In-App Advertising Guide for Publishers

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In-app advertising is an essential monetization strategy for mobile publishers, as apps are one of the most effective advertising tools for capturing the users’ attention, increasing CTRs, and providing ad revenue streams for app publishers. 

In this article, you’ll learn what in-app advertising is, what are its benefits, and how to reach maximum ad revenue potential from apps. 

What is In-App Advertising?

In-app advertising allows to deliver ads and ad campaigns on mobile apps, which includes smartphones, tablets, and wearable devices like smart watches.

In-app ads are typically delivered to users based on their location, demographic information, and interests, which can help ensure that the ads are relevant and engaging for the user.

Therefore publishers can use in-app advertising to monetize their apps, and advertisers can use it to target a specific demographic with their ads.

These ads can take the form of a banner, an autoplay video in a game, and sponsored tweets or posts on social media apps.

How In-App Advertising Works?

App owners get paid to serve ads within their apps, and publishers get to keep their content free for users. It increases the amount of downloads, and allows publishers to earn scalable revenue. 

App publishers make arrangements with ad demand sources who fill inventory in exchange for a revenue share. In-app advertising is one of the three main ways app publishers make money, along with in-app purchases and subscriptions.

Since in-app advertising has a complex ecosystem involving multiple players, let’s break down how it works, focusing on the ecosystem’s buy and sell sides:

Who is on the buy side? 

The buy side consists of advertisers–brands, agencies, and app developers–who purchase ad space to promote their offerings. They use DSPs to manage bids across ad exchanges and target specific audiences within apps to achieve brand awareness, engagement, or conversions.

• Advertisers want to promote their products, services, or apps. They include app developers who want to drive app installs, agencies managing campaigns for various clients, and brands looking to reach mobile users. Advertisers are the source of the demand for ad space.

• Ad exchanges facilitate the buying and selling of ad inventory in real-time. They allow advertisers to select their desired audiences and bid on ad impressions in an automated way, similar to a stock exchange. This process is known as real-time bidding (RTB).

• Demand-side platforms (DSPs) are sophisticated platforms that allow advertisers to manage their bids for ad inventory from multiple ad exchanges through a single interface. DSPs use algorithms to help advertisers find the best ad spaces based on the targeted audience, ad performance, and budget optimization.

Who is on the sell side?

The sell-side comprises publishers and app developers offering ad space within their apps. They use SSPs to optimize and sell their inventory to advertisers, aiming to maximize revenue while maintaining a positive user experience. 

Sell-side is responsible for providing valuable ad spaces that attract buyers and ensuring that the content is relevant to the app’s audience.

• Publishers sell ad space within their apps, which range from mobile games to utility apps, social media platforms, and more. They aim to monetize their app’s user base by providing relevant ad content.

• Supply-side platforms (SSPs) are the counterpart to DSPs but on the sell side. They allow publishers to manage their ad inventory across multiple ad networks, exchanges, and DSPs. 

SSPs help publishers maximize their revenue by optimizing the ads shown to their audience based on the highest bidder, audience targeting, and other factors.

Middlemen

Ad networks act as intermediaries between advertisers and publishers. 

They aggregate ad space from multiple publishers and sell it to advertisers, simplifying ad buying for advertisers who don’t want to deal directly with various publishers or navigate the complexities of ad exchanges and DSPs.

Ad networks typically specialize in certain types of inventory or audiences and offer additional value through targeting and optimization services.

The in-app advertising process explained

Here are the 4 main steps that simplify the whole in-app advertising process: 

1. When a user interacts with an app, the app sends a request for an ad to an SSP or an ad network.

2. The SSP or ad network then forwards this request to an ad exchange or directly to advertisers through DSPs.

3. Advertisers place bids for ad impressions in real-time based on user data and the audience’s relevance to their campaign goals.

4. The highest bidder wins the ad impression, and the ad is served to the user within the app.

The process, from the ad request to ad delivery, takes milliseconds, ensuring a smooth user experience.

Why Consider In-App Advertising?

The time users spend on mobile apps has grown more rapidly compared to the amount of time spent on mobile web. 

Data shows that in 2022, users spent more than 4 hours per day browsing the internet through their mobile devices, from which 3 hours and 47 minutes were spent using mobile apps and only 23 minutes using the mobile web.

Source: eMarketer

Mobile apps are more convenient for users, as they can quickly access the necessary platform and its features with less effort and steps than through the web.  

Typically, mobile apps offer a more user-friendly interface than websites, which increases the likelihood of users spending more time on apps. 

In 2022, users spent almost 92% of their time browsing mobile apps and games, whereas only 8.1% was spent browsing the web. In-app advertising undoubtedly offers many effective monetization opportunities.

Source: Statista

However, CPMs in mobile apps are traditionally lower than on the web. That’s because there isn’t enough premium ad inventory and difficulties associated with effective tracking and measurement of ad campaigns. For example, the industry still lacks a scalable ad viewability solution for apps. 

In 2023, the global in-app advertising market saw significant spending, with games and social networks being the primary sectors driving this investment. Games attracted over $91 billion in advertising dollars. However, social networks led the charge in in-app ad expenditures, surpassing $126 billion.

In-app vs. mobile web advertising

In-App Pricing Models

In-app advertising can use various pricing models to facilitate transactions between advertisers and publishers. Each model has its own advantages and disadvantages, tailored to different campaign objectives and success measurements. 

Here’s a breakdown of the most common models: CPM, CPC, CPA, and CPI.

CPM (cost per mille)

The publisher gets paid each time an ad receives thousands of impressions (views), regardless of user action. It’s best for increasing brand visibility but may not be cost-effective for driving conversions.

• Pros: Ideal for brand awareness campaigns, as it ensures visibility to a large audience.

• Cons: Doesn’t guarantee engagement or conversion, which could lead to higher costs without tangible results. 

Additionally_, if your audience is a good fit for your advertiser and you find the ads are getting many clicks, you might generate more revenue by charging per click or action instead

CPC (cost per click)

Publishers get paid only when users click on the ad, making it a performance-driven model.

It encourages user engagement with lower upfront costs but requires monitoring to prevent click fraud.

• Pros: Focuses on engagement, ensuring advertisers pay only for potential leads or customers.

• Cons: Risk of click fraud, where clicks are artificially generated, inflating costs.

CPC can be a good alternative to CPM for publishers. However, you risk giving away impressions for free and generating no revenue if ads aren’t clicked.

CPA (cost per acquisition or action)

Publishers get paid when a customer converts through the ad by completing an action such as making a purchase. It ensures advertisers pay for results, making it ideal for targeted campaigns with specific actions, though it might be more expensive.

• Pros: Highly effective for driving specific conversion goals, as payment is tied to specific results.

• Cons: Can be more expensive per action than other models and requires clear tracking and attribution mechanisms.

It’s a low-risk option for advertisers since they pay for specific actions. However, publishers can serve many ads and generate many clicks without actually getting paid for conversions.

CPI (cost per install)

Specifically tailored to mobile apps, publishers get paid each time a user installs the app from the ad. 

It’s perfect for app developers focused on growing their app’s user base, but it’s important to consider the lifetime value of the users acquired through this method to ensure profitability.

• Pros: Directly aligned with the goal of increasing app user base; straightforward advertising effectiveness measurement.

• Cons: Higher costs per acquisition and potential for lower-quality users who may not engage with the app after installation.

How to Sell Your App Inventory?

Mobile advertising is still evolving, but there are many ways advertisers and publishers can collaborate, such as: 

How to Get Advertisers For Your App?

Here are 8 steps and tips for publishers to get advertisers for their apps:

1. Provide high-quality content and user base

Advertisers are attracted to apps with a large and active user base. That’s why you should ensure your app offers valuable content and a great user experience–it can retain users and increase engagement. 

Take advantage of app store optimization (ASO), social media, and other marketing strategies to increase your app’s visibility and downloads.

2. Understand and segment your audience

Use audience segmentation to identify segments based on interests, demographics, or user behavior. This data is invaluable for advertisers, who can use it to target their campaigns effectively.

3. Choose the right ad formats

Different advertisers have different preferences and objectives. Offering a range of ad formats (e.g., banners, interstitials, rewarded videos) can make your app more appealing. 

To maintain a positive user experience, choose ad formats that fit naturally within your app’s design (e.g., native ads) and user flow.

4. Set competitive pricing models

Understand the going rates for different ad formats and pricing models (CPM, CPC, CPA, CPI) within your app’s niche. Be open to negotiating terms and pricing models that align with your advertisers’ goals and budget constraints.

5. Leverage ad networks and exchanges

Ad networks can connect you with advertisers looking for app inventory. Choose networks that cater to your app’s niche and audience.

Additionally, programmatic advertising through ad exchanges can automate the process of selling ad space, making it easier to fill your inventory at competitive rates.

6. Create a media kit

A media kit (press kit) is a set of promotional materials that informs media members to help them write articles. The kit should include detailed information about your app, user demographics, engagement statistics, ad formats offered, success stories, and contact information. 

A well-crafted media kit can significantly boost your credibility with potential advertisers.

7. Network and promote your app

Conferences and meetups can be excellent opportunities to network with potential advertisers and partners. Remember also to promote your app and its advertising opportunities on social media, relevant forums, and online communities, such as Reddit.

8. Offer trial campaigns

Consider offering trial campaigns to potential advertisers to showcase the effectiveness of advertising within your app. Discounts or bonus impressions for first-time advertisers can also be an attractive incentive.

In-app Advertising Benefits

There are 5 main benefits of using in-app advertising:

• Mobile apps have higher conversion rates than the mobile web.

• Ad blockers are used less within mobile apps.

• Apps have a better user experience and ad engagement.

• Users spend more time on mobile apps than they do on the web. 

• With a move from cookies-based advertising, in-app advertising allows a more precise user targeting and can be more personalized due to the use of first-party data. However, sourcing large amounts of first-party data for small app publishers can be challenging.

Ad Formats for In-App Advertising

Interstitial ads

Interstitials are full-page ad units that are displayed in between screens while using a mobile app. When an app transitions to full-screen mode, for example upon launch, during a video pre-roll, or when a game level loads, the user is typically presented with the ad.

Interstitial ads have a high level of user engagement due to their size, use of rich media, and appeal to premium brands. 

Therefore high CTR and conversion rates are generated.

Mobile Interstitial

Sizes: 336×280, 300×250, 300×600

Source: Setupad

Banner ads

Banner ads are among the most popular ad formats. You can see them everywhere, from websites to mobile apps. They are the standard format for all publishers.

On the user’s mobile device, they show up as a bar, column, or box containing text and a picture. They appear in feeds, articles or around content. They are difficult to miss, which makes them effective.

You should pay attention to where they are placed to have good engagement.

Medium Rectangle

Sizes: 336×320, 336×280, 250×250, 300×250, 300×300, 336×336

Native ads 

Native ads are considered high-performing ads, as they can seamlessly blend in with the surrounding content and improve the user experience.

Native ads can also help to increase user engagement with the publisher’s content by providing a more seamless and engaging experience.

As a result, they offer a better user experience than other ad formats because users aren’t distracted by intrusive ads when reading or watching content.

Native Mobile

Sizes: Custom

In-stream ads

In-stream ads play while a user watches video content online, or “in-stream.” In-stream ads can be viewed in a full-screen view before (pre-roll), during (mid-roll), and after (post-roll) the main content.

In-stream ads are efficient and provide the most relevant targeting. They can also improve the user experience as they are more engaging thanks to rich media. 

Because they may appeal to both the visual and auditory senses and offer lots of space for compelling storytelling, in-stream ads are known for having a strong emotional impact on their audience.

Users can usually skip these ads after 5 seconds, however, sometimes they need to watch the full video.

Instream Video Ad

Sizes: Fluid, but the minimum size should be 256x144px

Rewarded video ads

Rewarded video ads can increase user engagement with an app or game by rewarding users for watching an ad. Users typically interact with the ad to gain benefits, such as extra lives, coins, or useful points in the app. 

These ads can also increase ad revenue for the publisher. Some of the main advantages are high engagement, CTR, and conversions.

Rewarded video ads improve the user experience by giving users a choice in whether or not they want to watch an ad in exchange for a reward.

Additionally, because users choose to watch the ad, the ad is more likely to be effective, and the user is more likely to remember the advertised product or service.

Rewarded Video Ads

Size: 320×480, 480×320 and other sizes

Playable ads

Playable ads have a high engagement rate because they’re interactive. During their ad break, users typically can test out a game through the ad. These ads also have high click-through rates and a greater chance of user conversion.

In-game (playable) ads

Sizes: 300×250 and other sizes

Outstream video ads

Outstream video ads, also known as in-read or native video ads, are mobile-specific ads that appear within non-video editorial content.

Before, users could only view videos that appeared before, during, or after the video-based content. For example, on YouTube. 

Now, publishers can use video ads that don’t play inside video players due to technology developments.

Outstream ads

App open ads

App open ads are a unique ad format intended for publishers wishing to monetize their app load screens. They are served when a user opens or switches back to your app and can be closed anytime.

App open ads are specially designed to seamlessly integrate into the app, and the unique app open ad layout offers the best user experience for this placement.

Here are 5 tips to consider before placing app open ad units:

• Ad units should only appear when the user opens or switches back to an app. 

• Ads should be placed on an app’s splash (an introductory screen that appears while app loads in the background) or loading screen.

• Don’t implement ads immediately before or after app open ads, and don’t implement app open ads on top of other ads (e.g., on top of content with a banner ad).

• Review your app’s performance and adjust the app open ads’ frequency capping accordingly. 

• App open ads perform best with apps with a high frequency of open rate per daily user. Apps that are opened more than once every 4 hours see the highest performance from app open ads. 

Source: Google AdMob

Mobile In-App Advertising Best Practices

We have gathered 5 best practices for you to use for effective in-app advertising:

1. Increase engagement with interactive video ads. They encourage users to engage with ads and complete desired actions.

2. If your app is in the social, news, and gaming category, you’ll likely have a diverse base of engaged audiences which is appealing for advertisers.

3. Make use of interstitial ads, because they are effective for engaging users during ad breaks within apps.

4. Track, test, and analyze your ad placement, formats, headings, etc. Repeat this continuously to understand your ad performance, and make necessary adjustments if necessary.

5. Gain clicks and high quality conversions with rewarded video ads as they exchange the user engagement with in-app rewards.

How to Implement In-App Ads?

Initial setup

There are 3 steps you should take when you get started with in-app advertising:

1. Choose an ad network (e.g., Google AdMob)

2. Experiment and select the right ad format.

3. Choose an ad pricing model. 

Before starting in-app advertising, you must find the right balance between various criteria. The mobile advertising network you choose should work best for your app, your target audience, and the ads you intend to provide. 

Additionally, you have to choose which ad formats to offer to advertisers, which will need some experimenting.

How to integrate ads into an Android app using AdMob?

To integrate ads into your Android app using Google AdMob, publishers can follow two main pathways depending on their use of Google Firebase:

Without Google Firebase:

1. Create and set up a Google AdMob account, registering your app within the platform.

2. Import the Mobile Ads SDK into your Android project to facilitate ad serving.

3. Update your app’s AndroidManifest.xml file with the AdMob App ID specific to your registered app.

4. Initialize the Mobile Ads SDK within your app to start loading ads.

5. Select and implement desired ad formats, such as interstitial, banner, or native ads, following Google AdMob’s Mobile Ads SDK Android guide for detailed instructions.

With Google Firebase:

1. Register with Google AdMob and link your app.

2. Connect your app to a Firebase project, which involves configuring it with Firebase, adding Google’s Maven repository, and downloading the Firebase SDK for Android.

3. Subsequent steps are similar to those of the non-Firebase method above: import the Mobile Ads SDK, update the AndroidManifest.xml with your AdMob App ID, initialize the SDK, and choose ad formats. 

How to integrate ads into an iOS app using AdMob?

Similarly to Android apps, publishers have two options to integrate ads into their iOS app with AdMob: using Google Firebase as their mobile backend or another Mobile Backend as a Service (MBaaS) platform.

Using Google Firebase:

1. Install the Firebase SDK to connect your iOS app with Firebase services.

2. If you haven’t already, create an AdMob account, and register your app with AdMob.

3. Register your app with Firebase and link it to a Firebase project for centralized management.

4. Import the Mobile Ads iOS SDK to enable ad functionalities within your app.

5. Update your Info.plist file by adding your AdMob App ID to configure your app with AdMob.

6. Initialize the Mobile Ads SDK to start loading ads in your app.

7. Choose and implement the desired ad format (banner, native, etc.). 

Refer to the Firebase AdMob iOS guide for detailed instructions.

Using Another MBaaS Platform:

1. Create an AdMob account and register your app if this hasn’t been done.

2. Install the AdMob iOS SDK within your project, ensuring your development environment is Xcode 10 or higher and targeting iOS 8.0 or higher.

3. Update your Info.plist file with your AdMob App ID to integrate AdMob services.

4. Initialize the AdMob iOS SDK to prepare your app for ad serving.

5. Select the ad format that fits your app’s design and user experience.

Whether using Firebase or another MBaaS, the goal is to seamlessly integrate AdMob to effectively monetize your iOS app.

How to Measure the Performance of In-App Advertising Campaigns?

Typically the effectiveness of mobile advertising is measured by the number of clicks the campaign generates. It includes the already mentioned key performance indicators, such as CPA, CPC, CPI, etc. 

Mobile ad networks can provide data with user behaviour analysis, which includes post-click measurements, the amount of app installs, and conversions.

This information can help advertisers to measure how many post-click downloads and first opens are generated due to in-app ads, as well as calculate the expenses for each app download. 

Of course, some of the clicks might be accidental, but there are measures that can increase the chance of high-value clicks. 

In this case, relevancy plays an important role, because a precisely targeted audience has a higher chance to purposely click on the ad and engage further with it. 

Conclusion

Mobile app users increasingly avoid purchasing apps. Therefore, in-app advertising is a more viable method for monetizing your app. 

Due to the high increase in the average time users spend on mobile apps compared to the web, in-app advertising has a high potential for better ad engagement and performance.

Be sure to follow our tips for in-app advertising to create an effective strategy and reap the advertising benefits of the mobile app world. 

If you still have any questions, or email us at [email protected].

About Anete Jodzevica

Anete is a content marketing specialist at Setupad. In addition to writing articles, she works at gathering information, verifying data, and explaining complex concepts to others. Anete believes that simplicity is the key to brilliance.

View all posts by Anete Jodzevica