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By Amit Bhojwani, Head of Ad Tech Partnerships, Facebook Audience Network 

Ad monetization is going through a major transformation, driven by real-time auctions in mobile app bidding. Shifting from the inefficiency of waterfall mediation to bidding has created a more fair, open and efficient ad ecosystem. The result amounts to real benefits for app publishers, both financially and operationally.  

These benefits are why we see a growing number of app publishers adopting bidding. In fact, the number of apps using bidding with Facebook Audience Network is seven times larger than it was one year ago. Now, among the top 10 largest publishers using Audience Network to monetize, more than half are using bidding. 

In our new report, ‘The New Era in Ad Monetization: How App Bidding is Transforming Businesses’ , we spoke with publishers from around the globe who shared their experiences with bidding. These conversations helped identify three ways app bidding is changing businesses and what publishers need to know to succeed  in this new era of ad monetization. 

Increasing ad revenue with real-time competition 

Over the last decade, waterfall mediation has been the de facto setup for publisher monetization. But in recent years publishers have realized the method’s  shortcomings. With waterfall mediation, demand sources are called one by one in order of average historical price. As a result, demand sources that are willing to pay a higher price for an impression may never see the opportunity to bid, especially if they are lower in the waterfall. For publishers, the result is missed opportunities to effectively monetize.  

App bidding, on the other hand, gives every demand source a fair chance to win the impression opportunity, which helps publishers maximize the value of their inventory. Several of the publishers we spoke with experienced revenue growth following their move to bidding, recording between 13 percent and 27 percent uplift in average revenue per daily active user (ARPDAU).

Game Insight, a large developer and publisher of free-to-play mobile games, historically did not generate a significant amount of revenue from ads. Bidding helped Game Insight increase its ARPDAU, and raise the amount of revenue that ads contribute to its overall monetization. Due to these results, Game Insight now runs more than 95 percent of its inventory on bidding.       

According to Anatolijs Ropotovs, CEO at Game Insight, app bidding is destined to become standard practice.

‘’Bidding is the future of ad monetization across the industry because it provides a more efficient and fair ecosystem and streamlines ad optimization, whilst providing a positive improvement on ARPDAU,” Ropotovs said. “Publishers can expect to see revenue uplifts, as bidding surfaces the best prices advertisers are willing to pay for each impression.’’

Unlocking operational efficiency 

App bidding can also streamline business operations and free up key resources. Without having to manually manage the complexities of the waterfall, teams can reallocate their time to driving impact in other areas. For the publishers we spoke with, for example, replacing the waterfall via bidding meant they had more time to improve ad experiences, introduce new titles and optimize in-app engagement, all of which are important to building long-term sustainable businesses.

Mary J. Kim, head of growth at the Canadian developer Game Hive, agreed that building better experiences for audiences was a critical bidding outcome. 

‘’Freeing up time from managing the waterfall has enabled us to look deeper into meaningful in-game optimizations that have added tremendous value,” Kim said. “This includes improving the ad-journey user experience as well as strategizing to include new placements for more opportunities.‘’

App bidding can carry benefits for publishers beyond optimizing app experiences as well. The extra time that bidding affords also helped publishers integrate new demand partners and dedicate attention to scaling their user acquisition. 

A gateway to ads for IAP-heavy publishers 

A growing number of app publishers —  particularly those in the gaming category —  are looking at ads as a way to diversify and grow monetization. In fact, 89 percent of the top games worldwide had an ad platform SDK installed as of December 2019  —  an increase of 6 percent from January 2019.

Publishers who rely heavily on in-app purchases (IAPs), and that are getting started with in-app advertising (IAA) models, can use bidding to easily test ads and evaluate their impact without creating a large operational burden. For example, as an IAP-focused publisher, GSN Games found that bidding provided a platform to experiment with ad implementation and support its  hybrid IAA-IAP approach. The publisher was able to test ads more easily and maximize new revenue opportunities with limited operational resources.

‘’Although GSN Games is IAP-driven, we know not every player can or will spend money within the game, which is why having in-app ads is important to ensure we are maximizing the value of every player and providing a positive and tailored player experience,” said Brian Truman, executive director of digital ad revenue and operations at GSN Games.  

Moving forward into a new era 

Sustainable ad monetization requires a fair and efficient ad ecosystem. As more publishers experience financial and operational benefits, bidding is poised to become the standard ad monetization approach for the industry.  

According to YongWu Choi, CMO of Korean publisher BitMango, the clear, fair and honest ecosystem that bidding enables is what makes its adoption important —  and inevitable.

“The sooner publishers, advertisers and networks subscribe to a future of bidding, the quicker everyone will start to experience the benefits,” he said. “The completely transparent ecosystem will be the catalyst in shifting an entire industry’s perspective on how ad monetization should run. This is the future.’’

To learn more, download the full report: The New Era in Ad Monetization: How App Bidding is Transforming Businesses.

The post Three ways app bidding is transforming ad monetization for publishers appeared first on Digiday.