Blog In-app advertising: The complete guide t...

In-app advertising: The complete guide to effective mobile ads

In-app advertising is one of the most common forms of monetization for apps, and it’s also a powerful tool for mobile marketers, in particular those seeking to boost user acquisition. A successful in-app advertising arrangement offers benefits to the app owner—the opportunity to monetize their app’s real estate by selling space to advertisers—and the advertiser, who is placing their ads in the eyeline of an engaged audience with a high purchase intent.

With over seven billion mobile users around the globe, spending longer on their devices than ever before, mobile app advertising is  increasingly fundamental to the success of any mobile app. In fact, mobile ad spend has increased exponentially over the last decade, and is predicted to hit close to $400 billion in 2024.

While anyone with a smartphone is likely familiar with in-app advertising from a consumer point of view, even the savviest digital marketers may not understand the ins and outs of displaying ads. In this article, we will explore how mobile app ads work, how to use them effectively, and provide in-app advertising examples.

The basics of in-app advertising

What is in-app advertising?

While the definition of in-app advertisements is simple—they are ads that appear within a mobile application—the straightforward name can disguise the fact that in-app ads come in many shapes and sizes.

Types of in-app ads

For a marketer choosing an in-app ad format, the options can seem boundless. Typically, all in-app ads can be grouped into four main categories—with each category having its own subcategories. For instance, rewarded video ads are a subset of video ads and are becoming increasingly popular, as are playable ads. The four main types of in-app ads are:

  • Banner ads: These are particularly effective when it comes to raising brand awareness.
  • Video ads: Longer form, ideal for a narrative/story to boost engagement.
  • Rich media ads: Like banner ads, but more visually stimulating and sometimes interactive.
  • Native ads: A subtle option to build trust, sitting natively within an app’s content.
The four main types of in-app ads

Choosing the right type of in-app ad

The right choice of in-app ad can yield lucrative rewards, so it’s important to dedicate time and resources to the decision-making process. There is no “one size fits all” approach; many marketers find that testing out various options is the best way to find the option that best meets their needs.

A key consideration when embarking on an in-app ad campaign is where and how the most receptive audience will be found, ensuring that marketing budgets are spent wisely on ads that users find relevant and engaging. Let’s dive further into the four main types of mobile app advertisements and the best practices to match your campaign goals with your ideal audience.

Banner ads

Originally a feature of desktop marketing and having fallen into favor with mobile marketers in recent years, banner ads are subtle and not intrusive, typically used to build brand awareness. Taking up a horizontal portion of the screen (usually either top or bottom), a banner ad was traditionally an embedded static image encouraging the user to click to access an offer or learn more. Modern mobile marketing sees banner ads feature GIFs and videos too, although the static image approach is still a popular option.

Stats indicate that in-app banner ads perform 11.4 times better than other banner ads (on mobile web or desktop), and so they remain an effective format for marketers aiming to to raise awareness of a brand, app, service, etc. A potential risk of banner ads is “banner blindness”, a term coined when they were used primarily on web and considered easily ignored. Mobile marketers keen to avoid this should put time and resources into a banner ad’s design and text, perhaps using A/B testing to optimize the click-through rate (CTR).

Check out our recent blog post to learn more about optimizing in-app banner ads.

An example of an in-app banner ad

Video ads

A popular choice amongst mobile marketers seeking high CTRs is in-app video advertising. A banner or pop-up that appears on-screen during an app session, they are highly engaging and often appear on social media platforms. Video ads can take on many forms—for example, Instagram ad formats alone include reels, stories, carousels, etc.

A subset of in-app video ads is rewarded video ads, offering users clear incentives for watching. These are proving very engaging with gaming app users who will invest time in watching the entirety of a video in order to gain rewards such as in-game privileges or extra lives. In the gaming context, rewarded video ads are largely received well, with 53% of players saying they play a game longer because of receiving rewards through in-app ads.

An example of an in-app video ad

Rich media ads

Rich media ads are interactive, using components such as video, audio, text, and animation to encourage user interaction. When a user is presented with a rich media ad, they are given the opportunity to truly engage with a brand, so this method of mobile in-app advertising is popular amongst marketers aiming to boost engagement and brand awareness.

An example of an in-app rich media ad

Native ads

A native ad is unobtrusive by nature and fits in seamlessly within the environment of an app. By matching the app’s style, the ad encourages trust. Utilized more and more by marketers who want to benefit from the positive attributes of the brand of the app where the ad is placed, the native advertising sector is booming and predicted to be worth $400bn by 2025.

Native ads can prove more expensive and challenging to implement than alternative types of mobile app advertising, but such highly customized and well placed messaging can drive impressive click and download volumes.

An example of an in-app native ad

More in-app ad formats

The types of ads that apps can display vary—and in some cases, apps will come up with their own unique ad formats. In addition to the four main types of ads for mobile apps we’ve covered, we’re witnessing the rising popularity of these alternative ad formats:

  • Carousel ads: Popular on social media, carousel ads allow advertisers to display up to 10 images or videos within an ad, with users swiping through them to view all media. The amount of advertising real estate presented by a carousel ad allows an advertiser to offer a user a curated visual experience, with options for multiple link destinations.

  • Unskippable bumper ads: Familiar to YouTube users, bumper ads play before a chosen video. They are up to six seconds long and can’t be skipped, unlike skippable instream video ads. Short and minimally disruptive, they harness the power of video and audio and are displayed to a captive audience.

  • Interstitial ads: A video or image filling the full screen of a device, interstitial ads are usually displayed at a moment of transition in the user journey, for example moving between levels in a gaming app. The user has two options—to click the ad or close the ad. The full-screen nature of these ads for mobile apps can result in a higher CTR, although marketers must be aware of this possibly being the result of accidental clicks when users intend to close the ad. It’s crucial that interstitial ads are relevant in the context they’re displayed, to avoid irritating users rather than engaging them.

  • Playable ads: A type of rich media ad most often seen within the gaming vertical, playable ads give users the chance to try out the gameplay of a new app before downloading or purchasing it. Once this short trial period is over, a call to action (CTA) will prompt the user to install the app. Playable ads can result in lower uninstall rates for apps, thanks to users already having experienced the app’s content.

The reach and success of the various types of mobile app advertisements can vary wildly between apps and between industries. A Goodfirms survey “In-App Advertising: Trends, User Perception, and Challenges” found skippable instream video ads and banner ads to have the most reach, with 85.2% and 68.7% of respondents being exposed to them, respectively. The survey found that 42.6% of smartphone users have ended up buying products after clicking in-app ads and 56.5% of app users downloaded apps recommended through an in-app ad. This high conversion rate proves that the ideal type, design, and placement of an in-app ad can pay dividends in the long term.

In-app advertising in practice

The in-app advertising ecosystem

As we’ve alluded to, the mobile in-app advertising ecosystem involves two main players. A successful in-app advertising arrangement offers benefits to both the app owner (mobile publisher) and advertiser. It’s a symbiotic relationship in which both parties stand to activate valuable revenue streams.

  • In-app ads for mobile publishers: In short, in-app ads are how free apps make money. App publishers use ads to monetize their products and audiences. Free apps and mobile gaming apps rely on ads to generate revenue. In-app ads can be used effectively in tandem with other forms of monetization. For instance, a free mobile game may use in-app ads alongside the ability to make in-app purchases, allowing the game to monetize users regardless of whether or not they make purchases.
  • In-app ads for advertisers: If you are a marketer looking to use in-app ads as part of your mobile marketing strategy, your priority will be relevant placement of mobile ads to build brand awareness, drive sales, or drive downloads. For example, a cryptocurrency app looking to acquire new users may choose to advertise in a popular fintech app, where users may be more open to digital currencies and digital banking.

In addition to mobile publishers and advertisers, important players in the mobile app advertising ecosystem are:​​

  • Ad networks and ad exchanges: The intermediaries that keep the mobile advertising industry moving, connecting advertisers to publishers. Ad networks purchase advertising inventory and help advertisers to find exactly the right placement for their ads, while ad exchanges use real-time bidding to award advertising space to the most competitive purchasers.
  • Mediation solutions: Allow publishers to maximize ad revenue by connecting them to multiple ad networks, driving competition and higher profits for apps.
  • Demand-side platforms (DSPs): These allow advertisers to buy advertising, powered by automation.
  • Supply-side platforms (SSPs): An advertising technology used by mobile publishers to automate the selling of ad space.
  • Mobile measurement partners (MMPs): A third-party provider that attributes, collects, and organizes app data to deliver a unified overview of a brand’s campaign performance.

All players can be considered on the “buy” side of the ecosystem or the “sell” side, with ad exchanges and MMPs like Adjust in the middle.

A diagram showing the buy side and sell side of the in-app advertising ecosystem

In-app advertising workflow

At a basic level, the mobile in-app advertising workflow starts with an ad being requested, placed, and displayed to users. If a user takes action based on the ad, the network informs the advertiser and this data is used to optimize campaigns.

The in-app advertising workflow, from an ad being requested to the advertiser using ad data to optimize campaigns

Preparing for success

Best practices for advertising in mobile apps

Every campaign is unique, and each app must land on the right mix of ads for its user base. Abiding by these best practices can help you to ensure that users have the best possible experience and maximize your return on ad spend (ROAS).

  • Choose the right ad formats: It’s essential to understand which ad formats will work best for your audience and within the flow of your app. Here you must focus on the in-app user experience. For example, you don’t want an ad popping up in the middle of critical gameplay in your gaming app. If you’re advertising via social media, consider your approach for each social media platform separately—remember they all display ads in different ways.
  • Spend time on creative: With marketers putting so much time and effort into strategy, it’s important to remember that well-crafted creatives—both graphics and written content—could be the difference between a successful and unsuccessful campaign.
  • Test everything: In order to understand which ads work best and which factors influence their success, it’s important to test your ads. From testing pricing models to A/B testing the creative you use, your testing efforts will reveal how to optimize future campaigns.
Two device screens showing different ads being A/B
  • Find the right audience: Matching the right ad to the right audience is always integral to campaign success. App publishers need to ensure that their user acquisition (UA) efforts are bringing in the right users, and advertisers need to ensure that they are choosing the right ads. High relevancy leads to higher rates of conversion. Today’s mobile marketers often employ artificial intelligence (AI) and machine learning (ML) to build optimum target audiences.
  • Don’t overdo it: There is a balance to be found. No matter how great your ad is, no one wants to be bombarded or have ads interfere with their in-app experience. You will avoid annoying your potential customers by segmenting your audience and addressing them with relevant ads. Consider ad timing as well, and always aim to enhance the user experience rather than detract from it.
  • Use the right pricing model: From cost per mille (CPM) to cost per click (CPC) and cost per install (CPI), various pricing models exist. Make sure you’re choosing the one that best suits your campaign’s aims.
  • Remain on top of privacy legislation: A host of global data privacy standards exist, and they’re updated regularly. Keep a close eye on these to ensure that your advertising remains compliant.
  • Choose the right MMP: When it comes to using campaign intelligence to improve on previous campaigns, engaging with an MMP like Adjust is key. The data and insights made available via an MMP are central to remaining informed as you move campaigns forward and optimize future plans (or in real-time!). MMPs also help to safeguard against mobile ad fraud and keep data clean.
  • Understand the full user journey: Another significant benefit of an MMP is the ability to view how a user has interacted with your app after their initial ad click. By measuring in-app events and user behavior, you’ll learn which kind of users offer most monetization value and can use this information to target potential high-value users in future.
  • Remember to retarget: Don’t neglect the users who have converted but then lapsed. Retargeting is the ideal way to re-engage with these valuable users who have already shown an interest in your brand. These users have already shown signals of intent, so could help to boost ROAS and lifetime value (LTV).
The flow of the retargeting process
  • Cross-promote if you have multiple apps: A budget-friendly option open to app developers with multiple apps is the ability to cross-promote apps within apps, targeting optimized audiences and requiring no ad spend. Brand trust is high amongst these users.

Realizing the value

The power of in-app advertising

According to recent data from Statista, full-screen video ads are the most effective for user acquisition at 44%. In comparison, in-feed video ads came in at 30%, and playable ads registered as 29% effective. Note that this data didn’t include rewarded video ads, widely favored among gaming apps.

Spotlight on gaming apps

In the world of gaming apps, video ads are common, but rewarded video ads are especially popular among users. These ads give users in-app rewards, such as game currency, unique items, extra lives, or discounts, for watching an ad (often in a mobile game). Not only are users rewarded for their time, but advertisers will know that the viewer engaged with the ad.
Playable ads are also very popular. This type of ad is essentially stripped-down versions of a game that allow users to play a sample of the game before purchasing. To learn more about advertising on mobile apps with a specific focus on mobile gaming, check out our Gaming app insights report.

The power of advertising in mobile apps lies in its ability to improve CTR, engagement, and boost revenue. Employing targeting to display ads to the most relevant user base adds a level of precision that only serves to further reward savvy marketers.

The in-app ad options available to the modern mobile marketer are so vast that exactly the right ads to match strategy can be realized. Every consideration can be taken into account, for example the exact point at which the ad is displayed, ideally at a moment that catches an engaged user at a convenient time (e.g. not in the middle of active gameplay).

Evaluating the effectiveness of your ads is critical to a powerful and successful campaign. Ask yourself questions throughout, such as whether you’ve selected the right ad network, segmented your audience in the optimum way, and nailed the creative and content. If you fall down on one of the factors, your campaign may not reach its full potential.

In-app advertising and Adjust

Adjust, AppLovin, and in-app advertising

Decisions around whether or not to use in-app advertising are unique to each app. These depend on your business model, app type, vertical, your user base, and how you picture your in-app experience. Apps in certain industries—for example, mobile gaming, shopping, health and wellness, and food delivery—tend to find that ads are a natural fit and a simple way to monetize the experience provided.

After choosing to explore in-app advertising, the next step is choosing the right MMP and the right partners in the ecosystem—these decisions are both central to campaign success.

The combination of Adjust and AppLovin helps you to unlock your in-app advertising potential. Behind every successful campaign is an MMP like Adjust and an advertising platform like AppLovin, offering mobile marketers high volumes of ad inventory and providing a robust ecosystem that empowers app marketers to effectively reach their ideal audiences. Discover AppLovin Exchange (ALX), the leading real-time bidding (RTB) ad exchange.

The real-time bidding process flow

Intricately segment your audience with Adjust, implement robust advertising through AppLovin, and then use Adjust’s Measure products to confidently gain the full picture of your user journeys across all devices and channels.

Learn how Adjust can help you to grow your apprequest a demo today.

Be the first to know. Subscribe for monthly app insights.