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The Explicit Value Exchange: How the Desktop World Needs to Look to Mobile Apps When Tackling Ad-blocking

  21 December, 2015

Janis Zech While our industry seems to be coming around to the idea that advertising has to improve in response to ad-blocking, a big part of the problem is simply down to poor communication. As Janis Zech, CEO of Fyber, a Mobile SSP, explains here, the mobile app world has done a much better job when it comes to explicitly setting out the advertising value exchange.

Revenue is always top of mind for publishers, but in today’s digital economy, they face two big challenges when it comes to building a successful monetization strategy. The first is that users expect access to high-quality content for free. That feeds directly into the second issue, which is that the advertising strategies leveraged to monetize that free content are being challenged by the rise of ad blockers.

Balancing the need for revenue with the modern consumer’s expectations has put traditional desktop publishers in a difficult position. They need to fund their content, but can’t risk alienating users by pushing more ad units on a page to overcome ad blocking. Fortunately, we can look to today’s savviest mobile app developers, who are leveraging unobtrusive in-app advertising for sustainable revenue streams that allow them to continue creating freemium apps.

The freemium model – which allows consumers to use an app or website for free and then later pay for access to premium content – has been widely adopted by many content verticals, including games, communication, music, picture and social apps. The key to building a successful monetization strategy within this model is striking a balance between user retention, engagement and monetization. Freemium developers reach tens of millions of users, making it attractive properties for advertising campaigns.

At the same time, a fraction of users pay money in exchange for premium content. This balancing act between allowing a large audience to use your app, while knowing the conversion into paying users being very low has created a new approach to advertising – opt-in video ads essentially turn around the pre-roll experience by empowering the user to make an explicit decision about consuming ads — either pay cash, or engage with video ads to unlock premium content. Traditional online publishers should first turn to video, which smart developers use strictly on an opt-in, rewarded basis.

These app developers understand that a user’s reaction to an ad changes when there is an explicit value exchange. By asking consumers to opt in to a video in return for some form of premium experience, whether it is locked content or increased functionality within the app, developers have found a way to simultaneously grow revenue, increase engagement with the app itself and improve user retention. Hundreds of large app developers and services such as Spotify, Glu Mobile,  PicStitch, YouTube, and Cie Games are using this model successfully.

There’s no reason this explicit value exchange can’t work just as well for desktop publishers as it does for mobile app developers. By integrating opt-in video ads and leaving the decision to the user, publishers can create a seamless integration between content and advertiser, which is what they’ve struggled with for years. Rather than implying that ad messages are necessary to fund the content, this explicitly informs consumers – especially those employing ad blockers – that this revenue is crucial to the publisher’s survival. By rewarding the consumer at the end of the ad message through content or something else desirable, the publisher should experience the same kind of engagement lift we see on mobile.

With today’s consumer expectations and behaviors, an explicit value exchange through opt-in video is the best option publishers have. While many may cast the rise of ad blockers and increased mobile traffic as dark times for traditional web publishers, the truth is that the industry merely needs to be more innovative in the monetization strategies it employs. Mobile may be newer and less established, but there’s no reason why best practices on this newer platform can’t be applied to older forms of media. Developers are clearly benefiting from opt-in video. It’s time for traditional publishers to try the tactic for themselves.

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