11 September 2012
As an iOS or Android app developer, you have a variety of business models to choose from to monetize your apps: premium, freemium, and ad supported. This article covers in-app advertising, how to implement it, and how to maximize revenue from it. PlacePlay , my company, provides iOS and Android developers with an in-app advertising solution to increase revenue and cross promote apps to increase distribution. Whether or not you use PlacePlay, by the end of this article you’ll know how to maximize your in-app advertising revenue.
The mobile app marketplace has become crowded with thousands of apps available for download. The increase in-app consumption has led to a corresponding rise in the number of services available to app developers. In-app advertising solutions make up a large fraction of these services, providing a bewildering array of options for app developers to choose from. I eat, breathe, and sleep mobile advertising and I still get confused. Here are the big questions app developers face when looking at in-app advertising:
As discussed in Choosing the right business model for your game or app, the principle consideration in monetizing an app is to do what’s best for your content first and what’s best for monetization second. This absolutely applies when deciding what the best type of in-app advertising is appropriate for your app.
Keeping this rule of thumb in mind, ask yourself these questions to identify the best in-app advertising options for you and your apps:
Will your app compete on quality with big titles like Angry Birds, Cut the Rope, and so on? If so, banner advertising might not be as appropriate as video, interstitials, or offer walls. (See the question on long-term brand goals below for more on this.)
Do users play and complete a level or set of objectives, have a break, and move on to the next level or set of objectives? Or, is it a continuous experience? If your app includes natural breaks in game play, it is well suited to interstitial or video advertising during those intermissions.
Are you using freemium game mechanics? If so, you should be using some form of offer wall in order to provide your users with a simple value exchange: advertising engagement for currency, mana, or whatever your app uses.
This is a big question that deserves its own article. For now, I’ll summarize it this way: If you plan to be in the app business for the long haul you must think about how you want consumers to perceive and engage with your brand (see the article on building meaningful consumer connections via social media), and how you are going to move your consumers from app to app and from experience to experience.
Backflip Studios is an example of a company that has managed this process well. Backflip has provided troves of high quality ad-supported apps and, essentially, built their own network (rumored to be near 1B impressions/month). They used this network of ad impressions to move consumers from app to app, culminating with DragonVale, which has been a five grossing app for the last year. I encourage every developer to take a step back and think about how they are going to approach the market over time. It’s a worthwhile exercise that will help you identify the most appropriate advertising solution for your app, your brand (even if it is not yet established), and your business.
The process for choosing the right ad network will vary depending on what types of in-app advertising you are utilizing in your app.
Banner advertising is the easiest for app developers because you aren’t limited to choosing one; you can test many and find the one that works best for you.
App developers of any size can use AdMob mediation at no cost to access ten or more high quality mobile ad networks, including those that aren’t integrated directly into AdMob such as PlacePlay. If you are a bigger publisher with substantial traffic, you can use a service like MoPub or Burstly to manage your traffic. In general, networks with high eCPM will have low fill rates and networks with low eCPM will provide high fill rates. Try to get several of both. iAd is an example of a high eCPM network with low fill; AdMob is an example of a low eCPM network with high fill.
For Adobe AIR developers, I recommend using existing native extensions from Milkman Games to help with network mediation, along with the PlacePlay native extension for Adobe AIR.
Your choice for choosing a mobile advertising partner gets harder for mobile video or interstitials simply because there aren’t widely used and available mediation layers. AdMob has recently started incorporating mobile video into its mediation layer through a deal with BrightRoll, but they are the only one. AdMob will most likely add additional video networks in to their mediation layer moving forward; but for now you are left two options if you’d like to integrate multiple video ad networks in to your app:
If you have the resources to build your own mediator, you probably have enough traffic to use a service like Burstly. So, go do that.
Keep in mind that as the number of video ad impressions grows (how many are shown) by orders of magnitude, costs per view (CPV) are coming down. On average, app developers can expect between $.01 and $.05 per completed view, so you need thousands of views to make a meaningful amount of money.
As you integrate video advertising, you’ll need to decide if your app will allow users to close a video before they have finished watching it. If you don’t allow this, you’ll increase your revenue, but you may experience a decrease in retention as users become annoyed with being required to watch 15-30 second videos. Tread carefully here.
Offer walls enable you to provide your users with currency or other in-game consumable items for engaging in activities such as signing up for Netflix, completing a survey, and so on. On Android, this also includes the ability to obtain items by downloading another app, though this isn’t possible on iOS. Offer walls are the ultimate value exchange, but don’t always provide a fresh stream of offers for users to choose from.
There are a variety of offer wall providers on the market, including Tapjoy and W3i. One challenge developers face with offer walls is that most providers insist on exclusive agreements making it difficult to determine what works best within your app.
I recommend talking to other developers who use the offer wall providers you are reviewing. Sure, you might be competitors, but you’re all in this together and can benefit from sharing knowledge. Take advantage of the existing knowledge and resources available to you in the developer community.
Now that you have decided what type or types of in-app advertising you are going to use, and which mobile ad networks you are going to source inventory from, it’s time to maximize that revenue. Below are six tips and techniques that you can apply to increase your in-app advertising revenue. These tips and techniques apply to banners, videos, interstitials, and offer walls.
Obtaining location data is as easy as a permission request on Android, but requires location based features on iOS. It’s well worth it as location targeted advertising can pay up to four times more than advertising that is not location targeted. As mobile ad networks get smarter, location will enable context, interests, and a variety of other factors to be incorporated to help provide the right advertising at the right time.
As with many disciplines, less is more in mobile advertising. How many times have you used an app that showed an interstitial every 30 seconds, or multiple banners on a screen, or any other type of really invasive advertising? There are lots of problems with invasive advertising, but the biggest one is that you are annoying users to the point they will:
If you include banner advertising, that doesn’t mean you can’t use interstitials or vice versa. Some people may disagree with this, but it’s really up to you to determine what fits your content. The benefit of employing multiple ad types is that you create multiple revenue streams and have levers to pull in case one isn’t working for you. But, remember, don’t overdo it.
SDK fatigue can make trying a new ad network unappealing, but that doesn’t mean you shouldn’t make changes if a network isn’t providing you with a high enough fill rate, eCPM, or new offers for users to choose from. If you launch with AdMob mediation (or similar mediation products) you can easily ratchet up or down support from various ad networks to maximize your revenue. If you are going to fire and forget, you might as well not include advertising at all.
Make sure you provide your users with a simple way to turn off the advertising if they desire. There are two main ways to do this:
The biggest benefits to doing this are that you create an additional revenue stream and you give your users the choice of accepting advertising, rather than making it solely your decision.
You didn’t hear this from me, but everything is negotiable. Are you sending ad networks a ton of high value traffic? If so, it’s quite possible to negotiate more favorable terms including faster payment terms, increased revenue share, and sometimes even minimum eCPMs. Keep in mind that this only applies to developers serving a very high number of impressions per month; for example, something close to 100 million impressions per month.
To review, here are the actionable steps that every app developer should take to maximize their in-app advertising revenue:
Mobile advertising networks want your business, and your app users’ eyeballs are their "product". So take the time to identify what advertising is going to perform best for your app and your user base to maximize your revenue.