KEY POINTS

  • Mobile app-install ads — ad units that direct users to download a mobile app — are an essential tool for developers, and they account for a major share of mobile ad spend. We estimate 25% of total US mobile ad revenue was generated by app-install ads in 2015.
  • A combination of new developers entering the space and rising ad budgets will drive increased spending in years to come. US app-install ad revenue will grow to over $7 billion by year-end 2020, according to BI Intelligence estimates.
  • Mobile app-install ads fetch a higher price than other mobile formats due to their strong performance. App ads were the third-most important channel for convincing users to download an app, ranking even higher than app chart placements.
  • App-install ads perform well because they are easy to understand, are native to mobile, and have a very low-friction call to action. Conversion and lifetime ROI are easy to track with mobile install ads.
  • Mobile app install advertisers have traditionally invested heavily in display and interstitial ads, but are moving to mobile video and native install formats. 86% of developers currently use in-feed video app-install ads, and video ads are seen as the most effective app-install format. 
  • As formats like video rise in popularity, older formats are losing their appeal for install campaigns. Static nonnative ads are widely used but are not seen as effective. Free app networks and offer walls have also fallen out of favor.
  • The most popular platforms and ad networks for mobile app-install ads are still social networks, even as social spend is plateauing. Facebook is still popular, while Instagram and Snapchat are the latest to begin offering the format.
  • Ad platforms are now developing innovative new install formats to earn even more revenue from these lucrative ad units. New approaches, including deep linking and app streaming, are more contextualized and interactive than older ad formats. 

Introduction

Cutting through the noise of an overcrowded app market is critical for any app developer looking to build a viable user base. There are now more than 3 million apps available across the world’s five largest app stores. Delivering the right product to the right audience at the right time in this environment is imperative to the success of any app.

The challenge of marketing an app effectively has made app-install ads — an ad unit that directs users [...]