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Mobile Monday: Google to Enforce 30% Cut on IAP in 2021, Video Ads Drive 48% Higher Online Sales

Posted Oct 4, 2020

Its only the start of October but brands and shoppers are already starting to focus on the holidays. eCommerce has seen a boost this year due to COVID-19 and that is likely to continue for end-of-year shopping. With higher activity on mobile devices this year, brands will be turning to video ads as a crucial promotional tool. A recent study revealed that video ads drove higher sales than static ads during the holidays. Meanwhile, Google is finally going to start enforcing its 30% cut from Google Play Store transactions next year. Learn more about these news stories in this week’s Mobile Monday!

Google to Collect 30% Cut on In-App Purchases Starting Next September

Google announced last week that it will require developers that are distributing their apps in the Google Play Store to use its in-app payment system. By using their billing system, developers will have to give 30% of their earnings to Google. The requirement to use their payment system has been a policy for Google for some time now but they plan on finally enforcing it next year. “We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair. Not only does this approach allow us to continuously reinvest in the platform, this business model aligns our success directly with the success of developers,” Google said.

Google said in a blog post that this policy is only applicable to less than 3% of developers with apps on Google Play.  While the company did not name apps that had been skirting the rule, CNBC pointed out that Netflix and Spotify are among the apps that prompt users to pay them directly. The announcement comes on the heels of the recent scrutiny of Apple’s policies. Apple has been at odds with developers (most notably Epic Games) and regulators over several issues, including its own 30% cut.

Video Ads Produce More Sales Than Static Ads

According to a study by VidMob, video ads drive a 48% higher sales rate than static ads. The video advertising company compared retail and e-commerce ads on Facebook, Instagram, Facebook Messenger, and other platforms during the holiday seasons for the past two years.  The length of a video ad plays a key role in terms of purchase rate. Ads that are between 10 and 15 seconds have a purchase rate that is 19% more than average length videos. They also performed 184% better than video ads up that are only up to five seconds in length and 12% better than those that were longer than 16 seconds.

In terms of video creative, ads that showed text in the first frame or within three seconds had a 46% boost in comparison to ads that did not lead with text. Ads with the word “shop” as a call to action garnered a purchase rate that was five times higher than ads with the words “get” or “find.” Due to the pandemic, there has been a surge in eCommerce which is likely to carry into the holidays. The data from VidMob indicates that holiday sales will be driven by video ads. Dgital advertising and mobile in particular are likely to play a crucial part of the promotional efforts by brands this holiday season. VidMob’s study suggests that brand should produce ad creatives that aren’t too short and have enough time to tell a brand story.

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