November 10, 2010
As you dive head first into monetizing your ad-supported app, you’ll undoubtedly run into a few options for where you should place your inventory: ad networks, ad mediators and ad exchanges. They all give you ads and you can make money from each of them, but they’re all different. The problem is, most people have no clue how different they are (or that they’re different at all) or what the pros and cons are working with each of these choices. After answering this question more times than I can count, I figured it’s probably a topic worth explaining:
The ad network business model is very simple: They get money from advertisers, take a cut and then give the rest to their developers who are serving the ads. That’s how you (the developer) make money. Examples of ad networks include AdMob, Millennial Media, the now defunct Quattro Wireless and Jumptap.
- You make money.
- You deal with one network to get your payments.
- You only have to implement one SDK.
- Your income is directly dependent on the effectiveness of the ad network’s sales team. If the ad network doesn’t have ads to give you, then you can’t monetize your app.
- It’s not uncommon to see sub 60% fill rates when using an ad network. That means that you’re losing out on 40% of the traffic that otherwise COULD be generating you money.
To solve this, developers began using multiple ad networks in an attempt to get a higher fill-rate in their apps. This was a great idea but it quickly became difficult to manage. Enter the ad mediator…
To solve the issue of losing money on their application’s traffic, developers began using multiple networks. The basic idea was that you would install two (or more) SDKs into your app using the mediator’s code and then randomly call an ad network based on a percentage. These were called “network priorities”. Depending on how many ad networks you were working with, you could assign a different percentage to each network and your fill rate would be higher since you had more sources for ads. From there, more innovation quickly came. Instead of hard coding the ad call ratios into the app, a call to a web server was made to determine what percentages to divide among each network. Remotely configured priorities allowed developers to control who would receive the most ad impressions, so when Network A was running a better campaign than Networks B and C, Network A would get more of the impressions. This quickly evolved into an even more elaborate system that allowed developers to set “roll-overs” in addition to the priorities so that when Network A was called and it didn’t have any ads, then Network B would be called. Examples of ad mediators are AdWhirl and Burstly. These companies provide you with a Mega-SDK solution that you can download and install into your app and then remotely control the priorities and roll-overs from your server.
- You make money.
- You’ll receive a higher fill rate by working with more than one ad network.
- You can control your “network” priorities to help optimize ads.
- You have to manage each of the ad network relationships separately. If you wanted to use AdMob, Millennial Media and Jumptap in your app, you would need to sign up for accounts with each of them and get separate payments from each.
- You would need to login to all networks to get your ad reporting information (AKA: find out how much money you’re making). Ad mediators don’t know how much money you’re actually making from each network, so they can’t optimize your priorities and roll-overs to give you the best payouts for your ad impressions. That’s on you to do.
- Optimizations are based on general averages for each network rather than what you’re actually making. Since many ad networks will run special campaigns depending on the app (AKA: targeting), these averages tend to be very “off” and potentially will make you lose money.
- Since they are integrating 5+ SDKs, stability is an unknown and there is a massive inconvenience of having to update your app every time you want to ad a new network.
Mediators are a very popular choice for app developers, but there are other options to explore. Enter the ad exchange…
The ad exchange alternative gives you the best of both worlds by combining the things developers love about working with ad networks and ad mediators and then adding the technology to make it all work smoothly.
The ad exchange sits in the middle of developers and networks and links the two with an intelligent ad-serving platform. Developers download the exchange’s SDK and make calls for ads and the exchange uses a vast amount of information to find the ad within their system that will give the developer the most amount of money for that ad request.
- You make money.
- You only have to manage one relationship with the exchange and get support, payments, controls and reporting all from the same place.
- When the exchange adds a network to their platform, all of their developers automatically get access to it without the need to make any changes to their app. Since the SDK rarely changes, a very reliable and stable product is produced (which means less crashes for your app).
- Access to reporting data and campaign information that ad mediators don’t have; this allows exchanges to “Auto Optimize” the priorities and roll-overs for each application using the best information available which means that you will get paid the absolute highest amount possible.
- For many people (depending on the platform and ad size), ad exchanges can potentially produce 100% fill rates.
- Transparency on what ads are served in your app is hard to achieve. But Mobclix fixes this problem by giving developers control over what type of content would be suitable in their apps.
- Different networks pay out at different times, which means that developers may deal with multiple payment terms and receive payments at various times (NET 90, NET 60…etc). Mobclix solves this by providing all of the invoice items to the developer and making it clear when each network pays.
I may have missed a few things, so feel free to post your questions and I’ll do my best to answer them.