Ad Monetization Metrics for your Apps

Introduction

In-app advertising has become an integral part of the digital landscape, with widespread acceptance spanning different genres and global regions. Optimization and strategic leverage can provide publishers with a competitive edge in this evolving landscape. Monetization managers are the architects behind boosting the bottom line, relying on data-driven insights to shape their ad operation strategy and enhance the user experience (UI/UX).

In this blog, we dive into the critical world of key metrics — the compass that guides monetization success. We’ll explore each KPI, offering a brief overview, highlighting their relevance, and delving into the granular data levels and dimensions.

Having navigated the Data reporting of various ad networks and mediation platforms, one standout performer is Levelplay Mediation by Ironsource/Unity. It boasts precision when it comes to Key metrics, but there’s room for improvement, especially in providing more granular data.

Ad revenue

It is the overall revenue generated from an app offering a bird’s-eye view of its economic performance. It provides an overall performance check over time and can be broken down by factors like Ad Network, Ad Placement, Geo, Ad Formats, and UI screens.

Why is this granularity important? It allows us to fine-tune our strategy. For instance, if we identify a low-performing ad network, we can swap it out for a more lucrative one. If ad placement isn’t hitting the mark, we can experiment with new locations. We can test alternative ad formats, enhance call-to-action (CTA) elements, or indirectly influence performance by targeting user acquisition in high-LTV geographies.

ARPDAU (including only ads revenue)

Average Revenue per Daily Active User is what an app makes daily in ad revenue per for every user that has launched the app.

Although overall ad revenue is important, focusing on ARPDAU as a proxy provides a better indicator of an app’s monetization health, as the former varies with Daily Active Users in an app which are beyond Monetization managers’ control.

ARPDAU serves as a daily performance metric, revealing the immediate impact of live ops events and changes in ad placement. This laser-focused metric allows monetization managers to assess their strategies in real-time, helping them adapt and thrive in the ever-evolving landscape of ad monetization

Ad Impressions

Ad Impressions represent the total count ads are displayed to users, a metric influenced by an app’s user base, user engagement, ad placement, and user ad-viewing frequency. The goal is to maximize ad impressions without compromising the app’s user experience.

Optimizing ad impressions hinges on two key levers: ad frequency and placement visibility. To gauge the impact on user experience, we rely on critical KPIs such as retention, churn rate (product KPIs), and metrics like ARPDAU, Impressions per user, and Engagement rate (monetization KPIs). In the delicate balance of ad monetization, achieving higher ad impressions while maintaining a positive user experience is the ultimate goal.

ECPM (Effective cost per Mille)

ECPM = (Total Revenue / Total Impressions) X 1000

It is the revenue generated for every 1000 Ad impressions that were shown to the user. It is one of the most valuable metrics to gain insight on your ad monetization strategy’s effectiveness and optimization.

ECPM’s value is a product of factors like your ad network stack, mediation strategy, waterfall/RTB setup, and ad quality. To enhance eCPM, you can pull various levers, such as tweaking ad formats, optimizing ad placements, fine-tuning ad waterfall setups, improving ad quality, and adding networks to your app’s ecosystem.

A word of caution: while aiming for high eCPM floors in your waterfall setup is enticing, it may lead to reduced ad fills. Striking an optimal balance between eCPM and ad fill rates is key to a successful ad monetization strategy.

Fill Rate

It is the percentage of ad requests that was successfully filled with ads although this doesn’t guarantee successful ad views. Fill rates ideally should be 100% but lower fill rates suggest a missed opportunity. Various factors like network errors, timeouts, technical glitches, user departures, and page latency can cause reduced fill rates, indicating missed opportunities. Lower fill rates suggest a missed opportunity.

Industry has a benchmark for publishers to attain app fill rate as close to 100% as possible. A fill rate below 90% would require major action from monetization managers. Fill rate can be viewed at app level or instance level. It’s worth noting that at the instance level, the benchmark is lower, as certain instances may lack relevant inventory or feature high eCPM floors in the waterfall setup.

Monetization managers must master the art of optimizing revenue by fine-tuning eCPM floors, crafting network instance strategies within the waterfall, and selecting ad networks judiciously.

Engagement Rate

Engagement rate is the percentage of Active users that engaged/viewed an ad atleast once in a given timeframe. This metric provides insights into the user’s interaction with ads, the effectiveness of ad placement in driving impressions, and the ad’s intrusiveness.

In the case of Rewarded Ad format, a higher engagement rate can lead to improved currency balancing, especially when users interact more with ads. Additionally, placement engagement rate serves as a vital metric for assessing the visibility of an ad placement, which can be optimized by positioning ads in high-visibility areas within the app. Conversely, a low engagement rate may be a result of ads being placed in sections that disrupt the app’s content flow.

Impressions per Daily engaged user

It is the average impressions per engaged users (user who saw atleast one ad).

Combining Usage rate with Engagement rate can give you critical insight on the potential of the app. The idea is to maximize both the percentage of users who interact with the app as well increase the frequency with which they engage.

To boost this metric, monetization managers can leverage an effective ad strategy that incorporates visible ad placements and an ad reward system that incentivizes ad views. In doing so, they maximize the app’s overall appeal and the frequency of user engagement, ultimately optimizing its monetization potential.

IMPDAU or Impression per daily active user

It is the average number of ad impressions per daily active user (DAU) who launches the app at least once. This metric assesses monetization strategy success at the user level, alongside ARPDAU

IMPDAU is influenced by various factors, including the introduction of new features, events, changes in ad placements, and alterations to the product and design. It helps us gauge the impact of these on the Revenue.

Combining IMPDAU, Engagement rate and Usage rate with product metrics can really help you understand the cohesion between your monetization strategy and the App. An in-depth insight by combining these metrics can be valuable for a product’s success.

Summary

As Ad monetization is closely intertwined with the app’s own design and UX, there are a few product metrics that Ad monetization managers must keep in mind like Sessions/DAU, Session Length, Retention, App Latency and Crash rate. These metrics help understand the potential for the app to monetize at the same time improvements that need to be made.

Armed with these insights, create a strategy that can boost your revenue. Throw in some AB tests and experiments to keep your Ad Monetization strategy in tip-top shape. Some even swear by ARPDAU or Usage rate as the guiding stars that light the way to monetization success in an app or a game. Ready for lift-off?

Connect with me on linked in, Gmail or phone for any Ad monetization and Retention related Queries.