The following is an exclusive guest contributed post from James Kelm, Senior Director of Product Management at Flurry Analytics.
There’s a tremendous amount of money in the mobile app space. Between in-app purchases and ad spend, about $64 billion dollars ran through mobile apps last year. For developers, it’s the best of both worlds: Consumers are paying for content, and advertisers are trying to reach audiences. In fact, mobile advertising is only getting larger. Some estimates have it growing more than 50 percent by the end of this decade, and these figures represent the US only.
Long story short, the opportunity for developers to monetize their apps is huge. So how can developers make the most of the mobile advertising opportunity? Here are three key best practices.
Think Native and Video
Native ads are a great for content-rich applications where users are engaged in streams of content. They differ from legacy display ads in that they can match the visual context of the environment around them — ad title and ad copy can use the same font as the rest of your app. But this is an important point: Native ads aren’t branded content with an editorial voice. As a developer, when you invest in native ads, you are not investing in creating content; you’re investing in ads that match the look and feel of your app.
There are multiple categories of content-rich applications that work well for native ads. If your app delivers a social, messaging, or news experience, you should definitely consider this format. Utility and productivity apps also benefit from a native ad experience. The biggest reason developers should consider native ads is that we’re seeing huge growth in the space – 6x growth in the US and 26x growth worldwide. Compared to banner ads, we’re seeing an impressive 227% more ROI.
Video ads are also a powerful format for mobile. They started off as full screen, interstitial ads, and there continues to be ample demand for those videos. This year, we’re starting to see more advertisers using video ads to reach users with in-stream native videos, and they’re starting to experiment with vertical video formats. Basically, what’s happening is that video ads are evolving to catch up with popular consumer app user experiences – they’re evolving to work in content streams, and they’re evolving to better fit in vertically-oriented content apps.
Video ads work well in applications with natural pauses in user activity, or users in a lean-back mode; for example, games and entertainment apps. We’ve also seen messaging and music apps begin to experiment with vertical video ads from brand advertisers. It’s important to note that video ads are more expensive to make than still image ads — but they tend to be higher quality.
Integrate Now, Not Later
So when should you think about integrating ads? There are two schools of thought on this. Some argue that developers should have something in place from the beginning, so that you don’t jar users with a change later. Alternatively, if you aren’t strapped for cash, you can wait. My recommendation? Integrate early. Otherwise, you may take a ratings hit when ads are introduced, and it may take time for conversion rates from ads to stabilize.
Whichever path you choose, it’s important to understand how ad monetization affects user retention. Some placements may not affect retention at all, while others could be turning off users. If you’re not already using a mobile analytics product, start using one to uncover these insights.
Test and Iterate
So if you’ve started using ads to make money, and you understand how monetization and retention interact for your app, then you’re ready to start tuning and iterating. You can begin by analyzing the user experience in your app, and fixing any performance issues you find. Then, begin to experiment with placement and frequency, and think about segmenting your audience.
Regarding ad placement, one starting point is to distribute native ads throughout the content of your app, with the layout of the ad matching the content the app presents. A good starting point for video is to find the natural breaks in your app’s workflow, and test video ads at those points. If you have an in-app store, video ads can work well in relation to it.
Another dimension to consider is your audience. Are there natural segments that should receive more, fewer, or no ads? Should ad placement or frequency vary depending on the user’s country? User segments are particularly important in apps with in-app purchases. You don’t want ads to get in the way of users who will spend.
There are a few key performance metrics that you should pay close attention to: Fill, CPM, CTR, and viewability. Fill rate is the percent of times the ads service you’re using returns an ad when your app requests one. Effective CPM is the money you’re getting paid for every thousand impressions of a given ad placement. CTR, or click through rate, is a measure of how often users are clicking on them. Viewability is a relatively new metric – it’s a count of ad impressions that are in view when they are displayed. As you might expect, advertisers only want to pay for ads that are visible by users — and really, who can blame them?
The bottom line: For users who will likely never spend in your app, ads might be the only way for you, as a developer, to recover your investment. By starting early, integrating native and video ads, and consistently testing and iterating your ad experience, you can monetize your apps without disrupting the user experience.