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How does mobile app advertising work and why does it work so well?

How to make money from a free app? To make up for mobile app development expenses, you need monetization. One of the options is in-app advertisements. Let’s look at the examples of ads types and consider how to choose the right one that won’t put off app users.

Reading time: 9 minutes

in app advertisement
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    Lately, more and more people have switched to smartphones from PCs. In 2021, mobile web traffic has increased to 50%. Smartphones are more convenient: always on hand, cheaper, and the mobile Internet speed is comparable to wireline service or Wi-Fi. Following users, advertisers are switching to smartphones too. And there one  can place an ad in both a browser and an app. The first option is the same in mobile and desktop versions, but the second one exists exclusively on smartphones. Let’s straighten it out: how can you use app advertisements?

    What are the prospects for in-app advertisements?

    Ad placement is one of the ways to make up for custom app development services and get some profit. If your free app is becoming popular among users, all you need is to enable ads and make money on views. As a result, it is a win-win for everyone:

    • app owners get a reward for their work;
    • users get an app for free;
    • advertisers show their product to a wider audience and boost sales.

    Statistics show that smartphone owners spent about 90% of their time in appshttps://www.emarketer.com/content/us-time-spent-with-mobile-2019 in 2021, and only 10% — in a browser. According to experts’ forecasts, the apps’ popularity will grow in the future. It’s expected that the revenues from in-app advertisements will become two times bigger than in 2020. They are expected to exceed $225 billionhttps://www.grandviewresearch.com/industry-analysis/in-app-advertising-market?utm_source=prnewswire.com&utm_medium=referral&utm_campaign=PRN_Aug5_inappadvertising_ICT_RD2&utm_content=Content. Today, in-app advertisement is an opportunity for efficient targeting. It stands out for flexible settings and high efficiency due to the fact that users don’t usually share smartphones with their family or colleagues like they do with personal computers. Thus, an app advertising campaign will always get the higher return rate than browser ads.

    How in-app advertisements work

    To place an in-app advertisement, you need an ads network. It’s a kind of a bridge between a publisher and an advertiser. An ads network allows a brand to attract its target audience via App Store or Play Store apps.

    For app advertisements to make profit, it’s essential to set them right. The key characteristics for ad targeting are a user’s gender, age, and geolocation. Besides, you can use the audience’s interests and behavior. For instance, an ads network can show a sports goods shop advertisement in a fitness app. In most cases, this user data is collected by apps, social networks, and search engines by default. However, lately people tend to show concern about details that corporations may know about them, and thus bother about keeping their personal data private.

    In 2021, Apple released iOS 14 with an updated privacy policy. It allows users to choose whether to provide the app with their data or not when they download it . The  app would get  consent for collecting and processing personal data by default in the previous iOS versions.

    The mentioned changes in Apple’s privacy policy prove a trend for a conscious attitude towards using private data. This trend will make life tougher for app owners and advertisers but won’t collapse the whole in-app advertisements: it’s enough to explain to a user, what data you collect and how you will use it.

    Less data➡️ weaker targeting setting ➡️ an add misses the Target Group

    in app advertisement

    Types of in-app advertisements

    There are several app advertisement types. We will consider the ones that are popular with  advertisers and thus guarantee a maximum profit for publishers.

    Banners

    One of the simplest in-app advertisements types. A banner is a block on the top or the bottom of a screen. You can set a banner in a way to make them change from time to time.

    Advertisers like banners for their low price, so they often buy them. Thanks to an easy app integration process, banners work well for short-term advertisement campaigns. The key thing is to avoid an ad block overlaying the main content: it drives users mad.

    in app advertisementUsers often ignore bottom page banners

    A fixed position of banners makes the user remember where they can see an ad on their screen and start ignoring it. This effect is called ‘banner blindness’. To avoid a user ignoring ads, it’s better to seamlessly integrate them to the main app content, like they do with the next ad type.

    Native ads

    It is the most discreet type of app advertisement. Ad content seamlessly blends in an app fitting its design as much as possible. An advertisement looks like a part of the interface, so it’s considered the most informative one. Besides, it rarely frustrates users. A banner will look like just another item of sale in  an online shop and will pretend to be a regular post on a social network.

    For instance, native ads are often integrated into messengers. In our example below, an ad looks like a chat.

    in app advertisementNative ads look like another chat in the FB messenger

    Native ads integration requires more effort compared to placing traditional banners. It’s not enough to just insert an image into an app: you need to consider its interface and design. At the same time, native ads are thought to be a more efficient solution: it doesn’t jump out at users like regular banners and thus annoy them less.

    Interstitial

    It is a full-screen app advertisement that covers an app’s interface. It comes as static images, video clips, or animated content that pops up after a user finishes some activity like completing a game level or switching between the screens.

    For instance, a user finished editing a video in an app and wants to save a final clip. After hitting the ‘Save’ button on their smartphone screen, the user sees a video commercial that fully covers the app interface. Such a video lasts for 30 seconds (the countdown is shown in the left lower corner). If the user finds a promoted product interesting, they can click the ‘Go’ button in the lower right corner.

    in app advertisementNescafe Classic full-screen ad

    Depending on settings, a user can interact with interstitial ads in the following ways:

    • Immediately close the mobile app advertisement by clicking on a cross icon;
    • Watch the video until a particular timeline marker (it usually takes 5-10 seconds) and then close the mobile app advertisement;
    • Watch the clip till the end without an option to close it.

    Such ads allow placing more product information compared to banners or native ads. It also gives more space for creative ideas: unlike the previous ad types, limited by text and graphical formats, interstitials can come as videos or animations. Another advantage is that it’s hard to ignore such an ad, so a message will definitely reach the target user. Still, despite these advantages, interstitials are one of the most high-pressure mobile app advertisement types. Users don’t know when to expect the next clip to pop up and can’t ignore it like they can with native or banner ads.

    Rewarded Video

    Another full-screen video advertisement option. In this case, a user gets a reward for watching an ad. This ad type is mainly widespread in the gaming industry where players are offered to watch a video in return for in-game currency.

    For example, a Dragon Hills player can resurrect their dragon by watching a 30-seconds ad video. When the next high score is on the line, a player will be just happy to get such an opportunity.

    Dragon Hills offers a player to resurrect a dragon for watching an ad

    While people try to mask off ads in regular apps not to annoy a user, they place them in the foreground in mobile games and back them with in-game currency, extra hit points, or other bonuses. The method works out: players don’t only willingly watch another video, but even get disappointed if it’s not there. What is more, people are ready to watch an ad once more to get a reward.

    The key feature of Rewarded Video ads is that a user switches on a video clip themselves. Thus, they must know in advance that they will get a reward.

    The Rewarded Video concept doesn’t work exclusively for games; it can be applied in any other app. However, a developer must choose the right award so that a user doesn’t get annoyed with this mobile app advertisement type. For example, the InShot app offers to watch an ad video to remove a watermark in the right corner of a clip.

    For that, a user needs to do the following:

    1. Click the watermark.in app advertisement

    2. Click the ‘Free Remove’ button.

    in app advertisement

    Besides, Rewarded Videos can also give access to exclusive content in non-gaming apps. This type of app advertisement works with free and paid versions of the apps. For instance, free users can read only three articles per month in a magazine app. When they open the fourth article, the app offers to subscribe to a paid plan or watch a video ad to unlock access to the extra article.

    Playable Ads

    It is the most complex but the most elegant type of app advertisement: it allows users to interact with content. In this case, a user is offered to play a mini-game. This format came from the gaming industry but soon gained ground and was adopted by other verticals. For example, a playable ad on the Ruli.ru website offers a user to magnify various parts of a car with a lens. When you look at a car part through a magnifying lens, it triggers a popup window containing information about the technical condition, run, car owner’s number, and other essential parameters. Such an ad is a great way to attract someone planning to purchase a car.

    Interactive advertising content ensures the audience’s attention

    The major advantage of Playable Ads is that such app advertisements are unusual. Most users, sick and tired of aggressive pop-up windows, willingly involve themselves in a simple gameplay. Besides, this type of app advertisement shines out for its high involvement level: a user is no longer a viewer but takes part in what is happening on a screen. What is more, Playable Ads is the best way to tell a user about a product: people can interact with content instead of waiting until another ad clip is over.

    However, such commercials are pretty pricey: an advertiser will require custom app development services. Such mini-games are usually created from scratch, which significantly boosts an ad campaign price.

    A little about in-app advertisements pros

    There are several advantages of app advertisements over browser ads. We highlighted three major ones: a high click-through rate, better targeting, and ad blockers bypass. Let’s look at each in more detail.

    High click-through rate

    According to various ads networks and marketing agencies, the click-through rate — a number of ad clicks to a number of views ratio — is higher for mobile ads, and particularly for app advertisements. Such an advantage is the result of the other in-app advertisement features: accurate targeting and independence from ad blockers.

    Better targeting

    Unlike PCs, which can be shared by several people, smartphones are personal devices. People usually purchase a single PC for the whole family, and thus this PC is used by people of different ages, with different interests and life goals. For instance, a teenage daughter, a housewife mother, and a father, who is an engineer, use a PC daily. Their retired grandfather visits them on weekends and also sits at the computer to read some fishing articles. It all negatively impacts targeting: it’s not clear who of the four family members is the key audience. 

    It works exactly the opposite with a smartphone. This device has only one owner and all the apps on this smartphone are tightly connected with the personal life and habits of this particular user.

    Thanks to the first-person data, the app advertisements guarantee an accurate reach to the target audience. While setting an ad campaign, a marketer can use such parameters as gender, age, and geolocation.

    Geolocation data gives the following advantages to an advertiser:

    1. An app advertisement exclusively reaches people who visit particular venues. For example, video ads of a sports brand will be demonstrated to users who often go to pubs or stadiums.
    2. An app advertisement is visible exclusively for those who are located in the same region as an advertiser’s shop.

    Ad blockers are useless

    Many users install special extensions blocking ads in browsers — for instance, Adblock. If an advertisement is integrated into a mobile app, such a blocker will be ineffective. Thus, a user will see an ad anyway, no matter if they want it or not.

    Usually, the only way to remove ad videos is to purchase a paid app version. However, not every app has such an option.

    What do you need to remember when integrating ads into your app

    Let’s put it all together. Ads integration is a popular way to monetize apps. It helps attract the part of a target audience that doesn’t want to pay for downloading a program or subscription.

    Here is what you need to remember when you integrate advertisements into your mobile app.

    1. Which ads network to use. To integrate ads into a mobile app, you can use IronSource, AdMob, Adcolony, and other networks. Here you need to note that an advertisers’ list and rate of return may crucially differ. This is why some apps working in various regions often switch to several networks.
    2. When you integrate ads, walk by a golden rule: advertisements abuse is a dead-end road. So, don’t roll one video after another: such an approach will just annoy a user.
    3. Mobile traffic growth allows making a good profit from in-app advertisements. To succeed, you need to determine your target audience and set the ads campaign correctly. Don’t forget about the budget, too: product promotion often costs no less than mobile app development services.

    At Purrweb, we believe that the best monetization model is a subscription. Such an approach allows keeping the app’s visual side neat and clean. Still, ads integration is also a good way to make money for a publisher.

    Want to integrate ads into your app? Contact us and we will help you with integration.

    Editor
    • Anton Kiryukhin
    Designer
    • Aygerim Tuyakanova

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