The simple reason why in-app ads can earn 10× revenues

  • 21 May 2015

Advertising is an important aspect of a profitable news app, but it’s often not a trivial feature to design and build. That’s because the way ads work in apps is very different from traditional web display advertising.

On the web, you typically have:

  • Lots and lots of different people
  • Randomly accessing a random article
  • Most often leaving after one page view.

Whereas in a native app of a newspaper, you tend to get:

  • Much fewer, but very committed, readers
  • Accessing your app all the time
  • Often reading everything you have to offer.

These differences are profound and lead to wildly different optimal publisher strategies around advertising.

This post is about those differences. But first, let’s take a step back.

Meanwhile, on the web

Here’s a hard truth about advertising on the web: If your newspaper web site sees one page view in a typical visit, and you rely on ads on that page to pay the bills, you are in a situation where your interests are fundamentally opposed to your readers’ interests. The action you want the reader to take is to see an ad and click on it. The action they want to take is to read the story. Both will not happen, and so there’s zero alignment.

The end result is that web advertising gets played by publishers and readers alike as the zero sum game it inherently is. Hence the onslaught of more and more disruptive ad formats. Hence ad blocking. Hence the downward spiral of CPM rates. And on and on.

This is the structural tension publishers face on the web today, and—I’d argue—the source of much of their problems online.

But the good news—the amazing news—is that this tension simply does not exist in native newspaper apps.

Dwell time, not page views

The best thing about ads in apps is that it’s never just one page view. It’s often dozens, with sessions lasting 5 minutes, 10 minutes, half an hour, or more. And even when sessions are short, you know that the reader will be back soon. That’s the power of the home screen.

This changes the equation. Advertising is no longer a zero sum game between the reader and the publisher because in apps, there’s time and circumstance for editorial content and advertising to coexist.

That’s the theory. But even if this peaceful-yet-profitable coexistence of editorial and ads is possible, it’s up to the actual in-app ad units to pull it off.

What sort of ad units would we use if we didn’t have to design them with the web’s arms race mindset?

The I Word

So you hate interstitials. That makes you, well, a normal person. But consider why you hate them. Do you hate full page print ads with the same fiery passion? Probably not, right? So what’s the difference?

Well, for one thing, the print ads never ever interrupted you. They never put you in a bait-and-switch situation where you thought you were getting a story but got an ad instead. Instead, they were just a natural (native, if you will) part of your experience of reading a newspaper or a magazine.

So why do interstitials interrupt? Why do they feel like bait-and-switch? Because on the one-page-view-per-session web, that’s all they can do. Nobody browses the web for interstitials, so if you get one, you got something other than what you signed up for.

Again, apps are here to change this. With lengthy sessions and tons of page views, we can have both the stories and the full page ads interspersed between them. And that’s exactly what we’ve built.

But just don’t call them interstitials, OK?

Richie Ads, our flagship ad tech product, is a full page, in-stream, rich media ad unit for apps. It’s an interstitial that never interrupts. You can download our iPad showcase app, Richie Showcase, to see this in action.

When I run around selling this breakthrough (we think) technology to publishers, I invariably get one of two responses:

  • We hate interstitials with the burning rage of a thousand suns and we’d never put one in our premium apps

or

  • We already have interstitials in our apps, just like we do on the web.

And that’s why Richie Ads isn’t an interstitial platform, it’s a (wait for it) full page, in-stream, rich media ad unit for apps platform.

It’s not a web display ad, or a web banner, or a web interstitial. It’s something that works an order of magnitude better: for Helsingin Sanomat, the biggest daily in the Nordics, Richie Ads earn 700% more ad revenue.

The one thing you should never, ever do

So Richie Ads might not be for you. It might be too expensive, or you might have strategic reasons for rolling a similar solution in house (like the Washington Post recently did). I can’t win them all.

But the one thing you should never, ever do, no matter what, is to just lump your apps together with your web ad inventory. Because you know better. You know the trajectory of web CPMs. You know it’s a dead end.

Yes, your loyal native app user base is responsible for a ton of page views. Yes, it’s an easy, tempting little bump in your ad inventory, there for the taking. But remember the opportunity cost. Remember the 700% increase in ad revenue you’re choosing to forego.

Remember that for most publishers in the web display ad game, the only winning move is not to play.

Marko Karppinen is Richie’s founder and CEO. You should follow him on Twitter here.