In the previous part we took a look at what metrics advertisers use to measure effectiveness of their campaigns in your apps. Let’s turn to a topic that is more important to you as an app and game publisher – namely, what performance indicators you should care about when monetizing apps with ads.
You can go into a lot of detail on this topic, but on the surface there are only 2 KPIs you should care about.
Effective CPM (eCPM)
You are providing advertisers with a limited resource – ad space in your app. The amount of the available ad space doesn’t change based on the quality of the ads you run in your app (discounting the cases of really bad user repelling ads). Therefore you shouldn’t be responsible for the fact that one advertiser made a less attractive ad and/or product than the other. Your space is worth something to you and that’s what you would like to get from any of the ad providers and advertisers occupying that space in your app. Unfortunately in the buyer’s market it doesn’t always work that way.
As we’ve seen in the earlier chapter mobile ads are not always sold on the CPM basis. And unless you are a really important fish you will have to deal with this. But you don’t have to guess which of the advertisers or ad providers is better for you. That’s what eCPM is for.
eCPM is any ad sales model (CPC, CPI, CPA, etc.) converted to CPM.
Let’s illustrate this with a couple of examples.
CPC to eCPM
If advertisers are paying for clicks and you know the click-through rate you can easily calculate your eCPM:
eCPM = CPC * CTR * 1,000
Or, for example: if you sell clicks for $0.10 (CPC) and CTR on those ads is 1% (or 0.01) then eCPM = $0.10 * 0.01 * 1,000 = $1.
CPI to eCPM
When advertiser is paying for installs, you will need to know the CTR and install rate (IR) to calculate your eCPM.
eCPM = CPI * CTR * IR * 1,000
Or, for example: if you get paid $1 per install (CPI), CTR is 1%, as in previous example, and install rate (IR) is 10% (or 0.1) then your eCPM = $1 * 0.01 * 0.1 * 1,000 = $1.
The second important KPI for app developers, and the one that not everyone is familiar with, is called fill rate.
Fill rate represents a percentage of the ad inventory filled with actual ads.
Every time your app requests an ad from an ad network, contrary to what you may think, there’s no guarantee that you will get an ad back. In reality you may get a decent fill rate from a network in one region and zero ads in another. All-in-all it’s hard to expect to fill anywhere close to 100% of your ad space, if you don’t proactively attack the issue.
In the next part we will discuss just that – maximizing your fill rate and returns on your ad space. Stay tuned.