Want to make more money from app ads? Add more ad sources!
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.
Why you should NEVER rely on only one ad network / exchange for your ads
Relying on only one ad network / exchange for your ads is almost never the revenue-maximizing ad monetization strategy. Why?
- Ads may not be returned 100% of the time. Typically, ad networks / exchanges do not have a 100% fill rate (“fill” is a measure of how many ad requests return an actual ad, so a 100% fill rate means that an ad would always be shown). If you’re not showing an ad in your ad space, then you’re neither making money (by showing a paying ad), promoting your own apps / content, nor keeping your users engaged. All three of these scenarios ultimately result in more money in your pocket – having empty ad space does not.
- The same ads may be returned over and over. As an avid app user myself, I’ve seen countless apps where I get shown the same ad over and over again. Having a mix of fresh ads helps increase user engagement into your ad space, and increased engagement means higher yields from your ad space.
- The ad shown may not be the highest-paying ad available. Different ad networks / exchanges charge different prices for ads and have varying revenue shares for app developers. If you’re using just one source for your ads, you’re locked into the revenue share percentage and the ad pricing for that ad network / exchange. In other words, you don’t even know if your ad space is yielding you the most money.
- Ad relevance may be low. Since mobile ads are currently mostly sold on a cost per click basis (that is, you as a developer get paid if and only if a user clicks on an ad), it’s crucial to show ads that are relevant to your users so they’ll click on the ads. If you’re using an iPhone app and get shown an ad for a Blackberry app, you’re probably not going to click on that ad (this has actually happened to me before!). Just like not showing an ad 100% of the time, showing ads that are not very relevant will result in a low eCPM.
Put simply, relying on only one ad network / exchange means that not only are you at the mercy of that source for your app’s ad revenue stream, but also that you have neither visibility into what your ad space is really worth nor leverage to switch providers on-the-fly and increase your revenue.
You should use as many ad sources as possible
There are five main types of ad sources available to app developers today, and you should use as many ad sources as possible in your apps to have the freedom to choose which ad source to serve from so that you maximize your ad revenue. Here are brief descriptions of the five main types of in-app ad sources.
- Ad networks. Ad networks match app developers who display ads in their apps with advertisers who want to pay for ads in apps. Some examples of ad networks are Apple iAd, AdMob, Quattro Wireless, Millennial Media, Google AdSense, Greystripe, and VideoEgg.
- Ad exchanges. Ad exchanges pool together ad networks and other advertisers and provide developers with one ad feed representing all of these ads. In return for pooling together advertisers, ad exchanges usually take a fee for their services. Two examples of ad exchanges are Mobclix and Smaato.
- House ads. House ads are ads for your own products, services, and content. House ads include ads for other apps you’ve developed (crosspromotions – click here to read on how to effectively crosspromote your apps) and ads for in-app purchases within the app.
- Direct ads. Direct ads are ads that are sold directly to another party. For example, another app developer may want to display ads for his/her app in your app, or a corporation may want to advertise a product or service in your app.
- Content. Content such as Twitter & RSS feeds help keep your ad space relevant and engaging to your users. Although content may not pay directly, the increased user engagement will mean users will be more likely to click on and act upon paying ads.
Note that you need not use ad sources from all five of these types to maximize your ad revenue, though it’s crucial to include as many paying ad sources as possible (e.g. it may not be feasible to obtain direct corporate advertising deals). In fact, for most apps, using just multiple ad networks / exchanges and house ads suffices.
Optimization: showing the right ad at the right time
The next step after selecting your ad sources is to optimize across all of the ad sources so you’re always showing the ad that will make you the most money. The simplest (and most widely-used) form of optimization consists solely of arranging your ad sources in tiers with one ad source per tier, choosing an ad source to serve, and if that ad source does not serve an ad, to ‘rollover’ to the next tier and so on and so forth (Mobclix and AdWhirl support this sort of rollover functionality). Unfortunately, this form of optimization is sorely inadequate to run your apps as a business because of the following key shortcomings.
- House ads always serve and thus any ads in a lower tier than a house ad will never serve. Since house ads typically have higher eCPMs than ad networks, you’d often want to serve house ads before ad network ads. Also, serving multiple house ads can get very difficult to manage since you cannot frequency cap ads in this optimization scheme.
- Ad networks have different fill rates and eCPMs in different geographical locations. For example, an ad network may pay the highest eCPM in the US but have 5% fill overseas. Ideally, you’d want to geotarget that ad network to serve first in the US and another internationally-focused ad network to serve first overseas.
- You cannot set daily impression limits / budgets for ads. Assume a corporation pays you $5 CPM to show ads promoting their newest product, but wants to spend at most $10k a day. Although this would be a great opportunity for you as an app developer to monetize your userbase, you’d be unable to do so with this form of optimization.
Only an ad management platform such as Burstly or AdMarvel gives you the tools and levers (geotargeting, device targeting, frequency capping, budgets & limits, et al.) you need to optimize your ad mix effectively and make sure you’re not leaving money on the table. When one of my apps, Air Horn (Free!) reached the #1 spot in the app store, using Burstly allowed me to increase my eCPM from $2.06 to $2.62 (and beyond!) by optimizing my ad mix. You can find more details and data here.