Mobile Ads As Means Of App Monetization

Building a quality app and letting the world find out about it, is only part of the puzzle when you are trying to build a successful app business. You need to also make sure that your users have realised the value of your app and they keep opening it again, while figuring out a way to monetize the app so that you can earn enough money to cover your development, maintenance and marketing costs with the intent to eventually make significant profits.

The 3 primary methods to monetize your app are:
1) Paid app (a fee is paid to download);
2) Free app within-app purchases (IAP);
3) Free app with in-app advertising.

Each monetization method has its pros and cons and here we'll focus on mobile ads which have collectively generated $1.9B last year and accounted for 6.9% of the total app revenue for the year, according to Gartner.

Given the crowded app stores and the fact that a user's decision on whether to download an app or not can be heavily influenced by social proof elements (number of downloads, number and quality of ratings and reviews), many app developers opt to keep their app free and try hard to achieve scale so that they can separate their app from the noise. In exchange, many users appreciate the fact that the app is offered for free and they accept advertising as a compromise, as long as it does not disrupt the user experience.

Many ad-units have been developed over the years aiming to strike the right balance between user experience and positive ROI for both publishers and advertisers, and given how fast the mobile advertising industry has been growing these adunits are being continuously refined.


Banner Ads

Banner ads have been around for many years and was an attempt to transition the successful online banner from the web onto mobile, without much thought being put on the small screen real-estate and the unique challenges of the mobile user experience.

This ad-unit has been widely adopted due to its quick integration and large inventory availability; however, many users find banner ads annoying and don't click on them. This resulted in low eCPMs for the app developers and some have gone as far as using banner ads as a way to push people to purchase the paid version of the app so that they can remove them.


Interstitials

Interstitials have been an improved attempt to address many of the pain points of banner ads including larger screen real estate and more engaging content.

Most full-screen interstitials can serve rich media which might include HTML5 mini-sites, app installs or even minigames. They do provide a richer user experience which results in higher ROI, however, they can still interrupt user flow and app developers are advised to integrate them in natural breaks within the app.


Video Ads

Video ads are a relatively new ad-unit, which has so far demonstrated high ROI to app publishers. They can either be incentivized or non-incentivized, and while you need a good Internet connection to download these 'heavy' ads, the major challenge at the moment is to overcome the low inventory availability which has been magnified by the fact that creating video ads is currently expensive for advertisers.


Native Ads

Native advertising has been emerging as the most promising ad-unit, as it addresses the 2 core challenges of mobile advertising:

a) Native ads blend seamlessly in the user experience without interrupting the user flow;
b) Native ads require minimal screen real estate.

They can generally fall under the activity-triggered, in-stream or branded content categories and have been widely adopted by mobile giants such as Facebook and Twitter due to their superior ROI. Unlike banner ads though, integrating native ads requires a certain level of effort from the app developer which raises the question how scalable this ad-unit can be.

App monetization through mobile advertising has seen tremendous advances throughout the last years and app developers can experiment with a variety of old and new ad-units to maximize the revenues.



This is a guest post by George Makkoulis, founder at Avocarrot, a mobile ad network specialized in native advertising. He loves swimming, meeting new people and constantly asking questions.


See more:
★ What You Need To Know About Your Mobile Consumers
★ Mobile Payments: Advantages And Barriers
★ Mobile Software Monetization Models