The 5 Biggest Mistakes on Ad Frequency You Should Avoid
Originally published at adtapsy.com on August 28, 2015.
The good news: as an app developer, you probably know the importance of your app’s UX. The bad news is that you will probably find it difficult to determine the optimal ad frequency that will affect user experience the least, while at the same time generating the highest possible revenue.
The truth is that there is no simple solution. In order to help you find the optimal ad frequency for your apps, we at AdTapsy have detailed the most common mistakes you should avoid:
1. Showing too often
Showing a lot of ads in your app seems like a great strategy to increase revenue, however there are two reasons why it is not:
- An excess of advertisements in the app will affect revenue negatively in the long run. You should be aware that each displayed ad impression leads app users outside of your application, so showing too many ads carries the risk of losing the vast majority of your app users. Do not forget that whenever an app user clicks on an ad, he is leaving your app and might never return back. These users cannot be monetized in the future anymore, and your LTV will probably be lower than expected.
- Bad user experience. Open your app and try to put yourself in the place of your app users. Do you find your application difficult to use, due to the excessive number of pop-up ads? If the answer is YES, this will certainly affect the duration of each session length and your app retention. Even worse, you can expect a lot of negative app reviews. There is little need to explain how this can affect your downloads and ASO.
2. Showing too rarely
Many app developers in their fear of irritating app users decide to go with infrequent ads or even none at all. Although this is the safest way to avoid irritating app users with ads it sacrifices revenue with the result that developers may fall into the trap of requiring money for future app development and marketing. It’s all about the balance: finding the highest possible ad frequency with minimal irritation to your users.
3. Trusting your gut
If you are an experienced app developer, then listening to your gut in order to establish some number for an ad frequency cap in your app may seem like a good idea, but without analyzing key metrics (LTV, session duration, retention) you may be setting yourself up for failure. Regardless of your self-confidence, analyzing is a must. You can’t improve something that you can’t measure.
4. Obsessed with eCPM
eCPM is overrated, and in our case it is not relevant at all. Let’s assume that our goal is to extract maximum revenue from each user of our application — maximum LTV. Here is one basic formula for calculating LTV (feel free to use some other formula where a virality effect is included):
LTV = ARPU x 1/CHURN
ARPU — Average revenue per user for a given period
Churn — The number of lost users in that time period divided by the total number of users at the start of the same period.
Let’s say your monthly ARPU is $1.42 and you have a monthly churn rate of 55%.
LTV = 1.42 x 1/0.55
Your average app users will bring you $2.58 in their lifetime. This is the most meaningful metric for evaluating the profitability of your app. And it is closely linked to ad frequency.
5. Not testing
Establishing the optimum ad frequency is not an easy job, it takes some time to find the balance we are looking for. The best way to determine ad frequency is to run a few tests with varying ad frequencies while observing any changes in the key metrics. Once we have calculated the LTV, we can run a few tests to see which one generates the highest LTV and try to increase our current figure of $2.58. If your goal is to increase session length, and not LTV, the process will be the same with the difference that optimization is focused on an alternative key metric (time spent in your app).
AdTapsy is a mediation platform that simplifies in-app monetization by helping you to squeeze the maximum revenue from ad networks. You can download our lightweight SDK here.
