How Bad Measurement is Holding the Mobile App Economy Back

Fuzzy Metrics Are Slowing Growth For In-App Ad Spending

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Mobile app usage is exploding but the lack of reliable app measurement, particularly for understanding what app audiences look like, could throw a wrench into the mobile ad spending machine. Mobile analytics firms, traditional web measurement vendors and startups aim to overcome the challenges of app audience measurement, and are coming at it in a variety of ways.

"The state of mobile app audience measurement is definitely becoming an impediment to faster growth of in-app advertising revenues," said Joe Laszlo, senior director of the Mobile Marketing Center of Excellence at the Interactive Advertising Bureau.

Credit: Victor J. Blue/Bloomberg

There are gaps in the two most common methods: panel-based and direct-measurement via analytics code embedded in apps. While the directly-measured approach can pick up on apps with a relatively small pool of users, panel-based methods usually don't.

"The panel and what's reportable is going to be limited by what meets our minimum reporting threshold," said Andrew Lipsman, VP of industry analysis at comScore. In other words, despite the fact that the panel method can measure demographic data like gender, age and income in addition to usage information such as unique visitors and reach, a long- or mid-tail app probably would not be on comScore's radar. The company is now supplementing its panel research with direct measurement.

Flurry and Quantcast -- which got its start measuring website audiences -- also deliver mobile analytics to app developers. But their directly-measured view only encompasses apps that use their tracking technologies, not the whole universe of apps.

"I doubt there's going to be a one size fits all approach ever," said Mary Ellen Gordon, director of industry insights and analysis at Flurry.

Today's typical approaches to mobile app measurement "scare the hell out of" Anindya Datta, CEO and chairman of mobile app research firm Mobilewalla. The startup estimates audiences for apps by tracking users who have reviewed apps, grouping those users into clusters with similar interests, then layering on additional data to isolate audience segments.

The idea is to go beyond traffic and usage numbers and app content categories to show demographic information and affinity, or what other types of apps users of one app are likely to use. Mobilewalla provides data on mobile app user age, gender, ethnicity, income, and language in addition to estimating app affinity. The company's method for determining app affinity could be likened to the approaches taken by Netflix and Amazon to surface additional films or products someone might like.

Companies including mobile app platform NativeX plan to A/B test for ad effectiveness using Mobilewalla data, according to Rob Weber, co-founder and SVP of business development at NativeX.

The IAB is just starting to ponder mobile app measurement standards, said Mr. Laszlo. "With the desire to make in-app advertising a significant part of a digital advertiser's budget, buyers naturally want some assurance that they know the audience that they're reaching, and they can depend on the numbers that they're using to plan their buys," he said.

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