There are two key elements of being successful in the app world; first is developing an engaging app to attract users and second is managing your monetization in the smartest way. Mobile app monetization has two sides, as usual, maximizing the app revenues and optimizing your user acquisition campaign costs. Here we will map out the basis of mobile app monetization to allow you to build your own strategy that suits your app best.
Revenue maximizing strategy for an app can be built on three main pillars: Ad Placement/Ad Unit tactics, choosing the right ad monetization partner and launching the optimal In-App Purchases strategies. Let’s look at them in detail:
Ad Placement / Ad Unit Tactics
You might have thousands of daily active users but if you do not have a reasonable ad placement strategy most of the users might leave your game before even seeing one ad. An average gamer spends 24 minutes each day playing games. So, not disturbing your users with ads could be a good strategy for user stickiness but bad for your ad monetization. That is why you should check average session lengths and retention rates of your apps and change your ad placement strategy.
You can also choose to show less intrusive ad formats. Do not assume that your users will hate you that you are showing ads to them. Sometimes they might be even thankful. For instance, recent researches show that rewarded video ads can even increase your retention rates (For details, please look at this post). A gamer could be even happy to watch a 30-sec video and collect some virtual coins. Similarly, if you place them smartly, interstitial or native ads also do not always annoy your users. So, don’t get negatively lured by every comment on Appstore criticizing the ads on your games. Most of the users are more tolerant than you expect, as long as ads do not intrude too much.
In addition, the low eCPM rates should not discourage you to place banner ads into your app. Many performance indexes show that the total amount of revenue that you make from banner might exceed the other ad formats. So the general rule applies here as well, never put all your eggs in one basket and continue to test different ad placements and ad units till you find the optimal combination of them.
Choosing the Right Ad Partner
Even though Admob has a certain dominance in ad monetization, it is still a competitive market. Don’t be shy about trying new ad partners. If you do not want to lose time by changing your ad networks than you can try mediation tools. There are plenty of dependent or independent mediation services which allows you to benefit from the services of several ad networks without being obliged to choose only one of them.
If you work only with one ad network and its fill rates are around 50%, it means most likely you are leaving a significant amount of money on the table. Ad Mediation platforms generally increase your fill rates closer to 90% percent. However, if you want to increase your revenues in the same way, you have to get familiar with mediation strategies, such as optimizing your waterfall line.
Here, three main factors need to be taken into consideration, eCPMs, fill rates and the quality/diversity of the ads shown. Most of the developers decide about the waterfall strategy by only focusing on eCPMs but it is misleading.
If an Ad Network’s eCPM rates are high but fill rates are too low, it means when they show ads they give you good money but generally, they cannot show ads when their turn comes. Hence, they don’t contribute to your revenues as expected.
The quality of the ads is also crucial because most of the ad campaigns are paying on the basis of cost per click. So, if the users see but do not click on the ad then you cannot make money. Diverse and high-quality ads are more likely to be clicked and eventually will add more money to your pocket. To sum up, while you are deciding on your waterfall strategy, it is better to evaluate those three parameters holistically rather than only focusing on eCPM values.
In addition to ad monetization, another effective way of making money is in-app purchases. Your new users might have a tendency not to spend on in-app purchases, thus providing the in-app purchase and rewarded video options together is a more effective way of mobile app monetization. Your users will most likely choose rewarded video option in the beginning but after you reach a certain level of stickiness they will start spending for in-app purchases as well. Here the critical point is deciding about the prices. There is no golden rule of optimal pricing policies except than testing. Most of the ad platforms offer A/B testing for that purpose. By dividing your audience into two, you can test different options to find out the optimal prices.
Optimizing User Acquisition Campaigns
Designing an amazing app or game is not enough to have a stable user base. All of us need to launch user acquisition campaigns. However, deciding on a campaign strategy could be tiresome.
User acquisition strategies are of two dimensions, deciding about the optimum level of bidding, and where to launch your campaign.
While you are deciding about your bid level, there are certain metrics that are critical to help your decision-making process, and the most valuable one is the Life Time Value (LTV).
LTV is the projected revenue that a customer will generate during their lifetime. For instance, when we say LTV (30) we mean that the expected amount of a revenue that your app will generate from a specific user in 30 days.
If you know that metric, then you can confidently launch a user acquisition campaign without fear of losing money because you already know how much this newly acquired user will add to your pocket.
Secondly, on which geographies you should launch your campaign? Let’s say you would like to reach millions of users easily, and that is why you preferred to launch an ad campaign in crowded countries such as India or Brazil. Since you want to increase your user base you thought bidding higher is logical in the beginning? Is it right? Not always. Don’t forget about the LTV rule. Even though you can acquire thousands of users in those countries, if the LTV is lower than the CPI of your UA campaign, at the end of the day you are just going to lose money. So does it mean that you should not launch campaigns in crowded Tier-2 countries? The short answer is No. Installs are always important even if they bring a low amount of money. But again do not put all your eggs in one basket. Launch campaigns with compatible bids for Tier-1, Tier-2, and other countries simultaneously and grow globally. Check your bid levels regularly and update them according to floating ARPDAU and LTV rates.