In-App Mobile Advertising: What is it? And How does it work?

June 10, 2021

Mobile app usage has grown significantly. People choose to spend more time on mobile apps. There are new apps added in the app stores each day. Users spend 85% of their time in apps when using smartphones. With so many users interacting with various apps daily, businesses and app developers have a great opportunity to monetize from apps. 

In-app ads have given more businesses an opportunity to advertise on this platform. Through in-app mobile advertising, advertisers can reach a wide range of their target audiences. This can help businesses increase brand awareness and sales. App publishers also benefit from in-app ads. Since many apps are free to use, app publishers can gain revenue by displaying ads within their apps.

In this article we will explore in-app mobile advertising and understand how it works

Here are some key mobile app statistics for 2021 you should know.

What is In-App Mobile Advertising?

In-app advertising is a marketing and monetization strategy for app developers and businesses where advertisements are displayed on the apps. App developers get paid to display these advertisements within their apps. Apps allow businesses to get the attention of a wider audience who are using the app. Hence, it is a lucrative marketing and advertising strategy for many brands. Moreover, with various targeting options, apps allow advertisers to reach the right audience.

Why is In-app Advertising Important

Increase in app usage

The app market is growing, and users are spending more time on apps. According to TechCrunch, consumers spend 85% of their time on smartphones in apps. New apps are flooding the app market every day. Statista reported that 39 billion apps are downloaded on the App Store and 102 billion on Google Play. Moreover, by 2024 these numbers will increase 45 billion and 124 billion respectively.

The rise in app usage presents lots of opportunities for marketers to reach their target audiences. Advertisers can display their ads through these wide networks to create brand awareness and generate more traffic on their websites. Moreover, app publishers can make more revenue through these ads. This is the best way for publishers to make a profit from their apps.

Create personalized ads

In-app mobile advertising allows advertisers to create customized ads for their target audience. This helps to engage the audiences and increase conversions. Audiences will interact with an ad that is relevant to them. When users download an app, they give app developers the permission to collect their data. This way it becomes easier for ads publishers to identify who their audiences are. Based on the data advertisers can serve relevant ads to their potential customers. 

Can boost conversions

Relevant ads can capture the attention of the target audience. It helps improve click-through rates and conversions. According to TechCrunch, mobile apps have a higher engagement rate than mobile web and desktop. The app engagement rate is 100%-300% higher. Moreover, in-app ads are reported to perform 11.4 times better than banner ads on mobile websites (AppSavvy) Since users engage more with apps there are more opportunities for high click-through rates and conversions.

No ad blocks

As most users use free apps, they have no ad block options. This is an advantage for advertisers to keep displaying their ads to their target users.

Types of In-App Advertising Formats

To create ads which appeal to the target audience, advertisers need to select the right formats. This helps make their ads more relevant to the audience and improve user experience. Here are some in-app ad formats that advertisers can leverage.

Banner Ads

Banner or display ads are text or image ads which appear at the bottom or alongside the screen. This type of advertising can be intrusive as it appears on the screen when users are engaging with the app.

Native Ads

Native ads are video or text ads which are designed to match the look and feel of the apps. These ads target the user’s interest and are unintrusive.

Interstitial Ads

Interstitial ads are full screen images or video ads shown between different stages within the ads. For example, they are shown between different levels of a game.

Video Ads

Native video ads are displayed in a mobile video format and can allow users to skip it after a few seconds if they are not interested. Video ads are more engaging than any other ad formats.

Rich Media

Rich media ads include advanced features such as video, audio or other elements which grabs the user’s attention and encourages them to engage. These ads can be shown as pop up or banner formats.

Playable Ads

These types of ads are in a gamified format where users can play and experience the product. It is engaging and encourages the users to interact.

How Does In-App Advertising Work?

In-app advertisements are displayed using app advertising networks which enables app developers and advertisers to work together. An ad network functions as a bridge between these two sides. Ad network connects advertisers with app publishers to make it easier for businesses to reach their target customers through various apps. Here are some ad networks advertisers can use:

  • Facebook/Instagram
  • AdMob
  • Smaato
  • InMobi
  • Unity

The app that a user is on sends a request to the ad network to serve an ad. The ad network selects an ad based on its algorithm to find the perfect ad which pays more. This ad is then displayed to the users when they are using the app.

Here is an in-depth look at how in-app mobile advertising works.

Know the users

The first step that marketers need to take is identify the target audiences. These are the people who will be viewing your ads. Gather insights on their demographics, interests, hobbies etc. This information can help you target your audience better. It is important that the ads are shown to the right people.

Set goals

Next step is to set goals and objectives for your ad campaigns. Goals help you determine what you are trying to achieve from your ads. Maybe your goal is to increase brand awareness or retargeting users. This will help you plan what type of ad formats you will be using, and the resources required for it.

Ad network

Once the advertisers have developed the ad creatives and finalized the campaign, it is entered in an ad network’s campaign management system. The ads are then reviewed to ensure that they meet the quality standards. The campaigns that do not comply with the standards or laws will be rejected. Once the ad campaign is approved by the network it is placed in the queue on the ad server and waits till it is served to the right users.

App publisher’s perspective

App publishers and developers need to plan how ads will fit into their apps. They should think about various aspects like how ads will affect the user experience or how much revenue they will generate from ads. User experience is an important element of the app. Poor user experience can reduce engagement and app abandonment. Hence, app publishers need to choose the formats that are not intrusive and which engage the users.

User actions trigger ads

When a user opens an app, the ad network receives the request that the user is ready for an ad to be displayed.

Ad selection

Once the request is received the ad network will determine which ad is more relevant and profits the app publisher. Just because an ad is served does not mean it has performed well. Sometimes the users may exit the app before the ad is served or ignore it. This may take some time to effectively measure the progress of the ad campaign.

Data reporting

After the campaign ad network’s data can help advertisers determine the performance of their ad campaign. Based on the data advertisers can determine how much they owe the networks.

In-app mobile advertisements bring monetization opportunities for app publishers and help advertisers increase their sales. When creating your ad campaigns ensure that you know your end users. Target the right audience and provide them with the relevant ads. Consider using ad formats that are less intrusive and more engaging. Video ads are highly engaging and bring profitable results. Choose the ad network that has all the useful features you need to create an effective and successful ad campaign.

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