When Mobile App Ads Eat Your Budget

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

Eating-MoneyIt’s important for business owners to choose an advertising network that’s capable of reaching all device types. This is one of the benefits of using large advertising networks like Facebook and Google; they can give substantial reach on various platforms. It’s also true that mobile device users spend most of their time on apps, so it makes sense to display mobile ads on apps more often than on mobile websites. However, the problem comes when one considers the sheer volume of apps available and the behavior of consumers who are using an app. This post will explain how mobile app ads can gobble up an ad budget and what business owners can do about it.

There are more than a million apps available for Android and iOS devices, and many of them want to make money by having ads shown on their app. Unfortunately for marketers, consumers are less likely to convert on an ad from a mobile app. There are a variety of reasons for this, but the main issue is that many mobile apps aren’t designed to make people want to buy something, so ads are ineffective. For example, ads shown at the bottom of games are operating under the assumption that the person using the app would want to stop playing the game, leave the game app, and then go to an entirely different website so they can take advantage of an offer. Unless the offer is about another game or extremely generous, the conversion rate will be low.

Mobile apps eat away at the budget for internet advertising on channels with much lower click and conversion rates. This can be a big problem when an app becomes extremely popular very quickly. When a large number of people download and open an app for the first time, ads are being displayed that cost the advertiser money. In most cases, these ads shown to these first-time users of an app are wasted. The app user is so concerned with seeing why the app is so popular, they aren’t paying attention to anything in the ads. During app download surges, business owners may see a lot of their ad dollars flow out into mobile advertising but with little traffic coming back to their site.

In some respects, this a problem that will sort itself out with time and data. The reason that Google is such an effective ad network is that it knows which sites to show which ads to maximize the number of clicks. It may be a slow start as they gather the data, but eventually, the algorithm for placing ads on mobile apps will be sophisticated enough to know that people who use a particular type of app are likely to click on which kind of ad. Once Google (and other ad networks using mobile apps) has enough data to make those kinds of connections, mobile display ads will be just as effective as their desktop brothers. However, there are things that business owners and marketers should do in the meantime.

There are three ways to handle a situation where mobile apps are taking up a large part of the advertising budget but with few returns.

  1. Exclusion – This is the most extreme solution but it is effective. If a business owner isn’t happy with their ad performance on mobile apps, they can have that excluded from the ad settings on Google.

  2. Bidding – If excluding all mobile apps seems like too much, marketers can try to better control the way the budget is spent by lowering their bids for mobile app ads. This means the ad will be shown less often and is less susceptible to drains in the ad budget from ad download surges. The issue with this tactic is that lowering the bid limits access to the best apps.

  3. Segmentation – For marketers who still want to use mobile apps for advertising but don’t want it to eat up the entire budget, the best solution is to segment the campaign so that only a portion goes to ads on mobile apps. This can be done by using separate sizes for app ads and then budgeting them separately from the rest of the campaign. Or, business owners can just setup a separate campaign entirely for mobile and one just for desktops.

Since advertising dollars aren’t limitless, it’s important that marketers are monitoring their ad campaigns to ensure they are getting a good return on the investment. Ad networks will eventually figure out the best ways to target mobile app users effectively, but in the meantime, business owners should be checking their networks to make sure they aren’t pouring a bunch of money into ads on apps with no returns. Also, it’s important to remember that there are ways to increase the attractiveness of an ad, such as these tips on better ad copy. Before forswearing mobile app marketing entirely, make sure to try everything that can make the expanded reach work for a business.

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