In-app advertising is when ads are displayed inside a mobile app to generate revenue. It’s a way for app owners to earn money by showing banners, videos, or interactive ads to users while they use the app.
Why It Matters
Why Founders Should Care About This Term:
- Generates Revenue without charging users directly — great for free apps.
- Monetises Active Users based on engagement and time spent in-app.
- Reduces User Acquisition Costs by offering free access while earning ad income.
- Scales with User Growth, allowing monetisation to grow as your user base expands.
- Enables Data-Driven Decisions through ad performance tracking and audience targeting.
Use This Term When...
- You’re planning to monetise a free app.
- Discussing revenue models with your app strategist or investors.
- Choosing between in-app purchases, subscriptions, or advertising.
- Integrating third-party SDKs like AdMob or Meta Audience Network.
- Reviewing app performance or ad revenue metrics.
Real-World Example
In one of our projects, we used in-app advertising to monetise a freemium music game. By integrating rewarded video ads, users could unlock extra content without paying, which helped increase engagement while generating steady ad revenue.
Founder Insight
Many founders dive into in-app advertising thinking it’s instant revenue, but forget that poor ad placement or overload can hurt the user experience. If ads disrupt your core app flow, you risk losing users faster than you earn income.
Key Metrics / Concepts
- eCPM (Effective Cost Per Mille): Revenue earned per 1,000 ad impressions.
- Fill Rate: Percentage of ad requests that actually show an ad.
- CTR (Click-Through Rate): How often users click on ads — a sign of relevance.
- Retention vs Revenue Trade-off: Balancing monetisation without driving users away.
- Ad Frequency Cap: Limits how often the same user sees ads to avoid fatigue.
Tools & Technologies
- Google AdMob – Widely used SDK for integrating banner and video ads in apps.
- Meta Audience Network – Delivers high-quality ads using Facebook’s targeting engine.
- MoPub (now part of AppLovin) – Useful for mediation and managing multiple ad networks.
What’s Next / Future Trends
AI and machine learning are making in-app advertising smarter — automatically optimising which ads to show for better revenue. At the same time, privacy changes (like Apple’s App Tracking Transparency) are pushing the industry towards contextual targeting and user-consented data.
Related Terms
- Monetization Model – Different strategies apps use to generate revenue, including ads, subscriptions, and freemium.
- Audience Targeting – Techniques for showing ads to the right users based on their behaviour or profile.
- App Analytics – Tools and methods to measure how users interact with your app and ads.
- In-App Purchases – An alternative or complementary revenue stream to in-app ads, letting users buy content or features.
- Google Ads – A common platform for creating and managing ad campaigns that can appear in mobile apps.
Helpful Videos / Articles / Pages
Call to Action
Still unsure how in-app advertising fits into your app strategy? Book a discovery call with our team — we’ll walk you through the right tools for your tech stack.