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How Much Do Apps Make from Ads?

Apps can make anywhere from $10 up to $200 a day in average revenue from ads, and that’s a conservative estimate for an app with only 1000 active users.

However, the road to ad revenue is paved with bad ads, annoyed customers, and weak monetization strategies.

We’ve already talked about the best app monetization strategies like in app purchases, how to make apps like Uber and dating apps like Tinder, plus listed some popular apps to get your brainstorming sessions going.

Now, let’s talk about ads for paid and free mobile apps, how to create an app monetization strategy for your own app, and how you can earn as much as possible without sacrificing the user experience.

Let’s start!

What are in-app ads?

in app ads

They’re advertisements that are displayed within a mobile application. They’re one of the most popular app monetization strategies for both paid and free apps. They’re an especially attractive free app monetization strategy for applications that don’t offer in app purchases.

They may appear in different formats and include interactive elements, such as allowing users to view product details or take surveys.

Like in app purchases, ads can be a great way for an app developer to earn money because they do not cost anything (unless an action was performed by a user, such as clicking on the ad).

Advertisers only pay for clicks made for their ad campaigns, which means in-app advertising are a great win-win situation for both app developers and advertisers.

How does in-app mobile advertising work?

  1. First, advertisement networks connect advertisers with apps that want to host advertisements.
  2. Advertisers pay the network, which pays the app developer. Users download apps and are shown ads by the network in exchange for using the app for free.

For instance, ads are served to a user while they’re engaged in another activity on their device, such as playing a game, reading an article, or browsing social media (like Facebook).

  1. A mobile ad click event is triggered when the user clicks on the in-app advertisement or does the required action (e.g,watch the video).
  2. This click can be tracked and measured by the advertiser or network in order to report on the effectiveness of their ads. This is also how the app gets paid for the ad.

Advantages of Ads on Android and iOS Apps

advantages of ads on android and iOS

There are many benefits to in-app advertising. Here are some of the most important ones:

  • Monetization

It’s an obvious one, but it bears repeating: Adding ads can help you monetize your app and MAKE money from something that might not be generating revenue otherwise.

  • User retention

A well-crafted advertisement can provide real value for users, and a user who sees something worth downloading is more likely to keep using your app.

This is a key reason why ads can drive more revenue than other forms of advertising: If users return to the app frequently, they’ll see more ads, increasing the odds that they’ll click on one at some point.

  • It’s Free

Ad-based monetization is a free and easy way to start making money with your app, which makes it popular among beginners.

With hundreds of ad networks available, you can choose the one that suits your needs.

  • Increased brand awareness

The same principle applies to your brand as well, if you have it.

Users who see advertisements for your app are more likely to remember it when browsing on their own time, or ask about it when discussing apps with friends and family members.

That gives you a leg up against competitors whose ads aren’t as prominent or memorable.

  • Track and Analyze Customer Behavior

You can track the length of customer engagement with an ad and the number of visits to a website following an ad click.

These metrics will help you fine-tune future in-app campaigns for maximum results.

  • More Control Over Your Revenue

As an app developer, the more control you have over your advertising campaign, the better.

Using ads gives you greater control over your ad campaign whether you have a free or paid app — and ultimately, your revenue.

Disadvantages Of Using In-App Ads

While the advantages of in-app ads are clear, there are also some disadvantages of in-app ads that you should be aware of before committing to this strategy.

  • Some Ad Networks Cost You Money

Many ad networks are free, but some of the most profitable ones are not.

For instance, if you’re using a third-party service like AdMob or AdSense, you’ll have to pay for their services.

Even if you use an in-house approach, such as allowing advertisers to purchase ad space directly from your company, you will still incur costs associated with creating, hosting, and managing those ads.

  • Ads Take Up Valuable Space

Including ads in your app can take up valuable space that could be used to include other content or functionality.

That could discourage users from downloading your app or prompt them to uninstall it once they discover how little space it actually has available.

  • Poor User Experience

Not all advertisements are created equal and some may not function as intended or take over the entire screen when clicked on.

This can lead to a poor user experience which can make people never want to use your application again.

Should You Use In-App Ads in Your Mobile App?

It depends. Adding in-app advertising could be beneficial for your app.

It all depends on how you implement it and what you get out of it. A little time and research at the beginning will help ensure it actually helps your app in the long run, rather than just a temporary boost that fades as people get tired of the ads.

The Basics of In-App Advertising for Mobile Apps

in app advertising

Again, advertising through mobile apps can be a great way to make money from your app, and if done right, it doesn’t have to irritate your users.

In fact, it can even enhance the user experience (UX) by connecting the user with relevant products or services.

But getting in-app advertising right can be tricky.

You want to show ads that are interesting and engaging to your users without being too invasive.

There are also a number of different ways you can integrate ads into your app — from interstitials to rewarded videos — so you need to determine which format is best for you.

Common Types of Ads for Mobile Apps

Here are some of the most common types of ads you can add to your mobile:

Native Ads

Native ads are those that match the look and feel of the app in which they appear.

They seamlessly integrate with the platform’s design — for example, native ads look like a natural part of an app’s user interface.

This makes them more engaging than other types of ads. Native ads are also more likely to be clicked because they don’t look like ads.

Banner Ads

These are rectangular advertisements that span the bottom or top of an app screen.

Banner ads can communicate an app’s message while allowing the user to interact with their device as they normally would. 

Banner ads are typically placed at the top or bottom of a mobile device’s display so as not to interfere with user experience.

Interstitial Ads

Interstitial ads are full-screen ads that cover the entire UI of the app.

They’re shown at natural transitions in the flow of an app, such as between activities or during the pause between levels in a game.

Rewarded Videos

Rewarded videos are full-screen video ads that users have the option of watching in full in exchange for in-app rewards.

These ads appear at natural breaks in an app’s workflow, such as after completing a level in a game or finishing a movie.

Once a rewarded video ad is watched, users can be rewarded with app currency, extra lives, special content or unlocked features. They’re common for gaming apps.

Offerwalls

An offerwall is a collection of sponsored offers that users can choose from to earn in-game rewards or currency.

The offers usually involve watching videos or signing up for subscriptions or other services.

You can also create your own offers that might be related to your app — for example, if your app sells music, you could ask users to pay for a single song to unlock a new feature or extra lives in the game.

Around-the-Banner Ads

These are banner ads that appear around the edges of your app’s main screen.

They’re relatively unobtrusive but still grab user attention because they’re out of context with the app design.

These ads often come in multiple sizes, including a “skyscraper” size that makes it easy for users to click on them by accident.

Choosing the Right Ad Network for App Revenue

Selecting a mobile ad network is not like making any other business decision.

There are thousands of ad networks out there, but not all of them will be effective for your app monetization model.

In fact, some of them are downright fraudulent, and choosing to use one that allows fraudulent traffic could get you banned from more reputable ad networks, or worse — it can damage your brand.

What are ad networks?

Ad networks for mobile apps are third-party companies that help app publishers monetize mobile traffic.

Mobile ad networks work in a similar way to traditional ad networks, in that they act as the middleman between advertisers and publishers.

However, unlike traditional ad networks, which typically serve ads on desktop websites, mobile ad networks serve ads on mobile apps and sites.

Main Advertising Networks for Android and iOs Apps

Different types of mobile advertising networks exist and they each have their own features and capabilities.

Some ad networks specialize in certain kinds of ads (e.g., video ads or native ads), while others work with a range of different formats.

Other ad networks serve specific platforms, such as Android or iOS, while others are more open to multiple platforms. Others are more effective for certain types of apps, like mobile games and other game apps, freemium apps,

We’ve gathered some of the most trusted ad networks for mobile apps below:

  • AdMob by Google

AdMob by Google is one of the largest mobile advertising platforms in the world. It’s currently serving more than 40 billion mobile banner and interstitial ads per month across millions of free and paid apps.

  • Facebook Audience Network

The Facebook Audience Network is another great ad network for mobile applications.

It allows you to use the targeting data of Facebook users for your campaigns, so if you have a successful campaign on Facebook, it’s worth testing out with your app.

  • Inmobi

Inmobi is another leading mobile advertising company focused on developing innovative products for brands, iOS and Android developers and consumers.

InMobi provides advertisers the opportunity to reach 620+ million consumers, across 165+ countries.

  • Leadbolt

LeadBolt is a performance-based ad network that drives high-quality app installs.

Mobile advertisers can use it to promote their apps across 200,000 apps and reach 300 million users worldwide.

With a wide variety of ad formats and targeting options, LeadBolt allows you to increase your app’s visibility in the market and boost user engagement.

  • MoPub

MoPub is a mobile ad serving platform that provides monetization tools for app developers.

The platform enables you to monetize your app inventory via a single SDK integration and maximize revenue through programmatic demand from leading brands, agencies, and mobile-focused trading desks.

  • Amazon Ads

Amazon Mobile Ads is a self-service advertising solution that helps you monetize your apps by displaying ads to targeted audiences.

The network allows you to customize the types of ads you want to display based on granular targeting criteria including location, age, gender, language, interests and more.

  • Vungle

Vungle is one of the most popular video ads networks for Android and iOS applications. They claim that they have a very strong fill rate with their video ads as well as high CPMs.

  • Tapjoy

Tapjoy offers rewarded video ads to users in return for some rewards. The advertisements are well-targeted and they engage the users well.

  • Appnext

Appnext has been around for quite some time now and it has grown into one of the most popular ad networks for Android apps. It offers both display and native ad formats.

  • AppNexus

It is a self-serve ad platform where you can set your own floor price to maximize your revenue from ads.

Using this platform, you can integrate banner, interstitial, video, and native ads in your app to monetize it better.

  • iAds

iAds is a mobile advertising platform by Apple that allows developers to place ads oniPhone and iPad apps.

The network is one of the most popular ones and the fact that it comes from Apple itself makes it even more appealing.

iAds offers its own SDK for iOS developers to integrate into their apps, which is useful for keeping track of ad performance.

Ad Monetization Models for Paid and Free Apps

ad monetization models for free and paid apps

The ad revenue model of in-app ads for mobile apps is different from the typical online business models.

Since the audience is more engaged on a mobile app, the advertisement will be more effective and hence, mobile apps can usually charge higher for ads. Add the profits from in app purchases and other app monetization models, and it’s a great way to increase your app earnings.

There are a number of revenue models that mobile apps can use to make money from in-app ads. These are:

1. Cost Per Install (CPI)

The advertiser pays the publisher for app downloads and installs that are created through the ad.

This model is used by mobile app owners who want to increase their user base and improve their rankings on app stores like Google Play.

2. Cost Per Mille (CPM)

You will get paid for every 1,000 times an ad unit is displayed. This model works well if you have a large number of impressions on your website or app.

Advertisers like this model because they can spread awareness about their products and services before a user installs their app or visits their website.

3. Cost Per Click (CPC)

Every time a user clicks on one of your ads, you get paid. Advertisers usually prefer CPC over CPM as it’s more measurable and predictable for both parties involved in the campaign.

The downside is that your earnings will be low unless you have high traffic volumes on your website or app.

Cost Per View (CPV)

Cost Per View is a form of advertisement that counts the number of times an ad is shown to a user. It is also known as Cost Per Impression or Pay Per Impression (PPI).

The advertiser pays a fixed amount every time their ad is shown to users. CPV usually applies to banner and video ads.

An advertiser can use CPV to target specific demographics. While CPV is a common way to get an app noticed, it is not always effective if it’s not well targeted.

Cost Per Action (CPA)

Cost Per Action (CPA) is the amount an advertiser pays when a user completes an action they defined as valuable to their campaign objectives.

These actions could be anything from making a purchase to filling out a registration form or simply clicking on an ad.

This model works well if your mobile app has campaigns that need specific user actions performed within them before generating revenue.

Mobile Ad Targeting

Mobile ad targeting is the process of narrowing down who you want to show your ads to.

You can target your audience by demographic, location, gender, interests, and more. Mobile ad targeting allows you to reach the right audience for your app.

Why Mobile Ad Targeting Matters

In order for your mobile app to make money through advertising, you need people to see the ads. If no one sees your ads, you won’t make any money from them.

That’s why it’s so important that you target the right customers for your brand and product.

You wouldn’t want to show an ad for a new game to someone who has never downloaded a game before or shown an ad for a new product to someone who isn’t interested in buying it.

That would be a waste of your time and money.

Mobile ad targeting is the best way to get your message in front of the people who are most likely to download or purchase from you.

Main Types of Mobile Ad Targeting to Drive App Revenue

mobile ad targetting to drive revenue

There are several types of mobile ad targeting that can help you get in front of the eyes of potential customers:

Demographic Targeting

Demographic targeting is the most common type of mobile ad targeting and it’s an important part of targeted advertising.

It comes down to targeting a specific audience for your mobile app based on their demographic characteristics: age, gender, level of education, income, etc.

Behavioral Targeting

This type of targeting involves collecting data about a user’s browsing activity and then using it to deliver ads that are relevant to them.

For example, if a user has recently viewed a particular product online, they may find an ad for that product in their newsfeed.

Geo-Targeting

This type of targeting is based on the location of the user. Ads can be targeted by country, state, city or even zip code.

Geo-targeting also includes targeting by language, which is helpful in localizing ads for a specific country or area.

Carrier Targeting

Advertisers can target ads based on the carrier that the device is connected to (AT&T, Verizon etc.)

This type of targeting is helpful when you have a special deal with a particular carrier or want to target people from a specific carrier’s network.

Device Targeting

Device targeting allows you to pick and choose the devices (or operating systems) that you want to include or exclude from your ad campaigns.

You can also specify which version of a certain OS you want to target.

Best Practices for Monetizing Your App with Ads

app development user interface

Know how your users interact with your app before you start serving ads.

You don’t want to jump the gun and start serving ads without first knowing how people use your app.

You need to know what kind of content attracts the most attention from users in order to get them interested in what you have to offer rather than simply tuning out an ad banner as soon as it appears.

Handle ad placement with care.

Don’t place ads in areas where they will get in the way of important CTAs (calls to action) or key functionality of your app.

Look for the highest-paying network for your app.

There are plenty of ad networks available for mobile apps, so it pays (literally!) to do some research and find out which ones pay the most per click or impression.

Have a mobile-first strategy for ad placement.

Place your ads where they will be most effective. Pay attention to screen size, screen resolution and ad size.

The most common ad sizes are 320×50 and 300×250, so take them into consideration when designing your app.

Nail your targeting.

Targeting is the difference between a successful and unsuccessful campaign.

Provide as much information about your users as possible, including geographical location, age and gender, app usage, in-app purchasing behavior and more. The more you know about your audience, the better you can target them.

Present ads that are relevant and timely to your users.

It’s important to know when and how often to show an ad to optimize user experience while maximizing revenue.

For example, if you have a game in which users complete a level every 10 minutes on average, you might want to consider inserting an ad after every level completion or after several levels.

Don’t over-monetize.

Users will only tolerate a few ads in an app before they start deleting it.

The best approach is to keep the user experience clean, easy and enjoyable so that users will be happy to view ads from time to time.

Combine ads with in app purchases.

One way to make the most of your users is to give them the option of paying to remove ads altogether.

This has two advantages: You’re making money both from users who want an ad-free experience and those who don’t mind seeing some ads.

You can also offer a “lite” version of the app with unobtrusive advertising and a paid “pro” version that removes advertising altogether.

Balance user experience and advertising.

The first concern should always be the quality of your user experience; that means designing an app that people genuinely want to use.

If you try too hard to force ads on users, they’re going to stop using your app, which means zero revenue from both sources.

Focus on creating a great user experience first.

Bonus: How to Create a Good User Experience with Mobile Ads

UX with apps
  1. Know your app users’ intent and tailor your ad according to it.
  2. Be honest with users about the ads they’re seeing.
  3. Make sure the ads match the app’s design.
  4. Don’t make your ads more important than your app content.
  5. Don’t interrupt app activities unnecessarily.
  6. Give users control over ads they see.
  7. Place ads in more natural places and times.
  8. Be careful about how much screen real estate your ads take up.
  9. Be clear about what app users will receive if they click on an ad.

Takeaway

Ad monetization is complex, but understanding how it works and how to do it effectively will maximize your mobile app revenue. 

Of course, the first step in monetizing an app is creating an amazing app

Do you have an app idea in mind? Our team would love to help you bring it to life!

Dom and Tom works with start-ups and Fortune 500 companies alike to build apps that are beautiful, functional, and provide terrific value to your target audience.

Our full-service digital agency includes iOS and Android app development services, product and business strategy, research and insights, and everything else that makes successful apps.

Here’s a taster of what we can do for you – see our digital solutions in action!

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