Ad revenue (advertising revenue) is the income generated by displaying ads to users within an app or on a website. Advertisers pay app developers or website owners to display their ads to a target audience, and the revenue generated is shared between the advertiser and the app developer or website owner.
Ad revenue is generated through various types of advertising, such as display ads, video ads, native ads, Apple Search Ads paid advertising and more. Advertisers typically use a cost-per-click (CPC) or cost-per-impression (CPM) pricing model to pay app developers or website owners for displaying their ads.
Ad revenue is a crucial source of income for many mobile app developers. In fact, in 2023 mobile ad revenue accounted for more than 65% of total digital ad spending (and will grow to 70% by 2026). The benefits of ad revenue for mobile app developers include:
To calculate the revenue generated by your ads, you need to take into account several key metrics, such as the number of ad impressions, click-through rate (CTR), cost per click (CPC), and effective cost per mile (eCPM). Here’s how you can calculate your ad revenue:
Ad Revenue = Number of Impressions × CPM / 1000
Suppose your app displays an ad 50,000 times (50,000 impressions) and the CPM is $5.00.
Ad Revenue = 50,000 × $5.00 / 1000 = $250