Are you like me with a habit of remembering the big ticket ad types of last year. Do you remember them launching to great fanfares with stories of super eCPMs? No doubt all your friends and every developer forum told you to move on up to these ad types. After all, why would you run banners at $0.10 eCPM when you could be making hundreds of dollars with each thousand impressions instead?
But 6-12 months on, are you still achieving those dizzy heights? Was it all just hype? Is there a way to understand the trends and therefore maximize your returns?
Over 15 years ago, Gartner began using a Hype Cycle to analyze the introduction of new technology. The hype cycle was designed to not only show the inevitable hype (and fall) surrounding new concepts, but the subsequent stages, when they move beyond the hype into long term benefit and wide spread acceptance. The key to understanding this can ensure you benefit from this cycle.
So referring back to the topic of new and advanced ad formats, there’s no doubt the promoted $100 eCPM lies at the top of the hype cycle and even though many developers reached those heights initially, many a developer subsequently found their ad revenue results dipping into the ‘valley of despair’, before flattening out into a ‘production reality’.
This production reality (long term stats) for high performance ad types is averaging $5 to $15 eCPM. Obviously, the more targeted and qualified a publisher’s traffic then higher values can be achieved but that is a good basis for our discussion.
So what does this hype cycle tells us about ad type performance, beyond some sales cynicism. I am going to suggest it tells us some very important things about user acceptance, customer expectations and can provide an indication into user responsiveness.
Here’s what the hype cycle teaches us in relation to high performance ads:
- A new ad type is launched. Its new, fresh and attention-grabbing. Users respond positively, driving up ad revenues. The stage may take months as it has for our example, or years for examples like robotics.
- Due to its success, the ad type appears more often, making it more commonplace/ discussed negatively, users respond less and ad revenue falls.
- The ad type is optimized / reaches a level of status and delivers a stable revenue return.
- Finally, adoption becomes so widespread the ad type becomes an increasingly invisible commodity and revenue eventually declines to almost nothing eg banner ads
Understanding the connection between the hype dynamics and users acceptance across multiple ad types can be the real key to consistently high revenue returns for app developers and publishers.
So, what are the practical learnings?
One, new ad types do deliver well in their first releases and early adopters can gain a lot. These developers exploit our natural curiosity to new things, so seeking out and testing new ad types is surely a way to revenue performance.
Two, beware of fighting against the curve. As the new technology moves beyond stage two, ad networks will continuously optimize the ad type to reignite the hype revenue and move it into stage three. However, it is at this stage that less than desirable practices are also likely to emerge as ad type implementer attempts to prolong the hype instead of moving the technology into productivity stage.
For the bigger picture, we can become much more sophisticated with our ad technology usage in several ways.
Savvy developers can recognizing the connection of the hype cycle with user acceptance, and in stage two introduce user friendly options with their ad type integrations to ensure the long term relationships with users and ride the hype wave successfully to the ‘production reality’.
In the final stage of the ad type lifecycle recognizing the emerging commodity effect gives you time to ensure you have a new strategy already in play. We can liken it to surfing a set of waves rather than crashing with the first wave’s drop.
Finally, the hype cycle/user acceptance connection teaches us that ad technologies are not immune to the hype curve and that an effective strategy is to combine different ad types at different phases in the hype cycle. This way you can benefit from the hype, not be too affected by the inevitable crash, and continue to maximizing your returns through the (hopefully) long productivity stage.