Digital Marketing

In-App Advertising: The Complete Guide

May 15, 2023
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What Is In-App Advertising?

Mobile devices have become integral tools of communication, news, and entertainment, especially post-pandemic. With more than half of the world’s population using handheld devices such as smartphones and tablets, businesses are using this opportunity to promote their products and services online.

The mobile marketing market is expected to increase fivefold in size by 2030. Furthermore, the mobile advertising spend is projected to be $400 billion by 2024, as compared to $327 billion in 2023, according to the latest forecasts. In-app mobile advertising indeed is a lucrative revenue opportunity for app developers.

In this article, we will touch down the scope of in-app advertising and how to effectively monetize for higher revenue. In-app advertising is a tactic that allows advertisers and app developers to monetize their apps by displaying publishers’ ads to their users.

The ads are served through an advertising network that connects app developers and publishers who want to display ads. Creative collaborators who design the ads and launch campaigns are called advertisers. Apps that rely on a heavy user base such as gaming, social networking, and entertainment benefit largely from in-app advertising.

Types Of In-App Advertising

In-app advertisements provide an opportunity to cater to your target audience uniquely and serve as a gateway to an improved user experience if done right. Here are a few ad types advertisers and app developers can choose from and ensure the right delivery to the right audience through the right medium:

1. Banner Ads

Banner ads are the traditional form of display ads. As the name suggests they are in the form of a small banner that is either placed at the top or bottom of the page or screen. Banner ads are used to generate awareness without disrupting the user experience.

2. Native Ads

Native ads look and feel like the native content of the app. They do not disrupt or intrude but blend seamlessly into the user experience of the app looking like a suggestion. Native ads should be highly relevant to the user. For example, an ad for sports gear is rightly placed in a fitness app. These ads are highly targeted and reach the target audience with high accuracy.

3. Rich Media Ads

Rich media ads use HTML, CSS, JS, and image files to deliver a mobile banner ad, providing an enriched experience to the users. Rich media ads offer a huge amount of flexibility to implement a variety of creative advertising ideas. Some of the types of rich media ads are swipe ads, cube ads, and scratch banners that use heavy animation to enhance user interaction.

4. In-Stream Video Ads

In-stream ads are shown within the video stream either before, in between, or after the video is played. As mobile video is one of the most engaging forms of online content, in-stream ads grab the uninterrupted attention of the users. In-stream video ads capitalize on this trend and offer a high level of interaction rates. Offering quality content matters a lot in video in-app advertising. Also, if the video ad is too long, it may frustrate the user. Thus, keeping in-stream video ads under 15-30 seconds is recommended.

5. Playable Ads

Playable ads are short playable games to entice the user to sign up for a full product or service. These types of ads are highly interactive as they allow users to experience a part of the advertised product or service. Thus, ensuring a captivating experience throughout is a must. Placing such ads with games is a great strategy as users feel like they are playing the game even while consuming the ad. Keep the ad length under 60 seconds and add an effective CTA (call-to-action) to make the best of playable ads.

4. Rewarded Ads

Rewarded ads are placed in between a game or content in the app as an incentive to watch the ad. Rewarding users with some incentive is always a great strategy to make sure they complete a certain action that you want them to complete. Users can be rewarded with an extra life in a game, extra currency, or some power to unlock premium content in exchange for watching the ad. Full-screen rewarded ads are engaging and interactive. However, there is always a risk of attracting unwanted traffic with such ads. Thus, advertisers need to be careful in selecting the right target audience.

5. Interstitial Ads

Interstitial ads are immersive full-screen banner ads that grab user attention by capturing the entire screen. These ads are displayed at a crucial moment in a user’s journey such as during a transition or a natural pause. These ads push users to take an action with a CTA or close the ad with a button to proceed. Interstitial ads may cause an interruption in a user’s journey and may seem annoying, thus ensuring they are relatable and users are given the option to skip or close is essential.

It is essential to select the most relevant type of in-app ads to deliver the right content and user experience to the target audience. In-app ads not only provide an opportunity for app monetization but also help users discover new products and services.

Challenges Facing In-App Advertising

With all the lucrative advantages, in-app advertising also presents a few challenges to advertisers and app developers. If a proper cost-benefit analysis isn’t conducted, it becomes difficult to make your in-app ad campaigns successful. Here we discuss a few challenges and how advertisers should overcome those:

1. High Competition

As more and more businesses are moving towards in-app marketing, the space is becoming heavily crowded and highly expensive. Furthermore, as more ads are being served, standing out in the crowd without disrupting the user experience becomes challenging.

Users today are more interested in skipping an ad and continuing with their journey. It takes a bold message and hard-hitting creatives to grab their moving attention.

2. Tracking And Measuring

Advertisers find it difficult to attribute ad revenue to an acquisition source, especially after Apple’s App Tracking Transparency (ATT) framework in iOS 14. It is also difficult to measure post-view conversions and tie them with in-app conversions.

However, the good thing is that if there is no consent given by the user, the Mobile Measurement Partner (MMP) and the ad exchange platform see the same IDFV (identifier for vendors) and can measure ad revenue.

In-App Purchase Vs In-App Advertising

While in-app advertising benefits by displaying ads, in-app purchases allow app developers to benefit from purchases made within the app. App developers may advertise their apps as free and then upsell a paid version to long-term or loyal users. While in-app advertising comes in the form of various ad types as discussed above, in-app purchases are broadly categorized as consumables and non-consumable purchases.

Consumable purchases are temporary or limited purchases that allow users to consume a benefit they purchase within the app such as in-app currencies, extra points/rewards, and a hint or a tip. Whereas non-consumable purchases are ideally done once and can be consumed over a while such as unlocking a level or a character, a premium subscription, a hidden content piece, or an upgrade to remove ads. Researchers state that in-app purchases work best for content-based apps and ads work well for games. Ads are said to improve player retention in games.

AspectIn-App PurchasesIn-App Advertising
Monetization StrategyUsers pay for additional features, content, or virtual goods within the appAdvertisers pay to display ads within the app
Revenue PotentialHigh revenue potential, especially for popular apps with engaged user basesRevenue potential can vary based on user engagement, app popularity, and ad quality
User ExperienceUsers may enjoy a cleaner experience without ads if they choose not to make purchasesUsers may experience interruptions and distractions from ads
User AcquisitionIn-app purchases may not directly contribute to user acquisitionAdvertising can help attract new users to the app
User RetentionUsers who make in-app purchases are more likely to remain engaged and retainedAdvertisements can sometimes be intrusive and lead to user churn
Implementation ComplexityRequires setting up payment systems and managing virtual goods or premium featuresRequires integration of ad networks or mediation platforms
App Category SuitabilityWell-suited for apps with premium content, gaming apps, productivity tools, and subscription-based servicesApplicable to a wide range of app categories, but may work best with apps that have a large user base
Dependency on Active UsersRelies on a smaller percentage of highly engaged users who make purchasesRelies on a larger user base and requires consistent user engagement
Revenue StabilityRevenue can be more stable as it is generated from direct user transactionsRevenue can fluctuate based on ad demand, user engagement, and market conditions
User Privacy ConcernsGenerally, in-app purchases do not involve extensive data collectionIn-app advertising may involve collecting user data for targeted ads, raising privacy concerns

Ensuring Brand Safety While Advertising In-App?

Brand safety is a major concern in in-app advertising. It is essential to protect brands against negative impacts on their reputation associated with content, fraud, criminal activities, and/or loss of ROIs. Although automation makes a lot of ad buying and selling processes efficient, it does come with a risk that may negatively impact a brand’s reputation or budget. It is highly essential to carefully define the targeting parameters before the launch of a campaign.

Careful evaluation ensures that the brand’s ads are placed at a suitable place, at an appropriate time, and are shown to the right audience. Another risk brands need to be protected from is mobile fraud, which negatively impacts a brand’s budget. Frauds exist in many forms such as fake installs, click spamming, and click injections, which also pose a risk of wrong attribution. To avoid fraud and ensure brand reputation, it is essential to partner with trusted service providers, and ad networks, and ensure a trustable inventory.

Generating Revenue Via In-App Advertising

Ad revenue is the revenue apps generate by displaying in-app ads. It is essential to put together a solid ad monetization strategy to generate revenue from in-app advertising. The first thing app developers need to do to start generating revenues with in-app advertising is to build a real dedicated user base. Provide the best app experience while building a solid user base and then slowly introducing ads.

Starting with non-intrusive ads and gradually introducing heavier ads is a great strategy to make users accustomed to the ads in your app. Measure all the tracking points on how users are reacting to the ads and adjust accordingly. Scaling revenue through in-app advertising is an ongoing process. Advertisers must continue optimizing the ad strategy to generate an ongoing mechanism.

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