1. IncreasingENGAGEMENT
WITHIn-appADVERTISING
How a more interactive approach to in-app advertising can improve click-through
rates, conversions and user engagement
MobileMarketing
In Association with

2. In any revolution, there’s usually a tipping point that
takes a movement from a niche, majority interest, into
something for the mainstream. In the mobile advertis-
ing market, that moment, arguably, arrived with the
launch of Apple’s App Store in July 2008, the year after
the company launched its iconic iPhone handset.
Almost overnight, apps became a mainstream phe-
nomenon, as those consumers who had invested in
the iPhone realized that the App Store was the desti-
nation for all the great content that their shiny new
handset was built for. And so consumers began down-
loading apps in droves, with 1.5 billion apps download-
ed from the Apple App Store in its first year.
The app boom created a whole new market sector, for
in-app advertising. Developers readily turned to in-app
ads as a new source of revenues, and advertisers
turned to them as a new source of eyeballs. While this
was welcome news for both developers and advertis-
ers, the fact remained that the only options for advertis-
ers looking to place ads within apps was the standard
banner. And while these typically generated better
returns than web banners, it was still a pretty one-di-
mensional, unengaging approach, and the returns for
both advertisers and publishers/developers were
nothing to shout about.
Introduction

3. Since the launch of the first
in-app ad units, however, the
market has changed consider-
ably. We’ve seen the rise and rise
of Android, the only platform to
offer any sort of challenge to the
dominance of Apple’s iOS. We’ve
also seen the decline of RIM and
Nokia, though many believe that
the Microsoft/Nokia alliance may
yet bear fruit. And, of course, the
rise and rise of Samsung.
We have also seen the evolution
of the ad units themselves. With
the advances in technology in the
native environment, the increas-
ingly dynamic nature of apps, and
the subsequent increase in
consumer engagement time with
apps, in-app advertising has
moved beyond static banners,
towards more advanced ad units,
employing images, animations
and video, plus multiple calls to
action, such as click-to-map/Twit-
ter/Facebook/call/calendar
entry/play trailer etc. And given
the dynamism of this market-
place, there is every reason to
believe that the pace of change
will only accelerate.
As a result of these develop-
ments, the in-app advertising
market has gone from strength to
strength. The analyst, Juniper
Research, estimated that total
spend on in-app advertising was
worth $2.4 billion in 2012, and
would rise to $10.4 billion by
2017. (Source: Mobile Advertising
– Messaging, In-app and Mobile
Internet Strategies 2012 – 2017,
Juniper Research).
Yet, while the ad units have
THE EVOLUTION OF
IN-APP ADVERTISING
evolved in one sense, in another,
they have barely changed at all.
Because the vast majority of
in-app advertising is still focused
on banners. The banners are, in
many instances, more animated,
more engaging and more likely to
attract a user’s attention than the
static banners of old. But they are
still banners. And by relying solely
on banners for in-app advertising,
advertisers are unlikely to
maximize the return on their
investment.

4. There has been much written over the past 12
months about the death of interruption advertising
such as TV ads and banner ads. Already the televi-
sion industry is responding, although very slowly, to
consumers moving away from mainstream broad-
casting to real-time streaming (or other methods).
They have woken up to the fact that consumers
want advancements in technology to improve their
leisure experience – not the other way around. So
broadcasters are streaming shows, within minutes
of their airtime, with fewer ads etc.
Regardless of whether you believe some of the
hype about interruption advertising, there is no
question that consumers are asking for a different,
MOVINGBEYOND
INTERRUPTION ADVERTISING
better experience. In the case of mobile advertising,
it is about recognising that there is in fact a consumer
journey when interacting with apps, and that this
journey will differ, depending on the app.
Kumar Mettu, Founder & CEO of the app develop-
ment company Dexati says: “Our success with
regards to advertising came when we acknowledged
that consumers go through different stages with their
app. We changed our approach to get consumers to
interact with our advertisers during each of these
stages in different ways. Our consumers become
more engaged, their user experience was improved
and advertisers got better responses.”

5. EXIT
POINT
The different stages of app
engagement can be logically
broken into three phases. These
phases are often referred to, in
the term as coined by Leadbolt
as the App Usage Cycle. The first
stage is the Entry Point. This is
when the user first opens the app
after installation to engage with it
for the first time. Excitement
about the app is at its peak, and
as such, the user may be very
receptive to advertising, so if all
they see is a banner ad, this
represents a huge missed oppor-
tunity.
The second phase of the App
Usage Cycle is when users are
actively using the app – the
“Engagement” phase. This is
where advertising is currently the
most prolific, as the user is fully
entrenched in the app, and highly
motivated to continue to interact
with it. This means advertising will
continue to be extremely effective
here. However, recent trends
indicate that consumers are being
put off by advertising that greatly
affects their app experience. Ads
that are highly distracting or
interrupt “game play” run the risk
of pushing against this trend. The
challenge is maximizing the user
engagement while also maximiz-
ing the return for advertisers and
developers.
The third phase is the Exit Point.
This is where the user is not
currently engaged with the app,
but the app is still installed on the
handset. For most users, this
represents the majority of apps
on their mobile device and there-
fore provide advertisers a huge
opportunity if they can tap into
this underutilized opportunity.
TheStagesof
AppEngagement ENTRY
POINT
OPTIMUM EXCITEMENT
ENGAGEMENT
PROLIFIC ADVERTISING

6. One company that has seen the benefits of this
Entry-Engage-Exit approach first hand is Fetch, one
of the leading mobile marketing agencies, that has
developed and implemented campaigns for the likes
of ebay, Hotels.com and Krispy Kreme. They have
been utilizing alternative ad formats through innova-
tive ad networks such as LeadBolt. Utilizing App
Walls (a full screen’s worth of graphic links to other
apps or offers from a network’s catalogue) during
the Entry and Engagement phases they have been
able to generate incredible response rates.
Clément Boutignon, Operations Manager at Fetch,
says: “Interruption marketing is just not working in
the way it should do. Low click-through rates mean
that you need enormous volumes to get to where
you want to be.
IMPLEMENTING
ENGAGINGADVERTISING
“Using a non-incentivised App Wall is a really good
approach, because the people who land in this part
of the app are there because they want to be, so the
click-through rates are much higher; it’s a much
better qualified lead at the end of the day. 2012
[was] the year when people really began to move
from trying to drive downloads to trying to drive
active users and the App Wall concept had a big
part to play in this process.”
It’s all a long way from the early days of in-app
advertising, and LeadBolt, which entered the in-app
advertising space in 2011, is playing a big part in
this change.
Founder and CEO, Dale Carr, had been involved in
digital advertising for the better part of a decade.
Reacting to the common complaint from publishers

7. of diminishing returns, he set about developing a
solution where display advertising would be more
engaging for the end user, leading to higher click-
throughs and, therefore, increased revenues for the
content developer, and higher quality leads for
advertisers. Carr began testing the LeadBolt adver-
tising platform in 2010 and shortly after, as he, like
others, foresaw the explosion of mobile apps, he
launched the LeadBolt mobile ad-serving platform.
“At the time of our launch, although the mobile web
was also beginning to build up a head of steam, we
made a conscious decision to focus on apps as we
felt app consumers were more engaged than on
mobile web,” says Carr. “It’s because of this, we felt
it important that the advertising they see reflects
their level of engagement, rather than simply serv-
ing up banners constantly.
“We focused on building good relationships with
app developers, and developing one unified SDK,
containing multiple ad units that developers could
incorporate within their apps. These multiple ad
units, we feel, are the key to successful in-app
advertising, enabling developers to engage in the
most appropriate manner with consumers at each
stage of their journey through the app.
“This attitude informed the development of the
LeadBolt mobile advertising network from day one,
and it’s one of the reasons why we have been able
to deliver more engaged audiences.”

8. LeadBolt is one of the few mobile advertising networks
at the forefront of innovation in mobile advertising
formats. With multiple ad types, they claim to offer the
largest range of ad types in the industry. These ad
types can all be used to different effect at different
stages of the App Usage Cycle.
“Banners can be used to good effect while the user is
engaged in the app, but it also makes sense to target
users with more sophisticated ad units, including video
ads, Interstitials, App Walls, Audio Ads and In-App
alerts. If users are presented with an App Wall showing
apps from a developer while they are enjoying an app
in a similar genre, the chances are greatly increased
that they will click through and download an additional
app or apps,” says Carr.
“For a gaming app, for example, an advertiser can
target consumers with an In-App Alert or an Audio Ad
during a break between levels, before they go on to the
next level. The ad serves to capture the moment where
the user feels a sense of achievement, but may also be
ready to take a break from the game before continuing.
What better way to do so than to click on an ad that is
targeted to his or her interests.”
Research backs this up. A Harris Interactive study
carried out on behalf of MediaBrix found that 61% of
smartphone owners prefer free mobile apps, and of
those, 88% prefer to keep apps relatively ad-free, with
relevant advertising that appears during natural breaks
in the game or app.
THEEXPLOSIONOF
ADVERTISING
OPTIONS

9. Consumers have raised concerns regarding apps
using advertising at the Exit Phase. The use of
these types of ads allow advertisers to engage with
users even when they are not in an app, either to
remind them to revisit an app, or to encourage them
to download another. Apps that only use banner
advertising or other engagement phase apps can
do nothing to engage with the user at this stage of
the App Usage Cycle. But the use of ad formats
such as Notifications and App Icons have received
some bad press of late and are viewed by some as
‘spammy’. Notifications are text-based advertise-
ments in the notification bar of a smartphone. Icon
Ads work by appearing on a user's smartphone
when a user purchases an app or downloads an
app for free. A user touching the icon opens a
THE
EXITPHASE webpage or application designed to help the user
obtain the advertised product.
But statistics tell an alternate story. As these ad
formats are not interrupting the game play, response
rates are very high and are therefore generating the
highest returns to both developers and advertisers,
perhaps because consumers know they can view
them when they want, and delete them, if they wish
to do so.
LeadBolt says that some developers have achieved
eCPMs as high as $100 on premium offers.
Although returns of this order are very rare, eCPMs
of $30 are not uncommon. Figures like that tell their
own story.

10. Privacy has become a major issue for the mobile
advertising industry. Anyone serving ads within
mobile applications has access to a lot of data, and
can also target consumers in ways they are not
used to. This clearly raises some privacy issues,
especially in an industry that is still largely unregulat-
ed. The large app marketplaces have implemented
rules to tighten up privacy by requiring all apps to
disclose what information the app or any third party
service integrated into the app, such as an ad
serving platform, is gleaning from users. Additional-
ly, industry associations such as the IAB and Truste
have also responded to these concerns and have
implemented a number of certification programs that
are getting increasingly more take-up.
Some ad networks have recognised that their
Privacy
importance in the industry puts them in a very
important position and are making positive moves to
help regulate the industry and differentiate them-
selves from the less legitimate players. LeadBolt is
working with various parties, including the University
of Technology in Sydney, to develop a mobile com-
merce standard that will ensure that consumer
privacy is protected while protecting the free app
economy and ensuring app developers can still earn
an income from advertising. They have also imple-
mented User Agreements for their app developers
to ensure they comply with the requirements of the
market places. “Our aim is to lead the industry’s
mobile privacy initiatives, in order to ensure the
continued growth of the free, ad-supported mobile
app industry,” says Carr.

11. Some have argued, and with some conviction, that
apps are a passing fad, and that with the move to
HTML5 mobile web development, the future is all
about the mobile web. While most advertising
networks support HTML ad units that can be applied
to a mobile website or HTML5 apps, for the foresee-
able future at least, it’s all about apps, because the
technology available in the native environment of
smartphones is leaps ahead of anything that HTML
and HTML5 can offer. Apps offer a deeper, richer
and more engaging experience than the mobile web
and, will continue to do so for some time yet.
If you need more convincing, you only have to look
THE
FUTURE
at the numbers. 46 million apps are downloaded
from Apple’s App Store everyday. In 2011, a total of
31 billion apps were downloaded from all app
stores, and this figure is expected to increase to 98
billion by 2015. And when you consider that 96% of
all app downloads are free apps, it’s clear that
developers are going to require alternative moneti-
zation solutions going forward. In-app advertising
offers the simplest, most effective way for app
developers to monetise their apps, and using a
variety of ad units at different stages of the app
lifecycle helps advertisers – including app develop-
ers looking to publicize their own apps through
in-app advertising - to increase response rates.

12. The key to effective in-app advertising is to
recognise the significance of the App Usage Cycle
and use it to target the right ad to the right user at
the right time. Advertisers should be engaging with
mobile users with at least the same degree of
sophistication as they do on the internet. As
consumers are more engaged with their mobile
than any other device in the history of technology,
the industry needs to recognise this fact and
respond appropriately.
As the number of apps available to users increases
exponentially, the need for an in-app advertising
solution that targets users with ads in the most
relevant and effective manner possible has never
been greater. A greater choice of ad units results in
greater user engagement, and by increasing the
relevance of the ad to the app user, both in timing
and delivery, developers can deliver more effective
advertising, increase click-through rates, and in turn,
increase ROI for the advertisers. That has to be
good for the industry.
Conclusion
For more information about LeadBolt visit:
www.leadbolt.com
or call +1 (855) 599 LEAD (5323)