Although the mobile ad industry has matured, mobile app monetization remains a challenge for many app developers. Some publishers have millions of active users, but still fail to reach significant revenues.
If we look at the current state of the mobile app monetization landscape, ads are still the most popular channel for monetization, with 65% of all mobile apps displaying ads. Moreover, our latest Android SDK’s data trends report shows 75% of free apps using an ad-network SDK, making it the second most popular SDK category today.
According to Juniper Research, mobile app ads spend will reach $16.9 billion by 2018!
Games Paved the Way
According to a report that was released by App Annie in 2016, “Games generated approximately 85% of app market revenue in 2015, representing a total of $34.8 billion across the globe. We expect the games category to grow to $41.5 billion in 2016 and $74.6 billion in 2020 thanks to strong monetization in mature markets, especially China’s tier-one and tier-two cities, as well as Japan and South Korea.”
HIS also show that games are the biggest mobile ad revenue generators:
Of course, there are multiple monetization models, such as paid apps, freemium apps (one-time subscription fee), subscription, in app purchases (another model games are very fond of, although a report by swrve suggest that only 1.9% of mobile gamers made in-app purchases in Feb 2016), sponsorship (quite new), commerce and more.
Looking at industry veterans, many of which are games, we decided to share some advanced mobile-app ad monetization best practices.
Let’s get started…
The right placement and timing
Placement is one of the key factors to take into account. A good placement can make all the difference between a high eCPM and a low one, not to mention that a bad placement can damage user experience and lead to uninstalls.
Much like many other aspect of life, showing up in the right place at the right time is beneficial. What some mistakenly call luck is what others call planning ahead.
Here are a few rules of thumb for selected formats:
Native ads – Native ads can be placed anytime and anywhere, depending on the ad-content.
Interstitials work best in-between game levels (on the main menu screen) or when there’s a stopping point. Interstitial is a relatively aggressive ad format, so it’s advisable to test them carefully and look at their impact on retention.
Video ads are gaining a lot of popularity due to the high eCPM in this format, a trend that seems to continue for now. Video ads is a format heavily pushed by the top ad networks, and it leads to higher engagement rates than any other ad format. Videos are more effective if you delay appearance until some gameplay has taken place. For example, after a user has completed a level (similar to interstitials).
Rewarded videos are a smart way to keep users engaged with an app by offering goodies for video watching while at the same time exposing them to the offerings of the advertiser.
Banner ads are becoming an outdated method that may eventually be phased out. On the other hand, banner ads are an easy-to-implement ad format, so many publishers see banners as a “low hanging fruit” for monetization. Banner ads should be placed at the top or the bottom of the screens that are getting most of the impressions, but they should not be interrupting the UI, nor designed in a way that encourages accidental clicks.
Consider Users’ Emotional State of Mind
“High-engagement placement” is the serving of ads while being in-sync with the users’ emotional state.
For instance, serving users interstitial ads when they are most likely to be in a good mood (after finishing a successful level, or when exploring leisure related travel deals) is a great way to utilize the users’ positive state of mind.
In instances where users’ moods are more likely to be unhappy (after losing a level quite a few times and getting frustrated) an incentivized video ad (reward based video as mentioned above) may be a better choice.
Some mobile app news publishers I am familiar with include quiz-game ads (a cool ad format by the way) only in light content sections (like celebs or home décor), while the news “first page” areas are kept for more “serious” formats.
New is Better
Force of habit works backwards when it comes to ad types. When users grow more accustomed to a particular type of ad, they convert less. This common trend is called “ad fatigue”.
Also, well-known convention proves that ads shown at the top of the “waterfall” (at the beginning of users’ sessions) perform better than ads presented after the user had already spent a while exploring the app. The first ad shown has bigger chances to convert than the fifth ad shown.
This is true not only when looking at sessions, but also for the active users’ entire life cycle. Believe it or not, new active users convert better that senior users. Senior users shouldn’t get served at all (if you are interested in presenting impressive CR), as they get non-responsive with time. Of course, there are exceptions and you should analyze your specific ad trends using your ad monetization analytics, but as long as you see this trend too, you should consider optimal ways to increase your ROI.
Should You Offer “no ads” as an IAP (In-App Purchase)?
Allowing users to turn off advertisements as an in-app purchase or an upgrade is a widely used way to monetize, but more importantly, it gives your users a sense of control (the choice to accept or not accept advertising).
A more popular implementation of this is bundling the removal of ads with other gems and creating an in-app purchase that changes gameplay. Alternatively, you could offer some kind of feature and also remove ads at the same time, so users feel they got a special treat.
Cache Whenever Possible
Pre-caching is a big big issue. Nothing frustrated a user or converts worse than an ad that won’t load in time. Banners may be overlooked, native can be shrugged but interstitials and videos are bad user experience, plain and simple. If the video was of the rewarded kind, and the user fails to get a rewarded because of this, you’ve entered very dangerous territory in terms of retention.
So you should opt for pre-caching as often as possible. If an an-network SDK offers that option, take it. If not, consider if it’s worth the risk. If you’re offering ads yourself via direct deals and the like, examine CDNs and caching policies closely.
Monitor your Ads
Once you run ads, make sure you are given control and have full visibility over what’s going on in your app.
Balancing multiple ad network engagement and tons of ad units is hard to keep up with.
What if there’s an ad that’s not performing well (webpage not found…), which can lead to a significant waste of revenue as well as a poor UI? What if there are ads for violence or sexual context when that’s the last thing your users want to see? What if a competing app install-ad shows in your app?
We’ve recently released an ad intelligence dedicated solution that’s part of our SafeDK’s in-app protection solution. Our tool lets you get full visibility and analyze all the ads that are served in your app, in real-time, allowing you to act instantly if needed. You can use our dashboard to view all the ads shown to your users, see which ad network is serving which ad, what the conversion rates of each ad are and so forth.
This lets you optimize your ad revenues and protect your interests all on one platform.
Interested to hear more?
What Lies Ahead?
Some in-app ad trends that are relatively new should be kept in mind; the video ad format will continue to gain strength, especially the rewarded video ad format. Additionally, we will probably soon start seeing augmented reality ad videos.
Another relatively new ad format is a “playable ad” which allows users to experience a game before downloading it.
All in all, we can say this is a very vibrant field. Catching users’ attentions and getting them to convert is tricky so ad providers constantly try to shake things up and test new waters. Of course, there is a lot more chatter around who’s hot and who’s not in the ad world – this was simply a glimpse into what is continuing to be a very diverse in-app ads world. You are welcome to enlighten us on exciting trends and info, just drop us a note at firstname.lastname@example.org.