The Next Big Opportunity in Mobile Advertising

The typical mobile phone’s home screen is occupied by more than 30 applications. A digital tragedy of the commons, each additional mobile application a user downloads decreases the odds of an average application re-engaging a user. After all, the time spent on mobile isn’t increasing fast enough to cover the marginal application.

Developers have used push notifications effectively to re-engage users, but push overload drives more and more users to opt out of push.

Because of this app over-population and the tremendous reach many mobile developers have, mobile advertising spend will shift from new customer acquisition to re-engagement.

The mobile cost-per-install market is measured in the billions. But the mobile re-engagement market will be measured in the tens of billions. After all, most of the internet ad spend is on re-engagment.

The largest internet ad spend categories, retail, financial, telecom, auto and travel all spend extensively on re-engagement. The growth of Criteo, a retargeting company, is just a small indicator of the size of the re-engagement ad market. Search Google for a flight from San Francisco to Las Vegas and you’ll see a re-engagement ad.

This shift hasn’t gone unnoticed. Facebook launched Reengagement Ads. Google is also forging ahead with deep linking for mobile app re-engagement. Startups will of course forge innovative paths to market and unlock new opportunities.

Ultimately, the mobile app ecosystem will experience the same tectonic shift from a directory of applications both in the App Store and on the device to intent driven discovery - a parallel shift from Yahoo’s directory to Google’s search, search ads and content ads on the web. Fortunes will be made in the process.

Published 2013-11-21 in trends 


I am partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.

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