Coming to Your TV: More Ads for Apps

Originally posted on Re/code

Digital publishers are waiting for a flood of TV ad money to come their way. Dave Morgan thinks its going to work the other way.

Morgan’s Simulmedia startup, which uses Web-like targeting for TV ads, is courting developers who are starting to advertise their games and other apps on TV.

It’s a market that didnt exist a couple of years ago, but it has started to take off in the past few months. Morgan thinks SimulX, a new unit he’s launching for digital advertisers who are new to TV, could generate the majority of his revenue by the end of 2016. “We’ve got to go leapfrog ourselves,” he said.

If that seems counterintuitive, there’s a good reason. App developers, particularly game makers like Machine Zone, Supercell and King, have had huge success using hyper-targeted advertising on the Web – particularly via the mobile app install ads that Facebook dominates. Meanwhile, TV ads are data-poor and clumsy – good at reaching lots of people in a single shot, but not at much else.

Morgan argues that his company has the ability to make TV ads smart, using a variety of different techniques. And he says he’ll eventually be able to charge developers for each app users install after viewing his ads, just like mobile ad-sellers do. But he concedes his ads still won’t have the precision that digital promises.

On the other hand, people who buy and sell app install ads say that some app advertisers will head to TV anyway, simply because they dont have a lot of options. They say that the market for app ads, which didnt exist a couple of years ago, has become saturated – either there’s not enough inventory available, or the stuff that’s there is becoming too expensive.

So even if TV isn’t as accurate, the notion that it can find new app users is appealing, especially for companies that can turn new users into real money and higher valuations. These guys are now willing to live with a little bit of ambiguity in measurement, said an industry executive.

Which may explain why Machine Zone hired Kate Upton to star in ads for Game of War: Fire Age TV last fall and splurged on a Super Bowl ad in February. And you can expect to see more app ads whenever you watch sports, particularly from daily fantasy sports companies like FanDuel and DraftKings, which just signed a big-dollar deal to advertise on ESPN.

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A few years ago, the daily fantasy industry was nonexistent, said Mark Lazarus, who heads up NBCUniversal’s NBC Sports Group, which invested in FanDuel. Now its the fastest growing ad category for sports, and is becoming one of the biggest.

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