Apps monetise in different ways, and the app’s monetisation model needs to be carefully considered even before developing the app. Usually, the business model chosen is dictated by the app category. While those with a niche audience and high development cost require a fee per download, these don’t make up a majority of downloads. Most apps are free to download and monetise either through in-app purchases, or advertising, which takes the lion’s share of the apps in the app stores. Once a developer decides to monetise through advertising, the next consideration is the right formats to choose, and the right balance.
Choosing the right ad formats
While monetising using ads is more commonplace, they also present more potential pitfalls: filling your app with ads might temporarily increase your app’s monetisation, but including too many, or including them at the wrong time, leads to a poor user experience, a drop in retention, and even low ratings in the app stores. The key is to choose the right ad formats, and the right locations, timing, and frequency of the ads within the app, considering your app’s category and audience profile.
Although videos are usually the highest paying ad format to show, using them the wrong way would cause significant damage to your retention and user base: it wouldn’t make much sense for users to randomly start watching a video ad while reading an article or trying to call a cab.
Video ads are best included:
● As rewarded videos, where the user chooses to watch an ad in exchange for in-app currency, and thus doesn’t mind it
● Right before or after regular video content (e.g. a video news story in a news app)
● As in-feed native video (just like videos posted by friends in your Facebook feed, which causes relatively minimal disturbance while scrolling).
Native ads are the perfect solution for apps with content that’s displayed in feeds, lists, or photo tiles. Those are all often used in the app categories news, social, mCommerce, utilities, etc. They tend to generate lower eCPMs than full screen ads, but pay better than banners, and are much less obtrusive to the user.
Static interstitials are traditionally ranked between videos and native ads in terms of eCPM, but may be rather intrusive. The trick is to cap the number of interstitials shown to every user per session or day, and display them when users are expecting a new page to load, and are thus willing to wait a few seconds before the app content is revealed (e.g. between levels in a game, after clicking on a story link in a news feed, and so on).
Finally, there are traditional static banners. While they are still heavily used across the industry and often have higher fill rates than other formats, they also provide the lowest eCPMs, and mostly don’t really blend in well with their environment. Many users have already developed “banner blindness” to the famous little horizontal banner in the bottom of the screen (aka 320×50). When you have a big user base, banners can be a nice addition to your app’s revenues, but in most cases, you should use native ads instead, which have higher payouts while providing better user experience and retention.
Another key element is showing the right ad to the right user. Not all users are the same, and two different users who behave in the same way within your app, may have completely different interests and preferences. In order to show the right ad to the right person, you can use advanced data solutions, such as programmatic exchanges and mediation solutions, which are integrated with data management platforms. Such tools allow the establishment of the user’s demographics and preferences, and find an appropriate ad to show them, in the demand sources integrated with your inventory.
It’s all about balance
Ads are the statistically best way to monetise your app, but misusing them can seriously hurt its success. The good news is that by following a few simple principles, you can integrate ads in your app, while maintaining a good balance between ad revenues and user experience. The factors you need to consider are the ad format you will use, the location of your ad placements, the timing of showing the ads, their frequency & capping, and last but not least – the relevance of the ad content to the specific user. If you show the right ad to the right person in the right time, your users are likely to keep using your app, while generating better eCPMs. For real long-term success, you need both an effective monetisation technique & good user experience for retention.