Just wanted to continue from last post and tell our readers a bit more about making money with a free app. So for this we are going to assume you have built an awesome app with your buddies and want to commercialize. You decided it should be free because it needs tons of users. But…
You publish it of course and it takes off. Your startup is thrilled, but you aren’t making any money. Time to solve that.
“SHOW ME THE MONEY!”
Well first you need to know a few key terms.
- An impression is anytime a user sees an advertisement and has the opportunity to click it
- Ad requests are anytime your app requests an ad from an ad agency(more on this later)
- CPM or cost per mille is the amount you are paid for 1000 impressions
- CPC or cost per click is the money you receive for a user clicking on an ad
With knowledge of this, your are prepared for the higher level material.
I figured the easiest way to explain this was through a picture, so Voila, I made you picture. So basically the fill rate is the percentage of the time your ad network, for instance AdMob, is able to place an ad. But what? Why wouldn’t this be 100% Well it is never 100% and shouldn’t be. If there is no relevant advertisement to display to the user, why display an ad at all? Read this article to get a better idea on the advantages of each of the mobile ad networks.
Now what exactly is the difference between CPC and CPM? Well click through rate, or CTR, is the percent of people who see an ad and click on it. This number is generally quite low, however, the users who click through are much more valuable to the businesses who are advertising. This means CPC is much greater than CPM, about three orders of magnitude. For you as an entrepreneur, what this means is that if your app or service is very specific to a certain discipline, say for this case golf. If you were to show high quality golfing ads, to your golfing user base, you could probably achieve a high enough CTR to make CPC ads more advantageous than CPM. On the other, having a diverse clientele, such as most any app game, you may benefit more from CPM ads. Once you have data on your user’s CTR and usage stats, you can utilize the formulas above to decide for yourself.
Be sure to tune in next time to learn a strategy to take advantage of ad networks and make the most revenue possible from your app advertising. Follow the blog for more great content.