What Does 2016 Hold? 6 Predictions for Advertising, Mobile Apps, and Global M&A
The digital world is evolving quickly, but what’s new for 2016? From more demanding expectations for digital measurement to increasingly sophisticated advertisers, and from potentially disruptive Asia-based mobile app innovations to interesting cross-border M&A, 2016 will be a watershed year for digital media, we believe.
Our team has 6 significant predictions for 2016. Our forecast reflect trends that we see from our data, observing real struggles that some of our customers are now overcoming with better measurement solutions, and the cross-platform dynamics we’re seeing worldwide.
1. Asia will lead mobile app innovation. Japan, China and Korea will become increasingly important global players in the mobile app world. These countries continue to innovate with messaging apps, mobile gaming monetization, payments, and some of these innovations will begin to gain wider success outside of their home countries. Apps like Line and WeChat have brought us new use cases and monetization mechanisms, and their user bases continue to grow in the U.S. thanks to Japanese, Chinese, and Korean users who have exposed the mobile apps to a wider Western user base. They were also the first to bundle car-hailing, food ordering, and other such features into messaging apps – much before Facebook did the same.
2. Game publishers turn to advertising for in-game monetization. Advertising will become an important ingredient for the in-game monetization mix as only a handful of users are spending money inside games as Verto data has shown in 2015. Publishers will use video, native and premium advertising at a larger scale to monetize gamers who play for free. The upside is that many of these ads will offer credits to users to get them to the next level of a game, for example. A number of the top mobile gaming companies have already piloted ad-supported revenue streams, and this trend will only accelerate in the future.
3. Advertisers will plan for and invest in multi-screen campaigns. Advertisers are getting better handle on how to execute multi-screen campaigns and optimize to reach users on the devices and in the services where they spend time – at the right moment and location. We expect the share of mobile advertising spend (out of total advertising dollars) to increase. Better measurement data will support this shift in ad-dollar allocations. The big platforms, such as Facebook and Google, have spent considerable amounts of money to make ad campaigns to work efficiently across the screens and are funding research to better quantify multi-screen campaigns’ reach and performance. The incremental lift coming from the smartly designed multi-screen campaigns makes a difference. In building fresh media mix models, covering multiple screens, advertisers can get better results spending less money.
4. Mobile is not the only platform driving Internet usage. While everybody is talking about mobile, the world of Internet content consumption is not that simple. Most users in the Western hemisphere are using desktop and laptop computers, and most e-commerce is taking place on those devices. Yet, at the same time, smart TVs, gaming consoles and streaming media devices are also boosting Internet usage. Even though mobile is extremely important, it is just one of the digital device types among many.
5. Cross-border dealmaking will intensify. As the mobile world has brought users together (e.g. the same mobile game can be played in 20+ markets), on a business level, M&A will do the same. Big companies will start look to acquire or merge with other companies across the borders. Further, there’s lots of VC money still in play looking for high-value exits. The driving force is that the leading Western and Asian Internet giants have lots of cash to spend, and they are finding it difficult to enter new geographies with their own legacy services, or to organically build the stickiest, new app – particularly in distant geographies. To continue to grow and monetize their relative user bases , the most straight-forward option is to acquire or merge with the right companies to boost the total global audience. And because the market is still seeing high valuations, it is increasingly preferable to use stock as a vehicle to buy into new companies.
6. Advertisers and publishers become more sophisticated and will expect deeper, more detailed measurement. Many business decisions today, such as mobile audience acquisition, are partly based on rumors and partly based on gut feeling. As companies see the cost of audience acquisition increase, and ROI worsening, they will insist on better modeling, measurement and visibility when deciding how to invest and optimize their ad dollars. Publishers and advertisers will need better mobile and cross-platform device data and integrated single-source measurement for quantifying reach or campaign performance. They will require a deep understanding of in-app behaviors, demographics, retention and churn for all their digital media assets.