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Should marketers invest in in-app ads or mobile display?

Mobile apps continue to surge in popularity, making in-apps ads an increasingly attractive option for marketers who want to reach mobile consumers. While savvy marketers have begun pouring more money into in-app ads, mobile Web-based display advertising can still make sense for many.

A recent report from Strategy Analytics found that in-app advertising has overtaken display ads on the mobile Web in terms of how much marketers are spending in each. In the United States and Western Europe, apps are becoming the key distribution mechanism for media on mobile phones, with marketers spending $1.7 billion on in-app ads versus $934.5 million on mobile display ads.

?In a nutshell, the popularity of app downloads is being matched by app usage,? said Nitesh Patel, London-based senior analyst for wireless media strategies, Strategy Analytics. ?So, consumers are clearly using the apps they download.

?Based on consumer usage of apps, brands should certainly consider placing more of their mobile budget towards in app advertising,? he said.

Correlating usage
The report found that over 23 billion apps were downloaded globally in 2011, an increase of 38 percent.

One of the trends driving the growth in in-app advertising is the growing amount of time mobile users are spending on casual gaming and social media activity using their smartphones.

?Casual gaming and social media activity have led to people spending hours with mobile apps on-and-off over the course of a day,? said David Catalano, president and co-founder of digital advertising agency Modea, Blacksburg, VA. ?Recent reports show that time spent in mobile apps has now exceeded mobile Web usage, so it makes sense that there is a correlation in advertising dollars.?

In addition to the heavy usage mobile apps receive, another reason why marketers would want to invest marketing dollars in apps is that these ads can produce strong results.

Marketers can find good results with in-app advertising by apps can provide more information about a user than browser-based use can, potentially enabling them to better target their efforts.

?Whether it be games social networking or news publications, in-app ads can certainly yield a better result and have a greater impact,? said Dave Mataranglo, director of client services at PM Digital, New York.

In-app ads can also be relatively inexpensive.

Additionally, users tend to remember in-app ads.

?People consume mobile media within apps and it is cheap inventory ? moreover, while users are often frustrated by in-app ads, the recall metrics associated with in-app ads are relatively high,? said Philippe Sloan, senior vice president of digital marketing at digital agency TargetCast, New York.

Combo platter
The surge in overall time which consumers now spend on their devices is causing numerous areas of mobile advertising to rise. A recent report from the Internet Advertising Bureau found that mobile was the fastest growing category for advertising in 2011, with nearly 150 percent growth recorded.

Additionally, Strategy Analytics is forecasting that global revenue from mobile advertising and content will hit $67 billion this year.

As a result, mobile Web-based display ads are expected to continue to be strong as well this year.

Per TargetCast?s Mr. Sloan, the growth in-app ads has not had a significant impact on display ads overall and display budgets have not been shrinking

?Advertisers should place their mobile ads where their target audiences are at the most opportune times,? Mr. Sloan said. ?In order to accomplish that, a smart marketer would need to take advantage of combination of in-app and display ads.?

Data for the first quarter from ad network InMobi shows that iOS continues to be the dominant platform for display ads appearing both in apps and on the mobile Web. In the first quarter, iOS had a 37 percent share of total impressions, up 3.7 percent, while Android had a 34 percent share, up 1.6 percent.

The growth in tablets, and the iPad in particular, which can significantly improve the mobile Web browsing experience, also suggests mobile Web-based display ads still have an important role to play.

"Given the tremendous reach of apps on smartphones, advertisers who are not marketing in apps are missing one of the biggest opportunities in mobile,? said Anne Frisbie, vice president and managing director of North America for InMobi, San Mateo, CA.

?Tablets, however, are proliferating at a tremendous rate given the superior experience offered by a larger screen, and brands interested in reaching this high quality audience should invest in both mobile web and in-app ads,? she said.