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Contextual monetization: what it is and why it matters

by Mark Rosner on May 16, 2014

Much like everything else, mobile advertising’s effectiveness depends on its execution. The human brain is wired to process information in context. That’s why random ads slapped inside of an app rarely get good results – because they aren’t connected to the user in a meaningful way.

Which brings us to “contextual monetization.” It sounds complicated, but it’s important to understand if you want to generate advertising revenue within your app.

Here’s why: in 2013, 74% of users reported that they were frustrated with ads, offers, and promotions that had nothing to do with their interests. According to a study from JiWire, 80% of mobile users would prefer ads relevant to them locally. That’s what contextual monetization is all about: sending relevant, timely ads to your users that provide value for them – and produce profitable results for you.

So you want to add advertising to your app – now what?

As a developer or publisher, you may have decided to start monetizing your apps with advertising, but you don’t want to bombard your users with ads for things they don’t care about. After all, it doesn’t take much to frustrate the very user base you worked so hard to build. With over 1 million apps in the Apple App Store and Google Play store, your app needs to stand out – or your users will replace it with something better. Bombarding your users with multiple irrelevant ads doesn’t help – in fact, it creates the reverse experience. Eventually, you’ll see a drop in DAU’s (daily active users) and it gets worse over time.

Do the math

The more relevant your ads are to a user, the more likely they are to listen to what you have to say and take action. If a user is playing a word game, they tend to be interested in word games. If they’re checking a travel app, they tend to be interested in travel-related information. It’s all about context.

The more relevant the ad, the better the user experience. The better the user experience, the more often your users will continue to use your app. And that’s not all – relevant ads don’t just keep users in your app. People who see relevant ads tend to be better users who are more likely to engage. It sounds simple, but it works.

Everyone wins

If you consistently show ads your users want to see, they will interact with those ads more often, return to your app more often, and continue to engage. That means more revenue for you – making you happier, your customers happier, and your advertisers happier. With contextual monetization, everyone wins.

Mark Rosner is AppLovin’s Chief Revenue Officer.

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