What is In-App Advertising (IAA)?
The display of paid ads within mobile applications, enabling developers to monetize apps while providing advertisers access to engaged mobile users.
In-app advertising (IAA) is the display of paid ads within mobile applications. It helps developers advertise their apps by placing ads within publisher apps, and enables app developers & publishers to monetize their apps and sell ad space to advertisers. IAA can be applied through different ad formats like interstitial ads, playable, rewarded ads, or banner ads.
Why It Matters
In-app ads perform 150% better than mobile website ads in engagement & conversions. Users spend 92% of mobile time in apps, creating more ad opportunities. In-app advertising achieves an average CTR of 0.56% compared to 0.23% for mobile web ads, delivering higher ROI for advertisers and better eCPMs for publishers.
How to Calculate
IAA revenue is calculated based on different models: CPM (cost per 1000 impressions), CPC (cost per click), CPA (cost per action), or revenue sharing agreements. Publishers typically earn through eCPM = (Ad Revenue ÷ Ad Impressions) × 1000.
Industry Benchmarks
| Category | Average | Good Performance |
|---|---|---|
| Banner Ads | $0.10 - $2.00 eCPM | $3.00+ eCPM |
| Interstitial Ads | $1.00 - $5.00 eCPM | $7.00+ eCPM |
| Rewarded Video | $5.00 - $15.00 eCPM | $20.00+ eCPM |
Best Practices
Choose ad formats that match user experience (rewarded ads for gaming, native ads for content apps). Implement frequency capping to avoid ad fatigue. Use mediation platforms to maximize fill rates and eCPMs. Combine IAA with IAP for hybrid monetization - users who engage with rewarded ads are 4.5x more likely to make in-app purchases.
Examples
Gaming apps use rewarded video ads offering in-game currency or extra lives. Social apps display native ads that blend with content feeds. Utility apps show banner ads at natural break points. E-commerce apps use interstitial ads during loading screens between product pages.
Notes
IAA is projected to capture 82.3% of mobile ad spending. Apps offer better targeting through first-party user data and device IDs compared to browser cookies. Combining IAA with IAP increases ARPDAU by 30% and lifetime value by 33% according to industry research.