In 2018, the world of internet advertising reached a new frontier. For the first time ever, ad revenue surpassed $100 billion in the United States (Internet Advertising Bureau). Since then, we’ve seen businesses reallocate 6% of ad spend from desktop to mobile, reaching an even 50-50 split in spend between the two. Forecasts report this will be the year we finally see mobile take a majority 51% of the ad spend pie.

Desktop vs. mobile ad spend % split

Source: Statista

Ad revenue has reached an all-time high and ad spend is expected to continue its year-over-year upward trend. It’s no surprise mobile advertising dominates as a preferred app monetization method. Interestingly, 24% of US publishers monetize using mobile ads, compared to the 38% reported by publishers worldwide. Even more, US publishers are monetizing more with a paid app or through in-app purchases than their global counterparts — 8% vs. 3% and 10% vs. 4% respectively.

Most popular app monetization methods (January 2022)

Source: Statista.

Despite recent and expected changes to come across privacy and personalization standards, mobile advertising remains an unwavering tenet of any app monetization strategy. While navigating the unknown comes with its own challenges, the good news is there are eight steadfast, guiding principles (dos and don’ts) for optimizing any digital ad strategy.

The 4 do’s of mobile advertising

1) ✅ Create an engaging, seamless experience

Mobile apps are inherently interactive and demand user focus. A productive ad or marketing campaign will feel less interruptive and more like a natural part of a given experience. Look for engagement signals outside of advertising campaigns that tell you how users prefer to engage with your app.

Compare and contrast cohorts. What inspires user segments to engage more than others? Develop a thorough understanding of what motivates them to take each action (or not). Answer all the questions — who, what, when, where, why, how — to get an idea of what your most optimized user journey looks like in its current state.

Replicate what is working in non-ad experiences across advertising campaigns. The user flow should mirror the familiar, native app experience your users have grown to love, with mobile advertising adding value to — not detracting from — the experience. The goal here is to make ads feel a little less like ads.

Pro tip: Make IAP and IAA play well together.

• One of the smartest ways to optimize in-app revenue is to find the right balance between in-app advertising and in-app purchases. Ludia shares how they successfully transitioned from solely relying on IAP revenue to an IAA + IAP hybrid model. As a primary revenue source, they feared the potential cannibalization of IAP. The short-lived fear came and went as they soon realized effective IAA campaigns actually improved IAP.

  Ludia was able to capture meaningful insights from the relationship between mobile advertising inputs and outputs. Finding a groove with rewarded video, they needed to optimize for engagement by answering a few important questions:

  a) Timing: When should ads be shown? How long should they be?

  b) Reward: Are rewards required for every ad? Which rewards (e.g., money, credits) motivate users to take an action?

  c) Frequency: What is the optimal number of ads that should be shown? Does format influence frequency?

  d) Lifecycle stage: Where are users at in their lifetime experience? What actionable traits can be associated with specific user segments or cohorts (that can be correlated to behaviors)?

  The results? Landing on the right integrated IAP and IAA strategy proved fruitful as user session times, retention, engagement and conversions all improved!

2) ✅ Mix up formats

Click your heels because there’s no place like mobile. 👠 Mobile advertising has more functionality and opportunity than any other platform. From reaching users at opposite ends of the earth to the array of content formats, mobile is a powerhouse for delivering creative, memorable experiences into the hands of consumers.

Take advantage of the various potential placements and leverage them with eye-catching and engaging ads, like rewarded videos or rich media. Though the screen space you’re working with is much smaller, the interactive element opens up so much more possibility. Plan media buys so they mix formats and placements to attract a range of potential downloading leads. This strategy requires a clear understanding of your target audience’s behavior and typical device use, coupled with clever marketing copy and design to break through the noise in a limited space.

Pro tip: Jump on new format trends.

• Though trendy tactics sometimes have short lifespans, we know that content experience trends tend to stick for a little longer and usually signal a broader change in user behavior. So, it’s worthwhile to invest in testing new ad formats in order to better understand and anticipate broader user behavior changes.

  Implement testing cycles that include testing the latest ad and content formats. It’s an opportunity to learn about what (else) motivates your users to engage. Look at signals from ad performance to implement across product experiences and vice versa. For example, if data shows that your users engage most with rewarded video ads, these are signals that gamification is a motivator. Find ways to recreate similar experiences for users across different touchpoints outside of ads.

3) ✅ Optimize for ad network strengths

Ad buying has become fiercely competitive, not just for those making the bids on highly sought-after real estate, but also for the companies that now facilitate the execution of all this marketing material. Now, these ranging networks have carved out niches and specialized themselves, expanding the possibilities for where to invest your marketing dollars.

Prioritize advertising initiatives by ad network strength. Some excel in programmatic buys or specialty formats like interstitial video; others work within specific cost models like CPC (cost-per-click) or CPI (cost-per-install). When considering potential partners, map out effort vs. impact on a high-low scale. What does each bring to the table based on your planned media spend? How does each support business objectives across our team?

Pro tip: Rinse and repeat messaging across channels.

• Format-based placements tell you how to deliver information. Look at top-performing ad copy across campaigns and replicate core narratives into modified, channel-specific formats. You can get more out of the same message by delivering it in different ways. Preserving core narratives while modifying delivery mechanisms (e.g., memes might perform better on one channel, while video wins on another) optimizes the messaging work you’ve already done. The value prop you’ve successfully pitched on one channel should work on another when ad network nuances are considered.

4) ✅ Understand the regulatory environment

Over the years, mobile app advertising has become increasingly ubiquitous to consumer life, and slowly but surely the regulatory landscape has caught up with it. Make sure your marketing efforts take full advantage of what’s legally possible while keeping stringent adherence to the evolving rules and regulations.

For instance, Apple’s recent IDFA updates made the collection of key data trickier. The hindrance means you’ll need to be more clever about how you use the available information while working within the confines of what users feel comfortable with disclosing.

Pro tip: Expand resource and information networks.

• Big changes = big impact. It’s worthwhile to expand (and even automate as much as possible) how and where you get information. The more resources and connections you have, the better the perspective and insights you’ll get. Build new — and deepen existing — relationships with fellow founders and industry leaders. Consider setting up a standing monthly or quarterly meeting to catch up and talk industry best practices.

  Beyond leveraging your community as a knowledge base, it’s also helpful to automate industry news. Subscribe to industry newsletters, set up Google Alerts, create a Twitter list — whatever your preferred news consumption method is, there’s a way to serve it up just the way you like.

The 4 don’ts of mobile advertising

1) ❌ Measure success with dated metrics

A new era of advertising ushers in a new wave of metrics that better reflect the changing relationship between business and consumer. Forgo the old guard stats, like cost-per-acquisition, in favor of engagement and retention KPIs, which more accurately reflect a successful app.

Similarly, analytics revealing those mobile-specific metrics, like cost-per-action, can more accurately measure new users’ relationships with your app. Especially in an ad-buying sense, stats like CPA will more clearly dictate how to use marketing dollars to reflect performance-based pricing.

Pro tip: Find a healthy balance between external and internal benchmarks.

• Internal and external benchmarks provide useful data points. From project and campaign to individual employee and department to competitor and non-competitor — there are plenty of benchmarks to pick from when it comes to defining success and setting goals. And as with any data-driven decision process, it’s best to collect as many bits as possible to paint a more complete picture of performance drivers.

  External benchmarks leave plenty to the imagination; performance is distilled into a few numbers and we usually don’t get the pleasure of really seeing how the sausage is made. Ideas are the ultimate value you can get external benchmarks. What are competitors doing differently? What are non-competitors (across other industries) doing to yield favorable results that you might see success with as well? Use external benchmarks to get new ideas that you can test, modify, and make your own.

  Internal benchmarks will naturally come with more context and insight into what’s driving performance (i.e., you know how the sausage is made). This is where all the magic really happens. Focus on understanding how your machine runs and what levers you can pull to influence your own benchmarks.

2) ❌ Ignore the data you do have

Regulatory updates are unavoidable. Initial rumblings of a post-IDFA world caused some alarm, but have mostly settled as app founders and developers are focusing on pivots and what they can do to adapt.

Though less precise than targeting via IDFA, contextual targeting has become a fast favorite. Similar to behavioral targeting, contextual targeting uses a different set of available signals from app and device data to serve ads to consumers who are most likely to engage.

Pro tip: Encourage and optimize user-generated content.

• UGC is a goldmine of actionable data. Listen to what users are actually saying about your app on social media, review sites, and community forums. Create a library of testimonials, images, and video content crafted by users.

  Flag major themes. What do users love about your app? What do they dislike? The insights can be used to guide ad creative and copy, but the UGC itself can also be repurposed into an ad. If users create video or share screenshots of your app on social media, you can repurpose the content for ad campaigns (with their permission).

3) ❌ Annoy your users

Advertising shouldn’t annoy users, and mobile app advertising is no different. Marketers need to strike a delicate balance when formulating their advertising mix.

Though obtrusive formats like pop-ups and non-skippable pre-roll can be effective for boosting click-throughs, they can just as easily turn off potential customers if misused, overused, or poorly implemented. The wealth of available mobile media formats provide enough potential for less interruptive advertising that makes seamless placements all the more possible.

Pro tip: A/B test everything.

• Remember this is a quality game, not a quantity game. It’s easy to get overwhelmed running ad campaigns as you wade through a seemingly endless sea of variables and influencing factors. Start small and always focus on delivering quality experiences.

  Let users tell you what “quality” means to them by A/B testing everything. Establish regular, well-documented testing cycles that enable your team to build upon — and continue to reiterate/refine your ad revenue engine.

4) ❌ Mislead users about your app

During the last few years, regulatory groups have been eagerly cracking down on fraudulent advertising practices that deliberately misrepresent the in-app experience. A noteworthy example is Homescapes and Gardenscapes. They ran ads for their mobile gaming apps that showcased games users wouldn’t even be able to access. With enough consumers filing complaints about the bait-and-switch misrepresentation, regulators stepped in to ban the ads.

Keep advertising accurate. Ads are an extension of your brand and if the experience is disconnected, it will show in the results. Even worse, when advertising goes awry, it tends to escalate and attract more (unwanted) attention, which can ultimately be a brand/PR nightmare. Avoid mishaps by paying attention to important signals. If ads get negative comments or feedback, always prioritize understanding the situation and take immediate action to resolve and minimize negative outcomes.

Pro tip: Stress test all user experiences.

• It’s safe to assume that any external-facing experiences or communications are always sent with the best intentions, but they rarely undergo a stress test. For growing businesses, the rapid pace, sense of urgency, and limited resources can make additions to processes more of a nice-to-have.

  However, anything that impacts the user experience, impacts revenue and is worth as much investment as you can afford because it comes with long-term benefits. Create process improvements that allow for stress tests with your internal team before launching. Whether it’s a direct team member or a review panel with stakeholders in other departments, there’s value in broadening the perspectives in your feedback pool. The shared collaboration benefits all team members as insights into user behaviors and motivators help inform all aspects of your business.

In-app marketing will eventually become the standard as traditional means start to lose ground in an increasingly mobile world. By following these straightforward guidelines for mobile app advertising, developers can explore the creative possibilities of new formats and payment structures while navigating the changing regulatory environment with integrity. With the right executions, a great media campaign will launch a growing app from popular start-up to household name.