Mobile applications significantly impact our lives. They are a source of convenience, entertainment, and functionality. However, these mobile apps also have the potential to be lucrative ventures for developers, businesses, and entrepreneurs.
By the end of 2023, global app downloads will likely reach 299 billion annually. Looking at this number, we can safely conclude that the future belongs to mobile apps.
The variety of apps has increased significantly with the development of smartphones and technology. Most of these mobile apps cover everything from banking to shopping to communicating with people in distant parts of the world. Hence, we see hundreds of new apps launching every year.
Simply put, businesses need to adjust to the most recent technological developments. Small business owners miss out on significant opportunities if they haven’t considered creating a mobile app.
If you want more tips to skyrocket your sales, check out our blog
How Mobile Apps Can Help You Grow Your Startup in 2023.
However, there is another possibility through which an app can generate a significant return on investment.
App developers or businesses can set up a reliable monetization strategy by strategically placing high-performing ad formats. For example, they can place rewarded video ads at critical times to increase ad revenue.
Keep reading if you want to learn more about the potential revenue an app can generate per ad.
First, let’s find out more about in-app ads.
How Much Money Can You Expect from An App?
The annual revenue from apps could reach millions of dollars. However, most apps fail to achieve this potential and generate little or no money.
Given the huge number of apps and the vast variety in the amount of money they make to bring in for their publishers, calculating the money they can make is quite challenging.
On average, gaming apps earn roughly $22k per day. By dividing the impressions an ad gets on a platform by the eCPM, we can calculate the revenue from gaming ads. Ultimately, mobile game advertising revenue is profitable and likely to generate $39.8 billion.
However, we observe that other entertainment can only make $3090. Despite this, there is yet to be a definite answer to how much money an app can make per ad.
Numerous elements, such as the ad unit, the app’s genre, the user’s demographics, etc., affect how much money an app makes from each advertisement. According to estimates, rewarded video advertisements earn $0.02 on average per impression in the US. The average payout for interstitials is $0.16 per completion.
The highest revenue per rewarded video ad comes from casino and action games in terms of genre, while casual games generate the least. However, the latter makes up for it with more impressions.
What are In-App Ads?
It is also called in-app advertising, where developers can place advertisements within their applications to monetize them and earn a substantial income. Mobile app advertising allows application developers to generate revenue and helps advertisers reach their target audience at the right time.
Developers can incorporate various types of ads into their applications, including rewarded video ads, interstitial ads, wall ads, banner ads, and playable ads. Each ad unit behaves differently in terms of monetization. They may also take on different forms and have interactive features like allowing users to view product details or complete surveys.
Like in-app purchases, ads are an excellent way for an app developer or business to make money because these ads are free until a user clicks on the ad.
How Does In-App Mobile Advertising Work?
Initially, ad networks link sponsors with apps looking to host advertisements.
Advertisers pay the network, which then disburses the app developer. The network is paid by who then pays the app developer. In exchange for letting users use an app for free, the network displays ads to users after downloading it.
For example, users may view ads on their devices while performing another activity, such as reading an article, playing a game, or using social media.
A mobile ad click event is generated when a user clicks on an in-app advertisement or completes the required action (such as watching the video).
The advertiser or network can monitor and assess these clicks to report on the success of their advertisements.
Here is a summary of this process.
- The mobile ad network or exchange receives a request to serve an ad from the user’s smartphone app.
- It uses a variety of factors, such as user data, and an algorithm to select the best and highest-paying ad from among those offered by various advertisers.
- The mobile app is then given the advertisement in real-time.
Why is it Profitable?
In-app advertising is crucial since it allows app developers to make money, businesses to reach their target audience, and users to find new, valuable products and services. In-app ads are among the most widely used app monetization methods for paid and unpaid apps. They provide an appealing free app monetization strategy for businesses that build apps without in-app purchases.
For example, you could be an e-commerce store owner who wants to make more profits from its app. In this case, in-app ads can give you another income stream.
You can get more tips with this blog,
Optimizing Your E-commerce Store for Maximum Conversions.
Here are some of the goals you can achieve. In-app ads:
Developers can make money from ad clicks or impressions by displaying advertisements to users. This enables developers to continue creating apps and enhancing user experience.
Boost User Engagement
In-app advertising can help interact with users and motivate them to act. That can help companies in promoting their brands and increasing sales.
Businesses can display ads to users that are more relevant and customized by combining data on user behavior and preferences. Higher engagement and conversion rates are ensured as a result.
In-app advertising uses header bidding to distribute a publisher’s inventory more effectively.
In-app advertising has the potential to be a significant source of income for app developers. Ads allow developers to make money without directly charging users for their apps. That is crucial for free apps, which depend on advertising as their primary source of income.
But Should All Mobile Apps Use In-App Ads?
There is no definite answer. However, adding in-app advertising is beneficial for most apps.
Everything depends on how you use it and what you hope to achieve. Spending some time and effort will ensure that this strategy benefits you. Otherwise, it will provide a quick boost that soon subsides as users get tired of the ads.
However, in-app advertising is the most popular monetization method for free applications. Displaying embedded advertisements within your application is all you need; you need an outside ad network to pay you. Furthermore, you can choose from various advertisements to run inside your application.
How Can Mobile Apps Benefit from In-App Advertising
Again, mobile app advertising can be a great way to monetize your app, but only if you do it correctly. Otherwise, the same strategy may backfire.
The goal is to show interesting and engaging ads to your users without any intrusion.
There are also many ways to integrate ads into your app. There are different types of in-app ads, from rewarded videos to interstitial ads. We will discuss them later in the post.
App developers can choose from different types of in-app ads.
- Banner ads
- Gamified ads
- Interstitial ads
- Native ads
- Rewarded ads
Typically, banner advertisements appear alongside your content while a user reads it. They are used by advertisers who want to increase brand awareness or create a call to action. They appear as animated images, pictures, and clickable assets. You can choose the best sizes for your application and go well with your content.
These ads closely resemble those from desktop web publishing. Although they may be simpler to implement than other mobile app ad units, they also frequently have the lowest CPMs.
Interstitial ads, which look very different from banner ads, appear between stages of an app user’s journey. For example, it may appear in a mobile game when the user finishes a level. Furthermore, a full-screen interstitial ad appears before the user reaches the next level, tempting them to interact with it when the user is not playing the game.
These ads can take the form of graphics, text, or videos. The use of videos in this format produces excellent CPMs. In fact, video ads frequently offer some of the highest CPMs for app publishers.
A native advertisement blends in seamlessly with the app and causes little disruption to the user’s experience. Despite being identified as advertisements, they look and feel like the other app content.
What could be more captivating than a game? That’s precisely why these ads work. Because of this, gamified ads continue to flourish as a form of mobile advertising. Such adverts give the user a game to finish inside the ad and generate high in-app ad CPMs for publishers.
It could be simple or complex, but the secret is that it should be custom. Note that you can’t sell this ad inventory programmatically. They are direct-sell ads, which is why they produce such high CPMs.
Rewarded ads show up when viewers know they will get something in exchange for watching. That is why viewers almost always watch the ads altogether.
These rewards can be anything like coupons, in-app currency, or additional lives in a mobile game. The rewards should be anything that is of value to the users.
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What is The Average Earnings Per Ad For Mobile Apps?
The average revenue from in-app advertising per ad impression is $0.10 for banners, $1–$3 for interstitial ads, and $5–$10 for longer video ads.
How do Apps Earn Money from Ads?
Ads are displayed and monetized in a mobile app in various ways. The CPM model pays app developers for numerous ad impressions. CPC revenue is based on the quantity of clicks delivered by the advertisements. The number of views by app users determines how much CPV is earned.
Are some App Categories More Profitable for Ad Revenue?
Most experts believe that an app’s profitability depends not on the category. However, some app categories are more likely to generate income. Dating, fitness, gaming, gambling, social media, and music apps are a few examples.
How Can App Developers Increase Their Ad Revenue?
A single mobile app network, like MoPub, or a mediation platform, which coordinates various ad networks to prevent campaign overlap, are the two options for ad networks. You can use the AdMob Mediation feature if you have a Google AdMob account. These provide better click-through returns thanks to higher fill rates and more successful target advertising.
How Often Are App Developers Paid for Ad Earnings?
CPM stands for cost per mille or cost per impression. Every 1,000th time the affiliate ad is shown, the advertiser typically pays. The term eCPM stands for effective cost per thousand impressions. It estimates the advertising revenue the publisher will make from each 1,000 ad impressions.
Can the Quality and Relevance of Ads Affect Earnings?
A higher quality score means your ad can be helpful to someone who is searching for your keyword. You can use diagnostic tools to determine where it might be advantageous to improve your landing pages, ads, or keyword selection.