Ads in Apps 101. Part 1. Why would I monetize with ads?

imageEverybody loves ads. Right? Right!? Well, it’s not that easy to find a person who would agree with this statement. But nevertheless rational people learned to accept ads as necessary “evil”. The number of people who “love” ads is more or less equal to the number of people willing to pay for the content on the internet.

Most of the web content is monetized with ads these days. In-app ads is the first or second (depending on a platform) monetization method for app developers. Yet, most of the indie app and game developers are easily lost in the sea of terms and 3-letter acronyms used in the advertising industry.

I was in the same shoes when I entered advertising industry almost by accident. I had to learn most of these things as I went. So I decided to make it a little easier for my fellow devs by collecting most of the basics in a series of several blog posts. This is the first post in the series and what I’m trying to do here is answer the question why, despite the fact most people dislike ads, you should definitely consider advertising as a monetization model for your mobile app or game.

Why would I monetize my mobile app or game with ads?

 

According to Developer Economics Q1 2015 report 36% of app developers use in-app advertising as their revenue model (or one of them). Clearly this number is much higher than the number of people wholeheartedly liking ads in general. So why do they do it?

No one buys apps anymore

In the early days of app stores users were buying paid apps quite actively. Then pricing quickly converged on $0.99. Then people collectively decided that even that is to much and you can’t blame them. With millions of apps in the app stores, for almost every mass-market paid app there’s a good-enough free alternative.

So developers had to turn to alternative means of monetization: in-app purchases and/or advertising.

Minimal impact on game and app design

In-app purchases work great in games and apps specifically designed with this model in mind. But what if this is not how you want to structure your app? What if you want to turn your paid game into a free game?

Advertising can be used to monetize your apps without changing what that app actually is. You may need to find a place for the ad in the UI (in the case of banner ads), but you won’t have to artificially slice your app into pieces or invent other tricks to make it work with IAPs.

Monetize the long tail

And even if you design your game as a free-to-play title from the get go, it’s a well know truth that only a few percent of your users will ever pay for anything in your game. You may decide to accept that the remaining ~95% of your users won’t bring you any direct revenue or you may use ads to make money from 100% of your user base.

Gateway drug to IAPs

Additionally, if you offer ad-free experience to all of your paying customers, this could very well be that small extra push for them to make a purchase. And, as everyone knows, the first sale is the hardest.

Not only for monetization

While in-app advertising is primarily considered as a revenue generating tool, it could very well serve you on the other side of the spectrum – app marketing and user acquisition.

Jumpstart your new titles

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Successful publishers use the collective power of their previous apps and games to jumpstart their new titles. This is much easier to do when you already have dedicated ad space inside your apps.

Cross-promote with other publishers

Even if you don’t have previous hits or if you want to widen your target audience you can swap ads with other friendly publishers or use a cross-promotion network to automate the process. You can always switch back to partial or pure monetization once you achieve your marketing goals.

Hopefully I’ve convinced you that there’s a totally legit place for advertising in your app monetization strategy. In the next part I will cover the basic terminology used in the in-app advertising industry. Stay tuned.

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