App Monetization, Startup Tips

Can App Companies Succeed with Ads Only

can app companies succeed with ads only header image featuring the word success on an optimistic green gradient background

Many mobile app companies are asking themselves if they still have a shot these days. Are there still opportunities left for someone starting small these days where so much competition already exists from much bigger guys like Supercell, King, EA, Zynga, etc.

The short answer is yes. Lets see how:

The rise of rewarded videos

The top grossing games are monetizing mainly with IAP and competing with them becomes harder and harder. One of the main obstacles for smaller companies is the competition with the huge user acquisition budgets that bigger companies have. On the flip side, these budgets are an opportunity to make revenue from placing ads in your app. This is the opportunity that exists in rewarded videos today. The big game publishers are willing to pay high CPIs that translates into big payouts for apps that can get enough users to watch videos.

Forecasts show more money going into mobile advertising

The good news doesn’t stop with the current trend. Forecasts shows that mobile advertising and specifically video advertising in mobile is going to triple over the next 4 years. This is a result of big brand advertisers starting to warm up to video advertising. Research firm eMarketer is forecasting this revenue to reach $195B in 2019.

mobile internet ad spending worldwide 2013-2019 based on eMarketer research - showing a forecast to reach $195B by 2019

This means that the opportunity to create ad-supported apps is going to get bigger in the next few years.

Organic traffic or paid marketing

Traditionally app companies that monetize through in-app advertising are relaying on organic discovery and word of mouth virality. However, in the last 18 months there is a new breed of companies that are able to generate enough revenue from advertising to be able to also invest in paid marketing. These companies are paying in marketing dollars to get users into their apps and getting paid back for sending these users to other apps. As counter intuitive as this may sound, an app that is able to make more money on a single user than it pays to bring that user in can justify their marketing spend.

Examples of successful ad-supported App Companies

Some app companies that were able to make double digit millions of dollars (based on estimations) while monetizing mainly through advertising: Outfit7, Tabtale, Mobilityware, Gram Games, Tapps Games.

Maybe your company is the next on this list.

If you are planning an ad-supported app you should plan on attributing your ad revenue. Check out SOOMLA Traceback – Ad LTV as a Service.

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