In-app advertising is experiencing a period of growth with budgets likely to increase substantially over the coming months, due to factors including the continuing development of in-app header bidding solutions. However companies producing and selling apps still face substantial difficulties in growing their businesses, with an increased prevalence of fraud and higher fees from ad partners just two factors out of many.

To that end, the company behind Appodeal recently announced the launch of a new umbrella brand, Stack, to help mobile app businesses capitalise on these opportunities whilst navigating challenges. ExchangeWire speaks to Pavel Golubev (pictured below), CEO of Stack, for his insights in the mobile app ecosystem, why the platform is embracing the SaaS model, and how the industry can combat the growing threat of in-app fraud.

ExchangeWire: What were the main factors behind launching Stack as an umbrella brand, incorporating Appodeal alongside your other solutions? Is there anything significant about the timing?

Pavel Golubev, CEO, Stack

Pavel Golubev: Launching Stack is a natural progression of our main mission to empower mobile app publishers by making the ad tech market more transparent.

When we first launched Appodeal’s ad mediation platform back in 2015, it was to fulfil publishers’ yearning to monetise with in-app advertising in a new way that is simple, efficient, and transparent.

Publishers at the time were frustrated with spending valuable time integrating each ad network’s SDK and then managing the waterfall manually, based on incomplete or outdated data, which often meant they were not free to work on their apps, nor were they getting the best ad revenue results. After we introduced Appodeal’s solution, which enabled publishers to monetise from multiple ad demand sources with just one SDK integration, and to have their ad revenue optimised programmatically, it did not take long for the market to embrace ad mediation.

While we made great progress in fulfilling our mission with Appodeal, we have also learned from speaking with our clients and many other mobile app businesses about persisting challenges they have encountered that the market still has not provided adequate solutions for.

That is why our team began building new products and solutions, beyond our ad mediation platform, over the past two years. We decided to build an entire stack of ad tech solutions, based on our core value of transparency, to empower mobile app businesses with all the in-house ad tech platforms and expert support they need to scale their business.

Our new end-to-end solution, Stack, includes:

• Appodeal - our flagship ad monetisation platform powered by in-app header bidding
• AppGrowth - our ROI-driven user acquisition platform
• BidMachine - our own programmatic ad exchange
• DataCore - our business intelligence solution powered by ad revenue attribution impression-level data
• Stack Team - our team of ad tech experts dedicated to help our clients scale

Unlike what is currently available on the market, we are offering these solutions in-house with a transparent and predictable SaaS payment model so that businesses can scale without worrying about their expenses increasing. Now that our new solutions have all been built and tested with initial clients, we are excited to finally introduce Stack to the world.

What are the major obstacles to growth for mobile businesses, and what are the key opportunities within the sector which can be capitalised upon?

The good and bad news is that the mobile app market is in the age of maturation. Let’s start with the bad part. There is simply an overwhelming availability of apps today. Most users in mature markets, like the United States, have also already formed their habits with their favourite apps. Then there is the increase in demand by advertisers for mobile ad space, which increases paid user acquisition costs. Not to mention, there are all the middlemen fees that are taken by the myriad of ad tech intermediaries which both advertisers and publishers rely on to monetise or acquire new users. To top it all off, some major ad tech companies are also encroaching into the app publishing business, creating significant new competition with their technological advantage for mobile app businesses.

Now the good news is that, in 2018, USD$155bn (£121.8bn) was spent on mobile advertising globally and USD$101bn (£79.4bn) was spent on app downloads, IAPs, and in-app subscriptions globally, surpassing previous years. The pot of gold is there and is growing. But today’s mobile app businesses must consider new approaches to have their share in 2019 and beyond.

Another item of good news is that mobile advertising technology has now evolved to a new level of sophistication that makes it much easier for mobile app businesses to access these tools, manage them, and gain positive ROI, all with fewer resources required. For mobile app businesses, that means the risk is lower and the gains are more promising.

What further steps can be taken, following the release of app-ads.txt, to combat the estimated $12.6bn (£9.67bn) cost of mobile ad fraud? What is Stack doing to ensure monetisation does not occur at the cost of legitimacy?

As our mission has always been to bring transparency to the ad tech market, we are very excited about IAB’s release of app-ads.txt.

To help ensure app-ads.txt is adopted more widely in the market, our team is looking into implementing app-ads.txt on both our ad mediation platform (Appodeal) and ad exchange (BidMachine). Once it is ready, it will let our ad network and DSP partners know that Appodeal and BidMachine are allowed to sell the traffic we are offering them.

We are also looking into implementing IAB’s Open Measurement SDK for BidMachine and setting up viewability trackers, which will allow our DSP partners to know that the impressions we sent to them really happened.

Why is Stack embracing the SaaS model instead of more established methods for user acquisition? What are the main advantages and disadvantages with offering an ‘in-housing’ product?

Stack embraces the SaaS model simply because it is more fair for mobile app businesses, which are already under so much competitive pressure. We also find the status quo of ad tech middlemen taking percentages out of profits to be fundamentally unfavourable to both publishers and advertisers. It is unheard of in any other industries. Can you imagine your CRM service provider taking a percentage of your profits instead of offering a fixed rate?

We want to offer a different way. We believe that mobile app businesses’ profits should remain their profits. We are simply here to provide the technology and the ad tech know-how to enable their success. The SaaS model is the best way for us to provide that. As for applying the SaaS model to user acquisition, we want to remove as many of the barriers between advertisers and publishers so they can collaborate without going through middlemen.

Our entire stack of solutions can be customisable as an 'in-house' product tailored for the unique needs of each client. The main advantage of that is not having to worry about us making any sudden changes that can jeopardise their business model.

The second advantage is that the data remains firmly in the hands of our clients with an 'in-house' product. They do not need to be concerned about their sensitive users data being exposed to third-parties without any control. For example, we have all already read enough about Facebook’s data sharing to third-parties scandal, which exposed how in the dark and powerless we all were with where our data ended up. Considering the introduction of GDPR and more possible privacy protection regulations on the horizon, being able to have firm control of how data is used and shared is very important for mobile app businesses.

Thirdly, as mentioned earlier, mobile app businesses now face stiff new competition from major ad tech players branching out into the publishing business. Due to the new players’ ad technological might, many app developers and publishers are at a severe competitive disadvantage.

The main disadvantage of in-housing is that app businesses are often left on their own to figure out how to use an 'in-house' product and then needing to spend more resources hiring new staff to train and use it, which defeats the purpose of having an in-house solution. That is why we offer our clients a team dedicated to their success as a core part of our solution.

What’s next for Stack, will new products be launching under the umbrella in the near future or will you simply be looking at solidifying your position in the market for the time being?

Yes, we do have several exciting product launches down the pipeline. One will be a user engagement solution that builds upon DataCore, our business intelligence solution. We are also preparing to release more information about our ad exchange, BidMachine, in the coming months. And, of course, we will continue to improve on our entire stack of our existing products.