Tapjoy, Still Shunned By Apple On PPI Ads, Launches New Video Format

What do you do when one of your most popular formats for in-app advertising gets the cold shoulder from Apple? (NSDQ: AAPL) Launch something new, of course. Tapjoy, which built out a business on pay-per-install app advertising that subsequently got shunned by Apple, has now launched the Tapjoy Videos mobile advertising platform.

If mobile advertising is only a small (but growing) part of the overall market, then rich-media formats like mobile video advertising is even smaller: Tapjoy’s spin is that it will be integrating its video ads into its larger pay-for-performance advertising model.

The idea goes something like this: the ad units will be embedded into apps, and they will be required viewing to unlock further content in the app, be it a stage of a game or extended reading in a text-based app. In this way, Tapjoy says, the advertisers “sponsor content” in exchange for “virtual currency” in the app, which gets used for more content. Developers can integrate the videos using the Tapjoy Publisher SDK.

A healthy part of Tapjoy’s business in the past has come from app publishers advertising on other apps (the basis of the pay-per-install model), but the new video format potentially can snag in a new segment: brands that make video ad buys, primarily on TV but also online.

Tapjoy claims that its video service this will have a lower acquisition cost than that of TV advertising because one feature of the service is pay-for-completed-view pricing. However, it’s not clear whether if a user watches a fraction of the video, advertisers will have to pay for a proportionate fraction of the placement cost.

A spokesperson for Tapjoy says that while Apple is still rejecting those ads with pay-per-install ads in them, “It hasn’t impacted Tapjoy’s business all that much because [we] were able to replace PPI ads with other ad types.” This new video service will be one more format to add to the list.

Tapjoy says that its inventory currently gets seen by 50 million people every day across 10,000 apps across the iOS and Android platforms, as well as other “emerging” platforms.

EMarketer believes that mobile ad spend will be growing between 25 percent and 36 percent over the next three years, while more traditional media ad spend will stay flat.