Lesson 5

The World of App Advertising

As we mentioned in the Kinds of Monetization lesson, in-app advertising is a primary source of app revenue worldwide. Smartphones are increasingly penetrating emerging economies, and engagement and time spent in apps is skyrocketing in mature markets. Both of these trends will shift eyeballs way from other advertising mediums and into apps, placing more advertising inventory in front of more people around the world.

Right now, approximately 35% of digital advertising spend occurs on mobile. This number is only going to rise. The popularity of mobile video platforms, like YouTube and video streaming services, are expected to drive some of this advertising growth.

For apps that choose to pursue advertising, there are several factors to consider. For one, it may not be the best monetization model for your app. It will depend on your target audience and what kind of in-app experience they expect.

A few questions to ask yourself include:

  • Will advertising negatively affect user experience? If so, how can you better align the experience?
  • What types of advertising messages would you like to add to your app?
  • Are there certain brands you’d most like to work with or avoid?
  • What kind of ad platform can you provide to advertisers?

Answering those questions will help you decide if advertising is the right choice for your business and choose wisely among the different types of in-app advertising, which we’ll review next.

Types of In-App Advertising

There are pros and cons for each type of in-app advertising, and finding what best fits your app may take experimentation. Let’s look at the different ad types.

Static Banner Ads

Currently the most frequently used type of advertising, banners live at the top or bottom of the screen, close to other features users might access. These ads can be purchased at a lower cost than other types of advertising, and they give ad publishers access to a very targeted audience.

However, mobile banner ads have become as ubiquitous (and easy to ignore) as banner ads on desktop sites, and the average click-through rate (CTR) is low compared to other in-app ads.

Rich Media Ads

Some mobile ads leverage video, audio, social media or even maps to gain the attention of users. Rich media ads are typically designed to encourage the user to interact with them rather than merely view them — that way the user deeply engages with the ad content and messaging. A typical rich media ad might float, expand, or invite the user to peel down a corner of the ad to see its full message. These days rich media ads are often produced with HTML5.

Interstitial Ads (aka Static Full Screen Ads)

These full-screen ads appear during natural breaks in the app experience and are an effective way to grab a user’s attention because they literally won’t be able to click away. Since they take up the full screen, these ads can be off-putting to some users.

Video Ads

Video ads can be highly engaging and are becoming more frequently used by advertisers. Overall, annual mobile video ad revenue is predicted to reach $13.3 billion by 2020 and is already well on the way to reaching that figure. These ads have the highest CTR of all formats.

An important consideration is that many consumers won’t have their phone’s sound turned on, so on-screen text is highly encouraged.

Offer Wall or Incentivized Ads

With an offer wall, a user is encouraged to take an action with advertiser content — like answer a survey question or watch a video — in order to continue past the ad or receive other bonuses, like an additional life in a game. This form of advertising is aimed at creating a positive experience by making users feel like they got something in exchange for their time and engagement.

Native Ads

Native ads match the look and feel of the content the user is already consuming; it can be almost indistinguishable. Native has been on the rise in recent years — branded posts are very common in Facebook, Instagram and Twitter feeds. Other apps, especially those focused on content delivery, are now inviting advertisers into the fold.

Your App + Advertising = App Advertising Networks Can Help

In the user acquisition phase you focused on finding ad networks to display ads about your app. Now we’ll turn that idea around and find out how you can set up advertising to run on your app.

In most cases, you’ll pick an ad network to do the heavy lifting. Ad networks act as intermediaries between apps and advertisers. They bring together groups of publishers, sell the ad space on their behalf and then distribute the ads back to the publishers to display.

As a hypothetical scenario, let’s imagine that an advertiser has a large budget to spend on a mobile ad campaign. It’s difficult to find one publisher to fulfill that much ad inventory, and trying to nail down hundreds of different deals with hundreds of different apps, if not thousands, isn’t a realistic option. An ad network, however, has a number of different apps within it. So the advertiser only needs to strike one deal to spread its advertising across a wider inventory.

A network will take a cut of the ad revenue, but it will also do the heavy lifting of landing deals with advertisers, an especially important role for companies without their own dedicated sales team. Only you can decide if working with an ad network is the right choice for your business.

Choosing The Right Ad Network

Some networks in the app space are AdColony, AdMob, Chartboost, InMobi, ironSource and Unity Ads.

Tips for Working With an Ad Network

So which network do you want to work with? In general, all ad networks will help monetize the ad space in your app. But how much space will you devote to promoting your own apps (also known as cross-promotion or cross-app advertising)? Is there any ad content you refuse to display? Those questions will most likely come up as you review your options.

Here are other key questions to consider:

  • Demographics: Does the ad network reach an audience that aligns with yours?
  • Management: Who will run the relationship between advertisers and your app? Some larger publishers have the resources to run an in-house advertising team, but most will need to rely on an ad network. Those with an existing ad network running on other properties will only have to bring their app into that network.
  • Cross-app advertising/cross-promotion: If you have multiple apps, don’t forget to cross-advertise your entire portfolio on your own apps. For example, mobile game developer Ketchapp Studios relies heavily on cross-app advertising.
  • Supported ad types. Some ad networks might only manage certain types of ads (only video ads, for example).
  • Budget: What percentage of revenue will you claim from the ads placed on your app? What will the costs be of setting up a network on your site?
  • Customer support and resources: If you have questions or need advice on how to optimize advertising within your app, does the network have sound online resources or contacts who are responsive who can guide you?

Remember, there is no shortage of publishers monetizing through advertising that you can research. See what examples on other apps match your vision, then find a way to make it happen (or find an ad network, or networks, that can deliver the types of ads you’re looking for).

In the next section, we’ll examine the process or creating a monetization strategy, as well as that of weighing the benefits of using in-app ads or other revenue models.

Keep Learning

Next we'll discuss your monetization strategy.

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