How Does In-App Advertising Actually Work?

Introducing the Digital Marketing Players

In the past, advertisers would communicate directly with app developers and publishers whenever they wanted to run an in-app ad campaign. Essentially, the advertiser would pay the publisher directly for access to their user base.

Breaking Down the In-App Advertising Supply Chain

So how does an ad actually end up in front of someone? What happens to make sure the right mobile ads appears at the right time and for the right person? Let’s break it down:

  1. First, marketers need to determine who they want to reach and what kind of messaging they want to bring to market. For example, an energy drink brand may decide it wants to reach male gamers between 18 and 25 in the U.S. with their campaign.
  2. From there, marketers (and their partners) need to determine their goals for the advertising campaign, including how much they want to spend and how they will be determining success. Goals could range from brand awareness, i.e. reaching as many relevant people as possible looking at their ads, to driving a specific action like a mobile web landing page visit or an app download via a particular app store.
  3. Concurrently, app developers and publishers need to determine how they will generate ad revenue and how ads fit into the user experience being offered. Consider this: while banner ads are fairly easy to unobtrusively include in an app, more immersive formats like video ads typically provide greater ad revenue. App publishers need to consider how ads affect app usage, while also maximizing earnings.
  4. Now back to the advertisers for a moment. Once a campaign is finalized, it’s entered into an ad network’s campaign management system. From there, an ad ops team will review the campaign to ensure it meets the ad network’s quality standards. Creatives and campaigns that don’t adhere to compliance standards, publisher preferences or existing laws will be rejected. When a campaign is approved by ad ops, it’s placed in a queue on the ad server until the right time.
  5. Now, when a user opens up an app, the ad network’s SDK (or API, in some instances) is triggered, to highlight the fact that a particular person is ready to have an ad served to them.
  6. Based on the data available from the SDK, the ad network determines which potential ad would be most relevant and offer the greatest payout to the app publisher. When impressions and reach are the primary campaign goal, determining the right ad to serve is fairly straightforward. But, when a campaign tracks success using performance metrics like ad click through rates, the ad network needs to determine which ad will likely be clicked on and engaged with by the end user, and then use that prediction to determine payout rates and ad revenue. Having historical data and advanced predictive analytics capabilities powered by artificial intelligence helps in this arena, as does machine learning algorithms.
  7. Once an ad is selected (or served) it’s then (hopefully) rendered on the app and shown to the end user. The whole process, from start to finish, happens in as close to real time as possible — ideally, around 200 milliseconds. It’s important to note, however, that just because a mobile ad is server doesn’t mean it’s rendered. In the time it takes for the SDK to present a potential ad opportunity, someone may have left the app environment or scrolled past the advertising opportunity window.
  8. Finally, after all this, there’s the reporting and payout period. This occurs either during or after the campaign. Essentially, this is where advertisers and their partners determine how the campaign performed, and how much they owe based on performance. For instance, if the campaign’s goal was to ensure a certain amount of time spent engaging with an ad, then the data will determine how much an advertiser should spend with the ad network. Typically, advertisers will use third parties like AppsFleyer, Adjust, etc., in combination with the ad network’s own data to determine how the campaign went and how much is owed. This data can also be hugely influential in determining which ad network partners to use. But, certain platforms limit how much third-party verification is possible. With a Facebook ad, for example, advertisers are limited to just data from the publishing platform.

Other In-App Advertising Considerations

Getting in-app advertising right is about more than just understanding how the ecosystem works at a basic level, as there are many other factors at play in a mobile app advertising campaign.

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InMobi

InMobi

Matthew Kaplan is the Content Marketing Manager at InMobi (www.inmobi.com)