As mobile devices become more of extensions of our own bodies than just helpful gadgets, mobile apps grow in importance as well. The app stores are teeming with millions of various apps. From keeping up with our fitness schedule and weather updates to organizing work and playing games, apps have also become an excellent source of income.
The fact that the Google Play Store recorded gross revenues from mobile games in the amount of $21.5 billion USD in 2018 alone, speaks volumes.
In-app advertising vs. in-app purchases
The process of turning the app into a strong source of revenue is called app monetization. The most favored app monetization strategy is placing advertisements in apps. Its popularity has increased drastically over the past few years, overtaking in-app purchases (IAP) in both profitability and use.
In-app advertising began its climb with the advent of freemium when users grew less inclined to purchase paid apps so app developers started relying on in-app advertisements for income instead.
According to Appsflyer’s The State of Gaming Marketing report for 2018, in-app ads drive more than 50% of revenue in several app categories. Most notably, the hyper casual games – quick games with simple mechanics, rely on in-app ads as the primary, if not the sole, source of income.
In-app advertising is not only a great source of income but also provides a good opportunity for collecting meaningful user data. This is especially true in free apps as they provide easier access to a large number of consumers.
Furthermore, ads are also very easy to implement for most app developers. Only the SDK code is needed for inserting them into the app.
In-app ad types
The most popular in-app ad types include:
1. Banner ads
A rather traditional form of advertising, banners are often placed at the bottom or top of the app’s layout and remain on-screen for the most part of the app’s use. Even though banners are not really a strong source of ad income, they are a good place to start.
Nevertheless, be careful not to disrupt the app’s usefulness by poorly placed banners. And remember, not all apps are suitable for banner placements.
2. Playable ads
Interactive or playable ads are an increasingly popular in-app ad format that brings high conversion rates. Mostly used for advertising mobile games, the appeal of playables lies in the fact that they are a fun and easy way for the user to test out the app before deciding to download or purchase.
The main thing to keep in mind when using these ads is to keep them short and sweet. In other words, give the users just a taste of your app by demonstrating only its best and/or the features that separate it from the rest.
3. Rewarded videos
Rewarding users for watching videos is an increasingly popular ad-based app monetization strategy. It owes its popularity to the fact that people tend to enjoy watching videos on their mobile devices. Rewarded videos, therefore, positively impact retention and conversion.
The rewards could be anything from premium features, coupons, discounts, in-game bonuses, boosters, etc. Make sure to introduce this type of ads in the first week after downloading as around 80% of users have been noticed to uninstall the app within this time period. For that reason, it is a good idea to make the best possible use of those users while they are still around.
Also, don’t forget that rewards need to offer real value to your users if you want them to continue viewing the videos. You can check how much your users are interested in the rewards over time by measuring the opt-in ratio on a cohort basis.
4. Notification ads
Showing up in the device’s status bar, notification ads increase the user’s awareness of the ad’s presence. However, with these types of ads, there is a thin line between annoying and useful so be careful not to use too many or the user will want to delete your app altogether.
5. Interstitial ads
These ads appear at certain transition points or natural pauses in the app, covering the app’s entire interface. They can be in the form of a static or video ad, and remind a bit of a TV commercial.
1) Some ad types can interfere with the app’s usefulness, so use caution when implementing this app monetization strategy. For example, utility apps do not get along well with some ad types. Imagine trying to hail a ride and a poorly timed interstitial ad pops up or there is a banner that you keep accidentally clicking. Annoying and distracting ads are certain to kill your ad-based app revenue.
2) Make sure your ads do not take too long to load or even crash the app. Ads that load too long destroy your ad revenue as users tend to give up on watching them and only a fully loaded ad counts as an impression. In addition, ads can sometimes even crash the app in edge conditions like old Android versions or uncommon devices, driving your users away. Monitoring such events and fixing the problems is of utmost importance.
3) Always monitor your ad networks’ performance, renegotiating terms whenever possible. Ad networks have their own interests that might not always match to yours. Hence, it is important to renegotiate your terms and prices with them whenever you can. You can create leverage by tracking ad revenue per impression sequence and managing the waterfall (the term used for prioritization of ad networks in order of performance). In return for a better position in the waterfall, ad networks can provide eCPM and fill rates guarantees.
4) Do not shy away from displaying ads to paying customers. They will not scare them away if you are smart about it. For example, why not offer a player who just purchased a bag of gold more gold if they watch a video? It is unobtrusive and potentially very rewarding.
5) Diversify ads. Not all users will like every ad type you serve them. Try analyzing and segmenting your users into groups so you can design the ad experience with different types of users in mind.
6) Use ad monetization measurement tools. Optimizing your monetization strategy can be a difficult task, especially if you do it on your own. So why not get some professional help? SOOMLA provides a complete unbiased solution for measuring your in-app ads performance, allowing you to gain data-driven useful insights and improve your marketing decisions.