Key Points:

  • In-app advertising is growing, and that means it's a huge revenue opportunity for publishers.
  • It comes with a lot of challenges and technical considerations, such as in-app video ads and header bidding, as well as which SDKs to integrate.
  • Do it all right, and you will see your revenue skyrocket.

Apps are big-league money-makers for publishers. Mobile app ad revenue reached nearly $582 billion in 2020. By 2023, global app revenue is expected to top $935 billion.

With that kind of revenue potential, many publishers are eager to get in on mobile apps. In 2022, you have plenty of app revenue models to choose from, but one of the most popular and lucrative is in-app advertising.

To help you decide whether in-app ads are the right choice for your app, we have put together this guide to in-app advertising revenue generation.

Let's get into it.

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The Complete App Advertising Resource Center

Types of In-App Ads

When you are trying to decide what kinds of ads you want to include in your app to drive mobile app ad revenue, you need to understand the available types. Of course, most publishers have two main goals: to earn the most money possible and preserve the user experience. With the right combination of ads, you can accomplish both goals.

There are several types of in-app ads to choose from:

Banner Ads

Banner ads typically sit alongside your content for the entire time the user is viewing the content. They appear as images, animated images, and clickable assets and are used by advertisers that may want to drive brand awareness or produce a call to action. You can pick out the sizes that suit your app and complement your content. 

These ads look very much like traditional desktop web publishing ads. While they can be easier than some other mobile app ad units to implement, they also tend to offer the lowest CPMs.

Interstitial Ads

Welcome to full-screen takeover: interstitial ads happen between phases of an app user's journey, appearing very differently than a banner ad. In a mobile game, the user might, for example, complete a level of the game. And, before the next level loads for the user, a full-screen interstitial ad appears, motivating the user to engage with the ad in the game's absence. 

Interstitial ads can be text, images, or video. Using videos in this format can help generate great CPMs. In fact, video ads usually offer some of the highest available CPMs for app publishers.

Native Ads

A native ad is an ad that looks like a natural part of the app and provides little interruption to the user's experience. While they may be marked as ads, their look and feel are very much like the rest of the content inside the app.

Gamified Ads

What's more engaging than a video game? Almost nothing. That's why gamified ads have become such a popular type of mobile advertising. These ads, which yield the highest in-app ad CPMs for publishers, present the user with a game to complete within the ad.

It could be as simple as M&M's viral Eye-Spy Pretzel game or as complex as a platform scroller game - but it has to be custom. You won't be able to sell gamified ad inventory programmatically. These are direct-sell ads, which is part of why they generate such high CPMs.

Rewarded Ads

With rewarded video ads, you incentivize ad views by giving perks or bonuses after the app has launched. The reward could be in-app currency, coupons, more lives in a mobile game or anything that has value to the user. 

Rewarded ads come up in cases where the user's experience is fully interrupted. The user knows ahead of time that they will get something in exchange for viewing (e.g., when playing a game, a rewarded ad may provide the user extra lives in exchange for watching a video ad).

How to Pick the Right Ad Format for Your App

You know the types of in-app ads. But how do you decide which one is right for your app?

This is a tough decision that many publishers have to make. It's all about looking at your app and understanding where you can feasibly place ads that will be effective and preserve the user's experience. 

Is your app a first-person shooter with levels? Perhaps you would want to go with interstitial video ads between levels. Have a chess or board game app that maintains a continuous screen throughout? Banner ads beside the content might work nicely. Does your app offer lives, levels, or in-game currency? Rewarded ads could be the right fit.

Here's the point: In-app advertising revenue generation is not one-size-fits-all. It's unique to your app and your preferences. A good mobile app advertising partner will walk through your app with you to look for ad opportunities that could work well for you. However, if you're wondering how to calculate the ad revenue of an app yourself, check out our ad revenue calculator to help you get started.

But at the end of the day, it's about what you feel comfortable with. The process of adding ads to your app should be collaborative and leave you with a full picture of the mobile app ad revenue potential for each iteration of your strategy.

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The Complete Guide to App Advertising

Challenges of In-App Advertising

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.

Working with Mediation Partners for Mobile App Ad Revenue Generation

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 user 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.

How to Build Your In-App Advertising Revenue at Scale

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. 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, slowing adding more ads until you're generating solid revenue but preserving your user base.

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.

Adding In-App Video Ads: The Next Big Leap

In one of the advanced stages of the journey we described in the above section, 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.

You can get a complete breakdown of how to increase your mobile app ad revenue with video ads here.

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Everything There is to Know About Video Ads for Web & App Publishers.

Breaking Through to the Big Time: In-App Header Bidding

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 ad 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.

Do In-App Advertising Yourself, or Call in a Partner?

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.

About Playwire's SDK

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 mobile ads SDK is the 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.

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Monetizing with Playwire vs. with a Single Mediation Partner

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 network tied to one mediation partner - and come back to you filled and at a very high CPM almost every single time.

Your Partner in In-App Ad Revenue Generation

Generating revenue from in-app advertising can be confusing - even overwhelming - for publishers who would much rather spend their valuable time creating world-class content. 

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