Interstitial ads are full-screen ads shown to users at natural breaking points in an app’s flow. These full-screen ads allow an advertiser’s message to be delivered more strongly and directly to users in comparison to standard banner ads, resulting in higher eCPMs.

In our experience, interstitial ads command 2-5x higher click thru rates versus standard banner ads in the same app. Since many mobile ads are sold on a cost-per-click – CPC – basis (that is, you get paid per click), that means that each interstitial ad you show generates 2-5x more revenue than each banner ad you show. Also, some interstitial ads, especially video ads, are sold on a CPM basis (you get paid each time you show an ad, regardless of whether the user clicks on the ad). This means that you get paid for each and every ad you show – unlike cost per click ads.

Our developer partners have seen great results in monetizing their apps using a combination of both interstitial and banner ads. We recommend that developers include interstitial ads in their apps whenever possible. Since interstitial ads take over the entire app screen, we recommend interstitials be placed at natural breaking points in the app’s flow, for example at app launch or between levels or turns in a game.

One of the main gripes with mobile advertising is that users see the same ad over and over again. Not only does this make an app’s overall user experience worse, but it also decreases the effectiveness of the ad space because users tend to zone out when they see the same ad innumerable times. Although it’s impossible to control exactly what ad networks serve, you can take steps to ensure your app’s user experience isn’t compromised by using frequency capping to limit the number of times one user sees the same ad.

Frequency capping allows you to set the maximum times you’d like a user to see a certain house ad or ads from a certain ad network in a given time period. For example, you could have a set of four different house ads to cross-promote apps that you want served, but want your app’s user to see each ad at most once per session. To do that, you’d set a frequency cap of 1 ad impression every 10 minutes (or whatever your app’s average session time is) on each of the four house ads. This would ensure that a user wouldn’t see the same ad more than once in a 10 minute period, so your users wouldn’t see the same ad more than once during an average-length session.

In our post roughly 10 weeks ago we detailed Air Horn (Free!)‘s 8-day stay in the coveted #1 spot in the App Store. We promised to follow up and provide additional data and further insights. This simple app turned any iOS device into a loud and obnoxious air horn and netted Simpaddico, the app’s developer, $20K in 8 days. We were quite surprised when the app stayed in the Top 25 for the next 5 weeks, receiving over 3.5MM downloads in that period and netting Simpaddico over $100K. At its peak, Air Horn was getting over 188K downloads per day and never fewer than 30K downloads per day. The daily ranking and download data can be downloaded at the bottom of this post.

Although it’s easy to see the relationship between daily downloads and an app’s ranking to predict the number of future daily downloads, it’s nearly impossible to predict how an ad network will perform on any given day. The volatility involved in app advertising is startling (see the chart below for eCPM rates from a single ad network). For example, Air Horn’s daily weighted average eCPM ranged from $1.72 to $4.47, with the best performing ad network changing very frequently. Similarly volatile were ad network and ad exchange fill rates, ranging from 20% to over 90%. Even one that claims 100% fill rate was unable to fill all of the remnant ad requests.

With over 35MM ad network impressions, a small percentage drop (or increase) in eCPM had significant revenue ramifications for Simpaddico. Using Burstly’s ad management platform, Simpaddico was able to reach a $2.54 average eCPM for Air Horn. Had Air Horn run only one ad network, average eCPMs could have been as low as $1.25. Additionally, the number of ad impressions served would have been dramatically lower since no one ad provider has 100% fill. Due to these two factors, Burstly helped Simpaddico earn more from ads in Air Horn than it would have with just an ad network / exchange.

Although Simpaddico earned a substantial sum from ads in Air Horn, ad revenue was only 72% of Air Horn’s total revenue. The other 28% came from in-app purchases, also powered by Burstly. Out of Air Horn’s 4.0MM+ total downloads, roughly 1% of users opted to purchase the in-app upgrade that added additional sounds and removed ads. This conversion rate is over 2x higher than a cross-promotion that was run for a similar app created by Simpaddico (Annoying Sounds – 700K downloads, #5 Free App, Top 25 for 9 Days). Why? Because the in-app purchase occurs “in-the-app” while the cross promotion forced the user out of the app and into the App Store. This extra friction reduced the cross promotion up-sell conversion rate to an average of 0.4% for Annoying Sounds.

What does this mean for other indie developers?

The unpredictability of the app ecosystem today means you have to be ready to capitalize on opportunities as they occur. How do you do this? It’s imperative to diversify your income sources by using as many as possible (in-app purchases, ads, and cross promotion). For each income source, transparency and control are needed for you to run your apps as a business. For example, you should run as many ad networks as possible in your apps but have the ability to switch between them on the fly and target them to specific users if needed. Similarly, for in-app purchases, you should have the ability to present the user with different creatives and optimize based on which one gives you the best conversion rate.

Even if your app isn’t in the #1 spot… or even in the top 100, it’s still important to make sure you have the flexibility, transparency, and control needed to monetize your apps.

You can download the rank & daily download data for Air Horn here. [csv]

This post is part of my ongoing series on App Monetization Strategies.

Many popular (and successful!) app monetization strategies include using ads as a revenue source. I’ve personally used ads to help monetize many of my apps very successfully, but even so, I share a complaint many other developers have about ads: eCPMs from ad networks usually suck (if you’re not sure what an eCPM is, check out my intro post on ads).

Even with ad optimization and geotargeting – a necessity to make real money off of ads – eCPMs from ad networks alone aren’t spectacular. So how can you increase your ad eCPM overall? One great way is by adding house ads to the mix alongside your ad network partners. You’ll definitely see a noticeable jump in eCPM almost immediately. So what exactly are house ads and how can they increase your eCPM? Read on to find out!

Read the rest of this entry →

This post is part of my ongoing series on App Monetization Strategies.

Without question, the biggest mistake developers make when monetizing their apps with ads is relying on only one ad network or exchange for all of their ads. Relying on only one ad source for all of your in-app ads can mean that you’re not even showing an ad at all 100% of the time. And in the rare case that you are showing an ad all the time, you’re probably not showing the ad that would make you the most money… often you’ll show the same few ads over and over again. Want to stop leaving money on the table? Read on to find out more about why it’s crucial to have multiple ad sources in your apps. Read the rest of this entry →