How to make money with mobile apps

or better, how to monetize them... :)
The opportunities for developers and publishers for connect with consumers via apps is a seemingly limitless opportunity.
But, how do you make money with apps? There are multiple options available for iOS and Android app developers for making money with apps, the three main options are:

1. Ad Supported:
   1. Banner Advertising
   2. Interstitial Advertising
2. Premium
3. Freemium
4. Affiliates (but we won't get into it right now)

How to Make Money with Apps using Banner Advertising:

Mobile banner advertising is intended to be very simple, and it can be. Here is an overview of the process for integrating banner advertising in your iOS or Android app:

1. Identify, at the beginning of your app development cycle, where you are going to place banner ads. Banner advertising is most effective when placed on all screens within your app. Identifying where you will place advertising at the beginning of development ensures you have enough space to place banner ads.  Some app developers place banner ads on menu screens or similar – this will reduce your overall impressions and CTR, dramatically reducing the amount of money you can make in your app.
2. Integrate more than one banner advertising network which ensures you will fill a high percentage of ad requests – essential to maximizing your revenue.
   1. iAd (iOS only)
   2. Millennial Media
   3. Admob
3. Utilize an ad mediator to optimize post launch. Ad mediators enable you to actively manage which mobile ad networks fill your inventory.  This enables the developer to dynamically increase or decrease the percentage of ad impressions a network fills, allowing you to increase your mobile advertising revenue.
4. Launch your app and review the results of your mobile advertising
5. Optimize. Mobile advertising is not a one shot deal and every app developer should spend time post launch to optimize their revenue, add new mobile ad networks, replace one's that do not work in your app, et al.

A common question from app developers is: how much money can I make with banner ads? The answer, of course, is it varies.  For simplicity sake, we have provided an example with the following assumptions:

• 10k daily active users (60% US, 40% WW) 
• Banner ads on all screens
• 6 minute average session time (60k minutes/day)
• Integrate an ad mediation service for US & Admob for WW

In this scenario, an app developer can expect to make approximately $7,300 per month using mobile banner advertising. Mobile banner advertising can help app developers make a meaningful amount of money; but, like any form of app monetization it requires users. The more users of your app, the more money your app will generate with banner advertising.

Pros and Cons of Mobile Banner Advertising

Banner Advertising Pros:

• Options for developers: There are lots of mobile banner advertising networks to choose from
• Predictable income stream: While not always the highest paying, mobile banner advertising revenue is predictable, and no matter how few or many users your app has, you will make some money
• Enable IAP: including mobile banner advertising provides app developers with a simple option to get started with in-app purchase

Banner Advertising Cons:

• Reduce available space on screen: Typically, mobile banner ads take 50pts of space at the top or bottom of your app – reducing the available space for your app.
• Low eCPM: Most app developers use Admob, or other networks that pay <$1.00 eCPM. In order to make a large amount of revenue with these eCPM levels, app developers must have a lot of users.
• Consumers don't like them: Let's be clear here, consumers don't like any advertising, but banner advertising is less intrusive than app interstitials despite being persistent on the screen.

 
If you would like more information on mobile banner advertising, here are some additional resources you may find valuable:

• The 5 Worst Mobile Advertising Mistakes
• How to Optimize Your Mobile Advertising CPC Campaigns
• 5 Mobile Advertising Myths
• The 3 Most Important Words in Mobile Advertising

 

How to Make Money with Apps using Interstitial Advertising:

As defined in the Mobile Advertising Glossary, an interstitial is a “mobile ad unit that is inserted into the middle of of a mobile application, typically during menu screens or other natural breaks for the purposes of promoting 3rd party products or services”. In most of todays cases, mobile ad interstitials are used to promote 3rd party applications.
Here is a brief overview of the process any app developer can go through when looking to utilize interstitial advertising to make money with your apps.

1. What type of advertising will your users engage with? Is your app a game? Is it a weather app? If, for example, you are using interstitial advertising ina game it is likely that ads promoting 3rd party games will perform well. If your app is a weather or resource app, promoting 3rd party games will, most likely, not perform well. Simply put, make an effort understand who your users are and find interstitial advertising that will match their interests, and your content.
2. Identify what types of interstitial advertising you will utilize in your app(s). The two main types of interstitials are full screen display and full screen video. There are pros and cons to both (see below). If you expect your app sessions to be short, go with display; if you expect app sessions to be long, go with video. Or, do both and test effectiveness.
3. Decide where in your app you will show interstitials. There are endless examples of app developers placing interstitial advertising upon launch of an app. Scenarios do exist where this approach makes sense; such as a desire to push users to your own apps with higher ARPUs. But, when promoting 3rd party apps you are annoying users at the beginning of their engagement with you, potentially sending them somewhere else before they've had a chance to spend money in your app, and, they may never come back. The best way to identify when and where to place your interstitial advertising is to review your analytics. If your average user session time is 3 minutes set your interstitial to display after 2 minutes and 30 seconds. Your user is getting ready to leave your app anyway, try to monetize them before they go. App developers should monitor the success of each interstitial placement – if a placement isn't generating revenue, move it somewhere else. No matter what, don't place interstitials where they could interrupt game play or another core element of the app experience.
4. Decide how often to show interstitials. Standard practice is to show an mobile ad interstitial no more than every 3 minutes. We do not have any first hand data to support this, but it is a reasonable assumption that the law of diminishing returns apply here. Your app users will have the highest level of engagement with the first interstitial they see, each subsequent interstitial will have a lower engagement rate. Be careful that your in-session retention rate doesn't drop faster than your advertising engagement rate. If it does, that could be a sign that the advertising is driving away your users.
5. Identify ways to reward users for interstitial ad engagement. Given Apple's ban of incentivized installs, you are not able to reward users with currency (or other) in your app for downloading another app – though you can still do this on Android. On iOS, you can reward users with currency (or other) for viewing video advertising. Incentivized installs on Android & rewarded ad engagement on iOS & Android are fantastic ways to reward your users for engaging with advertising and will help you make more money in your apps.

Interstitial advertising is one of the methods that iOS and Android developers can utilize to make money in their apps. If done correctly and with your users in mind, interstitial mobile advertising can provide app developers with a stable source of revenue while providing their users with value in return.
As always, we recommend testing various formats and companies to see which work best with your users and your content.

Pros & Cons of Mobile Interstitial Advertising:

Pros:

• eCPM is high. Pay-per-install rates are over $1.00 on average and given a comparably low number of impressions, eCPM's can be high. Video advertising has average view rates of $.025 – this can add up quickly
• Compared to banner advertising, interstitial advertising provides you with full screen use for your app = more space for your content
• Some 3rd parties like, Chartboost, enable you to cross-promote directly with other app publishers providing you with a fantastic way to drive installs of your own apps
• Ability to reward users: You can reward users with free currency for watching video on iOS or downloading a 3rd party app on Android. Not only does this provide you with a revenue source, but enables you to reward your users for engaging with advertising creating a longer lasting, profitable, relationship

Cons:

• Mobile ad interstitials are interruptive, if you display them more often than every 2-3 minutes, your retention rates may decrease
• Despite higher eCPM's, mobile ad interstitials do not necessarily generate more revenue than mobile banner ads on aggregate given comparably low impressions
• Mobile video impressions are typically between 15-30 seconds. That's a lot of time to ask one of your users to spend viewing an ad within a 3-5 minute app session, especially if they aren't interested in the content
• Difficult to find appropriate advertising for your user base: A majority of interstitial advertising and video advertising is for the promotion of 3rd party games. If your user base is not predisposed to games your ability to fill a large percentage of requests with relevant ad inventory may be limited, and your revenue opportunity more so.

If you are interested in using interstitial advertising to help you make money in your apps, you might want to check out the following companies. Mobile Video Advertising:

• AdColony
• YuMe
• Brightroll
• Flurry

Display Interstitials:

• Tapjoy
• Greystripe
• W3i
• Chartboost
• Flurry
• RevMob (the true best)

 

Back to Blog