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In-App Advertising For Absolute Beginners

Advertising & Marketing

Isadora Teich wrote this article


These days there are more ways that businesses and developers can monetize and advertise via apps than ever before. In this blog post, we will take a look at some of the ins and outs of in-app advertising.

Here are some helpful tips, as well as an explanation of the most common ways apps are monetized.

Why All The Hubbub?

It turns out that in-app advertising is a huge deal, as it is a highly lucrative sector.

Experts suggest that by 2025, global in-app advertising will hit over $220 billion in revenue. They are simply more effective when it comes to getting clicks than mobile web advertising. This is likely partially because users spend 90% of their smartphone time using apps.

Also, app advertising offers more control to those who run campaigns. You can keep track of performance, clicks, engagement, and more all from one place. When used correctly, this can be a powerful tool to help you achieve milestones and get ahead of the competition.

This is what has made selling ad space on apps so successful for companies like AppLovin’.

You need to keep these things in mind for in-app marketing success.

Throw Out Your Funnel

The classic sales funnel doesn’t exactly apply anymore. Things used to be a lot simpler.

While there are countless takes on this, the basic sales funnel refers to the customer’s journey from not knowing what product you offer or what your business does, to being a satisfied customer. The simplest classic sales funnel follows these steps:

1. Awareness

2. Interest

3. Desire

4. Action

This made a lot more sense when the customer journey was more or less confined to hearing about something (for example, a pair of sneakers) on the radio or TV, becoming interested, deciding you want it, and buying it. Case closed.

The Endless Sales Cycle?

Currently, this is somewhat complicated by the way we constantly interact with ads via apps, product placement, and social media.

Customers may interact with digital content in a variety of ways before taking the plunge.

Also, via in-app ads, you can do this in different ways. You not only want to have this in consideration for your own app but balance it with how the ads will be placed and function. Publishers and advertisers essentially curate customer experiences within their customer experience.

It could be argued that due to the nature of apps, this funnel is more of an endless cycle.

After all, if your app is successful, users will incorporate it into their lives for the long term. This is why those in the business of apps talk about prioritizing Life-Time Value, or LTV.

There is really no simple funnel to show all of the value that will come from a long-term dedicated daily app user. That’s why you want to keep a close eye on the actions your users take long after that initial installation.

Know Your Options

There are a wide array of options when it comes to in-app purchases. Here are the four main categories of mobile in-app ad formats.

1. Banner

2. Interstitial

3. Native

4. Video

Banner and Interstitial Ads

Banner ads are also known as display ads and have been around since the early days of the internet. They are essentially a digital billboard placed in a prominent area of a site or app, designed to generate traffic for the advertiser.

Banner ads may be less likely to interrupt the flow of app use for users and annoy them.

Remember, it is key that you strike a balance.

Feeling over-advertised-to is a big reason that people dump apps. The average revenue per banner ad impression is $0.10.

Interstitial ads, on the other hand, are strategically placed between content breaks in an app.

For example, in between levels of a gaming app. If your app has hundreds of levels, that is a lot of places that you can put ads without interrupting the flow of the game. Interstitial ads generally earn $1-3 per ad impression.

Native And Video Ads

Native advertising is also called sponsored content.

If you are a social media user, you have likely seen this type of ad thousands upon thousands of times. These ads match the form of content of whatever platform they appear on. So for example, on Instagram, a native ad looks like an influencer making a reel or post for a product.

Depending on your kind of app, this will vary wildly. Remember, not all types of ads can be used in the same ways on different apps.

Native ads take special consideration and savvy. If they are not well-incorporated and executed, they can be amongst the most intrusive and least successful types of ads.

For example, if your app is a puzzle gaming app, randomly having an influencer appear in the middle of a game to promote protein powder simply would not make sense.

Video ads generally refer to two different things within the world of mobile and digital marketing. These are ads that take the form of videos and ads that show before, during, and after videos.

You have likely seen many of these if you are an avid Youtube watcher. Long video ads often earn between $5 and $10 in revenue.

A Quick Look At Some Key Buzzwords

Like any industry that involves tech, things can evolve fast in the world of mobile advertising.

The lingo also changes and evolves.

While it would be impossible to compile all of the terms that have or will ever be used, here are 10 key phrases to help get you started.

Advertiser: Person, company, or other organization that pays to have ads shown.

Publisher: The one who gets compensated for displaying ads.

PPC: Pay per click is an incredibly common type of ad campaign. In this scenario, advertisers pay publishers a commission every time their ads are clicked on.

CPC: Cost per click is the actual amount that an advertiser pays the publisher per click. This can be decided in a number of ways.

CPI: Cost per impression refers to how much an advertiser pays each time an ad appears on a publisher’s platform. This rate depends on many factors, such as how popular a publisher’s platform is.

CPA: Cost per action refers to how much the advertiser pays for the occurrence of a specific action that is beneficial to their ad campaign. This can include things like clicks, sales, and registrations.

CPV and CPCV: These refer to cost per view and cost per complete view. These are specific to video ad campaigns.

CTR: Click-through rate is one way to measure the success of PPC campaigns. It is the number of clicks an ad receives, divided by the number of times its shown.

CR: Conversion rate refers to the percentage of users that completed the desired action after clicking on an ad. This can be a sale, installation, or other action.

IR: Install rate refers to the rate at which users actually download and install an app after clicking an ad. You get this number by dividing the number of installs by the number of clicks on an ad.

Final Thoughts

When it comes to in-app ads, advertisers and publishers have options, and it is key that you understand both perspectives. After all, monetizing an app is incredibly important. If you want to have a free app for users and still make money, utilizing advertising can help.

Also, if you want to run a mobile advertising campaign for your own app or business, knowing some basics is incredibly important.

What do you think? Tell us below.

About Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.


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