All About Apps Revisited (Part 4: App Development)

There were more than half a million app developers in 2010. Their number will rise 28 percent by 2020, a decade later, placing them in the 72nd place in term of growth among 749 occupations tracked by the United States Bureau of Labor Statistics. For comparison, there were almost 392,000 system software developers whose rank will expand 32 percent during the decade and 363,000 computer programmers whose number will increase by 12 percent. Among the occupations with higher growth, very few have a large base to begin with (e.g., the number of personal care aides will increase 71percent from a base of 861,000 in 2010); most have a relatively small base (e.g., the number of bioengineers will rise 68 percent but from a base of only 16,000) (NY Times 11/16/2012).

Developers

Who are the app developers? What drive them to develop apps? How well are they at making a living?

Profile

There are some common myths about app developers. One is that they are typically high school and college students developing apps on the side. There are relatively few barriers to entry into the app development business. So another myth is that developers come from all over the world, who are driven by their desire for a quick rise to fame and fortune. While there are some truth to these myths, a report by GigaOM Pro (Craven 2012) gives a clearer picture of reality.

  • Demographics. By age, there are many developers still in their teen or early 20’s but they are in the minority. They account for only slightly over 20 percent of the developer population. Nearly 60 percent of app developers are 30 years of age or older. So, the median age of app developers is 33. Developers tend to be younger in Asia-Pacific (averaging 29 years old) and older in North America (35 years) and Western Europe (34 years). By education, over 70 percent of app developers already have a college degree. Nearly half of those (or one third of the total app developer population) have graduate school education or degree. By gender, app developers are predominantly male; in the Asia-Pacific region, the population of female developers is virtually non-existent.
  • Geographical location. There are relatively few barriers to entry. The key challenge is being able to spot an unfilled need and to come up with an app idea on how to fill that need. It is not surprising that app developers tend to concentrate where app usage is high: North America (54 percent), Western Europe (21 percent) and Asia-Pacific (14 percent). Few developers come from the other parts of the world.
  • Employment. There are three types of developers: (1) amateurs, (2) professionals and (3) career developers. Amateurs pursue app development on the side, most likely on a part-time basis, for fun or for extra income. Professional and career developers are full-time developers. They make up a majority (60 percent) of the app developer population. Of those, 65 percent have their job focused solely on app development (career developers); 35 percent get involved in app development as a part of their full-time job for which app development skills are necessary for career advancement but not the main career focus (professional developers). Developers in both groups are highly experienced: nearly 30 percent of them have been developing apps for over four years; to put this in perspective, the app development craze began only five years ago when Apple opened it App Store.
  • Work setting. A very sizable minority (40 percent) of app developers work solo. The rest work in team in business firms. Many of these firms have two or three developers each; they employ 27 percent of the app developer population. Few firms have ten or more developers; they employ 19 percent of developers. A majority of developers work on one or two app projects at a time, few on four or more projects.

Economic Status

Until very recently the mobile app market looked like a duopoly between Apple iOS and Google Android platforms, which attracted the large majority of developers (61 and 68 percent, respectively, in mid-2012). There is now an expanding third platform: HTML5 (with 50 percent of developers, compared to 56 percent for iOS and 72 percent for Android, in mid-2013). Other platforms (e.g., Windows Phone, BlackBerry, Symbian and Bada) lag far behind (Vision Mobile 2013). How much developers can earn from app development depends on several factors.

  • Developing apps for multiple platforms makes economic sense, up to a point. Multi-platform developers generally earn more, e.g., $2,155 per app-month for those serving four platforms, compared to $1,017 for two platforms and only $653 on one. Taking into account the multi-homing cost (of porting an app from one platform to another), dual-platform development (mostly Android and iOS) is the most popular option, attracting 27 percent of developers, compared to 22 percent of single-platform developers. Beyond this point, multi-homing begins to lose its popularity: 26 percent of developers work on three platforms, 13 percent on four and 7 percent on five.
  • Being “career developers” pays well. About 18 percent of developers do not intend to make money from their app development activities. For the remaining 82 percent who are in it for money, a majority (67 percent) do not make enough to sustain themselves or their business. They fall under the “app poverty line” of $500 per app, per month. This is true even on the leading platforms, e.g., 55 percent on iOS and 54 percent on Android. Keep in mind that each developer has on the average 6.2 apps on Android platform and 4.8 apps on iOS, according to the App Genome Report (Lookout Mobile Security, 2013). So even those earning less than $500 per app-month may actually earn several times as much. Their earning looks even better considering many of them are part-time developers building apps on the side (as “amateurs”). The economic picture for app developers may not be as bleak in reality as it looks initially. Findings from GigaOM Pro (Cravens, 2012) show one in three app developers are part-time developers and only 65 percent of the remaining developers, or slightly less than 40 percent of all developers, are “career developers” focusing solely on app development. It comes to no surprise that a slight majority of app developers earn less than $15,000 a year. This figure skews downward the average annual earning of app developers to about $45,000. If those making $15,000 or less are excluded, the average annual earnings for the rest (presumably full-time developers only) jumps to $75,000.

Apps_Developers_MorePlatformsHigerRevenues

  • Learning about the market is key to higher earnings. Nearly half of developers build apps based on their own needs and one in three based on discussions with friends. These developers make the least money, $779 and $1021 per app-month, respectively. Fewer developers build apps based on market research (18 percent), discussions with users (24 percent) or monitoring app stores (24 percent). Those doing so make much more money, between $1,685 and $1,883 per app-month. Clearly, it pays to conduct market research, get user feedbacks and monitor market trends.
  • App development is a business. Developers building more apps per year tend to make decisions based on different criteria than those publishing only a few apps per year. The former developers are often commissioned to build branded apps or work for large app builders. They have to work closely with clients and management to conduct market research, perform data analysis and build defendable business cases. They benefit from such rigorous business practices.
  • Extending successful apps to new markets pays the most. Developers who make the most money are those extending their apps into other markets, either to other countries ($1,952 per app-month) or other industries ($2,957 per app-month). There are relatively few of these developers (7 and 13 percent, respectively). Obviously, these two approaches only work for developers having already built tried-and-proven apps.

Development Process

Timeline

App development is a business undertaking. It has to address business issues and considerations as much as technical ones. It requires a whole lot more than just coding the app. Figure ? below summarizes the major steps that comes before and after (technical) development.

Apps_DevelopmentProcess_5Ds

  • Define. This first step involves (a) articulating the user need for the app under consideration, (b) making a business case for it, (c) selecting a mobile platform for app development, (d) setting deadlines for deliverables, (e) allocating budget, and (f) assigning project management responsibilities.
  • Design. This step, more than any other steps, shapes how consumers will eventually experience the app in use. It (a) specifies the core functionality the app will provide, (b) sets its look and feel, (c) maps how the app flows, and (d) set forth key technical requirements.
  • Develop. This step is where “the rubber meets the road”. It involves the coding (a) to turn technical specifications into a functioning app and (b) to incorporate add-on features (e.g., in-app purchasing, game center or social sharing).
  • Debug. This step ascertains that the app will work as intended. It (a) tests and improves functional usability, (b) corrects technical issues, and (c) detects and closes potential security holes.
  • Delivery. No app is done until it is submitted to and approved by the intended app store. This step brings the app to the launch point where marketing and promotion ensures its wide acceptance.

How long does it take to complete this development process? That will depend on the type of app being developed. A simple app having only 3 to 5 screens with simple flows between them, using offline data and offering no server-side interactions may take 2 to 4 weeks to develop. Adding list-based or organized static data that requires server-side interactions makes the app moderately complex and hence lengthen development time to 4 to 8 weeks. Building a complex app that needs heavy server-side interactions to display dynamic data and provides social media capabilities can easily takes 8 to 12 weeks. Developing an enterprise-class app that replicates enterprise business processes and supports system integration (e.g., product catalog with real-time inventory status, shopping cart, payment processing, order tracking and customer reviews and ratings) requires much more time, 12 to20 weeks or even longer. In general, graphic-intensive design, complex logic controlling the flow between app screens, and integration with backend server or third-party system take more time for conceptualization, execution, testing and debugging. Platform fragmentation (e.g., the large number of screen sizes and resolutions among Android devices) can increase complexity and thus stretch out development time.

Apps_Development_HowLong

Cost Elements

While all apps may go through a similar development process, they come out in all shapes and sizes. Each app differs from other apps with respect to design features (e.g., basic vs. complex interactions), aesthetics (e.g., simple 2-D vs. high-definition 3-D graphic), functionality (e.g., entertainment- vs. utility-oriented), integration (e.g., with back-end databases or other apps, or without), sharing (e.g., with vs. without connections with other users through social media), and so forth. There is therefore no such a thing as a typical mobile app and hence no such a thing as the typical cost of developing a mobile app. Instead, app development cost may fall somewhere in a very wide range from a few thousand to several hundred thousand dollars; and that is just for a single platform. There are also business owners with app development skills who build their own apps with “sweat” equity and no cash outlay other than the registration fee with a leading platform for the necessary software development kit (SDK) and the right to distribute apps through its app store. Google Play requires a one-time registration fee of $25 while Apple App Store requires an annual membership fee of $99.

One cost variable is the wage rates of app developers. They vary very widely depending on the skills, experience, reputation, location and professional affiliation (freelancers vs. career developers employed by established development firms) of individual developers. A sample from the directory of app development firms on Sourcing Line shows the minimum hourly rate can be as low as $20 or less and as high as $200 or even higher. The rates for developers in emerging economies (e.g., Bulgaria, India, Peru and Vietnam) are generally much lower than those for developers in developed economies (e.g., Australia, Canada, France, USA and UK).

Apps_Developers_HourlyRates

The total development cost will depend on the hours it takes to develop an app, not on the hourly wage rate alone. A relatively simple app without access to back-end systems or unique hardware features (e.g., camera and contacts) may take an equivalent of 2-5 days of work for one or two developers, for a cost of $3K-$8K. A more complex app with access to database and social connectivity may cost a great deal more, $50K-$150K. The Barack Obama app reportedly took 22 days to develop, using 500-1,000 hours at a rate of $100-$150 per hour, for a total of about $100K. Game apps, often using 3-D graphic and many hardware features (e.g., GPS, accelerometer, compass and gyroscope), can cost as much if not even more. Angry Birds was estimated to cost $125K-$180K (SocialCubix 05/28/2013).

Dissecting the development process can offer additional insights. Design work for a not-so-complex app should take one designer a week or two to complete; at about $100/hour, that design work would cost about $6K. To connect that app to a backend server may require another two weeks or so of time by a more experienced developer; at a higher hourly rate, that system integration feature may add $12K to the project. Coding then takes several weeks or a few months; even offshoring that to low-wage developers in an emerging economy still costs $10-$15K. Add-on features cost extra, e.g., in-app purchasing $1K-$3K, Game Center integration about $1K and social media sharing capability $1K-$2K. Someone will have to manage the app development project; even on apart-time basis, that may easily add $5K. Do not overlook other costs such as graphic design, testing and debugging, and unforeseen delays and issues. One can easily look at $35K-$40K for a not-so-complex, non-game app.

Business Insight: iEmotions and Twitterific

iEmotions is an iPhone app produced by Yord Apps. It claims to be able to identify the user’s emotions based on his/her choice of images. It uses proven psychological testing to determine what the user’s subconscious mind is trying to tell him/her through his/her feelings, e.g., having doubts about the choice of partner or being worried about making the wrong career decision. According to its producer, being graphic-intensive, the app required the work of several graphic designers, a 3-D modeling artist and animator and an art director besides the usual position of a project manager. That led to nearly $60K in designing the app, its graphics and unique look and feel. Afterward, technical development took 8 months at the cost of $45K plus some “extras” such as text content (written by professional psychologists and a sci-fi author for $5K), music and special effects ($1K). Testing and debugging led to extensive polishing works at the cost of $17K so as to employ an artist and a developer for an additional 6 weeks. On top of all these were $30K in project management and $50K in app marketing.

Apps_DevelopmentCosts_iEmotions

Twitterific, the popular twitter app for the iPhone, required about 1,100 hours just for coding alone, according to its developer. It was built solely with sweat equity so there was actually no major cash outlay. Had it been built with hired programmers at the hourly rates of $150, its coding alone would have amounted to $165K. On top of that, the design phase would have added $34K, project management, testing and other tasks $16K, and recoding the app for the iPad another $20K. Note that this app does not use any support from backend server, which would have added significantly to the development cost of $230K+ (PadGadget 2010).

All About Apps Revisited (Part 1: By the Numbers)

Apps have become a big business and increasingly an indispensable marketing tool.

User population: one billion strong and expanding. There were one billion app users in the world in 2012. Thirty percent of them lived in the Asia-Pacific region, 29 percent in Europe and 17 percent in North America. The population of app users is projected to swell to 1.6 billion in 2014 and 2.1 billion in 2016.

Apps_WorldwideUserPopulation

App usage varies among countries. An analysis of the world’s top-30 nations in app usage (Gordon 02/21/2013) identifies the United States plus seven others (Australia, Canada, Denmark, the Netherlands, Singapore, Sweden and the UK) as “mobile pioneers” – leaders in adopting mobile technology. Right behind them are the “connected Asia” – the hyper-connected Asian economies of South Korea, Taiwan and Hong Kong). China and Japan are quite unique in their pattern of app usage. Among the rest of the top-30 countries are several “slumbering giants” – those nations that are still low in app usage but very large in population (Russia, Brazil and India) or are small in population but can be quite influential (Israel and Switzerland).

Users have a healthy “app-etite”. Web browsing and TV viewing have peaked in the United States, at around 168 and 70 minutes a day in recent years. Meanwhile, app usage is on the rise, from 66 minutes a day in December 2010 to 127 minutes in December 2012 (Khalaf 12/05/2012). Worldwide, users made 45.6 billion downloads in 2012, of which 5 billion were paid downloads, generating $12 billion in revenues for the app stores. This revenue figure includes both the revenues from downloading apps and from purchases made by consumers using downloaded apps (in-app purchases, IAP). It does not include other revenue sources such as advertising using apps (in-app advertising, IAA), which do not flow through app stores. Advertising still holds a small share of total app revenues (23 percent in 2012), but that share appears to be on the rise (from 18 percent in 2011) (Farago, 2012). Apple took the lion’s share of app revenues – 50 percent in 2012; Android took 25 percent and other platforms the remaining 25 percent. Some of the download and revenue figures will nearly double in 2013: 81.4 billion downloads over all, including 8.1 billion paid downloads for a total revenue of $20.4 billion. By country, the United States is the largest app market in revenue term, followed by Japan, the UK and Australia (Spriensma 2012).

Apps_WorldwideDownloads_UsageByCountry

There is an app for that. With so many apps being available currently, there is an app for just about anything. By the number of apps, games make up the largest category (17 percent). Behind them are apps for education, entertainment, lifestyle, business, books, utilities and more in that descending order. Consumers spend 80 percent of their time on mobile devices using apps and the remaining 20 percent using web browsers. By the time spent on mobile devices, games still make up the largest category but become more dominant (43 percent). Social networking apps ranks second on the time spent (26 percent) although they barely amounts to 2 percent in number. Next are entertainment (10 percent), utilities, news, productivity and other app categories (Khalaf 04/03/2013).

Apps_ByCategory_iOS_Android_2013

Usage and retention matter as much as, if not more than, downloading. Downloading apps does not equate with using them. About one in four apps, once downloaded, is not used again after the first time, and the trend seems to get worse (Localytics 2011). Among tablet owners having downloaded just a few apps, 95 percent use them on a regular basis, those having downloaded 10 or more apps 37 percent, and those having downloaded 20 or more apps only 16 percent. App usage among iPhone owners shows a similar pattern – only 17 percent of users having downloaded 10 or more apps use them regularly (eMarketer, 09/22/2011). An analysis by Gordon (03/13/2013) offers some additional insights on this. It categorizes apps along two dimensions: the number of monthly users and the level of retention (percentage of users still using an app at least once after downloading it for one month) into the top, middle and bottom thirds. In term of users, the top-third apps in term of users have 32,000 users or more whereas the bottom third-apps have fewer than 8,000 users. In term of retention, the top-third apps reach a rate of 37 percent or higher whereas the bottom-third apps has a rate of 21 percent or less. Combining the two dimensions produces nine possible categories, four of which represent interesting situations.

  • Superstars. They are in the top third along both dimensions – the number of users and the retention rate. About 15 percent of the apps attain this status.
  • Black Holes. Quite the opposite to the superstars, black holes apps are in the bottom-third along both dimensions. Falling into this categories are 17 percent of the apps.
  • Shooting Stars. The make up 6 percent of the apps. They attract lots of users (being in the top third) but fade away very quickly (poor retention).
  • Red Dwarfs. They are the opposite of the shooting stars. They have small user base (being in the bottom third) but retain their users very well (in the top third). About 6 percent of the apps are in this category.

Users spend more time with superstar and red-dwarf apps (98 and 62 minutes per app-month, respectively) and less time with shooting-star and black-hole apps (50 and 29 minutes per app-month, respectively). Looking at that from a marketing viewpoint, better retention offers greater opportunities for advertising by having users to spend more time on an app.

Apps_UserRetention

It is a two-horse race. Two operating systems – Apple iOS and Google Android – have come to dominate the mobile device business and hence the mobile app business. iOS devices, particularly the iPhone, had been in the lead since its introduction in June 2007 and particularly since its 3G version and the opening of the App Store in July 2008. From 800 at the start, the number of apps on Apple App Store had risen quickly to about 900K in July 2013. Shipments of Android smartphones trailed iOS devices initially, but since 2012, have surpassed the latter and hence given Android apps a big boost lately. The number of apps on Google Play, the leading app store for Android devices, had reached 850K in April 2013. Meanwhile, Windows Phone and Blackberry lag far behind. In term of cumulative app downloads, the App Store passed the 50 billion mark in May 2013 while Google Play reached 48 billion.

Apps_AvailableNumbersOnAppStores

Mobile Advertising (Part 4a: Ad Formats — Messaging and Display)

Mobile advertising comes in four formats: messaging, display (e.g., banner and rich media ads), search and video. There is another format: branded apps. These apps are designed to foster branding but often contains additional functions (e.g., transactions), not just advertising. They are examined in-depth in the chapter on mobile apps. Video ads are essentially a form of display ads. Statistics on them are often lumped together with those on display ads. On the other hand, video ads have their unique characteristics and in some major markets such as the United States they constitute a major category of spending. Examining them as a distinct format can offer valuable business insights.

Messaging is the oldest format and video is the most recent. Search advertising accounted for the lion’s share (62 percent) of the total advertising spending worldwide in 2011, far ahead of display advertising (28 percent) and text messaging (10 percent). This pattern was true for all world regions except Latin America, where text messaging ran slightly ahead of search and far ahead of display advertising.

MobAd_WorldwideMobileAdSpendingByFormat

In the United States, search advertising captured the largest share (45 percent) of $1.45 billion being spent on mobile advertising in 2011. Display advertising (both banner and rich media) was in the second place (33 percent). Among the two display formats, rich media ads took off in 2011, rising nearly eight folds to $224 million that year from only $29 million the year before. It is projected to stay ahead of banner ads in the years ahead. Meanwhile, ad spending in messaging was comparable to search advertising ($254 vs. $253 million) in 2011. It is projected to decline gradually from $254 million in 2011 to $202 million in 2016 despite rapid growth in total mobile ad spending. Its share will decline from 33 percent of total spending in 2011 to below 2 percent in 2016. Video ads had the smallest share (4.7 percent) of mobile advertising spending in 2011 but will grow at the fastest pace, 74 percent annually, between then and 2016. Sometime in 2013, it will overtake messaging as the third largest mobile advertising format (eMarketer 09/06/2012).

MobAd_USAMobileAdSpendingByFormat

Messaging

Text messaging includes short message and multimedia messaging services.

Short message service (SMS)

SMS refers to the exchange of short written messages, up to 160 characters each, between mobile phones over a phone network. Why such a limitation on message length? Back more than two decades ago when SMS was under development, bandwidth was very limited and expensive. Messages would have to be as short as possible and 160 characters in length were considered as sufficient space for users to communicate most thoughts (Milian, 2009). Messages can also be sent over the Internet but only through SMS centers set up by the companies that own the mobile network in that particular region.

The first SMS message was sent from a computer to a mobile phone 20 years ago on December 3, 1992. Not long after that, Nokia brought to the market the first mobile phone that let users send text massages to each other. This and other mobile phones at the time had only 9 keys with which users entered text; mobile phones with a full keyboard were not introduced until 1997. Texting caught on as cell phone users in various parts of the world discovered by chance that their network operators did not have adequate facilities to monitor and bill for SMS. Later on when this “loop hole” was plugged, users still found SMS attractive as a cheaper alternative to mobile voice-calls (Mukund 2003). Texting continued to gain popularity. Americans sent an average 35 text messages per person per month in 2000, for example, and then 218 messages in 2007 when they sent more text messages than they made phone calls (213 calls per person per month). By 2011, the number reached 357 messages per person per month or about 1.5 trillion messages for whole population of the United States that year. Worldwide, more than 8 trillion messages were sent (Tatango, 2011). That figure should rise to 10 trillion by 2013 and hence average out to about 200,000 SMS per second (SMS Global).

Marketers wanting to use SMS for advertising sign up with a service provider that allows them to use its SMS centers to send out ads to its mobile subscribers. SMS advertising con¬sists of placing a marketing message into a text message that the consumer has opted in to receive. At the phone user’s request, for example, a retailer regularly sends out alerts regarding sale and special events. That retailer may also send out mobile banners, which the phone user can use as a coupon and show at an in-store checkout counter to receive a price discount. Despite lacking the glitz and glamour that are found in other mobile ad formats, SMS has one key advantage: virtually all mobile phones can send and receive text messages. SMS advertising messages can potentially reach the widest mobile audience.

SMS advertising works well when it contains a call-to-action such as sending a message to a short code. Also known as short numbers, short codes are special telephone numbers that can be used to address SMS messages from mobile phones. They are significantly shorter than full telephone numbers (i.e., in 5 or 6 digits) making it easier to read or to be keyed in on mobile phones. Consumers in the United States, for examples, can text the key word “COUPON” to 62297 (or “macys”) in order to receive SMS messages about sales and deals from Macy’s, a leading department store chain. The key word is unique to only a particular advertising campaign. It tells the SMS provider which SMS campaign consumers are requesting to join. In fact, short codes are the only phone numbers that are approved by wireless providers for transmitting marketing or promotional text messages.

Macy_GetSMS

Besides inviting SMS replies, SMS advertising messages can also be designed with a call-for-action that, when activated, connects consumers to other media to give them a richer experience. In that case, SMS messages serve as the entry point to other marketing media, e.g., following a link to visit a mobile website, calling a phone number, downloading an app, watching a video or receiving a coupon. Universal Pictures, for example, launched an SMS ad campaign targeted at consumers of digital media in promoting its new release “Forgetting Sarah Marshall.” It sent out SMS ads inviting consumers to reply SARAH to find out more about the movie; those who responded got more information about the film and an opportunity to view the trailer.

SMS advertising works well when the call-to-action messages are clear and relevant, and contains some incentives to encourage actions and reward on-going engagement. Hard-to-notice or confusing calls are likely to be missed or ignored. Calls that are contextually relevant to the opted-in content or search by consumers are likely to bring them back for more. SMS advertising can thus be designed to build interest and engage consumers by inviting them to answer a question, play a game, check out an offer, look up some information or download a discount coupon. Each message, in “bite size”, is intended to lead to further messages, thus turning these messages and their generated responses into a dialog with consumers.

Multimedia messaging service (MMS)

Coming a decade after SMS, MMS takes messaging one step further. It can deliver not only text messages but also rich content including images, videos, games and sound, thus making the advertisements more appealing and informative than plain text messages. It can be even more appealing than TV in some regards. Its rich media content can be created faster than TV commercials, be viewed on demand and be accepted or rejected by mobile device users (John et al, 2009). Unlike SMS (with 160-character-per-message limit), MMS has no size limit. However, it requires the high transmission speed that is suitable only for mobile devices with 3G (third generation) or later technologies.

Display Ads

These ads include mobile banner ads and rich media mobile ads (RMMAs). They can be served on or off mobile devices and inside web browsers or in-app.

How Display Ads Are Served

On-device vs. Off-device

Mobile display ads are for the most part served as on-device ads – being delivered onto the mobile devices themselves. They are quite similar in format to those ads delivered to desktop PCs (e.g., text links, banners or video pre-rolls, which is a short video ad playing before the selected video). They can also be delivered as off-device display ads (e.g., a print magazine ad with a QR code) featuring a call-to-action on mobile devices (e.g., once scanned by a mobile app, the QR code leads to an in-stream product video). This is similar in effect to a click-through on a banner ad or a direct-response to an on-sale print flyer.

An example of mobile advertising with off-device displays is a campaign by Turkish Airlines during the 2012 London Olympic Games. The campaign tried to reach a large number of visitors from around the world coming for the Games and gained their attention that Turkish Airlines served over 200 destinations worldwide. It created a kind of scavenger hunt by transforming 73 national flags into QR codes and placing them on digital posters at 94 bus shelters throughout London. Fans were encouraged to scan their way through London as they waited for a bus. Upon scanning a “national flag” QR code, they were automatically checked-in with that flag via the Turkish Airlines mobile website. Upon check-in, the mobile site allows participating fans to check the total number of check-ins and the number of check-ins per country, and to find on a map the other bus shelters with the poster-size QR codes. Top participants in term of check-ins would then be entered into a drawing for two tickets to any destination served by Turkish Airlines. Below are some images related to the campaign and a link to an online video explaining how the campaign worked.

Unlike their off-device counterparts, on-device mobile display ads are served straight onto mobile devices. They typically use banners and text links that appear on a mobile web page or mobile application.

In-browser or In-app

Mobile banner ads can be served via mobile web browsers or mobile apps. For the whole world, the split is roughly even – 48.1 percent via apps vs. 51.9 percent via web browsers. In North America (the US and Canada) and EU5 countries (the UK, France, Germany, Spain and Italy), the split is skewed toward mobile apps – nearly two-thirds of the ads are served via mobile apps (62.6 and 62.4 percent, respectively) and slightly more than one-third via web browsers (Perez, 2012).

Mobile browsers are set to automatically load mobile websites, which should be designed to load quickly, fit content to smaller screens and accommodate a wide gap in computing power among mobile devices, ranging from smartphones and media tablets to basic cell phones. Smartphones with a high-resolution screen can handle visually rich ads with ease while legacy mobile phones with fewer resources may be limited to simpler ads being designed for a small, low-resolution screen. Media tablets having a larger screen and more computing power can typically display desktop websites without difficulty.

Banners can also be served inside mobile apps. For RMMAs, however, the process of serving them in-app is not as straightforward as serving them in web browsers. There is no single coding standard for how mobile apps need to handle ads. Each app therefore has its own ad specifications. An ad coded to run in one particular app (e.g., CNN) cannot run inside another app without some recoding to meet the latter’s ad specifications. That takes time and money, especially in case of RMMAs. So until there is some industry standard, this limitation will remain a hurdle dampening the growing popularity of in-app RMMAs.

Mobile Web Banner Ads

These ads are often designed as a still image in some common graphic formats (e.g., jpeg or PNG) to ensure its proper display across various mobile devices and ad serving networks. Like banners on the “desktop” Internet, they are typically “clickable”. Once clicked (or actually “tapped”) on, they enable users to take some actions, e.g., going to a mobile website or downloading a mobile app.

Banners come in many different sizes, with mobile banners having more variations than desktop banners so as to accommodate a large variety of screen sizes on mobile devices. There are several screen resolutions for the iPhones alone – 320×480 on the older iPhones, 640×960 on the iPhone 4 and 640×1136 on the iPhone5. On the Android platform, there are many more devices with so many different screen sizes, e.g., 480×800 on the Samsung i9000 Galaxy S and Google Nexus S, 720×1280 on the Samsung Galaxy Nexus, just to name a few. To that one can add a number of media tablets, each with their own screen size, e.g., 1024×768 on the iPad 1 and iPad 2, 2048×1536 on later iPad models with retina display, 720×1280 on Google Nexus 7, 1024×600 on Amazon Kindle Fire, 1280×800 on Samsung Galaxy Tab 10.1inches, and so forth. As a result, the mobile advertising industry currently uses over 60 unit sizes for banners. To reduce that to a smaller, more manageable number, the Mobile Marketing Association (MMA, 2011) recommends nine sizes ranging from 120×30 to 320×50, plus four text taglines options ranging from 10 to 24 characters per line.

There are banners that are designed to fill the full width of the screen regardless of screen size. Known as smart banners, they help address the screen fragmentation caused by the proliferation of mobile devices with different screen sizes and resolutions. They can detect the screen size of the device and its orientation (i.e., portrait or landscape) and render the ads accordingly.

Rich Media Mobile Ads (RMMAs)

Banners can also contain rich media design elements. The term rich media refers to a variety of dynamic motion or digital interactive media, including videos, 360-degree image spins, animation and zoom imagery; the dynamic motion occurs at certain points on a timeline or in direct response to user interactions (other than click-through). The most common design element for RMMAs is to create them as expandable banners, which can expand across the whole screen in response to user action, creating a larger surface area for the display of information and further interactions. Two thirds of RMMAs are expandable banners; the remaining third includes interstitials (21 percent) and animated banners (12 percent). Interstitials, a.k.a. “splash page”, are ads that take up the whole screen. They run before a mobile web page loads, in between two content pages or in between levels of a game.

Below are images of an expandable mobile banner ad for Vicks DayQuil and NyQuil cold remedies, which are designed by Medialets, and a video clip showcasing it. The ad runs at the height of cold and flu season inside the Yahoo! Fantasy Football and CBS sports apps. Tapping on the banner expands it into a full screen ad, which invites users to play the Dayquil or NyQuil version of the “Cold Symptom Knockdown”– a football-themed game of target practice. In the game, users are given 10 chances to knock down 5 “symptom” targets and presented with the option to play again, allowing numerous attempts and creating further brand awareness. The in-ad game experience allows users to interact with the Vicks brand in a new way, without having to exit the app.

RMMAs are typically displayed in two stages: “display” and “activation”. They are initially displayed just like a still-image banner. Only upon user activation (by tapping or swiping on a banner ad, or flipping between pages of a magazine app) are the rich media features showcased. The addition of motion and multimedia features (e.g., videos) makes these ads attractive and eye-catching, thus leading to high engagements, click rates and conversions. Engagement (defined as the percentage of ad impressions resulting in user interactions with an ad) is found to average in the double digits (12.8 percent), with video and gaming experiences being the most engaging (16.6 percent of users respond to a gaming element) (Small, 2012).

Wap 1.0 Banner Ads

At least half of mobile phone users still rely on older cell phones with a small screen and very limited computing power. They can be served with WAP 1.0 banner ads (WAP stands for wireless application protocol). These ads are designed with black-and-white and low-resolution still graphics that can be displayed in a small screen and require little bandwidth to download.

Text Tagline Ads

Text links may also be used in place of graphical ad units. There are many older mobile phones that are not capable of supporting graphical images. There are also publishers who prefer to use text ads instead of graphical ads to lighten up their mobile websites. Text links can be used as stand-alone ads, which are “clickable” and act like banners. They can also be used to supplement graphical banners, typically appearing just below the latter. The Mobile Marketing Association recommends this practice of using text links. Accordingly, some consumers are unfamiliar with mobile banner ads and may not realize that these can be clicked on for navigation. A text link can be quite helpful in such case (MMA 2011). Text links should be phrased in such a way to make the call-for-action clear (e.g., “Learn more”, “Start saving” or “Just get it”). They can also use a tagline – a phrase that sums up the tone and premise of a brand or product – so as to make them more inviting and memorable. Examples of taglines include “Every inch an iPad” (for Apple’s iPad mini), “JUST DO IT” (for Nike sportswear) and “Turn On Tomorrow” (by Samsung).