Report Suggests That 2021 May Just Be The Year of Android Ads After IDFA Changes

If things that are stated in a report by Liftoff are to be true then 2021 is definitely going to be the year that Android has been waiting for. And all of the immense shift in the world of ads is only going to take place because of Apple’s decision to give more privacy to users and halt targeted advertising through mobile games and apps.

Recently, Apple made the brave call of changing the Identifier for Advertisers (IDFA) and because of it, mobile game developers and app makers are finding it more difficult to show ads to targeted users based on past activity. This overall has resulted in lower revenues on iOS and also a dramatic decrease in conversions related to video ads in 2021. Not to forget the conversions were the highest in the pandemic year 2020.

It is now the consecutive second year that the report tends to shed light on how Android is the future for mobile marketers as the platform already saw an astonishing year-over-year increase in the value of the video ad format. Moreover, because of a sudden dramatic shift in the engagement of users, the report also highlights some sharp changes in the acquisition costs belonging to different key app categories.

For those of you who are not aware of Liftoff’s reach being a mobile app marketing optimization platform, it has recently been able to raise a capital of $400 million from Blackstone. Their current report is based on almost 400 billion impressions on 6.2 billion clicks, 275 million installs, and 7.7 million first-time events that took place inside 1,800 apps in between the time period of January 1, 2020, and October 31.

2021: Why Ad Creatives Must Focus On Android This Year

After the IDFA changes, there are chances that advertising spending on Android may turn out to be relatively higher in 2021 and that may just be a great thing. But before that let’s dive deep into the dynamics and data of both the competitors.

Apple is the ultimate king when it comes to earning the highest app store revenues. Android, on the other hand, dominates in terms of download numbers. We know that majority of Apple customers belong to rich countries like the U.S., whereas Android focuses to be available for almost anyone and everyone. This makes it obvious that advertisers are bound to pay more to attract Apple’s customers and less for the ones who are going to see the ads on Android devices.

According to Liftoff if we compare the customer acquisition costs of Android with Apple then the costs to acquire a purchasing user turns out to be three times lower on Android as compared to iOS. This massive difference can also be seen in CPAs (cost per action) of 2020 as well since the charges for traditional banner ads on iOS were $36.77 - exactly 3.5 times more than Android’s $10.28. One can also say that it is the largest difference observed around any ad format.

However, the major concern has always been the conversions which are often split by ad type at 50/50. The report states that Interstitial ads and banner ads outperform on Android devices with 52% and 22% respectively. Although Native ads still work when it comes to converting the iOS users but the lead percentage is a very small one with only 10%. This makes up a positive sign for all those marketers who plan onto spent more on Android in 2021 — who as per data provided by Liftoff, is one-third of mobile marketers.

Furthermore, the CRO Mark Ellis thinks that in the upcoming days, publishers who may choose to continue monetizing via advertising on iOS may take advantage of their plan but that will only be because of marketers not knowing how to value non-IDFA supply and that will eventually give lower CPMs as well. Soon it will get sorted out and CPMs (costs per mil, or costs per 1,000 users) will become pretty much stable to what we are seeing right now. After all, iOS users are going to stay in demand and the audience will remain better than what Android can offer in terms of money.

The question at the moment is which game companies exactly are going to lose revenues in the matter. There are estimates by an acquisition expert Eric Seufert at Mobile Dev Memo who thinks that Facebook will have to bear a 7% hit to revenues. And maybe that is the reason why Facebook has been quite vocal at opposing Apple’s IDFA changes because the company thinks it will only make things difficult for smaller advertisers, publishers, and developers on the platform.

There is a solution of using machine learning for identifying non-personalized signals (e.g., time of day, ad format) which will remain connected with in-app behavior, guiding about the value of signals before bidding on an impression to serve an ad, and also upon delivering an ad which will have a higher chance of an in-app conversion. But this all won’t just be possible for demand-side partners (DSPs) since it requires a technical infrastructure and professional team to do so - which Liftoff already has.

Video Ads Are Going Down

Last year, video ads were regarded as a smart move as they made the purchasing rate go up by 60% than banners. But there has been a dramatic year-over-year flip and now the video-ads unfortunately offer the lowest return on ad spend (ROAS).

Apart from that, more stats on the similar category shows that despite the costs going down on a year-over-year basis, video ads are still the prices at $47, and with that, it is also the only category that saw a decline in conversions - down by 1.5% year-over-year.

This all doesn’t mean that videos have lost their importance. It’s just that marketers always require peak advertising engagement happening at moderate costs and that is the reason why they are considering different methods. For instance, they have achieved the similar goal with Interstitial ads as it has a substantial value among gaming apps and comes with the highest conversion rates among all the types of ads at 8.1%.

When asked about why video ads are then failing, Ellis thinks that it is because of stay-at-home orders. As more people were watching videos in 2020, therefore, more advertisers started to compete for the attention of their targeted users and gave birth to the bidding war with limited inventory.

Besides that, banners, interstitial ads, and native ads are usually made for direct conversions whereas video campaigns are most effective for branding campaigns, which may not even require direct conversions for their success.

The Rise of Shopping & Finance Apps

COVID-19 showed us shopping and finance apps finally having longer values and also the strongest retention rates over the past year. But still, shopping apps experienced a drop in costs of between 75% to 85% year-over-year for all ad formats. The highest drop was for interstitial ads.

On the other hand, in Finance apps, banner and native ad costs also went down dramatically to nearly 91%. With that, video and interstitial formats also decreased by 72% and 62% respectively. Hence, as user acquisition costs within these apps have reached an all-time low and the usage has sky-rocketed, now is the time for the mobile marketers to place their bet!

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