Since the recording of this interview, Colin has moved from Vungle to Branch.io, where he’ll be leading partner discovery. All of us at Apptopia are super excited for Colin’s new role and look forward to continue working with Branch on all things mobile intelligence.

Eye-watering estimates about the size and scale of in-app spend—a figure set to top $6 trillion globally (up from over $1 trillion in 2016) if we count mobile commerce transactions—naturally spur app marketers on to find new ways to get users to spend more in the apps they use. But a laser focus on targeting and triggering “whales” to dig deeper in their pockets, is a fatally flawed strategy that dooms app marketers to spend more money and resources to win over a small but active segment of users.

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It’s smarter – and frankly more profitable—to double-down on ways to monetize all your app users, Colin Behr, former VP Business Development at Vungle, the leading independent performance marketing platform for in-app video ads, tells me in an interview. As he puts it, “It’s a must-have mindset because when you pursue a strategy that forces you to hunt for whales and throw out all the fish you catch in your net, you end up throwing money out the window as well.”

The trick is to monetize whales, minnows, dolphins and all the other user personas that populate your pivot table with advertising formats that cover the bases to activate and motivate audiences at scale.

This is where mobile video ads, specifically reward videos, lays the groundwork for an incredibly effective and lucrative business model.

Colin observes that video is the format that delivers significantly higher CPMs (2X the CPMs of interstitials). Even more impressive; smart app companies have harnessed it to build lean-mean-game machines that pair addictive free-to-play casual games with rewarded video to make millions. A prime example is Ketchapp, an app company that has, as PocketGamer puts it,  “quietly carved out a name for itself in recent years.” That's an understatement if you consider Apptopia data shows Ketchapp pulled in a massive $57,000 in just one day for a single game.

Reward video moves the needle

Ketchapp is just one of a new and successful breed of games companies making a mint on reward video because the ecosystem has finally evolved to fully support the model, Colin explains. “We’re seeing tens of billions of video ad use per month being generated through an ad format that didn’t exist at all a few years ago.”

It is these numbers that speak volumes about a new dynamic emerging in the marketplace. CPIs have risen to such heights that even a strong portfolio with positive LTV can’t keep the pace, Colin explains. “This turns up the pressure on games developers to get more money out of their audience and more mileage out of their creatives.” This is where video ads are proving to be the placement that pays dividends. “From medium rectangle banner ads to native ads, and from screen grabs to full-screen interstitials, you can put some form of video in every ad unit.”

Video is the way to engage massive audiences at a much lower acquisition cost provided app companies adopt a mindset that will allow them to look beyond short-term goals and to optimize towards user engagement metrics. “It’s important to think about the context—the when and how of what they’re doing in the app first,” remarks Colin. This requires a laser focus on quality and a firm grasp of what it takes to create a reward experience that will move the needle.

Myth Busters: 3 hard truths about monetizing audiences with mobile video ads

Colin draws from insights gathered during his time at Vungle to bust some of the myths surrounding mobile video ads and the opportunities and obstacles you can encounter as you optimize campaigns to performance goals and engagement outcomes.

#1 Users want to snack all content--including video advertising. Mobile and multi-screening has reduced our attention span to 8 seconds, meaning that we trail the garden variety goldfish (which has the enviable ability to focus for all of 9 seconds). It’s data that sparked a race to the bottom, creating the myth that shorter is better. (Best practice on some platforms, such as Snapchat, suggest 5 seconds is good, but 3 seconds is better.) All the more surprising that Colin is observing quite the opposite. “We’re seeing that users respond better to longer form ads in rewarded placements, not shorter form ads.” Specifically, “The engagement is stronger and longer because the experience draws users into the advertising.” The key is compelling content that fits the context. Game companies that harness user data to make this match see higher conversion rates. “The fact that it leads to higher click-throughs, installs and post-install conversions tells you a lot about the user mindset in this scenario.” The bottom line: smart app marketers can influence users to consume longer form ads if they make sure content and the context are on the money.

#2 Video ads cost a bundle. You get what you pay for. Video ads may seem pricey, but high-value users (and higher conversion rates) will always come at a cost. Following the shocking industry stat that reveals the average app loses its entire user base within a few months (!), it’s clear a focus on quantity over quality—even if it comes at bargain prices--is a sure-fire way to burn money, not make it. “It’s about turning UA thinking on its head and asking yourself the question: How can I increase installs and post-install results?” Adopt this mindset and “you’ll understand that what *really* matters is the scale you can drive, not the cost of the ad format that drives it.” Granted, app marketers will need to invest time and money to crack the code on what defines a winning creative, but the chance to engage massive audiences at a lower acquisition cost is worth it in the end. The bottom line: Sure, video ads are more expensive than, say, banner ads, but they pay off in the end, netting you users that consume ads and—ultimately—increase ROAS and ROI.

#3 Advertising is the necessary evil in the user experience. Forget the notion that you can’t build a business on advertising. Casual games publishers like Ketchapp and Voodoo are showing that smart approaches to advertising can engage audiences, not annoy them. “They have found a formula that allows them to convert more users at a lower cost per user, proving ad revenue doesn’t have to be the cream on top. Ad formats like reward video are self-sustaining--driving revenue and allowing companies to turn around and reinvest that revenue in a sustainable model to drive additional user acquisition.” But mobile video isn’t just at the core of a model that allows app companies to monetize their audiences profitably. Interaction with the ads produces data and insights that smart marketers can feed back into models to significantly increase LTV. The bottom line: If you think ad-supported models won’t support your business and will annoy your audience, think again. Video ads and rewarded video represent a new and sustainable way to fund user acquisition.

Colin debunks these popular myths to show how mobile video, particularly reward video, has evolved to power a “self-sustaining” business model. The model allows app companies to unlock the value (and revenues) within their user base to fund UA campaigns and—ultimately-- reinvest revenues in ways that will fuel growth. Now, Colin says, it’s up to marketers to get smarter about how they use ad creatives (and choose the context in which to show them). Data informed decisions about both will extend engagement and drive “incremental increases in user attention that will deliver incremental increases in ad value and revenue.”

AuthorPeggy Anne Salz

As a mobile analyst, a top 30 Mobile Marketing influencer and a nine-time author based in Europe, I track and document the trends, companies and innovators shaping how we do business and engage with consumers across the multiple screens, devices and apps that define our daily lives. In my position as Chief Analyst and Content Strategist at MobileGroove. a top 50 ranked tech destination, I produce and promote custom research and knowledge resources for the global mobile industry and organizations including the Mobile Marketing Association (EMEA).