Monetizing efficiently – important terms and crucial metrics

Numbers may scare the average Joe, but as an app developer, you’re not the average Joe. You have your own app business and you need to track your progress and performance. Metrics and tools are the only way that allow you to monetize efficiently, and to know where you stand. What are the most important metrics and tools you need to know?

First of all, a platform that gives you full transparency abou your ads is essential. Thankfully, the majority of platforms these days include that, yet there are some less transparent than others. Having a dashboard with critical metrics is key to monetizing effectively, so you can see what’s working and what’s not. With this information you can act accordingly. Here are the most important metrics to monetize smartly:

• Request/Calls – The number of time you call ad partners to provide an impression of an ad via SDK, API or other integration tool

• Impressions: The number of ads supplied for your calls by the ad partners. In other words, the amount of times your users get exposed to an ad unit.

• Clicks: The number of actual clicks an ad received.

• Installs: The number of times that an app was installed. From each install you receive a set CPI rate.

• CTR: The Click-through-Rate of an ad you displayed. This is the number of clicks divided by the number of impressions. For example, if an ad received 10 clicks and 1000 impressions, the CTR would be 1%. A higher CTR is a good indication that the ads you are displaying are performing well with your audience.

• Completion rate: Relevant for video ads. This is the percentage of plays that were watched until 100% completion. This is a good measure to gauge how engaging the video ad was.

• CR: Conversion rate. Which ad is better: the one that pays $10 or $6? Naturally you think whichever one pays more, but it’s more nuance than that. The answer is, whichever one was installed more. Think about it — ad that pays $10 may be installed only 3 time per 1,000 views, while the ad that pays $6 is installed 7 times per 1,000 impressions, so in the long-run it will make you more money.  

• CPI: Cost-per-Install. This is the price that you receive when a user installs an app that you are displaying. Appnext runs on a CPI basis only which give you high revenue (CPI bids are higher than CPM since CPI requires more user engagement). Like many networks, with the Appnext dashboard (see image below), you can see which campaigns and which partners are performing best.

• CPM: Cost-per-Mille. Firstly, it’s extremely important to understand how exactly particular networks or platform calculate impressions. CPM is the price you receive for every 1,000 impressions, or views. This has become a very popular pricing format, yet the engagement may be low since users are simply viewing an ad rather than engaging with it.

• CPC: Cost-per-click is just as it sounds. The cost you pay per click on your ad.

• CPA:  Cost per action is when an advertiser pays for a specific action being carried out such as a click/impression/contact request/form submit/sign up or other action.  

• eCPM: It stands for “Effective Cost-per-Mille.” The most simple explanation is your earnings for every 1,000 impressions. This is one of the most important metrics because you can use it to compare various ad units to see which are performing most optimally. eCPM is your total earnings divided by the number of actual impressions you received, times 1,000. The number 1,000 is important here is because Cost-Per-Mille is the cost of 1,000 views.

Note of caution: As developers measure their ad performance primarily by eCPM, networks tend to count impressions with as little views as possible (there are all kinds of tricks unfortunately). For example, instead of 1,000 impressions, only 850 were counted as valid, so the eCPM seems higher.

• Fill rate: The number of delivered ads divided by the number of ad requests. The goal is 100%, which means that every time there was an opportunity to show an ad in your app, an ad appeared. Having a high fill rate means that you maximize each opportunity for revenue. However, what happen in an ad partner returns the same ad to consecutive requests you make at the single user session? It means that even though perceived fill rate is close to a 100%, the user in fact sees the same ad, so the engagement and revenue potential are not fully realized.

Monetization in the near future

Over the past few years, the mobile app industry has evolved rapidly to meet user demands, and even in some cases, pushing mobile users to new heights that they would have never dreamed of. Developers are acclimating to this ever-changing climate by creating apps and games that provide users with fun, useful and enjoyable experiences. In order to rightfully make a profit from all this hard work, developers are choosing between a variety of monetization strategies, both ad-based and not. Whether displaying ads or not, you need to constantly assess and reflect on what’s working and what’s not. See which monetization strategy works for you individually — but never skimp on metrics. These metrics will give you the full  picture of your ads performance,  and best performing partners, providing insights that can help you in your future decision making process.

Advertising industry trends and developments change as fast as lighting. In the very near future, we’ll see more mobile VR and AR ads pop up as the norm. We will all have to stay tuned to see just how creative developers and the mobile ad industry get while still optimizing user experience, the true balancing act in today’s mobile world.