Using Utility Apps to Realize the Value of Brand Ads on Social Apps
Throughout human history, we have relied on our five senses to obtain the information we need, but as civilization progressed, media took on an enormous role in shaping our perceptions of the world. At first. we relied on print media and later TV broadcasts to get to know what was going on around the world, but since the dawn of the internet era, print media has been fading and TV viewership has decreased year-by-year. Hand-written letters will soon be just a memory and the PC is no longer the device that we spent most of our time on.
The mobile internet pushes the trends of our time. Mobile internet is the core, while traditional media is secondary. The importance of the mobile phones is increasing; we now call it “the new sensory organ of humanity”. We are as accustomed to using mobile phones to understand the world as our ancestors were to relying on their eyes and ears.
This change in habit is driving changes in media consumption, and consequentially changes in ad formats. Now, cell phones can help advertisers to complete the entre process of ad display, click and purchase. The connection between various channels is becoming ever closer, as brand ads and performance ads are no longer separable. Below, we will use big data provided by Cheetah Mobile to explore the future of brand ads in the mobile Internet era.
First, digital ads will become mainstream in 2017
1. Global spending on advertising will reach USD 547 billion, of which 1/3 comes from digital advertising.
According to the study by WPP’s media investment management group Group M, global advertising spending is expected to reach USD 547 billion by 2017 (4.4% growth), of which 33% comes from digital advertising. In 2016, 72% of every dollar increase in advertising was allocated to digital advertising and 21% to TV advertising. This is projected to increase to USD 0.77 for digital and 0.17 to TV.
2: Mobile advertising continued to grow, accounting for half of digital advertising.
According to eMarketer’s forecast, total spending on global mobile advertising will reach USD 101.37 billion in 2016, and the number will increase to USD 195.55 billion by 2019. It is expected that by 2019, mobile advertising will account for 70.1% of total spending on digital ads and 1/4 of total ad spending on media.
Second, how can we gain dividends on the Android market?
1. Worldwide trend has it that Android platform is widely distributed.
Android and iOS are the two major platforms of mobile devices throughout the world. Since 2010, Android has developed quickly, showing rapid annual growth. iOS is only supported by Apple devices, so its growth has slowed.
According to the Internet Report of 2016 provided by App Annie, the share of iOS was 16% in 2015, representing an 11% YoY decrease. While the share of Android increased 7%, up to 81%.
2. Gaining dividends from traffic: utility apps are necessary for Android users
The growth of Android is the main reason for the rapid increase of the Android APP market.
【Note: The proportion of new users refers to new installations of apps in a certain category divided by global Android app users. A higher percentage indicates a higher number of new users who installed this category of apps.】
According to the “Global APP Development Report 2016” released jointly by Cheetah Lab and Appinsight, the number of installation from utility apps is far higher than any other kind of app. It is 1.7 times higher than the number of communication apps, which are ranked second. The huge demand for utility apps comes from the inherent weakness of the Android system in cleaning up internal memory, screen lock and security functions. All these weaknesses have become the profit point for utility apps, and make it the rigid demand from Android users.
Third, realizing value of ads based on a big user base
1. Utility apps are welcomed by a wide range of users.
For brand ads, users of utility apps have lower stickiness, but cover a wider range. Especially on the Android platform, where users have higher demands for junk cleaning and security system, the number of active users for these two types of apps is even higher.
2. Users of social apps show higher stickiness, but the threshold for ads is higher as well.
The advantage of social apps is that their users have higher stickiness, but the threshold of ads is even higher. Throughout the world, every nation’s native social apps have their own monopoly. For example, WeChat in China, Facebook in Europe and America, and Line in Korea and Japan. These Apps have saturated their major markets. To ensure a better user experience and higher quality, the ads on these social apps are limited in display and placements, hence the competition among advertisers is fierce given limited ad resources.
Additionally, since some users regard social apps as their private places, advertisers have to have a more discrete way to launch their ads. Many advertisers started from content creation, and to have ads perform well, a lot of cost must be spent on content creation, so the length of production time is relatively long.
3. Screen lock serves as the best connection with social apps
Data period: January 2016
The first priority is given to privacy protection when using social apps. That is why app locks have become more popular. App locks are not only used to lock cell phone screens, but also to lock any apps based on users’ preferences.
Applock’s data shows that the top five countries using applocks are the United States, India, Brazil, Mexico and Indonesia. Most of the users are in America and Asia where mobile internet is experiencing rapid development. A closer look shows that among the top 10 most frequently locked apps, the top 2 are social apps, and in the Indonesian market, the top 4 are social apps.
Other than Indonesia, most users in the US, India, Mexico and Brazil chose app locks to lock Facebook and WhatsApp, two world-class social Apps. In the Indonesian market, the top 7 most frequently locked Apps are social apps, the highest ratio among the top five countries.
4. Social apps are the best at building user stickiness
To find apps with the highest user stickiness, we need to look at active apps that have the highest penetration rate on a global scale.
Data from Libra shows that, based on users’ habits, 5 of the top 10 apps with the highest penetration rate are social spps, and their open times are much higher than other categories, which indicates a higher user stickiness.
5. Screen lock placement fits brand ads
The critical demand of brand ads is extensive and repeated viewability, so the placement on screen lock matches such demand. In other words, the availability of screen locks on utility apps gives them wider user coverage, and the need to protect privacy on social apps generates higher open rates.
Fourth, case studies
1. Samsung S7: Entry into the India market with 31 million impressions per day
As mentioned above, given the great growth potential in India’s mobile Internet market, Samsung won’t miss out its opportunity. During the promotion of Samsung S7 in India, Samsung adopted screen locks and received high conversion rates along with high viewability.
Samsung sold app lock ads by daily buyout price. Every time users unlock their Facebook App via app lock, full-screen and inserted ads were displayed to promote their latest device. Users could also click through to popular e-commerce site Flipkart to shop for the Samsung S7. In this case, Samsung gained 31 million impressions per day, far beyond the preset goal of 22 million, and its conversion rate reached 1.5%.
2. Suzuki: Targeted the younger generation in their own way
When Suzuki, the Japanese automobile brand, launched their latest model, Swift, in the Indian market, they hoped to spread their message among target users. The company released several pictures of the Swift to excite up the market. Swift is exquisite and sporty, and the best choice for young people as their first cars. Therefore, Facebook users naturally became the target buyers of Swift.
Suzuki also sold Facebook app lock ads at the daily buyout price. The campaign gained more than 2 million impressions in 2 days, and the conversion rate reached 1.47%. According to statistics, each user viewed 3 pages of content on Suzuki’s site via click through, allowing them to further understand the car.
3. AliExpress: Pushed their presence on 7 successive days to plant the idea of shopping on Nov. 11
The November 11 shopping festival is a miracle moment in China, and now it has expanded overseas. In China, customers are accustomed to saving the products they want in their virtual shopping carts before November 11, whereas in the oversea market, the November 11 shopping festival is still something new. Therefore, frequent views and education are priorities for exploring the overseas market.
AliExpress used a countdown model to purchase app lock ads for 7 successive days at the buyout price. The un-lock buttons were designed as shopping bags. Every time users unlocked the app, their impression of the November 11 shopping festival deepened. This launch gave AliExpress 105 million impressions, and drove shopping traffic directly onto AliExpress.
According to our observations, app lock ads can be deeply embedded into social apps to realize the value of brand ads. From a user footprint perspective, utility apps show their advantages, while from a stickiness perspective, social apps lead to higher open rates and thus bring more viewability to brand ads.
App locks have great demand in both developing countries with great potential for growth (e.g. India and Indonesia) and developed countries (e.g. US). Social apps are among the most used apps in the world, and their user stickiness is highest.
At user level, the combination of app lock and social apps perfectly solves the issue of privacy leaks. And at advertising level, high viewability and deep engagement creates more value for advertisers. We believe that in the near future, following the maturation of mobile apps and a stronger need for security by users, demand for app locks will increase, creating more value for users and advertisers.