Liftoff: Android may gain in ads as IDFA changes hurt iOS games and apps

 Liftoff: Android may gain in ads as IDFA changes hurt iOS games and apps

In 2021, Android could enjoy a strong surge thanks to Apple’s decision to focus on user privacy over targeted advertising for mobile games and apps, according to a report by mobile app marketing optimization platform Liftoff.

Changes to Apple’s Identifier for Advertisers (IDFA) will make it harder for mobile game developers and app makers to target users based on their past activity, and that could lead to lower revenues on iOS. The survey also found a dramatic decrease in conversion found among video ads so far in 2021 compared to a big spike in 2020.

For the second year in a row, the report highlights the promise of Android for mobile marketers and features a surprising year-over-year flip in the value of the video ad format. Plus, after a year of dramatic user engagement changes, the data showed notable dips in acquisition costs across key app categories.

Liftoff has a pretty big reach, which is why it recently raised close to $400 million from investor Blackstone. The report analyzed nearly 400 billion impressions across 6.2 billion clicks, 275 million installs, and 7.7 million first-time events in about 1,800 apps between January 1, 2020 and October 31, 2020.

2021 may be Android’s year for ad creative

Above: Android vs. iOS. Ad spending on Android may grow in 2021.

Image Credit: Liftoff

With IDFA changes on the horizon, the data shows that the coming year in ad creative may be Android’s for the taking, Liftoff said. That means advertising spending on Android may be higher in 2021.

Apple dominates when it comes to overall app store revenues, while Android leads with download numbers. Apple’s customers are based in rich countries like the U.S., while Android dominates in regions with less wealthy users. That means that it’s more expensive to advertise to Apple’s customers, and it’s less expensive to advertise to Android customers.

Liftoff said the customer acquisition costs favor Android, with costs to acquire a purchasing user three times higher on iOS. In 2020, the cost-per-action (CPAs, or ad costs in general) for traditional banner ads on iOS were $36.77, or 3.5 times more costly than Android’s $10.28 and the largest difference of any ad format.

But conversions are the real tipping point, split by ad type at 50/50. Interstitial ads and banner ads perform 52% and 22% higher on Android devices, respectively. Native ads still convert more users on iOS, but with only a minor lead of 10%. This is good news for those planning to spend more on Android in 2021 — which, according to Liftoff data, is roughly a third of mobile marketers.

“In the short term, publishers who monetize via advertising on iOS might take a hit, partly due to marketers not initially knowing how to value non-IDFA supply, hence leading to lower CPMs,” said Liftoff CEO Mark Ellis in an email to GamesBeat. “But this will likely get sorted out in short order and CPMs (costs per mil, or costs per 1,000 users) will stabilize at a rate similar to what we see now. Demand, after all, for more users on iOS isn’t going away. iOS users are just too lucrative an audience to abandon for Android.”

Which game companies will lose revenues as a result of the ad changes is still the subject of debate. Facebook itself could take a 7% hit to revenues, according to an assessment by user acquisition expert Eric Seufert at Mobile Dev Memo. Facebook is opposed to Apple’s IDFA changes, saying that it believes it will hurt smaller advertisers, publishers, and developers.

“I have little doubt that the upcoming shift on iOS will disrupt some businesses while making others stronger,” Ellis said. “Retargeting-only companies will face some real challenges. In the short term, I expect they will put more focus on Android. Long term I think they will face some real headwinds.”

Ellis said that demand-side partners (DSPs) that do not have a strong technology infrastructure and team will also likely struggle, as they will be competing with companies like Liftoff who have been investing heavily into understanding how to effectively leverage non-personalized signals to continue to drive user acquisition performance at scale.

He said the solution is developing machine learning to recognize non-personalized signals (eg. time of day, ad format) that are strongly correlated with in-app behavior, knowing how to value these signals when bidding on an impression to serve an ad, and delivering an ad with the highest likelihood of leading to a download an in-app conversion.

Video ads are fading with a dramatic drop in returns

Above: Install-to-action costs per ad format.

Image Credit: Liftoff

Video ads were a smart and strategic investment last year — driving 60% higher purchase rates than banners for mere pennies more, Liftoff said. But this year, the video spotlight is fading: in a dramatic year-over-year flip, video ads now offer the lowest return on ad spend (ROAS). Despite slightly lower costs year-over-year, the category is still the priciest among ad types ($47) and, notably, the only category whose conversion rates declined year-over-year (down 1.5%).

Video isn’t a lost cause by any means, with COVID-19 driving increased mobile use and generating a more captive audience for long-form video ads. Still, marketers looking for peak advertising engagement at moderate costs may wish to consider different methods, Liftoff said. Interstitials, for example, delivered the highest engagement at moderate costs. This form has already demonstrated substantial value among gaming apps, with the highest conversion rates among ad types (8.1%), Liftoff said.

Asked why video ads are fading, Ellis said, “Our explanation comes down to stay-at-home orders. It would be wrong to say people were watching video less in 2020, far from it. Rather, more advertisers want to capture their captive user’s attention. This kicked off a bidding war for (relative to other creatives) limited inventory.”

Compounding this are different uses for advertising. Banners, interstitial ads, and native ads are usually focused on direct conversions of users. Video campaigns also can be used for branding campaigns, which don’t need direct conversions to be regarded as successful, Ellis said.

“So not only were marketers buying video in a crowded market, but they were also competing against different types of ads,” he said. “Branding campaigns don’t try to push [the user] to convert [to making a purchase or taking an action], which can depress the figures.”

Shopping and finance apps are booming

Above: Finance ads are booming.

Image Credit: Liftoff

Apps that drive longer value in the COVID-19 era, like shopping and finance apps, have had the strongest retention rates over the past year, and the data show that loyalty reflected in acquisition costs. Shopping apps saw a cost decrease between 75% to 85% year-over-year across all ad formats, the highest being for interstitial ads.

In finance apps, banner and native ad costs both saw a dramatic drop of nearly 91%, with video and interstitial formats decreasing 72% and 62% respectively. User acquisition costs are at all-time-lows across the board, and with mobile use higher than ever before, it’s never been a better time to be a mobile marketer.


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