Key Points

  • App publishers have a few available online advertising revenue models available to them, the two most popular of which are: Cost Per Acquisition (CPA) and Cost Per Mille (CPM) models.
  • Traditional mediation solutions work primarily on the CPA model while programmatic advertising, such as in-app header bidding, and direct sales allows the infusion of CPM-based demand.
  • Combining both models and forcing them to compete against each other provides the best overall in-app advertising revenue for app publishers.

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app The Complete Guide to App Advertising

The Complete Guide to App Advertising

Definitions of CPA and CPM

Cost Per Acquisition (CPA)

In a Cost Per Acquisition model, advertisers pay for an ad only when a conversion happens. In the digital advertising space, the event that is considered a "conversion" is when a user downloads an advertised app.

Ultimately this means that for app publishers, you'll see a lot of ads for other apps showing in your app. The goal of those ads is to drive users to the app store and the ultimate conversion is the download of said app. And you, as a publisher, get paid only when that happens.

Cost Per Mille (CPM)

Cost per mille (CPM) is the amount an advertiser pays a publisher for every thousand impressions on their ads. CPM rates can vary widely, depending on the vertical, publisher-side optimization strategies, and various other factors.

With CPM advertising, brands bid on advertising space, and you, as the app publisher, get paid on a per ad impression basis anytime the ad is shown in your app.

Traditional App Mediation Demand

As an app developer, most of the demand you'll find through traditional app mediation SDKs like App Lovin or Fyber is CPA-based demand.

The major problems with the CPA-based demand provided by App Mediation sources are:

  • Ads are for other apps: The majority of ads that will show up in your app will be for other apps. While you may be able to control, to a degree, what categories of apps show up (e.g. blocking competitive apps), it is not always the most desirable set of demand. 
  • You don't control the conversion experience: You only get paid if a user downloads the app that is being advertised. This means you cede control of a portion of the experience that ultimately determines whether or not you get paid. You have no control of whether or not the user ultimately downloads the app once they leave yours.
  • It takes a while to get paid: Because you only get paid once someone takes the specific action of downloading an app, it stretches out the length of time between when an ad shows in your app and when you might ultimately get paid. In fact, it is entirely dependent on the user. If someone clicks on an ad from your app and then doesn't download the app for months, you have to wait months to get paid.

Overall this model gives less control to the publisher and is the primary type of demand available through mediation partners.

This isn't to say that CPA-based demand is all bad. Advertisers will pay a hefty price for downloads, so in the event it does work, it pays well.

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App Advertising Resource Center

The Complete App Advertising Resource Center

In-App Header Bidding Demand

In-app header bidding tools often include a bit of both CPA and CPM-based demand. 

In fact, Google Open Bidding's set of demand is almost entirely CPM-based. This means that you get paid as soon as a user sees an ad. The revenue provided by CPM pricing models is more consistent and reliable, a primary reason why many app publishers choose to incorporate Google ad demand.

The set of advertisers who are vying for inventory also significantly expands with these sources. Instead of ads primarily for other apps, you will be serving ads for major brands looking to achieve greater brand awareness with your audience. This is beneficial if your goal is not to interrupt the experience on your app by having ads that encourage the desired action of downloading other apps. 

Direct Sales

Another key source of CPM-based demand is often direct sales. Major brand advertisers who work directly with a sales team, like Playwire's direct sales team, will often structure deals on a CPM basis.

Combining CPA and CPM Models

Who's to say you have to pick just one of these models? The best in-app ad revenue can be achieved by blending the CPM model and the CPA model and taking advantage of the benefits of both.

And that is exactly how we've built the RAMP Platform to work for apps. We've combined header bidding with app mediation in a way that forces the two models to compete against each other to drive higher ad revenue for app publishers.

App-Mediation-Partners_In-App-Header-Bidding (1)

RAMP's in-app header bidding solution forces mediation partners to compete in an entirely different way:

  • Combining auction and mediation models
  • Driving increased competition
  • Ensuring you don't miss out on higher bids

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