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How to calculate Mobile Ad Revenue

Gartner predicts that in 2017, mobile apps will be downloaded more than 268 billion times, generating revenue of more than $77 billion and making apps one of the most popular computing tools for users across the globe.

Since a lot of the content and apps available are free to a large extent, getting users to pay for apps is getting increasingly difficult. It is fairly common knowledge that many apps depend primarily on ad revenue as their primary source of income. With these significant numbers, building an app based on ad revenue is feasible and possibly the way forward.

While there are several ad networks available today, choosing the right is key to getting the most out of your app eyeballs. There are 2 key factors that decide on the revenue that your app is going to pull in.

1. eCPM or the rate per thousand impressions that the ad network offers
2. The fill rate – the rate at which the network returns or displays an ad when it is supposed to.

eCPM – explained :

eCPM stands for  “Effective Cost per Mille.” Mille in Latin means 1,000. eCPM in mobile advertising terms translates to the advertising revenue generated per 1,000 impressions.

Impression as defined by Google is the count of each time an individual ad is displayed in an app.

eCPM = Total Earnings / Total Impressions x 1,000

Assuming that your app has registered 150,000 impressions, and this has earned you $300 in ad revenue, then applying the formula, you would get an eCPM of $2. Now this is important as this is the basis for calculating and forecasting ad revenues as well as deciding which ad network to choose.

It is a good idea to use ad mediating service like Admob that allows you to plug in different ad networks into your app. This would allow you to compare different ad networks and decide which one giving you the best return.

Fill Rate – explained:

The next important concept that needs to be understood is the fill rate. This is also an important factor that determines your ad revenues. Simply put, this is the rate at which the network is returning ads for each request that your app sends to it. One might assume that every request should return an ad. But this is not always the case. To elaborate further, the app developer decides on certain criteria of age, category, geographical market etc that the app is listed under. On the other hand the advertisers can also set preferences as to which markets, categories, age and other demographics against which the ad is shown. So while the network might have enough advertisers, it might not always have enough to show for a particular profile of app and user. In which case the fill rate might not always be 100%. We have also seen that in some markets and apps that fill rate could go down to as low as 25%.

There are several ad networks in the market today  including Admob, UnityAds, Chartboost, Inmobi, Revmob, Heyzap, Applovin, iAD to name a few.

It’s always good to do some research of your own across a few credible sites to assess what their eCPM and fill rates are.

A mediation network helps to compare different networks and then focus on what works for you. This is an ongoing exercise and you would need to recalibrate /shuffle your network/s from time to get the best returns.