Advertisements in Phone Apps: Costs, Tips & Tricks

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Reaching your small business’s target audience with advertising is no easy task. Consumers have short attention spans and are constantly inundated with marketing messages. If you’re looking for an innovative and effective way to promote your products and services, consider using mobile app advertising. You can place advertisements for your business within other companies' phone apps.

How Advertising in Apps Works

Mobile advertising is a digital ad format. It’s a monetization strategy used by mobile phone app developers where they make money by enabling others to serve consumers ads on their apps. How app advertising works is that, typically, mobile app ads are placed through a third-party platform. This mobile ad network is a middleman between advertisers and app developers.

The way small businesses can use mobile advertising is by working with different advertising platforms to distribute their ads onto smartphone apps in real time. Businesses can select their target demographic, and the mobile ad network will place their ads based on those parameters.

Different Kinds of Mobile App Ads

The type of ad that businesses use affects the efficacy of their campaign. Depending on the target audience, industry and product or service, one kind of mobile ad format may be more successful than others. Be sure to do your research before settling on a mobile ad format. Types of mobile ads include:

  • Native ads: These ads can adapt to the design and function of the app itself, so they appear seamless to the consumer. This makes them more effective than other kinds of ads because they don’t disrupt the user experience.

  • Banner ads: This kind of mobile ad can be static or animated. They are often the cheapest form of in-app advertising. However, they are not as effective as native ads.

  • Interstitial ads: This type of ad takes up the entire mobile phone screen, so it gives the advertiser more space to fill with its message. Many consumers find this kind of ad intrusive because it gets in the way of their app usage. However, interstitial ads do have high conversion rates.

  • Expandable ads: When a consumer clicks on a banner ad, it expands to an interstitial ad. This way, interested consumers can get more information without feeling like the advertising is too aggressive.

  • Video ads: One of the most popular types of in-app ads, this kind of ad is costly to make because high production value is important. Many consumers find video ads distracting.

Understanding App Advertising Effectiveness

Whether or not in-app advertising will be successful for your business depends on your target market and your advertising strategy. In general, however, mobile ads are an effective way to grab consumer attention because of the medium. Consumers are spending more and more time on their smartphones instead of on their computers. According to eMarketer, 89% of the time consumers spend on their phones is in apps.

Because mobile phones are used by one person instead of a household, like many computers are, the usage of the phone is tied directly to the interests and needs of one consumer. As a result, mobile ad networks are able to place ads that are highly tailored to the user’s daily habits. Advertisers can use the phone device ID as well as the GPS location of the phone to ensure they are targeting the right market. Plus, the type of app on which the ads are displayed also tells the advertiser more information about the consumer.

When consumers receive ads that are in tune with their demographic, geographic, psychographic and behavioral traits, they are more likely to pay attention to those ads. As a result, advertisers can find more success with in-app advertising simply because they have the ability to properly and closely target their ideal consumer.

Knowing the Right Apps and Platforms

Selecting the apps in which you want to advertise and the mobile app advertising networks with which you want to work begins with your target market research. Look to your consumer profile to understand the smartphone usage of your ideal customer. If your target market is young adults in college, they may be using their phones for social media and looking things up on Google. If your target market is business executives, they may often be checking stock prices, traffic or weather on their phones. Look for demographic statistics on app purchases, app downloads, and app install.

Once you have an understanding of the kinds of apps your target market uses, you can begin looking at which app advertising network you want to use to serve your ads onto those apps. There are many different networks from which to choose, including:

  • Google Display Network: This is the largest network of third-party sites, so you can find a number of different places to serve your ad campaigns based on your target market.

  • Facebook Ads: Facebook also owns Instagram, Messenger and WhatsApp, which are some of the most popular apps in the world. As a result, you can reach a wide demographic of consumers with this network.

  • Twitter Ads: You can tailor your ads based on the app users’ activity on the social network.

  • Smaato: This network enables you to target your ads based on demographics and many other criteria. It also provides real-time data for each ad impression.

  • Appnext: You can select where your ads go based on country, channel or types of mobile devices.

Regardless of the apps in which you advertise and the networks you use to place your ads, be sure to do detailed research on your target market. Just like other forms of advertising, your mobile app advertising efforts will only be successful if they are seen by the right people at the right time.

Checking the ROI for In-App Advertising

When it comes to return on investment for mobile app ads, it’s important to define the metrics you are measuring. Similar to other forms of advertising, it can be difficult to confirm whether customers purchased your product simply because they viewed an ad. There can be many different touch points between your business and prospects before they decide to make a purchase.

To understand whether your ad spend is worth it, there are a few key metrics to note when it comes to mobile app advertising costs:

  • Price per thousand views: This is what you are charged when your target audience views your ads on their smartphone.

  • CPC: Cost per click is when you are charged when a user clicks on your ads.

  • CVP: Cost per view is when you are charged if your video ad is actually viewed by the consumer. The length of the view can differ based on the network you choose.

  • CPCV: Cost per completed view is when you are charged only when the entire ad is viewed, not just a portion.

  • CPE: Cost per engagement is when you are charged if the viewer interacts with your ad in some way. Different types of engagements include clicking on the ad, taking a survey, pausing a video or signing up for a free trial.

Depending on your targeting criteria, you can spend anywhere from a few cents to a few dollars for every time a customer looks at, clicks or interacts with your ad. It varies greatly depending on your industry, the audience you’re targeting and several other factors. Determine whether that cost is worth it for you based on your cost of customer acquisition, product price and profit margin.

Designing an Effective Ad

A key component of your mobile advertising strategy is the design and viewability of your ads. Mobile ads are particularly challenging to create because advertisers have a very small space in which they have to fit a lot of engaging information. In addition to capturing your audience’s attention with your ads, you also have to tell them why your product or service is something they want, and you have to tell them how they can buy it.

When designing mobile ads for digital marketing, be sure to take into account:

  • Intrusion: While you want your mobile ad to stand out, you also don’t want it to intrude on your audience’s user experience in the app. If you do, they may become annoyed and not want to engage with your business. Consider the user experience when designing your ad.

  • Readability: Mobile ads are small, so you cannot include too much text in your ad. Work with a professional copywriter to come up with the text for your ad and ensure it’s big enough to be readable on a mobile phone.

  • Size of closure cross: If consumers want to close your in-app advertisement, it should be easy for them to do so. Do not make the size of the closer cross too small that a consumer needs to try several times before pushing it correctly.

  • Logo placement: Be sure the consumers know which business is showing them the ad. Your logo needs to be prominent so consumers remember your business.

  • Call to action placement: Make it easy for your consumers to take action. Your call to action text needs to be clear and direct, and the button needs to be large and easy to click.

Work with a professional designer to ensure your ads meet the app standards and captivate your target audience’s interest.

Tracking Your Ad’s Success

Check to see industry norms for common metrics like clicks, video plays and other engagement stats. This will give you an indicator of for what you should be aiming. Set those benchmarks for yourself so you can track how your ad is doing. If your industry click-through rate is 10% but your ad’s click-through rate is only 3%, then you know there is a problem.

If your ads are not measuring up to industry performance standards, you will need to adjust your ad. Consider what about your ads is causing them to not be as effective as other businesses in your industry. Look at competitive ads to see what is different about them. If your competitors’ ads are image-focused while your ads are mostly text, this could be an indicator that your audience prefers ads with more images in them.

Learning From Successful Examples

In addition to looking at your competitors’ ads, be sure to learn from successful mobile ad campaigns from large companies. While these organizations may have marketing budgets that differ from yours, you can learn from their successes to create engaging ads for your customers. Advertising app campaigns that have engaged mobile users include:

  • Pond’s: This beauty cream company designed an ad that utilized the front-facing camera in the smartphone to take a picture of the user’s face and incorporate it into the personalized ad for face cream.

  • Gap: To reach its target audience and showcase its new collection, it used Instagram to display video ads of its clothes and gained a click-through rate that was 73% higher than previous campaigns.

  • Snickers: This chocolate bar targeted users in the music app Spotify who were listening to songs outside of their usual genres. When this happened, the users received a message incorporating Snickers's tagline “You're Not You When You're Hungry”.