Don’t Leave Ad Revenue Money on the Table! – Part II
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Hey you! App marketer, don’t leave ad revenue money on the table! – Part II

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In the second part of our ad monetization and revenue maximization training we will discuss the math behind the in-app advertising business.  Understanding the behind the scenes math will help you pave the way in maximizing ad revenues from YOUR very own app. Let’s begin! 

So, who is up for some math?

Ad revenues are calculated by looking at:

Ad requests X the fill rate X eCPM

That’s the front, but behind the scenes there are important parameters that impact the number of ad requests, fill rate and eCPM.

Ad requests

By ad requests, I mean the number of requests for ads that the app sends to the network. Ad requests volume is determined by the app’s user engagement level (% of active users, number of active sessions, session duration, etc.) and by the available inventory (in-app events that can provoke ad- requests).

Fill rate

The fill rate is the % of the total available inventory within the app that was successfully used to display a monetized impression. Naturally, you want this percentage to be as close as possible to 100%. The formula to calculate your fill rate is: Number of ads delivered by the network/number of ads requested by the app. Fill rate is very much dependent on the ad network/platform but you could make sure your app supports a variety of ad formats (will be discussed in detail below), and can provide advanced targeting capabilities (demographics, location and so forth). This way, you increase the chances of being relevant for more advertisers. In short, the more innovative and flexible you are, the higher the chances you will fill your ad requests.

eCPM

The effective cost per thousand impressions. This is your cut of the revenues coming from the impressions delivered by your app. Higher eCPM doesn’t necessarily mean more revenues. Imagine an airplane. The plane includes a given number of seats. Now, what is the bestselling strategy? Some (but not all) seats sold for high price (that’s high eCPM) or most of the seats sold, for a variety of prices? The answer is, as always: Depends. Not enough data to answer, additional info is needed. Exactly. Same story here. eCPM varies by ad format, targeting and more – the higher the CTR (Click through rate) the higher the eCPM.

Maximizing your number of ad requests

(your inventory)

Let’s put user engagement aside for a moment. No need to explain why high % of active users and high engagement levels seriously contribute to the volume of ad requests. It’s also important to know how to increase number of ad requests for the same volume of users. Let’s use the airplane metaphor again. How can an airline increase revenues? Using a bigger plane and reach out to more potential passengers is one option, but they could also leverage the existing situation by hunting for additional revenues streams. In fact that is what airlines do. Most of the airlines offer promoted content on their media channels, including printed magazines, TV channels and so forth. They found innovative way to serve advertisements while their passengers are on board.  Mobile apps are no different.

We could increase our ad inventory by:

1. Leveraging popular in-app locations

Track user actions in the app to make sure all relevant in-app locations are generating “ad requests”. Analysis is a key here.  Investing on “lost islands” makes no sense, you should focus on the prime events in your, and make sure they are “ad-covered”. I would suggest that you create a list of the events generated by your app, sort by popularity, high to low. Here’s an example (ad formats are put in details below):

in-app advertising_app monetization_maximize revenues2. Define and optimize possible ad formats

This is a combination of ad formats you can integrate into your app (supported by 3rd parties) with those that you actually choose to implement. Extra attention to user experience is needed here. You must make sure you do not harass your users, or they will run away!  Note that for advertisers, using a variety of ad formats plays a critical role in the success of engaging with customers, so a delicate balance is needed here.

Summary

Now that we are in full understanding of the behind the scenes math and calculations, we are ready to move to part III of our training, where we will discuss specific ad formats and how we can optimize them to maximize our ad revenues. If you missed part I of the training, you can find it here.

Elli
Elli is one of AppGo2Market.com Co-Founders, a mobile expert and a mentor. Having years of experience in the mobile and marketing industry promoting popular mobile apps and B2B related services. Presenting specific expertise on users' acquisition strategies, PR, social media, product marketing, BizDev integrations and more
Elli
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