This is the first part of a four part series on advertising for mobile developers.
The basic rule of advertising is that you want to spend less than you can earn from people who download your app.
We have some ways to make sure you do this, but first we are going to go over some of the basic terms that you need to be familiar with before getting into the more advanced calculations.
Basic Mobile Advertising Terminology
First, here’s a list of some common terms and abbreviations to help you become familiar with the industry shorthand.
- CTR – Click through rate is the percentage of people who see your ad and click on it.
- CPC – Cost per click is the amount of money you pay each time someone clicks on your ad.
- CPM – Cost per mille (mille is thousand in Latin) is the amount of money you pay per one thousand impressions of your ad – i.e. the price you pay for one thousand people viewing your ad, even if they do not click on it.
- Conversion Rate – This is calculated as a percentage of the number of people who take a specific action after clicking your ad – (e.g. specific actions may include downloading an app, signing up for an account, making a purchase, etc.)
- CPI – Cost per install is the total of all the money you have spent on advertising, divided by the total number of people who have installed your mobile app.
- ROI – ‘Return on investment’ refers to whether or not the money you spent on advertising is making you a profit – and how much profit.
- ARPU – ‘Average revenue per user’ is the average amount of money each user makes and is calculated by dividing the total revenue by the number of users.
- ARPPU – Average revenue per paying user is the amount of revenue (on average) that each user who has paid to install the app makes. This may be different than the ARPU.
- ARPDAU – Average revenue per daily active user is the amount of revenue (on average) that each daily active user makes for you. As an app developer, this is probably the metric you’ll want to keep track of, along with your DAU (listed below).
- Burst Campaigns – An advertising campaign where the budget is compressed into a very small time frame, typically used to buy app installs to increase the ranking in the app store. A positive side effect is that a higher app ranking typically increases the levels of organic installs.
- Fill Rate – This refers to the number of times an ad is successfully shown compared to the number of times the app requests an ad. For example, a 90% fill rate means that 90% of the time, the network was able to serve an ad for the app to display to their user.
- House Ads – These are usually “free” ads that are used to fill a spot when there are no paid advertisements to show in a network.
- Cross Promotion – If you have more than one mobile application, this refers to showing current users who have one of your apps installed other applications that you have to offer. This can be a cost effective way to increase your user base. However, you need to have an active user base in the first place to benefit from this.
- Retention Rate / Churn Rate – Not everyone who installs your app is going to keep it installed. The percentage of people who install and then uninstall your mobile app over a specified time period is known as a churn rate.
- DAU – ‘Daily Active Users’ refers to the number of people who are actually using your application on a daily basis. This metric will help you determine how much money you earn from each user, which is essential to know before making any advertising purchase decisions.
- Net-15 / Net-30 – This payment schedule term refers to the length of time it takes your revenue sources to pay out. If you are dealing with a company that pays ‘net-30’, for example, you will need to wait 30 days until you get the revenue from your users. If using revenue to support ongoing marketing efforts, the payout schedule will have an effect on how soon you are able to spend to attract new users.
- LP / Lander / Landing Page – When you advertise online, the ‘landing page’ is the webpage where users will be directed when they click on the ad. A well-planned landing page will compel a visitor to spend time on the page. The longer a visitor spends on a page, the more likely it is that the person will take an action – like installing your application. When a webpage keeps visitors on the page for an extended period of time, we often refer to the page as being “sticky”, which is a good thing.
- Conversion – Conversion means that a potential customer has completed your desired action – (e.g., the visitor has installed your app). In other words, has converted from a prospect to an actual customer.
- CPC – You pay per click.
- CPM – You pay per thousand impressions.
- CPI/CPA/CPD – You pay per install/action/download.
Types of Ads
Now that you’re familiar with the pricing model options, let’s take a look at ad placement opportunities.
- Online/Web Ads – These are advertisements that are placed on websites. Traditional Web banner ads vary in size from small (125×125 pixels) to large (768×90 pixels) or even larger, and are available in several configurations, depending on the characteristics of the website/webpage. From video ads, to more complex “site takeovers”, to branded webpage background and “skins”, online advertising can take many forms. Whether it is Google, Facebook or another ad network, there are -virtually endless online environments to spend your money on advertising online.
- Mobile Web Ads – Somewhat more effective for mobile developers, mobile web banner ads are small graphic or text advertisements that run on mobile websites. Mobile Websites may accommodate many other ad formats as well, beyond the banner.
- Mobile In App Ads – As a mobile developer, you’ll probably be looking at these types of ads to promote your app which are found embedded into other mobile apps at different points. Types of in-app mobile ads include banners, in-app alerts, interstitials, video, audio, app walls, custom-themed native ads, and many more. Ask you ad network for guidance on how best to achieve your campaign goals.
Track Your Performance
Wherever you advertise, you want to make sure you are able to track basic information like the number of impressions you receive, the number of clicks the ad gets and the number of installations that result from the person clicking your ad. Depending on where you purchase your advertising, the way to get all this information will vary slightly. Do ask your network partners what kind of analytic support is available to ensure you have what you need to measure the success of your campaigns.
Good advertising is one part Art, one part Science. Beautiful, award-winning creative is nice, but it’s not creative if it doesn’t work. The science of a campaign is understanding how the ad is served, targeting to your advantage, and measuring performance along the way. Yet focusing solely on the technology, you mustn’t ignore the importance of creating a campaign using engaging images and compelling copy. You must balance both, Art + Science.
The Bottom Line
Simply throwing money at advertising is not going to work. You need to make sure you are tracking the money you spend as well as the results you get from them. This will allow you to spend your money wisely. When you get it right, it can be like printing money because the more you spend on advertising, the more users you can attract to your app and the more money you can make. In due time, you will have the tools and methods needed to make sure your advertising money is being spent wisely.
Mobile Developers as Advertisers
Advertising is a key component to helping you grow your user base (and profits). That is why we set out to help you master the practice. Here is a complete look at this series on advertising as a mobile developer. Please check back often for additional lessons.
- Introduction and Terms
- Value of a User
- Cost to Acquire a User
- Smarter Advertising