Many of our posts have focused on re-engagement strategy, but we’d like to take a look at the nuts and bolts of what makes app re-engagement and in-app advertising actually work. To help us with this, we spoke to our supply side platform (SSP) partners at BidMachine to give us some insights on how their SSP works, what they specialize in, and how they envision the future of in-app advertising.

What makes BidMachine’s inventory so specific? Are there any formats, regions, or other areas where you are strongest?

The first aspect that differentiates BidMachine’s inventory from most players in the market is that our inventory is 100% in-app. We focus entirely on the in-app vertical, both on iOS and Android. Secondly, we are very proud of the fact that more than 95% of our traffic is SDK-based. The flow is very straightforward: SDK > BidMachine > Demand Partner. Our goal is to have 100% SDK traffic by the end of this year.

We work with a worldwide audience, but we do have a strong core that includes countries such as the US, Germany, Canada, the UK, Russia, Brazil, France, Australia, Italy, Japan, South Korea, India, and Indonesia.

In terms of ad formats, we cover all standard mediation in-app ad types: small banners, MREC, full-screen banners, playable ads, native, video interstitials, and rewarded videos.

Do you have specific criteria when it comes to adding a new publisher?

The main criteria we have is whether a publisher can follow the flow I mentioned before — SDK > BidMachine > Demand Partner. We strive for less intermediaries and want to ensure the inventory is as close to our demand partners as possible and that there will be little to no reduction in the end revenue the publisher sees. To give this visibility to our demand partners, we require publishers to be compliant with app-ads.txt.

After the publisher is onboarded and integrated, we have a dedicated fraud team investigating suspicious app stats and behaviors and thoroughly checking all apps. We check for COPPA apps to see whether there are incentivized placements or real money being offered in the app, which we do not allow. We also make sure there are no ad placements that lead to forced clicks or actions. We check whether apps have obscene content, and whether they comply with the CCPA and GDPR regulations when applicable.

Is your SSP a first price auction or second price? Could you describe the impact of choosing one or the other?

We support both first and second-price models in our inventory. Until the end of 2019, there wasn’t any difference—both models had pretty much the same access to the inventory. We were improving our auction logic this year to reduce requests that are not important for DSPs and to improve their performance. But first-price auction participants ended up having access to more unique users at a reduced QPS, which enabled more users to be visible and decreased server costs for our partners.‍

How do you think first price auctions will change the future of the app industry? Do you have any recommendations, tips on how DSPs should adapt?

Slowly but surely, first-price auctions are changing the future of the app industry, bringing more transparency to publishers about how much their traffic is worth and increasing competition between buyers. This is good for publishers but not necessarily the best scenario for the buyer side.

Quite a few DSPs are still struggling (some even resisting) with the shift from second to first-price models. Because their bidding/buying algorithms are not ready for a “pure” first-price auction as there is no floor price passed in the request. Second price algorithms are pretty mature for DSPs and they tend to be very precise when it comes to how much they should pay for a specific user. With first price models they need to start almost from scratch. The open support and push from big platforms in our industry towards the first price model is definitely something that will accelerate the transition.

Our advice for the transition to first price would be to build a bidding/buying algorithm that doesn’t rely on price floors in the request and the buyer can bid exactly how much they are willing to pay for the impression (or at least with that step already planned). There won’t be any base floor prices once the full shift from the traditional waterfall model to a bidding model takes place.

As an SSP, are there any upcoming changes you have planned for expanding your inventory?

Yes, our sales team is always going after new publishers to onboard to our platform. We have a few big publishers going through the integration process right now, and soon we will share more details about that with our partners.

At the moment, we are working on making it easier for publishers to integrate our SDK and developing automation tools for a more efficient set-up.

If publishers feel like they want to get more out of programmatic, we also give publishers an opportunity to acquire their own exchange by leveraging BidMachine technology and existing relationships with demand partners, through a SaaS model. 

Are there any major trends or changes that you see happening when it comes to monetization solutions?

We see trends that are continuing to evolve, e.g. increased privacy of mobile users. Both Apple and Google now give more control to users with how and when their information is shared across the ad ecosystem. It will surely lead to a different way of tracking (or assuming) events within an app, and at the same time, it might shed more light on contextual advertising.

There is a continuous shift from second price to first-price auctions as buyers update their bidder logic and get more confident in buying traffic that way. Publishers continue to strive for more transparency and control when it comes to ways the traffic is bought in their apps. Demand buyers are more concerned about the traffic origin and how far away they are from the actual source (app-ads.txt, sellers.json). 

Also, more transparency does not necessarily mean less hops in the supply chain: indeed, the way companies approach the SPO (Supply Path Optimization) is slightly changing. The original goal of the SPO was to eliminate unnecessary intermediaries by uncovering them all. However, the process of automatically eliminating them regardless of the benefit they can bring to advertisers or demand partners was, perhaps, not thought through. The benefits may include aggregating high-quality inventory, providing advanced metrics and custom information, giving access to more unique users, etc.

How has GDPR impacted the way you work as an SSP?

As we are a technology/engineering-focused company, it didn’t have a huge impact on how we work. We were ready to add the required parameters to our requests. The most difficult part was educating publishers since not all of them understood how GDPR would affect their revenue.

In the beginning, we were only giving publishers guidelines on how to create their own consent window but now we have a fully-fledged consent management platform that can be used by publishers.

Another non-tech-related aspect of it was registering as an official IAB vendor for Framework 1.1. And now we are doing the same when the Framework 2.0 goes live.

What measure are you taking to ensure GDPR compliance and user consent collection?

If the client uses our own CMP, we make sure they are compliant and collect consent correctly. If they do not, we make sure that once the consent is given, we pass it along the supply chain. If it is not given, we act accordingly and don’t collect and pass their information to our partners, abiding by GDPR guidelines.

Do you provide any specific support and educate publishers on how to ask for consent?

Yes, we give the publisher the possibility of using our own CMP. We also have guides on how they should implement their consent windows if they don’t want to use our consent management platform. Our team is always ready to help the publishers.

How has BidMachine begun to prepare for the eventual removal of device IDs on mobile? What will be the immediate business impact for you?

We have a few solutions being investigated at the moment by our engineering and legal teams to understand how exactly we can help our demand partners, who are sometimes highly dependent on device IDs in their purchase logic. The immediate impact we expect not only for us but also for the in-app environment as a whole is a decrease in spend and revenue for publishers if the vast majority of users opt-out to share their unique identifiers.‍

This article was first featured on Adikteev's blog.

The summary highlights the most important insights coming out of this webinar. This blog post is originally published in the Admixer blog. To access the webinar in full, follow this link.

The pandemic is sending shockwaves throughout the app industry. The changes in daily routines and habits increase usage and app engagements. In the first quarter of 2020, weekly time spent in apps grew by 20%. 

Appodeal and BidMachine report the increase in daily active users and the number of available impressions. However, it does not match with revenues, despite the higher number of impressions, CPMs are dropping. 

The biggest beneficiaries of the app boom are communication and gaming apps. However, the situation varies from app to app, even inside the same verticals. According to Apptopia, the verticals that experience the biggest surge are grocery applications, gaming, content/media, and entertainment. Also, there is a surge in the usage of medical applications and health and fitness trackers. The biggest losers of the crisis, are apps dedicated to tourism, maps and navigation, and certain lifestyle categories. 

App downloads on iOS and Android devices during the crisis

iOS is prevalent in the wealthy, mostly English speaking markets. The most popular application in these environments during the pandemic are: 

• photo and video editors
• entertainment
• shopping 

Android is dominant in the rest of the markets, where the favorite segments are quite different. The most popular categories include:

• action games
• casual games
• tools, mostly for cleaning and optimizing device performance

Android is mostly used for entertainment, while iOS for shopping and content production. 

Changes in advertising budgets and CPM

Since the beginning of the lockdown in February, advertisers have decreased their budgets for branded content. At the same time, at the beginning of April, the following niches have picked up in spending:

• health and fitness
• hygiene products
• FMCG products

Performance campaigns have gained momentum, and comprise a bigger portion of the advertising market. According to BidMachine, there was 60% of branded campaigns and 40% of performance ones before the pandemic. Now, the share of performance campaigns increased to 75%-80%. 

According to the recent Pixalate’s programmatic ad spend report, there was a 14% decrease in programmatic mobile app ad spend in March. According to Admixer data, mobile ad spendings decreased by 15% in March and lost another 5% in April. 

While the number of ad impressions remain stable or even increase, CPM is consistently going down. A recent McKenzie survey of U.S. households noticed consumer pessimism: 30-50% of households are expecting their income to fall and planning to tighten their belts and decrease spendings. Consumers will spend less on non-essential commodities.

Therefore, the verticals that currently maintain their ad spent might have to cut down their advertising budgets. Even if the pandemic and the lockdown end tomorrow, the financial impact will have a lingering effect throughout the year. In China, where the lockdown is coming to an end, and fewer people spend time in confinement, the number of impressions decreased, however, CPMs have not bounced back to the pre-crisis levels. 

Best and worst performing ad formats 

According to Appodeal, there are significant changes in eCPM for different ad formats. Advertisers notice less yield from static banners, especially small and full-screen formats, as well as interstitial banners and pop-ups. 

At the same time, there is a significant eCPM increase for video ads, mainly because of the performance campaigns directed at user acquisition, installs of other apps, that command higher value.

According to Admixer, rewarded video is the best performing video ad format which demonstrate higher CTR and conversion rate than other video formats.

Rewarded videos are 2 times more effective than interstitial videos and 3 times better than regular out-stream video. Rewarded videos are not skippable so users watch them to full completion. In addition, it is is limited, premium inventory since game developers cannot add them anywhere. 90% of game apps support this format and can supply the quality impression to various advertising verticals in a brand-safe environment. App and game publishers can boost their revenues with video ads on their platforms through integration with an Admixer video player solution.   

Another ad format that keeps getting traction despite the pandemic is native advertising. Agencies and new categories of brands increasingly use them. Admixer witnessed a growing interest in native and awarded video formats from automotive brands. 

Programmatic trends 

The global pandemic and the rapid shifts in the app landscape delayed trends of programmatic adoption. The waterfall auctions still dominate the industry, which is yet to transition to new programmatic buying methods based on real-time bidding.

Nevertheless, the transition is inevitable. Both publishers and advertisers will win as the transition will make the ad buying process more transparent.

Slowly but surely, the app industry is leaving second-price auctions in favor of first price action and adopting real-time value metrics, already common in the desktop web. 

Recommendations for advertisers

1.Cost-effective strategies

The current crisis provides an excellent opportunity for advertisers to understand their audience better and implement cost-effective strategies. Advertising during the crisis ensures that the brand retains customer loyalty and can recover quicker. 

Yaroslav and Fernando suggest experimenting with the combination of different ad formats, implementing native and rewarded videos, as well as throwing some banners into the mix. Banners can provide extensive reach and high volume at a low CPM. 

2. Keeping brand safe

At the same, brands should be cautious with their messaging and sensitive about the information that they broadcast. According to Kantar, 75% of consumers think that brands shouldn’t exploit topics of COVID for their campaigns. 

Advertisers should prioritize brand-safe environments for their ads, and apps and games can be a perfect controlled medium for that. 

Recommendations for mobile app developers 

1. In-app advertising

As the consumer buying power is decreasing, app developers that relied on in-app purchases for their monetization are facing a drop in revenue. For this reason, they should consider implementing ads on their platforms to supplement their income and offset losses during the crisis. 

Consumers increasingly tolerate advertising; nearly 9 in 10 consumers feel that online advertising is necessary to receive free content online. However, it is crucial to strike the right balance between acquisition, retention, and the life-time value of your customers. The current app boom can attract a broader audience to apps; it is vital to keep them engaged and not to exploit their attention too hard. 

2. New ways of promotion

Publishers need to be flexible to adapt to new market realities and implement new types of cross-promotion, and giveaways to target untapped segments of the audience.

For instance, Tinder, the world-famous dating app, made free some of their premium features, such as “Tinder Passport” and “Secret Admirer”. Despite dating apps losing appeal during the pandemic, Tinder managed to remain in the Top-10 among lifestyle apps. 

Glovo, the food delivery app, provided new features for restaurant promotion, and special deals on delivery for restaurants who didn’t have this feature prior to the pandemic. Additionally, Glovo introduced features of groceries and medicines delivery in certain European countries. As a result, Glovo was able to maintain its leadership in the segment of delivery, while UberEats, their direct competitor, had to pull out of 7 markets.