Despite Its Risky Reputation, In-App Advertising Is More Popular Than Ever

PubMatic's survey finds programmatic players seek refuge in private marketplaces

PubMatic logo with phone
PubMatic released its Quarterly Mobile Index for the second quarter of 2019. Sources: Getty Images, PubMatic

Although digital advertising continues to snap up billions of ad dollars annually, brand-safety snafus, data-driven scandals and the constant threat of ad fraud are leading players in the programmatic space to be more choosy about where they spend their media money.

This news comes courtesy of ad-tech outfit PubMatic, which released its second Quarterly Mobile Index on Tuesday morning. The index—which surveyed the tens of trillions of bids served through its platform from media buyers worldwide over the course of the second quarter—found advertisers increasingly turning toward private marketplaces, or PMPs, to make their media buys across apps and the mobile web. Though these private deals often come with a heftier price tag than their public counterparts, PubMatic found media buyers sucking up the added costs with hopes for fraud-free, transparent inventory that’s a harder find across public auctions.

According to Paulina Klimenko, PubMatic’s svp of corporate development, the past year has seen less-than-ideal inventory drain ad dollars across every platform, but mobile marketers—a group that spent more than $76 million on its media buys in the past year, per eMarketer— have been hammered particularly hard.

“In the last 12 months, there have been several high-profile cases exposing click fraud in the app environments: Cheetah Mobile, CooTek and DO App, just to name a few,” she explained. “In most instances, uncovered fraud was associated with app installs and illegitimate clicks causing the app install advertisers to overpay. These examples are tainting the image of the in-app environments which brands at times perceived as more risky.”

The app market has certainly earned its risky reputation. A 2018 report from fraud-intelligence company Pixalate found app-based inventory had the highest concentration of invalid traffic, with roughly one in five of these ads serving up impressions to bots and bad actors—rates higher than ads served on desktops, tablets or even the mobile web. And while industry heavyweights have rolled out initiatives like app-ads.txt to mitigate these quality concerns among app publishers, adoption has been lackluster. As Adweek previously reported, only a fraction of apps in Google’s Play store have files that are compliant with current fraud-fighting systems, with apps in Apple’s and Amazon’s own stores facing even slower adoption rates.

That uncertainty, as Klimenko explained, is driving more deals in PMPs than ever. By PubMatic’s estimates, advertisers will spend more than $27 billion on digital display advertising by the end of 2020, and more than half of that will happen through private marketplaces. PubMatic found PMP-based app inventory grew by 69% over the past year, while inventory on the open market grew by 26%.

American app fanatics are driving the lion’s share of impressions from these PMPs—50%, to be exact—while their European and Asian-Pacific counterparts are driving 29% and 21%, respectively.

@swodinsky Shoshana Wodinsky is Adweek's platforms reporter, where she covers the financial and societal impacts of major social networks. She was previously a tech reporter for The Verge and NBC News.