Why In-App Advertising is the Future of Mobile Advertising

According to emarketer, almost 54% of the entire UK population will own and regularly use a smartphone in 2014 and tablet penetration, at 41%, isn't far behind.Given that consumers of luxury goods are 50% more likely to use a smartphone and 3 times more likely to use a tablet (according to Google/Ipsos), it's not surprising to see premium and luxury retailers exploring ways in which they can reach consumers on their mobile devices. The fact that mobile advertising lags well behind TV and print in terms of spend vs. time spent with the medium gives that trend even greater impetus.But it may surprise some to learn that the best way to reach premium consumers on mobile may not be the mobile web, but in-app advertising. Here's why.People spend more time using apps on their smartphones than they do using the mobile web. A recent study from analytics firm Flurry found that US smartphone owners spent 2 hours 19 minutes per day using apps, or 86% of their time using their mobile, compared to just 22 minutes on the mobile web in March 2014. Not only that but app usage time had increased since March 2013 whereas time spent on the mobile web had decreased. Gaming (32% of the time spent with apps) and social media (most notably Facebook at 17% of time spent with apps) were the main sources of app usage.Given that mobile users spend so much time using apps, it's not surprising that in-app ads are the most commonly seen. Research conducted by Decision Fuel and On Device Research for InMobi indicated that 56% of mobile internet users had noticed in-app ads, more than any other ad type.The options available to advertisers in this medium are really starting to develop too. At present the interstitial and much-maligned banner are still the staples, but native formats are a growing trend and are being offered by the like sof InMobi and Twitter-owned MoPub. With these formats, app-owners can set the creative-style of the ads, whilst often being able to control the types of brands who can advertise to their users and the frequency too. This level of control by app owners is desirable - advertisers want a relevant, engaged audience, not one driven away from an app by the frequency and style of the ads.And the targeting options are diverse too - including options to target on demographics, context, location, behaviour and device. And location is key here, particularly for premium and luxury brands. Smart marketers can target by real world location and behaviour - for example targeting prospects who actually went to the Cartier Polo rather than just those who read about it online.New providers are emerging all the time. As well as the Apple's iAd, Google's AdMob, Twitter's MoPub, Microsoft has recently launched Ads in Apps for Windows 8. And performance display advertising specialist Criteo entered the market in January of this year. It's no wonder that Jupiter Research forecast that in-app advertising globally will increase 5-fold from $3.5 billion in 2013 to almost $17 billion in 2018.However, this is still an emerging market and teething problems remain. As with all mobile advertising, tracking a user across devices can be problematic, especially as only a small number of mobile apps attract account logins. And with a plethora of in-app ad networks there's a plethora of ad formats to consider, which increases complexity and can drive up costs. Exacerbating this, measuring the true impact of ads can be challenging, which will likely mean that in-app advertising's true worth may not be realised for some time to come.But the massive imbalance between time spent on apps and time spent on the mobile web isn't going to be corrected anytime soon, if at all. So premium and luxury advertisers are going to need to get to grips with in-app advertising if they're to fully leverage the power of mobile for their business.