We're living in a mobile-first world, where there are 7.2 billion people and 7.5 billion mobile devices. With mobile ad spend expected to hit $100 billion by 2016, and account for 72 percent of digital ad spend by 2019, mobile ads are becoming the biggest digital advertising market.
As marketers tailor their ad strategies to mobile consumers, they need to decide how to divide their marketing investment between the two primary mobile formats: in-app and mobile web ads. While mobile users spend 90 percent of their mobile device time in apps, mobile web still presents an opportunity for conversions and shouldn't be ignored.
To most effectively deliver performance with mobile campaigns, marketers need to include both formats in their ad strategies. So how do you know how much to invest in each ad platform? It all depends on your customers. Here are three things to take into account when deciding how much to invest between in-app and mobile web ads.
Which channel do customers use most?
The majority of consumers (85 percent) view mobile devices as a central part of their everyday life, spending 3.3 hours a day on average on their smartphones. But where exactly are your customers spending the most time interacting with your brand -- in your mobile app or on your mobile website?
For many brands -- especially those whose customers buy its products on a less frequent basis -- customers are primarily interacting with it on the mobile web. Marketers for these brands should allocate part of their budget toward ads to acquire customers on the mobile web or on ads within other brands' apps. For brands whose app model drives daily use, such as flash sale and travel apps, marketers should instead spend their ad dollars driving users to download their app and shop on it on a regular basis.
Which option sees more customer engagement?
Beyond use of an app or visiting a website on mobile, advertisers need to assess how customers are engaging with their brand on each platform. According to Gallup, customer engagement is the definitive predictor of business growth. When businesses provide the meaningful experience their customers want, they realize greater rewards in terms of loyalty and profits.
For example, if your app has low user engagement, you may want to invest more money in mobile web, where consumers are more likely to interact and be driven to make a purchase. By focusing on the experience that's not only used most often, but also has the most customer engagement, you'll improve brand loyalty and also increase conversions.
Which one has higher sales margins?
With the emergence of Apple Pay and Google Wallet, it's easier than ever for consumers to make purchases on their mobile devices. A recent study we conducted at Criteo found that mobile transactions now account for 30 percent of e-commerce sales in the U.S. and more than 50 percent in Japan and Korea.
To drive mobile revenue, conversions both in-app and on mobile web are equally important. One good measure of conversion is a customer's average order value (AOV). If your AOV is much higher on mobile web, for example, it's likely you'll see a bigger return on ad spend there. However, AOV isn't the only measure of success. While you could have a small amount of sales with large AOV, you could conversely have a large amount of sales with low AOVs.
With consumers spending more and more time on mobile devices, marketers need to realize that apps versus web isn't a winner-takes-all battle -- both play a part in a successful mobile ad strategy, and one channel undoubtedly impacts the other. Marketers should look to follow a consumers' lead, adopting a pragmatic attitude toward the two channels and investing in both, rather than one over the other.
Once taking each mobile channels' frequency of use, level of customer engagement, and average sales margins into account, marketers can identify how to best allocate their budget between apps and mobile web to maximize their ad spend. The bottom line is, if you're not reaching, engaging, and monetizing customers effectively on mobile -- regardless of the ad format -- you're probably losing them to your competitors.
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