Native Ad Insights #1 with Quack!: “Native ads are the future of mobile advertising”
Welcome to the first in a series of insightful interviews about native advertising. Over the coming weeks and months we will be talking to industry executives and thought leaders about what’s working for them, the challenges they have faced and what’s in store for the future of native advertising.
Kicking things off for us is Fernando Vilá Sagnier, Founder & Deputy CEO of Quack!, an instant messaging app. The app uses PubNative’s native advertising integration via an API, and we wanted to find out more about their decision to go native and their thoughts on native advertising as a whole.
Fernando has an impressive background in the finance industry, having also founded affliliate network app Gatwin and held the role of regional director at GE Money Bank and worked for Renault Credit Internacional and Nissan Finance. He gained an MBA at Esade and a Bachelor of Business Administration at University of South Carolina.
We hear Quack! has an interesting business model. Could you explain a little more about that?
Sure! Quack! is an Instant Messaging Service (IMS) on mobile, similar to many apps out there. However, we try and go further in our business model. Although we do monetize through ads, we differentiate ourselves in two major ways.
First of all, we believe that the user should always come first, and for this reason we only serve friendly and high-quality ads. Second, and most importantly, we have fully embraced what we believe is the third generation of IMS.
With the first generation, users would have to pay to use messaging services. The second generation then saw the rise of free messaging services, sponsored by ads and/or premium services. The third generation goes beyond this; with Quack!, we actually offer to pay our users for interacting with our app. We see this as the natural evolution of messaging services.
The payout is not incentivized per se, meaning it’s not directly linked to users interacting or even clicking on the ads. Users are actually paid based on sheer usage. For this purpose we have developed a proprietary algorithm that measures the activity of our users and remunerates them accordingly, by weighing the following factors in decreasing order of ponderation:
- How many messages sent and received
- How many group messages sent and received
- How many people present on users’ contact list
What were your reasons for wanting to implement native advertising within your app?
From the beginning, we wanted to create the best experience possible for our users. It was not necessarily an obvious choice. With our business model, it would have been easy to take a direction involving ‘farming’ the users. We could be displaying a maximum amount of crappy ads to increase the yield, banking on the premise that, since users are getting paid to use the app and therefore are less likely to churn, we can show them just anything. Even though incentivizing the users can in some cases increase retention, we wanted to create an experience which would be enjoyable per se, in order to attract and retain quality users while fostering genuine engagement at the same time.
With Quack!, we made sure to combine flawless user experience with a model that rewards the users for using and enjoying the app, and this is why we introduced native advertising.
Why do you think that native advertising is better than traditional banner ads?
For us, it’s a no-brainer. Native advertising is the only type of advertising capable of monetizing an app while ensuring a smooth and pleasant user experience. If implemented the right way, that is, if you know when and where to show them, native ads can also enhance the user experience and advertising performance. We’ve indeed seen a significant uplift in CTRs, conversion rates and consequently eCPMs since we introduced them into our app.
What did you want to achieve by monetizing via native advertising?
We mostly wanted to try out something new! As mentioned, we mostly wanted to stick to our business model of rewarding our users while offering them a seamless user experience. And it paid off. For us, a better experience means happier users, which in turn means better and more frequent interactions of the users with the app, which down the line also means more revenue and profitability for us.
Are there any challenges that you experienced concerning native advertising?
The main challenge was to figure out the best possible integration of the ads within the app. It was not immediately obvious when or where to show them. In the end we realized that the smallest changes can have immense impacts on performance. It is paramount to A/B test and optimize the smallest details, such as the placement or the size of the call to action button. Iterating is the way forward.
How have your results been in terms of engagement, retention and monetization since you began showing native ads?
The performance of native ads compared to traditional advertising formats such as banners has been staggeringly high, as high as 3 or 4 times what it was before we introduced them. We’ve seen average eCPMs of above $3 and click-through rates beyond 5 percent.
What do you feel are the most important things for publishers to look for in an SSP if they want to begin monetizing with native advertising?
Second, working with an API rather than an SDK has proven to be extremely valuable for us. It give us the flexibility to run multiple tests from our server. That’s not to mention that it doesn’t weigh anything, which is great for the advertising performance of the app itself.
Another important thing to bear in mind is that demand, and thereby the offers shown, is an integral part of the user experience. This means that you should never show an ad for an app that the user has already installed on their device. For this purpose, your SSP should allow you to detect the apps already present on a user’s device and blacklist offers for that specific user accordingly.
In your opinion, is native advertising a passing trend or here to stay?
Native ads are, simply put, the future of mobile advertising — there is no other way forward. No brand will ever want to advertise on mobile if the ads through which they are represented are intrusive, disruptive or low quality. Moving forward, native ads will enable mobile to get the attention and the budgets it deserves.