A seemingly big, difficult phrase for a very simple idea: generating revenue through your website, blog or app by showing advertisements. Here's the whole thing explained in plain English, through the 5 concepts that matter most in mobile marketing.
Are you familiar with those free apps, so well made that they often persuade us to buy paid content? They belong to the freemium world — free to download, but with premium content to be paid for. Think of Spotify or Skype. This is IAP — in-app purchase — the classic way to monetize an app: you make a game freely downloadable, but extra content like lives or resources must be purchased.
A second, equally effective method is IAA — in-app advertising — where advertisements from third parties (the advertisers) are published inside an app (the publisher) through ad networks, which connect the two sides by acting as a channel between supply and demand. Think of the banners you see at the end of a level in a game. That's a push ad — the publisher decides when and where to show it, as opposed to a pull ad, where the user chooses to see it.
Imagine we own an app and have decided to earn money through ad monetization. Two advertisers want to run ads with us. One is a new technology shop that wants to be known and drive visits to its website; the other is a developer who wants the maximum number of app downloads.
The core idea of a branding campaign is to leave a positive impression of a brand — not necessarily to push an immediate purchase. The technology shop wants to be remembered when a customer is finally ready to buy. A performance campaign, by contrast, aims at a concrete action — very often an app install. The developer wants their latest creation downloaded as many times as possible.
This matters because the type of campaign shapes the pricing model the advertiser chooses — which brings us to bid types.
Once advertisers know their campaign goals, they must choose what kind of ad to create. In mobile there are mainly four:
The user is offered premium content in exchange for watching a video ad. They choose to watch; when it ends they return to the app and earn in-app currency. The user is in control — a classic pull ad.
Full-screen banners or videos that occupy the "interstices" of the app — shown at natural breaks like the end of a level. They're served without an explicit request from the user.
A page offering rewards for completing specific actions — subscribing to a newsletter, installing a game and reaching level X, or watching a video.
Native ads match the form and function of the app so they feel coherent. A banner simply sits on part of the screen — a static image or text bar — without affecting navigation.
Now our advertisers must pay for their ads. The two most relevant bid types in mobile marketing are CPM (cost per mille) and CPA (cost per action) — chosen based on the campaign's objective.
Opting for a CPM bid means paying for every one thousand views ("impressions") of the ad, whether or not the user clicks. A branding campaign, which aims to spread the word, will opt for CPM. A CPA bid means paying for every actual user action — a purchase or a subscription. When that action is an app install, we call it CPI (cost per install). A performance campaign will choose CPA or CPI.
eCPM stands for "effective cost per mille" and is the standard unit publishers use to compare every ad running on their app — whether sold on CPM or CPA — on the same footing.
Say the technology shop runs a CPM campaign and the developer runs a CPA one. To compare them, the publisher translates the CPA into a per-impression value: if one install has a CPA of $5, and it took 1,000 impressions to earn it, that's $5 ÷ 1,000 = $0.005 per impression. Expressed back per thousand impressions, that's an eCPM of $5. Now both campaigns can be measured with one univocal unit — and the publisher can see exactly which ads earn the most.
That's (almost) everything on the basics. If you want help turning this into real revenue, let's talk — an NDA if you need one.
jacopo@digitalimbo.com ↗