Monetizing mobile apps without harming the user experience [Q&A]

In the past making money from a mobile app has usually involved signing up to an advertisement network and allowing the app to display banner ads.

The problem with this is that it doesn't make for a particularly good user experience and may actually turn people off using the app. For some time now the buzz around the industry has been about 'native' ads within apps. But exactly what is a native ad and what are the benefits? We spoke to Yannis Dosios, VP of Yahoo Publisher Services to find out.

BN: What is a native ad and how do they differ from more traditional options?

YD: At Yahoo, we believe advertising doesn't have to compromise how users enjoy an app, and that advertisements should, and can, complement the user experience. This is why Yahoo introduced native advertisements inside its own mobile applications. What makes these advertisements native is how seamlessly they are integrated into the user experience. For example, users scrolling through the Yahoo Finance application articles see a native advertisement after every few pieces of content. This ad has the same look and feel, and layout as the other content sections, while clearly denoting that this content is sponsored.
What we have found is that these native ads deliver significantly higher revenue and eCPMs (revenue per thousand impressions) than the traditional banner or full-screen interstitial advertisements. We also have found that these ads perform well for advertisers, delivering superior click-through rates and post-click conversion rates. Users notice and engage with these advertisements.

BN: Yahoo announced back in February that it was launching native ads following its acquisition of Flurry. What success has this brought?

YD: The Yahoo Mobile Developer Suite is helping mobile developers measure, advertise, monetize and enhance their apps. We've seen a lot of early success with Gemini, Yahoo's native advertising solution. According to a recent Flurry from Yahoo survey, nearly half of mobile app publishers already have or are planning to introduce native ads, and that number is growing rapidly. We’ve seen publishers express that revenue and control of the user experience are most important to them right now. It's a rapidly evolving space, and we're excited to be a leading player in it.

BN: Is Yahoo competing directly with other mobile ad networks?

YD: With its Yahoo Mobile Developer Suite, Yahoo offers mobile developers a comprehensive solution for acquiring, engaging and monetizing users, and for deeply measuring and optimizing their mobile applications. In particular, with Yahoo App Marketing, developers can use just one platform to gain exposure to an enormous audience of highly engaged and active users across desktop, mobile and social. With Yahoo App Publishing, developers can maximize their advertising revenues through a combination of well-integrated Gemini native, video and search ad units, extensive and unique data from both Yahoo, Tumblr and Flurry, and a powerful ad selection algorithm that leverages this unique data. And with Flurry Analytics and Explorer, developers can instantly measure their application performance and identify problem and opportunity areas to maximize performance.

BN: Are search ads as important for mobile apps as they are for the desktop?

YD: Search ads are certainly also important in mobile. But the search context and experience are also very different in mobile. Flurry data shows that about 88 percent of time spent on mobile devices is spent inside mobile applications, so it makes sense that mobile searches also get initiated directly from those applications. This is why Yahoo offers a Search-in-Apps service, which enables app developers to introduce search capability from within their apps. For example a user of the Pinger messaging application can easily search for movie times for the movie that they have just chatted about with their friends, all without leaving the Pinger application. This is an exciting space with lots of room for innovation.

BN: What trends are you seeing in the mobile advertising market?

YD: This is a fast changing market, but the main trends I would call out are:
1. Growing interest of brands in spending more on mobile -- in recognition of the very rapid increase in mobile usage.
2. Increased advertiser focus on measurement and impact assessment from mobile campaigns.
3. Growing importance of data and programmatic for more precise and better optimized advertising campaigns.
4. Rapid growth of native and video ad formats.

BN: Native ads are obviously good for the end user but what benefits do they offer advertisers?

YD: What's special about native ads is that they appear to be meeting the needs of all three key parties: they monetize well for developers, they perform for advertisers, and they are accepted and even liked by users. In particular, a recent Yahoo/Ipsos Consumer Perceptions study showed that 60 percent of consumers have said they feel positive about native ads. And 80 percent of advertisers say they will invest in Native in 2015. This, combined with the superior monetization performance of native advertisements over other ad formats makes native advertising a very compelling ad format.

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