The Four Horsemen are symbolic descriptions of a series of events that are set to take place at the apocalypse, the end of times. It is also a term used to describe the four main players ruling today’s digital economy - Google, Apple, Facebook and Amazon.
Much has been said about the arms race or, in this particular case, the horse race between these four giants to achieve world domination. It is, really, a series of different races that are happening concurrently and are masterfully woven into an intricate strategy. I would like to shed a light on one interesting, less looked upon race - the race to win the hearts of app developers. Google, Facebook and Apple, three of the four original horsemen, are strong contenders in this race, joined by two more contenders, Twitter and Yahoo.
When you look at any of the LUMAscapes, end-to-end visual representations of the ad tech ecosystem, you find that most of the players comprising this space are serving the buy-side, namely brands and agencies. This makes sense since these entities are the ‘wallet’ from which every ad dollar originates.
Google was among the first to cater to the sell-side with AdSense and DoubleClick for publishers (DFP), realising the importance of capturing more parts of the value chain to enhance its value for the buy-side as well as for its own bottom line. Google’s acquisition of AdMeld, a supply-side platform (SSP), was a significant addition to its publisher product suite. Another acquisition, that of AdMob, a mobile ad network, helped solidify Google’s mobile dominance among app developers. Most developers using Google’s Android platform (another successful acquisition) and enhancing their apps using Google Apps APIs are using AdMob as their first promotion and monetisation platform of choice. Apple enjoyed the same advantages as Google, being the first to touch app developers on their way to glory. Apple’s acquisition of Quattro Wireless, a mobile ad network, formed the basis of iAd, Apple’s current advertising platform, which offers developers various monetisation solutions. Apple and Google are building close relationships with developers from day one and are enjoying a ‘cut’ from every app and in-app purchase. However, as global mobile ad spend is expected to top $100 billion next year, both giants are making efforts to dominate that market as well.
With no mobile operating system or built-in app marketplace, Facebook and Twitter started this race at a disadvantage. Why? Because when a developer is already used to and deeply vested in an environment, it’s easier for the environment provider to cross and up-sell different products and services to that developer. So, Facebook and Twitter needed to add and deliver value to developers through touch points based at a very early stage of the process. They did so by providing authentication services, social plugins and various other developer tools such as crash reporting and Tweet embedding (Twitter’s Fabric) and database enhancements, push notifications and analytical tracking additions (Facebook’s Parse). Developers that are using these services can also very easily monetise their properties using Twitter (MoPub) and Facebook’s (FAN) mobile ad marketplaces. Yahoo, the oldest player around, is working hard to get a piece of the action. Immediately upon joining the company three years ago, Marissa Mayer declared that Yahoo is a ‘mobile company’. The company went on to develop strong mobile properties of its own and, through the acquisition of Flurry, gained access to hundreds of thousands of app developers who were enjoying Flurry’s analytics tool through its software development kit (SDK). Yahoo’s new mobile developer suite includes monetisation opportunities via search but also through native and video ads, leveraging Yahoo’s own Gemini marketplace and its recent acquisition of BrightRoll. Yahoo recently held its first ever Mobile Developer Conference (not unlike Facebook’s more established F8 conference), another indication of the importance of developers in the eyes of Mayer.
Why are app developers so damn important?
Follow the users
Marketers go where users are. This is the main reason behind the $100 billion figure mentioned above. Most of the internet consumption today is happening on mobile devices and, while on their mobile devices, users spend most of their time on apps. Users’ time on mobile web is decreasing and most mobile web properties are actually accessed through an app gateway: usually social networks such as Facebook or content aggregators such as Flipboard (on a side note, it will be interesting to see if Facebook’s recent 'Instant Articles' offering will establish its rule over the remaining mobile web ad market). With the addition of new screens such as connected TVs, wearable devices and cars as part of a growing IoT environment, user engagement online will mostly take place in an app-centric environment.
It is important to note that three of our five horsemen are first and foremost publishers. They have been experiencing users’ shift to mobile firsthand and two of them, Facebook and Twitter, managed to truly harness the potential of this medium as 73% and 89% of their revenue, respectively, is already contributed to mobile (Yahoo is slowly getting there, with over 20% of its revenue coming from mobile). These giant publishers have acted as ‘closed gardens’ and they are now starting to open their gates and leverage their advantages for the benefit of both marketers and other publishers. These horsemen have strong direct and automated sales channels in place that can be leveraged to provide for the increasing demand for mobile inventory. Finally, the fact that these publishers are able to collect, match and use troves of login and other quality first-party data is a great advantage, especially in a cookieless in-app environment, and it definitely shows in their performance.
The other hat
Another reason for the recent developer love is the fact that developers can wear another hat - that of marketers. In order to monetise their apps, developers need to promote them and our horsemen love to help them do so. Since app discovery is still broken, most app developers are using demand side platforms (DSPs) and ad networks to promote their apps, enjoying performance-based pricing models such as cost per click (CPC) and cost per install (CPI). The fact that developers are already in bed with our horsemen coupled with the fact that they see great ROIs when promoting their apps with them (mainly due to the quality and scale of their user data, the less intrusive native ad formats and more advanced features such as deep-linking and ‘buy’ buttons), make a cross-sell of app install and app engagement ads a very low hanging fruit for them to pick.
Indeed, the race to win the hearts of app developer is often overlooked but I feel that it is detrimental in shaping the future of the digital economy realm.