Five ad tech trends to watch in 2017

In the ad-tech world, we’ll continue to see significant changes that will affect both advertisers and publishers alike. Marketers have already begun to tackle these new challenges in the never-ending pursuit to reach and engage key audiences. Here are five trends you should follow—and respond to—throughout 2017:

1) User acquisition costs will rise.
Attracting and acquiring new customers is expensive—and getting more expensive. The average cost to acquire a high lifetime-value (LTV) mobile consumer has been steadily increasing since 2015.

This trend will continue into 2017, thanks to increased competition for in-app ad inventory from large brands and other companies expanding their mobile-first advertising strategy.

As an advertiser, to remain competitive, you’ll need to be more prudent about how you allocate user acquisition (UA) budgets. Paying more attention to the quality of users acquired, and less on the number of installs generated from campaign. Focus instead on key metrics that drive user engagement and retention, in-app purchases (IAP), and mobile-sharing mechanisms that contribute to your brand’s organic (and sustainable) growth.

2) New mobile ad innovations will boost ad revenue, but app publishers will need to stay current.
Advertisers will be seeking out more effective mobile ad formats that deliver personalized ad experiences that blend into an app’s flow and generate better conversion. To meet this demand, there’ll be a slew of innovations centered around ad formats, contextual targeting, placements and viewability.

To maximize ad revenue in the new year, app publishers need to keep their ad-tech SDKs updated in order to keep pace with advertiser demand.

If you’re a mobile publisher, this is great news. Improved ad technologies will lead to increased ad revenue since there’ll more advertisers seeking new publisher inventory. But to seize these new ad-revenue opportunities, your dev team will need to keep pace with these improvements.

It’ll be more important than ever to consistently update the ad-tech SDKs integrated in your apps. Rewarded videos, native ads, vertical video ads, playable end cards, and dynamically updated calls-to-action are just some of functionalities advertisers will be pursuing this year as advertisers roll out their performance marketing strategies. Speaking of which…

3) Performance marketing is the go-to advertising strategy.
Data-driven advertisers favor performance marketing because it gives a transparent view of return on ad spend (ROAS) and allows them to rely on defensible metrics to optimize their engagement strategies.

We know marketing teams everywhere are facing increased pressure to deliver high-LTV audiences. That’s why performance marketing will continue to drive UA plans this year, particularly with in-app video ads. Consider this: Last year it became a focal point as top brand marketers embraced a mobile-first advertising approach.

Need more proof? The slew of ad-tech mergers and acquisitions deals throughout 2016 show how bullish both investors and advertisers are on mobile performance marketing. Savvy investors (and marketers) know it’s effective. And they know companies large and small have allocated budgets and teams, dedicated wholly to using performance marketing technologies to expand customer bases.

4) Consumer backlash against intrusive ads will grow.
We saw significant developments in ad-blocking software across desktop and mobile web throughout 2016. This is a testament to what traditional digital advertising has become: Ineffective at capturing attention at best, repulsing whole audiences at worst.

This year, the use of ad-blocking technology will only increase. Consumers are frustrated with the shotgun nature of traditional digital ads. As an advertiser, diversify your marketing strategies to grow your audiences. Take advantage of ad technologies that deliver more integrated ad experiences and reward consumers for taking desired actions.

5) Virtual reality market fit won’t be there yet; it’s too early for wide advertising investments.
VR generated massive interest with Sony, Facebook and HTC (to name a few) releasing VR/AR headsets and other products to the public. However, consumer adoption has been slow last year.

VR will remain too nascent to justify advertising investment.

While VR is meant to provide deeper experiences beyond the novelty factor that plagued 3D, true market fit is still a ways off. VR currently lacks clear direction. A few reasons include:

  • The presence of a dominant platform for developers to build on;
  • Software applications that resonate with wider consumer audiences;
  • Solid monetization models that warrant heavy investment from brand advertisers;
  • Software development costs and best practices for smaller development shops that are more willing to experiment with this nascent platform.

Despite these challenges, 2017 will be a year for VR to begin finding stronger footing. Bear in mind though: It may still be early—advertising on the burgeoning platform is a risky proposition. Advertisers want to protect their brands by incorporating ads that won’t compromise the VR experience as well as see return on investment.

There will be a lot of challenges this year for both advertisers and publishers in executing UA strategies drive greater ad revenue. But for those that can navigate these hurdles, opportunities to grow await. It’s an exciting time to be in mobile. We want to help you reach your goals.

If you want more tips on how to develop the better ad experiences, check out our ebook, How to deliver an excellent ad experience, for practical advice and in-depth look at how and why consumers engage with ads.