Ad monetization is the process of generating revenue for mobile apps through advertising. While it may seem straightforward to insert ads into the app and collect revenue, maximizing ad monetization can be quite challenging for app businesses.
To calculate the total ad revenue, you need to combine the money earned from each source, which, when working on a large scale, will come from several ad networks that define views, clicks, and conversions in different ways. Furthermore, different creatives and placements provide varying revenue opportunities. Sophisticated mobile publishers also analyze their most valuable ad monetization users, their return on investment (ROI) of acquired users, and the lifetime value (LTV) of their users.
Since many app businesses also earn revenue through in-app purchases, these figures must be included to accurately determine the ROI of acquired users.
For many free or freemium apps, ad monetization is their primary source of revenue. One of the most common types of ad monetization is in-app advertising (IAA), which relies on ad networks to connect developers and app businesses with advertisers. Ad monetization enables apps to monetize all users, not just the small fraction who will pay. In addition, advertisers can target users with personalized ads on platforms like Android (and pre-iOS 14 iPhone and iPad) to earn revenue for the apps.
Since apps collect first-party data on an opt-in basis, they can provide valuable targeting parameters like gender and age, making it easier for advertisers to reach their ideal audience. While that level of targeting may not always be possible with iOS 14.5 and SKAdNetwork, contextual targeting can be used instead.
There are four main types of in-app ads: rewarded video ads, interstitials, offerwall ads, and native ads. Rewarded video ads provide users with a reward for watching a video ad, while interstitials are push ads placed within an app’s interstices. Offerwalls are similar to rewarded videos and provide a reward for users completing a specific action. Native ads are in-app content that matches the form and function of the rest of the app.
To successfully monetize an app with advertising, app businesses must test and optimize each advertising option to determine the right mix for their audience. In many cases, native ads provide an optimal user experience as they fit seamlessly within the app experience. However, the other methods can also be effective for the right business. Many app businesses combine this revenue stream with other monetization methods to maximize their ROI.
Cost per mile (CPM) and cost per action (CPA) are two widely used bidding models for ad monetization. CPM is a bidding model where publishers pay for every thousand ad views, regardless of whether or not users interact with it. CPM works well for branding campaigns, as it increases brand awareness. High-traffic platforms are best suited for this type of bidding as it makes ad monetization easier.
On the other hand, with CPA, publishers only get paid when users click on the ad or install the advertised application. This model is commonly used for performance campaigns, where ad strategy is crucial for revenue. Publishers earn money based on user clicks or form fill-outs, but not for actual product sales. Accurate targeting can result in more user actions and higher income.
Effective cost per mile (eCPM) is a standard measurement system that publishers can use to assess the effectiveness of advertising. To calculate the eCPM while running a CPA ad, all paid CPAs need to be divided by 1000. For instance, if you pay $10 for every game installation, divide 10 by 1000 to get a cost of $0.01 for every impression. This number helps in calculating the general revenue from the running ad.
When running an app, publishers might experience low eCPM. Several reasons could contribute to this, including a lack of advertisers for traffic, slow website performance, or malfunctioning pages. Fixing these mistakes requires selecting an advanced Supply-Side Platform (SSP) that can optimize and check your ad.