A diverse monetization strategy is vital to provide your app with long-term resilience. Using varied revenue streams, you’re able to ensure that your app keeps running and growing even if one stream fails to deliver.
For subscription and IAP-based apps, ad monetization can offer this resiliency. When IAP and subscription conversions are low, ads enable these apps to continue monetizing and generating revenue, making them a valuable addition to their monetization mix.
But, some apps are cautious to adopt ads, since, if left unmonitored, they can lead to churn due to negative user experiences or poaching from competitor apps. Furthermore, if a user has a negative ad experience in an app, that could cause them to view the app negatively too.
To effectively monetize using ads, developers need a way to monitor the ads they run, identify those that are problematic, and balance the churn that some ads cause alongside the revenue they create.
To that end, let’s dive into how ads can cause churn, why that needs to be an element of how you understand your ad monetization and tools that can help you find the right balance between churn and revenue.
How ads can cause users to churn
Churn here refers to users leaving your app once they’ve already installed it and are engaging with your content. Many factors can lead to churn: an unfriendly user interface, failing to meet the needs of a user, or even fulfilling the user’s needs to a level where they no longer need your app. But another cause of churn can be the ads running in your app.
To help break down how ads can cause user churn, we can use two distinct categories - negative ad experiences and competitor ads.
A negative ad experience can mean a variety of things but generally can be defined as ads that create frustration. This frustration can be the result of the ad being difficult to close due to a hidden or tiny close button, the ad length being too long, or even ad content that is seen as inappropriate.
Then there’s competitor ads. This is when an ad gets the user to leave your app to download another. We can separate the source of these ads into two categories, direct and indirect competitors.
Direct competitors are those that have an app offering that is in the same vertical as your own, offering the same or similar services. Indirect competitors are those apps that take a share of attention away from your app. Social media apps, streaming apps, and news apps (to name just a few) are all in indirect competition with one another, as a user typically goes to each from a similar motivation, and can only be focused on one at a time.
Whatever the reason, churn can cause major damage to the long-term success of your app. So, preventing churn should be a top priority.
The other side of the coin
As important as preventing churn is, there’s another side here. The ads that will be running in your app most often are likely to be those from direct and indirect competitors - they’ll be the primary source of demand for your placements since they have the most to gain and have the best chance of converting users.
So, to effectively monetize with ads it’s important to include those that originate from competitors. However, doing so without taking into account the churn they could cause can be harmful to the longevity of your app. Effective ad monetization is about striking a balance between the churn and the revenue generated from ads.
Necessary tools to balance revenue and churn
Solving for the right balance can be a daunting task, particularly since for most apps, seeing which creatives are running can seem like peering into a black box. Luckily, there are many tools available to help, including Ad Quality from Unity - but to make sure you’re able to use them effectively to find that balance between revenue and churn, there are several important functions you’ll want to consider.
1. Churn management
Obvious but vital is the ability of these tools to reliably measure user churn on a per-ad basis. This is your canary in the coal mine and your best defense against ads that are causing users to leave your app. Churn management allows you to monitor user churn across the user journey, which means you can see when users are leaving your app and which ads they engaged with before they did.
2. Creative overview
Also important is the ability to see all the creatives currently running on your app. This allows you to review the creatives users are seeing manually, so you can spot problematic or inappropriate ads and report them. Used in conjunction with churn management, you can see which ad a user saw that could have caused them to churn.
3. Revenue per creative
To make effective use of an ad management solution without negatively affecting revenue generation, you also need to be able to see the revenue individual ads are bringing in. Without this visibility, it won’t be possible to calculate your revenue/churn balance.
4. Competitor ad detection
Another essential is the ability to detect competitor ads. Solutions that offer competitor ad detection let you set which ads can run on your supply by source. If an ad is coming from a direct competitor, you can set custom triggers to report the ad before it runs.
Finding the right balance
Ideally, your ad management tool should allow you to see which ads are causing churn, block ads from competitors that you see as harmful, get an overview, and manually review all ads that are running, and see how much revenue these ads are generating.
Using this information, you can start to find the right balance between revenue and churn. You can do this by examining the ads’ CTR (click-through rate) and churn rate. If you see that an ad’s CTR is high, but revenue is low, you’ve found an ineffective ad. What these data points are telling you is that users are clicking on the ad, which then causes them to leave your app, without generating revenue sufficient to justify allowing it to keep running. Similarly, if an ad’s bounce rate is high and the revenue is low, the ad is causing users to leave without generating revenue sufficient to justify it.
These are the most simple outcomes of the revenue/churn equation, but what happens when CTR or churn is high, and so is revenue?
The answer depends on your goals and app. For an app that is still scaling and attempting to acquire loyal users, the correct choice could be to block this ad as it is negatively affecting retention, but for an established app with a loyal user base, the answer might be to keep it running. This is the balancing act of revenue and churn.
Whatever your needs, to find the right balance for you, a prerequisite is the visibility and control that an ad management solution affords, like Ad Quality from Unity. Talk to a Unity expert about how we can help you effectively manage your ad monetization while protecting your app and brand.
