Alto. For example, the next frontier is virtual reality, cars will drive themselves soon, the blockchain will fix everything (somehow) and robots will take our place at work.

Add another one: The future of content consumption and mobile advertising lives in apps and not the mobile web.

But at the risk of heresy, I believe this last commandment wilts under scrutiny. The data rejects it, the way that we use our phones disproves it and emerging trends in mobile usage run counter to it.

Like it or not, the future of ad-supported content belongs to the mobile web.

The Case For The Web 

By now, we've probably all seen the data that shows that smartphone owners spend far more time with apps than they do on the web. For example, a 2016 report from eMarketer claims that "apps will account for 86% of adults’ nonvoice smartphone time this year, with the mobile web accounting for just 14%."

But this is an oversimplification, especially where it concerns advertisers.

First, several of the most dominant apps, including Facebook, Twitter and LinkedIn, are essentially mobile browsers. A large amount of time in these apps is spent consuming content between different news articles and websites. That's more like a walled web browser than the numbers reflect, and the advertising when consuming this content is rendered in HTML5, aka the mobile web. Even Facebook pulled back on Instant Articles in favor of the more (albeit not totally) open AMP protocol.

Content consumption in digital, compared to utility or entertainment, relies heavily on discovery and socialization. Even with improvements in deep linking, distribution is harder in siloed apps. It’s unlikely that consumers are going to install an app to read content tweeted by their friends. The Media Briefing claims, “Big-name brands like Vogue and Top Gear have paltry circulations in the mere thousands of their digital magazines.”

Advertisers need to ask themselves what kind of content their ads are running against if name-brand publishers are struggling to find audiences for their mobile apps. Social media, disappearing photos, shooting zombies and dating apps simply aren’t the best environments for most brands. Not to mention there is difficulty in measurement, which creates opportunities for fraud, such as the click farm that Google just shut down.

Apps that perform a utility, including sending email or messages, looking up the weather or candy-crushing, are somewhere between difficult and impossible to advertise inside. Even when ads are shoehorned in, they are far less suitable for branding, since consumers simply aren’t as receptive to advertising content when they are playing games or checking train schedules.

As a consumer, apps do deliver certain advantages. Apps are better when the network connection is spotty, for example, and you can preload content and provide offline access to services. This advantage, however, will diminish as connectivity reaches our few remaining dead zones, such as subway tunnels and the friendly skies during airplane flights.

And apps typically offer a better user experience because they maintain state better than mobile sites, and they can more readily take advantage of a phone's built-in features, such as the camera, GPS and contact list. From an advertiser perspective, apps offer stronger tracking and targeting capabilities through the use of a device ID.

As connectivity improves and the mobile web catches up to apps in functionality, we'll likely see publishers and advertisers alike de-emphasize their app strategies and invest in the web, just as we saw about 20 years ago.

Apps Vs. Web: The Sequel

It's worth recalling that we've already seen a battle between apps and the web, and the web won.

During the dial-up internet days, our personal computers were stuffed with applications for encyclopedias, accounting books, email clients and news readers. Eventually, these local apps were replaced by rich websites, which could perform these same functions without needing to keep a local application updated.

And just as it soon became far more convenient to visit Encyclopedia.com rather than download and install an app, so too are smartphone users shifting away from app-switching and toward centralized web browsing. In fact, today's smartphone users are barely downloading any new apps at all: A 2016 study from app analytics firm SensorTower found that the average American downloads a grand total of zero new apps per month.

And if you're investing in the app world, zero is not an encouraging number.

That's because we've already downloaded all the apps we need. Sure, every once in a while, a Snapchat or Uber will come around. But otherwise, we've got our essential apps, and we're not itching to add more icons to our home screens, especially when the same content is available on the web.

Leave The App, Take The Cannoli

So, if you are a publisher, you are pushing out against a tide of data and user behavior that suggests a narrow path forward for your app. You're working against the high costs of app development, the need to update the app for a dozen different versions of iOS and Android, the nonexistent consumer appetite for new apps and a waning advertiser demand for the attention captured in the app environment.

Isn't it more sensible to invest where the action is?

Follow Marc Guldimann (@guldi), Parsec Media (@ParsecMedia) and AdExchanger (@adexchanger) on Twitter.

4 Comments

  1. Does Marc Guldimann define major online publications such as NY Times, Wall Street Journal, and other premium publisher mobile apps as part of the app world or mobile web? It matters, because these properties provide considerable value to their audience, and advertisers. Where does he place them?

    Reply
  2. Eric Picard

    Great to hear the counterpoint. I think really the point you're making is that most apps don't need to be apps at all, and should just be mobile web. But let's be clear that there are apps that work as fairly powerful unique media / content delivery mechanisms and those make sense as mobile apps - and drive more value. Pandora, where I work, is obviously one of those. But I'm betting there are fewer than 200 - 500 apps that make sense to operate this way. The remainder may not make sense to do the extra effort, unless they're utilities that require APP-only functionality (e.g. system utilities, wifi analyzers, etc...) Certainly as a user, getting the "install app" from Huffpo is not a great experience when I'm reading an article linked off Facebook. I'm simply never going to install the Huffpo app. I do have the San Francisco Chronicle app installed, but it's so bad I hardly use it. But the NYTimes App rocks - and it's one of my most-used apps, and I find it superior to their web experience.

    Reply
  3. Patrick O'Leary

    Marc - I think about this all the time that apps are the 2nd coming of client server computing and when will they go away? Who needs incessant downloads of software updates from apps at 150MB a pop? Either HTML5 or something new will reach parity with native capabilities to interact with the phone and kill off many of the apps. And from an advertising POV, you're right, most apps aren't suited to ads.

    Reply
  4. Jason Shulman

    I applaud your efforts to shine some light on the in-app advertising space because I am continually amazed at the in-app ad avails on the major exchanges/SSP's and the questionable quality and nature of these "ad opportunities". Two apps alone, Clean Master and Go Keyboard, supposedly have just over 10 billion avails today. Plus, there has been a recent spate of press regarding in-app fraud with articles like this:

    http://www.zerohedge.com/news/2017-05-11/look-inside-chinese-click-farm-fake-followers-fake-likes-fake-reviews

    Put simply, in-app advertising fraud is not a trivial matter and complements your additional points about in-app advertising. Thanks for sharing.

    Reply

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