The Complete Guide to App Advertising

Built with the expertise of:

Anthony Berrena, CRO

Think of setting up in-app advertising like building something from a set of instructions. In that scenario, you get a preview of the tools you’re going to need. Here are the tools you’re going to need (a.k.a your ad tech stack) in order to do in-app advertising the right way:

Forgive us if we’ve painted you a rosy picture. The truth is that in-app advertising isn’t easy. It’s hard — especially if you’re not a publisher who has a lot of technical knowledge and dev resources.

Here is a look at some of the most common challenges app publishers face as they try to do in-app advertising:

Balancing SDKs

Publishers who are new to in-app advertising often face some obstacles as they try to bring in revenue. That's because it's a lot harder to get started with in-app ads than with ads on a website.

On a website, you can make changes and see them live in real-time to make sure they work. You can change up your ad inventory layout and offerings with little effort. 

But in a mobile app, you face some unique challenges as you try to implement or change your ad strategy:

• You have to ensure that all of the software development kits (SDKs) you and your ad partners are using work together. 
• You have to make changes to your app in a testing environment.
• Then, you have to resubmit your app to the major app stores for approval.

After you have resubmitted your app and gotten it approved, you then can see whether your changes were effective. If this sounds inefficient, that's because it is. It takes a lot longer to get mobile ads up and running and a lot longer to make changes to them.

Sourcing Demand

That SDK struggle often contributes to a separate problem: sourcing demand. To bring in programmatic advertising revenue as an app publisher, you have to connect some kind of demand for your app’s ad inventory to your SDK configuration. That usually involves integrating yet another SDK.

But here’s the issue: That’s just one source of demand. In-app inventory demand is like anything in economics — more competition leads to greater profits. Even if your single source of demand is a huge one, such as Google, you’re leaving potential revenue on the table if you’re only working with that one source. 

Impressions will sometimes go unfilled, and CPMs will just be the best that single demand source has to offer — not the best available among all buyers.

So, you want to source plenty of demand from diverse demand sources, but you may find yourself hesitating to do the work of that because you don’t want to break something or even deal with your mess of SDKs. And any hesitation here translates to money quite literally lost.

Related: Learn more about the differences between Cost Per Acquisition (CPA) based demand and CPM-based demand.

Dealing with Privacy Issues

If you’re looking to more advanced app publishers and feeling jealous that they have it all figured out, don’t. Here’s why: All app publishers face a turbulent and fear-inducing legal challenge as they try to bring in revenue from in-app advertising.

Many of those established publishers suffered greatly when Apple announced that tracking the Identifier for Advertisers (IDFA) of app users required an explicit opt-in. Suddenly, publishers and advertisers couldn’t track app installs — a primary ad performance metric — and the whole in-app advertising ecosystem was under threat.

Publishers and advertisers suddenly found themselves scrambling for solutions. Some lost a lot of money or threw in the towel completely. That all happened from one change — not even a legal change. A single company made a single privacy-focused change, and the whole in-app advertising industry started shaking.

It happens all the time. And for an individual app publisher who is building a business based on in-app advertising revenue, it’s disheartening at best and existentially threatening at worst.

Looping in Direct Sales Demand

Direct ad sales may feel a little outdated when you’re talking about SDKs and programmatic advertising, but it’s a mistake to discount the value of direct sales for app publishers. Classic insertion order (IO) buys handily outdo most programmatic buys when it comes to yield.

The problem, of course, is actually doing direct sales. It’s a two-pronged issue:

1. Maintaining a direct sales team is expensive, particularly at first before it is generating enough revenue to pay for itself.
2. Getting a seat at the table with the premium buyers who are interested in IO buys is a long-term play. You have to build a brand — not to mention a user base — that is well-known and attractive enough to the major brands with advertising money to burn.

Those issues are enough to turn away even the most determined app publishers. It happens all the time, and it’s a shame because much higher CPMs are on the other side of the struggle to build up a direct sales game.

Supporting High-Value Ad Units

Let’s just admit something: In apps, display banners are tiny. They’re certainly not turning many heads or making a splash. This is a medium that requires a different approach to ad units in order to really get advertisers excited, but actually running the premium ad units that get buyers’ attention takes a lot of technical work.

For example, a gamified interstitial ad is enough to make many advertisers salivate. These units command attention by taking over the entire screen, and they foster engagement with brands by getting viewers to play a game. From an advertising perspective, it’s near perfection.

But for the publisher, even the sky-high CPMs that come with an ad unit like that may not solve the central problem: Most publishers have no idea how to accommodate complex, premium ad units like that. And even if they have a dedicated engineering and development team (which is often just one person for small to mid-sized publishers), finding the time and resources to build out an ecosystem in which these units thrive is a pretty heavy lift.

As you can probably guess, the result is often that publishers give up. They stick with lower-value but less technical ad units, and their revenue potential suffers.

The above challenges are a big part of the reason why many publishers work with ad mediation partners.

Ad mediation is an app monetization solution that allows an app developer and publisher to handle multiple ad networks through a single SDK. If consolidation of revenue reporting and engagement metrics on a single dashboard is important to you, you'll also be pleased to discover that these monetization efforts can be quickly scaled.  

When a mobile ad mediator manages the available ad space from your app, it will automatically send your supply to every ad network you are working with for you. Mediation partners are another way to tap into more advertising demand.

So far, we've discussed the nuts and bolts of ad formats and mediation partners, but we should zoom out for a moment to discuss how to scale up your in-app advertising smartly and safely. 

The first thing to know is that you can do this wrong. You can go in too hard on in-app ads, shoehorn in a bunch of different types in too many places and watch your audience shrivel. You can slap a strategy together and never optimize it based on incoming data. You can get the technical side wrong. 

But that's not going to happen to you because you're reading this guide. You're going to do this the right way. 

Audience First, Then Ads

You're going to begin by focusing on building a real, dedicated user base for your app. No matter how tempting it is to start in-app advertising before you've even attracted a user, it is, in most cases, a bad idea. 

Start by building your user base with a world-class app. Then, slowly introduce ads. At first, do only small, non-intrusive ads, and do them sparingly. A banner here and there will do the trick. 

Don't add anything else until you've gotten some feedback from your app's users. Based on the feedback you get, tweak your strategy, slowly adding more ads until you're generating solid revenue but preserving your user base.

Don't Fear Premium Ad Units

But don’t get stuck in your early patterns. There’s nothing wrong with simple banners and video units, but there is something wrong with only ever doing those and never trying out the many premium in-app ad units.

For example, if you never run rewarded video inside your mobile game, you’re missing out on some of the highest CPMs available in the app space today. Don’t let the technical side scare you — many partners (like Playwire) will take care of that for you.

Don’t let fear stand in the way of progress when it comes to your in-app advertising strategy. Remember — there’s no harm in trying something new and walking it back if it doesn’t work.

Leverage Your Data

Yes, data and privacy are changing. But one thing remains the same: The data your app’s user base generates has real value. That is, it has real value if you use it correctly.

Simply understanding more about your app’s users has value of its own, but that’s not what we’re talking about here. We’re discussing the value of data as it relates to what you can charge advertisers to reach your audience. 

Your user data tells the story of your audience — who they are, where they are, how engaged they are, what they buy, what they like, and more. For advertisers, that’s an uncut gem. You can cut and polish it by creating audience segments that illustrate who, exactly, buyers are reaching when they purchase your app’s impressions.

Don’t panic — you don’t have to become a data scientist. You just have to find the right data management platform (DMP). These tools offer varying levels of ability and service, but the main idea is that they take a lot of the grunt work and guesswork out of the picture so you can derive value from your data without taking up too much of your valuable time.

Optimize Always

The last thing to remember is that scaling up your revenue from in-app advertising is an ongoing process — it never ends. You should never stop optimizing your strategy based on user feedback and hard data, as well as tests you want to try. 

If you stop optimizing your strategy, it will one day stop working as well as you need it to. Keep going, and soon you'll have a mobile app ad revenue machine.

As you build out your in-app advertising strategy, you are likely going to consider adding some video to your in-app advertising strategy. That's because there's big money in in-app video advertising (try $18 billion in 2021).

How much adding video to your mobile app advertising strategy will affect your revenue will depend on a variety of factors. The type of app you have, the video ad format you choose, and whether you're doing direct sales will all play a part in how much you make.

Once you're more than a beginner in in-app advertising, it may be time to move on to the big time: in-app header bidding. 

In-app header bidding is like header bidding for web in that it turns the traditional programmatic auction process on its head. Instead of your SDK sending out a request for bids and accepting the first one that exceeds your price floor (the waterfall method in a nutshell), you get the highest bid on every impression. How? By soliciting bids and accepting the highest one instead of the first one. 

That's potential. And it's a big part of how app publishers go from middling revenue to revenue in the seven figures. 

It's exciting, but it's important to remember that, more than most any other step you've taken to reach this point, adding in-app header bidding is a big technical lift. You're going to need either a couple of experienced developers or a revenue partner like Playwire to implement, manage and optimize your in-app header bidding tech and strategy.

In-app advertising is the logical next step once you've built a solid user base for your app. But before you're bringing in advertising dollars, your budget may be limited. That means you should do all of this yourself, right?

Not necessarily. Not every app revenue partner out there can or will actually do the work, but the handful that can and will do the work well will increase your revenue by more than enough to make their services worth the cost. The increased revenue is the bottom line, but there are other key benefits of calling in a partner as you set up advertising in your mobile app:

Instead of having to painstakingly integrate every SDK yourself, you have a partner who will do it for you. 

In a similar way, you don't have to worry about dependency management as you integrate SDKs. Your revenue partner should handle all dependency management for you.

Allowing yourself easy access to dozens of high-quality SDKs means you get access to incredibly broad demand. And more demand means higher CPMs for apps.

Our Ad Tech Build vs. Buy Series covers this topic in detail here.

If you decide to work with Playwire, you won't have any need for a dozen SDKs. You'll just need one: Playwire's.

That's because Playwire's SDK is an SDK of SDKs. With one, you get many — and we have already managed the dependencies for each inside our SDK. That means you get integrations for the biggest header bidders, various high-quality mediation partners, and consent management all in a single, lightweight SDK.

Why choose a revenue partner like Playwire to handle your in-app advertising when there are dozens and dozens of mediation partners out there? Because you want access to the broadest possible demand.

Broader demand means more competition, which means a lower likelihood of unfilled ad requests and unnecessarily low CPMs. How does Playwire increase your demand over a mediation partner? By integrating that mediation partner and various others into our SDK.

That way, your requests for ads fan out over vast networks — not just a single ad network tied to one mediation partner — and come back to you filled and at a very high CPM almost every single time.