What your in-app bidding waterfall will look like in 2020

The app monetization industry has been working towards developing support for bidding for some time, impressed by the success of header bidding on web. However, the transition to adopt it has been slow across the board, largely due to market confusion (at the end of the day, technology for mobile apps differs greatly than for websites), lack of standards, and the stickiness of the tried and true waterfall in a world with multiple ad networks instances.

By next year, however, we’ll reach a situation in which in-app bidding will make up a substantial proportion of app developers’ monetization strategies, as both platforms and networks complete product development and deploy their bidding solutions. Despite this, it’s still unlikely to be a 100% bidding world. Let’s look at the breakdown of how we can expect developers to manage their monetization in the course of 2020.

The majority: Bidding networks

By the end of 2020, it’s likely many developers will run the majority of their inventory through in-app bidding. The SDKs that currently make up a large percentage of developers’ waterfalls are already racing to build bidders, and in a few months, these networks and the mediation platforms that support them will have finalized their technologies.

Since SDKs often generate higher revenue and increased performance than non-SDKs, we can assume developers will continue monetizing heavily with them, and allocate the same percentage of inventory to SDKs as they do today. However, instead of stacking them in a waterfall, developers will simply shift these SDKs into a bidder system, so they can automate their monetization management, increase competition, and squeeze the most revenue out of their inventory.

A small slice: Pre-defined CPMs

Despite a general industry shift toward in-app bidding, we’ll rarely see situations in which developers choose to move over their entire inventory to this monetization model. Rather, most developers will work with a solution that allows them to combine in-app bidding functions and predefined CPMs.

Presumably, these predefined CPMs will be from niche SDKs that are strong in specific geos — which won’t have bidders supported by mediation platforms but are still highly relevant for game developers with significant inventory in such geos.

Bidding requires deep server side integrations and business partnerships between SDKs and mediation platforms, and tight resources may restrict the platforms from building integrations with more than the market leading bidders. In these cases, would a gaming studio stop using that SDK? Probably not, especially if it delivers higher eCPMs and fill rates for users in a specific geo than any mainstream SDK could. Rather, developers will continue utilizing these ad sources in order to fulfill the full potential of their media as predefined CPMs.

Still, with most big SDK players developing bidders, non-bidding SDKs will make up only a small percentage of a developer’s inventory.

Special circumstances

Now with the capability to A/B test their monetization strategies more easily, developers may find that some apps and geos monetize better using a traditional waterfall based on a revenue share model, rather than a pure in-app bidding solution or even a combination of both. Full automation, while offering significant benefits in terms of optimizing time spent manually managing the waterfall, lacks human oversight, insight, and control.

For example, developers may still want to sign a guaranteed deal with a network or brand advertiser to run parallel to the auction if data shows a particular ad source consistently performs well.

Retaining control

The challenge of balancing automation and control is a common one for developers, dating back to the launch of auto-optimization algorithms inside mediation platforms. It’s not unlikely to assume developers may also be hesitant to let the bidding auction make all their monetization decisions for them. If so, we may see developers swing the pendulum in the other direction, crafting combined strategies which grant them increased control of their monetization strategy.

It wouldn’t be the first time. In the past, for example, developers collectively pushed mediation platforms to adopt multiple instances, which is a step more efficient than a basic waterfall, but still requires manual control.

Of course, it’s impossible to tell what the industry will look like a year from now. But with the way it’s headed today, we can assume a monetization model run primarily via in-app bidding will be the norm.