In-App Advertising: What It Is, How It Works, and How to Do It

Date: 2024-05-02 | Time of reading: 9 minutes (1685 words)

In 2023, worldwide app downloads reached 257 billion, with users spending over 16 billion hours in them last year. In 2024, these figures continue to grow.

App marketing is one of the most promising online promotion strategies. Advertising within mobile apps can serve as an additional tool for marketing communication with both external and internal audiences. This approach is called In-App advertising and is utilized by various online businesses.

This article will delve into the types, complexities, and creation of such advertisements.

What is in-app advertising

In-app advertising refers to ads within mobile applications, appearing either before loading or within the interface. The format resembles website banners that appear at specific times or persistently on the page while the user browses content. However, mobile advertising is more intrusive: users often cannot immediately access the app's functionality and must first view the ad or close it with a special button. This is reminiscent of pre-roll ads before videos.

In-app traffic is chosen for advertising gaming app services, platforms, and other online businesses. Ads are typically shown in free or trial versions of applications, and the option to disable them may be used as an incentive to pay for premium access.

Brands' own advertisements within apps are also considered in-app advertising. In this case, users are not directed to an external website but are kept within the company's app or redirected to its own web page.

How does in-app advertising work

In-app advertising is managed by Demand-Side Platforms (DSPs) — intermediaries between app owners and advertisers that aggregate different ad networks. They handle the purchase of ad space. Companies come to DSP platforms to order mobile advertising placements. The cost depends on the current bid, which is determined by auction principles.

There are also Supply-Side Platforms (SSPs), where advertising can be tailored to a specific target audience.

How is in-app advertising paid for

There are several pricing models:

CPC — Cost Per Click: Payment for each click. A beneficial model where the advertiser only spends the budget when users are genuinely interested in the ad. However, accidental clicks also incur charges.

CPM — Cost Per Mille: Payment for 1000 ad impressions. It's inexpensive but not the most reliable model because there is no guarantee of returns.

CPA — Cost Per Action: The cost deducted from the advertiser for a specific action (conversion, subscription, download, etc.).

CPI — Cost Per Install: Payment for the installation of the advertised application.

Advantages of in-app advertising

In-app marketing is a promising avenue for promoting products. Advertising on mobile devices offers the following benefits:

Simplified moderation and ad creation compared to ad managers on social networks and specialized platforms.
A vast audience that accesses applications daily and potentially can become your customers.
Opportunity to diversify ad creatives. In-app ads can be dynamic, such as in the form of mini-games.
Visibility of ads, from which users cannot escape.

Distinguishing in-app advertising from push notifications

Push notifications are also utilized for advertising through mobile applications, but there are differences compared to in-app advertising.

	Push	In-app
Appearance	A small pop-up message at the top of your smartphone screen. You can view the full message by clicking.	Banner (image, picture with button and other variants) in the application interface.
Location	Appears outside the application.	Only works within the application at startup.
Purpose	Promotes in-app activities: returns to purchases, incomplete actions, and so on. Does not promote third-party products, but only those that can be purchased in the app.	It also advertises third-party services and products (if it's paid ads from other brands in the app). But own in-app, as well as push messages, motivate to actions inside the app. For example, they offer to take part in a promotion.
Personalization	High level because push notifications are often sent to a specific user based on their actions.	For third-party ads, personalization is weak because external advertisers don't get all the information about the audience. Internal in-app ads from app owners can work on a Push basis and personalize offers.

Types of in-app notifications

Let's explore options for advertising within other applications and internal in-app messages.

Banners with a CTA triggered by clicking on the image. They occupy either the entire screen or a portion of it. Typically, they remain visible until the user takes action: clicking on the image or closing it via the cross or a dedicated button.

Video ads are clips that cover the interface, and users cannot scroll past them until they have watched them entirely or for a set amount of time.

An interactive format that resembles a game. The user is offered to control a hero, solve a problem, spin a wheel for a drawing, take a test and so on.

By the type of user interaction, in-app notifications can be:

Welcome and guidance notifications. Often used for onboarding purposes to help users understand how everything works.
Rewards for returning or for completing a specific level.

Announcement notifications: informing about updates, new features, or failures.
Personalized notifications offering discounts and promotions.
Feedback request: a request to rate a product or service.

According to the location in the application distinguish such in app messages:

A banner on part of the smartphone screen.

A banner that closes the entire interface.
Embedded ads in the app's shared feed.

What can be the difficulties with in app advertising

In-app advertising is a non-universal format and is not suitable for everyone. Along with significant pluses, there are disadvantages.

For in app ads within your app:

Deterioration of the user experience. Pop-up messages can annoy the user, especially if they are intrusive and it is not obvious how to close them quickly.

Banner blindness. In-app ads are more noticeable than on-screen ads, where ads are plentiful. But even here it is possible that the user will close the message out of habit if it does not attract attention. Similarly, your ads will get lost in the interface.

For in app advertising in third party apps:

Lack of quality audiences and lack of personalization. Ads can go to waste because there are no detailed targeting settings.
Cost. Because of the work on the principle of auction at high demand prices for displays (or other method you have chosen) will become higher and not the fact that will pay off. Especially if they show the wrong audience.
Risk of fraud. Due to unscrupulous intermediaries, the sphere of In app advertising is discredited. There are cases of account theft, false clicks to get more payment from the advertiser, and even use special software that imitates targeted actions.

How to make in-app ads work

Before launching an in-app campaign within your app or buying third-party ads is important:

Define goals — how many conversions, new users or subscribers you expect.
Describe the target audience to whom you will show ads. If possible, segment to understand exactly which offer to broadcast to each group.
Prepare creatives. Here it is worth to show originality and go beyond the boundaries of the standard banner to capture the attention of the user. If there are resources and the opportunity to make an interactive format, gamification, try to realize it. The message in advertising should be short and clear, because it is unlikely that the user will spend time to study the content that he did not expect to see. Especially if he went to the app with a specific purpose.
Check the view of your creatives on the screen: whether the picture is displayed correctly, whether the buttons work and where they lead.
Test different variants and draw conclusions (A/B and other hypothesis testing options).

What a proper in-app marketing campaign for your own app should include:

A personalized approach. The more precisely you hit the customer's need with your message, the more chances you have of getting the reaction you want. Personalization is possible when a company collects and processes user data correctly, for example, with a CDP marketing automation platform.

Don't forget geotargeting either: offer relevant offers nearby.

Thoughtful timing of ads. You don't want to distract people with a notification when they are already placing an order. Telling about new individual discounts when opening the application is a more effective option.

Moderation in the number of messages. Messages that appear on the screen too often will only cause irritation, not a desire to continue communication with the brand. They will also only increase the user's "banner blindness".

Summary

In-app advertising comprises promotional messages inside mobile applications: both from the app's owners and third parties, which appear on the screen and prevent users from continuing their actions until closed.

This method of marketing targets a broad audience, often utilizing creative formats such as interactivity, gamification, and others. In-app messages differ from push notifications in that users only see them while using the application, whereas push notifications appear even when the app is running in the background. However, both types of messages aim to encourage users to take specific actions, such as making a purchase, downloading content, subscribing, and more.

Within proprietary applications, in-app advertising is also employed for onboarding, informing about updates, and soliciting feedback. The main types of in-app advertisements include banners, videos, and various interactive formats like mini-games, quizzes, and others.

To create effective in-app advertising, it's crucial to define goals, design creative content, consider timing and frequency of displays.