Instructions: increase the profitability of mobile advertising three times

    Recently, in mobile applications and games, advertising sales via RTB (Real-time bidding) is rapidly gaining momentum.
    Now you can observe a very interesting situation on the market - the monsters of mobile advertising are gradually disappearing, and they are being replaced by young, more advanced companies with a fresh look at monetization. Yesterday, the gold standard in application monetization was Admob or Chartboost .
    Today, traditional pay-per-action ad networks (installation or click) can no longer fully compete with RTB exchanges and pay-per-impression impressions.

    RTB is a standard that describes a software algorithm for selling each advertising display in your application through an auction on one of the exchanges. The largest RTB exchanges that deal with mobile traffic are MoPub , Smaato , OpenX , TapSense and some others.

    RTB exchanges are inherently very similar to financial exchanges such as Nasdaq or MICEX. On the one hand, they serve users who want to sell impressions in their applications (or securities), and on the other hand, advertisers who want to buy impressions (or securities). The task of the exchange is to connect the seller and buyers with each other and organize an auction at which the one who offers a higher price for an impression wins.

    CPM is determined programmatically based on many different factors. The bidder (the program that makes bids) analyzes the information about the display - the user's geographical location, model of his device, OS version, the list of applications installed by the user, the history of search queries and, if possible, the gender and age of the user.

    Trading example

    Application: hey, exchange, there is free space, I can show ads.
    Exchange: hey, advertisers, there is free space, who wants to show ads?
    Advertiser 1: I give $ 2, because this is a 25-year-old man in the center of Moscow with an iPhone, he may be interested in a taxi ride.
    Advertiser 2:I give $ 1, because I have a global media company and I am ready to buy any traffic at such a price.
    Advertiser 3: I give $ 10, because the user was looking for a new Toyota two days ago, and I have a car sale right now.
    Exchange: hey, application, show ads of the 3rd advertiser, he won.

    It would seem an ideal option for everyone. A situation where everyone wins. But there are several pitfalls.
    The fact is that the whole RTB is designed in favor of the advertiser. At first glance, this is not very obvious, but let's take a closer look.

    Second price auction

    How much do you think the advertiser who bids $ 10 and won the auction will pay? Think $ 10? No matter how! The whole market is designed so that the advertiser always has better conditions than the seller. In fact, the advertiser will pay $ 2.01. Why it happens? Because the second-price auction rule comes into effect - the advertiser wins the bid, but he does not pay the amount that he stated, but the amount that was indicated by the advertiser next after him, plus 1 cent.

    It turns out a funny situation. The advertiser has determined a budget for himself - he is ready to pay $ 10 per impression. And it pays $ 2.

    Not fair? And how.

    How to get a fair price and make the advertiser pay as much as he actually planned?

    It’s very simple - to plant a decoy that will call the price as close to the winner as possible. Thus, according to the rules of the auction, the winner will be forced to buy an impression at almost the price that he announced. Similarly, Appodeal fights very effectively with the second price auction on Admob and RTB exchanges.

    User Information

    The RTB standard requires advertisers to interact with special companies called DMP (Data Management Platform) to get more information about users. Of the DMP platforms known to me - Bluekai , Flurry , Personagraph , Datamonk . That is, after the exchange announced an auction, the following dialogue occurs:

    Exchange: hey, advertisers, there is free space, who wants to show ads?
    Advertisers (all in unison): hey DMP, what kind of user is this?
    DMP: like a man, it seems 25-40 years old, definitely not sure, but, like, Toyota is interested.

    That is, in fact, the reliability of the data that comes from DMP is still extremely low. DMP makes some assumptions, but often they turn out to be erroneous. As a result, many advertisers completely abandon the use of DMP, relying only on information that is directly available from the application, such as the model of the device and geographical location.

    In order to allow advertisers to place higher bids, the application must independently collect first-hand information about its users. Such data can be directly transmitted to advertisers, thus increasing the cost of their traffic.

    There are two main ways to collect reliable user information :

    1. Social networks.The easiest and most convenient way to collect information. Add the login via Facebook or Vk to your application, request permission to receive personal information of the user and voila - the most accurate data about the user in your hands. Transfer this data to advertisers and watch how they gradually increase bids on your traffic. The most difficult thing here is to come up with why you need authorization through Facebook / Vk in the application.

    2. Polls . Offer your users some kind of bonus for filling out the questionnaire. For example, promise them that they will receive a beta version of your new game. Or give out game currency. There are many ways to motivate a user to fill out a questionnaire.

    Want to sell traffic to RTB? Take care to collect user data.

    CPI vs CPM

    It turns out funny. Traditional networks operate on the CPI model. That is, it doesn’t matter how many times an ad has been shown. A deal will only take place when the application is installed. Fair? For the advertiser, yes. But not for the seller.

    The fact is that when the advertiser pays for the installation, he is completely devoid of motivation to work on the conversion of his banners and landing pages. What for? Payment is all the same for the installation. So we observe situations when 10,000 impressions were unscrewed, for which not a single cent was received. At the same time, the seller has no way to influence the conversion of advertising. In the best case, it can block the advertiser, whose advertising is poorly converted and that’s it.

    The CPM model is completely different. She removes the risks from the seller, transferring them to the advertiser. Want to buy ads in my application? Make sure that your landing page is well displayed on the phone by users, and the banner is interactive and high resolution. CPM makes advertisers think. At the same time, the advertiser, unlike the seller, has the opportunity to influence the conversion of his product.

    Can you imagine that a radio or TV advertisement is paid with payment for actions? This is nonsense!
    The mobile advertising market will completely abandon CPI / CPC and move to CPM over the next few years.

    Bonus about pacing

    Most advertisers have a setting of how much money they want to spend in one day.
    So, even the largest advertiser does not try to bet on all possible impressions. Instead, he buys a show and then hesits for a while until it is time to spend some more money according to his settings. These settings on the advertiser's side are called pacing.

    Why does the seller need to know this? Yes, because mobile advertising is not exactly the same as the web, and this must be taken into account in order to effectively sell traffic.
    Entering the site, the user expects to see the advertisement instantly, therefore the exchange should give the advertisement instantly, choosing from what it has.

    Mobile RTB is a completely different matter. The user launched the application. But he doesn’t need to show ads right away. You can calmly organize auctions in the background one after another until you find the advertiser whose seller’s bid really suits you. Typically, the seller has about a minute before you need to directly show ads. In 1 minute you can easily organize a dozen auctions, which significantly increases the chances of getting a good offer from advertisers.

    How effective is it?

    Very effective. The income from applications, if properly configured, increases up to 3 times.

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