The mobile advertising industry is one of the biggest advertising industries in the world. And as advertisements are a very competitive marketing channel, especially on mobile for targeting users, you need to be able to calculate your revenue and also budget efficiently.
Identify your ad monetization goals
Mobile ad revenue is the money a company makes from selling ads on their mobile devices. It can be measured by either an acquisition cost per 1,000 impressions (CPM) or a cost per click (CPC). CPM is the amount of money a company receives for each 1,000 impressions of an ad.
This is the number that advertisers care about when buying ads, and it’s usually higher than CPC because of less competition among advertisers in the market. CPC is how much advertisers pay for each click on their ads, and it’s usually lower than CPM because there are more competitors who want to buy space in your ad inventory.
Understand your target mobile users’ behavior
Mobile ad revenue is growing. In the United States, it grew by 37% in 2016 to $7.2 billion, according to data from eMarketer. However, many brands are still struggling to make mobile advertising work for them. The challenge is that mobile advertising is fundamentally different than traditional web advertising.
There are two types of consumers who use their phones as their primary computing device “lean-in” and “lean-back” users. Lean-in consumers are highly engaged with their phones, using them for navigation, search, entertainment and other activities like banking and shopping. Lean-back consumers use their phones primarily as a way to pass time when they’re bored or waiting for something (like an appointment).
Lean-in consumers are more likely to buy products online via their smartphones than lean-back consumers are. They also tend to be younger and more educated than lean-back consumers; they’re also more likely to be male than female.
Pick the right ad format for your app
There are many factors that can affect mobile ad revenue. Factors like the type of app, user base, and the location of the users are all key elements that can impact revenue. This guide will help you understand how to calculate mobile ad revenue.
- Banner Ads: These are static images that appear at the bottom of a web page or next to content in an app. Banner ads are often used to drive awareness and brand recognition for advertisers and publishers alike; however, they typically have low engagement rates with users as they tend to be ignored by most people who use them regularly when browsing the Internet or using apps.
- Interstitials: These are full-screen ads that interrupt user experience by popping up before or after a page loads in an app or browser window. They are often used during game play as well as during other important moments when users want uninterrupted access to content without distractions from other ads or offers from advertisers that may not be relevant for them at that moment in time.
Choose the best ad network for your app
The average mobile ad revenue per user (ARPU) can vary significantly between different apps and ad networks. Here are some tips to help you:
- Choose the best ad network for your app
- Optimize your app with A/B testing
- Maximize your revenue from each user
- Make sure your ads are relevant, useful and engaging
Calculate eCPM to find out how much money you’re making per 1000 impressions
Calculate eCPM to find out how much money you’re making per 1000 impression. eCPM is the effective cost per thousand impressions (or views). It’s the number that you actually want to know, because it’s the closest estimation of how much you’ll be making on your ads. It’s not perfect, though.
Your actual revenue will be higher than this number because you will get click-throughs and other conversions from your ads. You’ll see some discrepancy between eCPM and CPM if you have a lot of impressions without many clicks or conversions.
Cost-Per Click (CPC)
In contrast with CPI, CPC involves charging advertisers based on how many clicks they receive on their ads. You make more money if there are more clicks on your ads because the advertiser pays a fixed price for each click received
Cost-Per-Action
Cost-per-action (CPA) is a payment model where the advertiser pays a publisher only when a predefined goal is met by the user. It can be used, for example, when the advertiser pays a publisher when a user makes a purchase or signs up for an email subscription. CPA is similar to cost-per-click (CPC) and cost-per-impression (CPM), but it differs in that it uses an action as the metric instead of impressions or clicks.
Cost-Per-Thousand (CPM)
Cost per thousand impressions (CPM) is the standard way of calculating how much you can charge for a single ad impression. CPM is calculated by dividing the cost of an ad by 1,000 impressions. For example, if an ad costs $10 and it has 10,000 impressions, your CPM is $1. If an ad costs $2 and it has 50,000 impressions, your CPM is also $1.
Conclusion
Display mobile ads, on the other hand, have no measurable click through rates, so you pay for the impression. In other words, the user doesn’t need to click the ad for you to pay for it. A company can decide what a display impression is worth to them and will pay accordingly. As a result, advertisers need to set a daily maximum in terms of money they are willing to spend on their campaign. This is called a budget.