What is ad revenue?

Ad revenue is the income generated when ads are shown to users within a digital environment, such as a mobile app, website, or platform. For app developers and publishers, it’s a primary monetization model that transforms user activity and screen space into earnings by selling advertising slots to brands targeting specific audiences.

Ad revenue is most commonly calculated using the formula:

Here, ad impressions are the number of times an ad is shown to users, and effective cost per mille (eCPM) is the average revenue earned per 1,000 impressions. Unlike cost per mille (CPM), which reflects what advertisers pay in CPM-based campaigns, eCPM captures how much revenue a publisher actually earns across all pricing models, including cost per click (CPC), cost per acquisition (CPA), and revenue-sharing.

eCPM is used in the formula because it gives a standardized view of total earnings, even if different ad types and pricing models are used within the same app. For example, if an app delivers 400,000 impressions at an average eCPM of $5, its ad revenue would be (400,000 × 5) / 1,000 = $2,000.

Mobile apps generate ad revenue by integrating advertising placements that monetize user interactions such as views, clicks, or conversions. These ads are served through direct deals, ad networks, or programmatic platforms like in-app bidding, which allows advertisers to compete for placements in real time.

Common mobile ad formats include:

• Banner ads: Rectangular ads typically placed at the top or bottom of the screen; simple and non-intrusive.
• Interstitial ads: Full-screen ads that appear at natural transition points, such as between levels or screens.
• Rewarded video ads: Opt-in video ads that offer users in-app rewards in exchange for watching.
• Native ads: Ads designed to match the look and feel of the app’s content, blending in seamlessly with the user interface.
• Offerwalls and takeover ads: High-impact formats that display multiple offers or take over the screen entirely, often used in gaming or promotional events.

By selecting the right mix of formats and optimizing placements, publishers can balance monetization with user experience, ensuring revenue growth without sacrificing engagement or retention.

Ad revenue is impacted by a combination of factors related to user behavior, app design, and market conditions. One of the most critical elements is the quality of user engagement. Apps with active, loyal users who interact frequently are more likely to generate meaningful impressions and clicks, which directly contribute to higher earnings.

The placement and timing of ads also play a major role. Ads shown at natural pauses, such as between game levels or during onboarding, tend to perform better because they don’t interrupt the user experience. The ad format matters, too. Video ads, especially rewarded or full-screen interstitials, often command higher rates than traditional banner ads due to their immersive and interactive nature.

Geography and seasonality are additional influencing factors. Regions like North America typically yield higher eCPMs, while global holidays and events can drive temporary spikes in advertiser demand and spending. The genre of the app can also impact revenue potential. Gaming apps, for instance, are well-suited to rewarded video ads, whereas productivity or lifestyle apps might rely more on native or banner formats.

Finally, the choice of ad networks is critical. Working with reliable ad networks that maintain high fill rates and competitive bidding can maximize the value of your inventory and improve total revenue performance.

Growing ad revenue takes a balance of experimentation, optimization, and smart monetization strategy. From ad formats to performance data, the following practices can help maximize earnings without compromising user experience:

Optimize ad placements

Strategically place ads at high-visibility moments such as between levels or during content loading to ensure they feel natural and non-intrusive. Regular testing can reveal what placements perform best.

Use a variety of ad formats

A diverse mix of rewarded videos, interstitials, banners, and native ads keeps the experience fresh for users and helps attract more advertisers, reducing the risk of ad fatigue.

Adopt in-app bidding and refine your waterfall

Moving from traditional waterfall setups to in-app bidding allows demand sources to compete in real time, boosting fill rates and eCPM. Optimizing your mediation stack ensures every impression delivers maximum value.

Track key performance metrics

Monitoring indicators like eCPM, click through rate (CTR), fill rate, retention, and total ad revenue helps identify areas for improvement and is essential to optimization and strategic implementation of ad revenue monetization. These insights guide better decisions on format, placement, and demand sources.

Prioritize the user experience

Overloading your app with ads or using disruptive formats can lead to churn. Maintain a healthy balance by limiting frequency, choosing the right formats, and placing ads thoughtfully.

Personalize ad delivery

Tailoring ads based on user behavior, preferences, and app activity increases relevance and drives higher engagement, improving outcomes for both advertisers and publishers.

As with all mobile app monetization methods, clear, accurate data is  essential to monitoring and improving ad revenue performance. Adjust enables precise measurement of the revenue your app earns from in-app ads, using data from supported mediation partners and both event-based and impression-level reporting. This visibility allows you to uncover trends, compare performance across user segments or app versions, and make informed decisions to grow ad revenue over time.

Request a demo today to discover how Adjust helps you boost ad revenue, improve monetization performance, and drive long-term user value.