Advertising monetization: detailed explanation of advertising display forms and monetization!

With the changes in the current economic situation, investors are paying more attention to the ability of products to realize profits and monetize. If investment is the entry ticket to a product, then the commercialization of the product will determine how far the product can go.

1. Common Monetization Methods

Different product types have different means of monetization. For example, for e-commerce products, Taobao mainly provides services to small third-party merchants and then charges various service fees; while JD.com mainly makes profits by improving the operating efficiency of goods through self-built logistics and other means.

Social products mainly rely on membership privileges and costumes to generate revenue, for example, QQ members usually provide a variety of green diamond skins. Currently common live broadcast products mainly make profits by users giving virtual gifts to anchors, and the platform charges a certain fee when the anchor withdraws cash.

A typical example is Momo, which launched its live streaming function in 2016. In the second quarter of 2018, live streaming revenue accounted for more than 80% of the platform's total revenue.

In my personal experience, I mainly focused on advertising monetization of tool products for overseas, so I will mainly share relevant content about advertising monetization.

2. Detailed explanation of advertising monetization

Advertising monetization is to directly integrate advertisements into your own products. Users see the advertisements while using the products, thereby contributing to revenue.

1. Where do ads come from?

Some small and medium-sized companies will directly access third-party advertising sources, such as Google's AdMob, FaceBook advertising source, Twitter's MoPub and some smaller advertising sources; and some companies of a certain scale will also build their own advertising platforms, and advertisers (who have advertising needs) will recharge the platform and choose different pricing methods for delivery.

2. How ads are presented to users

When it comes to monetization through advertising, a key point that commercial products need to grasp is the balance between revenue and user experience.

If you focus too much on revenue and ignore user experience, and keep showing ads to users, it will lead to a large number of user losses and ultimately cause product failure. If you focus too much on user experience, then monetization will be out of the question, so it is particularly important to strike this balance.

How to maximize revenue while keeping user churn within a reasonable range requires a process of continuous exploration and experimentation.

Therefore, when designing the timing of ad display, it is necessary to combine the user's specific usage scenarios and try to minimize the impact on user experience.

For example: you can show ads to users after they perform a certain operation, or show ads to users when they enter a certain page without affecting their operations. For overseas cleaning products, when designing advertisements, people usually display the advertisements after the user has completed the cleaning operation. This appears more natural and less abrupt.

3. Advertising format

The main forms of advertising are: interstitial ads, native ads, banner ads, and rewarded video ads.

• Interstitial ads: are full-screen ads that directly cover the current page and require users to manually click to close them. This type of ad has a high ecpm. At the same time, this type of advertisement has a relatively large impact on users and is generally displayed after the user performs a certain operation.
• Native ads: They only occupy part of the page and have relatively little impact on users. They are usually displayed on the result page or when users enter a certain page.
• Banner ads: They are usually displayed at the bottom of the page, cannot be closed, and have a low ecpm.
• Incentive video ads: They are commonly used in games, mainly for exchanging some game props or special functions in the APP.

4. Classification of advertisements

We are also used to dividing advertisements into in-app advertisements and out-of-app advertisements:

• In-app advertising refers to: ads displayed when users perform certain operations or enter a certain page in the APP;
• Out-of-app ads are ads displayed outside the app. For example, app lock ads are ads displayed when users open other apps.

5. How to increase advertising revenue through product means

For in-app ads, they need to be triggered by users to be displayed. What needs to be done is: increase the frequency of users opening the APP and provide relevant function guidance, so that users can open the APP as much as possible and use as many functions as possible, thereby increasing the number of ad displays.

For out-of-app advertising, we need to explore more high-frequency new scenarios and features that users can use every day, such as good morning and good night cards, health reminders, etc., which can bring value to users while also displaying ads.

6. How to track advertising effectiveness

For tracking of ad positions, one is to monitor existing ad positions, and the other is to evaluate the effects of newly added ad positions.

For existing advertising space, since it involves revenue, once a problem occurs, the impact will be huge, so daily data monitoring is very important.

As for new ad slots, as long as they are added, they will inevitably affect the user experience. Therefore, newly launched ad slots need to be evaluated. If the ad slot performs poorly, they can be adjusted in time or the ad can be taken offline.

7. Advertising statistics

We have a series of statistical indicators for advertising. Through these indicator dimensions, we can find out whether there are any problems:

Ad page PV: refers to the total number of visits to the ad page

For example: if a banner ad is added below the message notification, the total number of times users enter this page is the PV of the ad page.

Number of requests: refers to the total number of ad requests initiated by the client.

Through the number of requests/ad page PV , we can see whether there is a problem with the ad request. Normally, the ratio of the two should be close to 1.

If the value here is low, it is possible that the advertisement has a cloud control strategy. For example, an advertisement is displayed only once within 30 minutes. After the advertisement is displayed once, it will not be requested again within 30 minutes. Another possibility is the network rate. When requesting, it will first determine whether there is a network. If there is no network, the request will not be made. Therefore, if the number of times is found, it is necessary to first verify whether there is a cloud control strategy, and then calculate the network rate.

Fill count: The number of data returned by the third-party advertising platform after the request is made.

Fill number / request number = fill rate : When talking about fill number, we have to talk about the floor price strategy when requesting ads, because each advertiser (the person who places ads) offers a different price when placing ads, so the display prices of different ads are different - some ads may cost $0.005 per display, but some ads may cost $0.001 per display.

In order to earn revenue, we all want high-priced ads, so there is a floor price when requesting ads from third-party advertising platforms. For example, if the floor price I bring with me when I make a request is $0.005, then when I request from the third party, I only need ads equal to $0.005. If there is no advertisement greater than $0.005 in the third-party background at this time, then it will not return. For example, if you send a total of 100 requests to Google with a base price of 0.005, and Google returns 50 requests with a base price greater than or equal to 0.005, then the fill rate is 50%.

Of course, if there is no padding, it means that the ad cannot be displayed and no revenue will be generated. In order not to waste every request and ensure that an ad is returned for every request, we usually set a multi-layer floor price strategy.

Let’s take the previous example: we make 100 requests to Google. We usually set 5 levels of floor price + no floor price ads, from high to low: 0.005, 0.004, 0.003, 0.002, 0.001.

We will request in order from high to low. If the high price is not available, we will request the next lowest price. Ads with no reserve price are used to guarantee a minimum price. For example, if none of the third-party advertising platforms that we set a reserve price for meet the requirements, then we will use an ad with no reserve price to avoid wasting advertising opportunities. Therefore, the more layers there are in the advertising floor price, the closer the price will be to the optimal value. However, too many layers will also lead to too long request times, so it is necessary to strike a reasonable balance between the two.

Impressions: The number of times the ad was shown

Number of impressions/number of fills = impression rate : The number of impressions, as the name suggests, is the number of times the ad is actually displayed. Only when the ad is actually displayed will it generate revenue.

Impact on ad display:

1. The user stayed on the page for too long and exited the interface before the ad was displayed.
2. It may be a problem with the ad design. Some ads may be designed at the bottom of the page and require swiping up to be seen. If the user does not swipe up at this time, the ad will not be displayed.
3. It is a problem of operational configuration. The advertising type configured in the background may not be supported on the front end, resulting in the inability to display the advertisement. In addition, network conditions may also affect the advertisement display.

Clicks: The number of times the ad was clicked

Number of clicks/number of impressions = click-through rate : The number of clicks on pop-up ads is the number of ad clicks. Only when the user clicks on the ad and installs the APP recommended by the ad can it be considered a complete conversion.

The revenue generated by clicks is much higher than that generated by pure display, so if you want to increase revenue, improving click-through rate is a very important part.

However, you cannot operate in violation of regulations. For example, some app developers deliberately design the ad close button to be very small and difficult to click, causing users to accidentally click it, which then increases the click-through rate in the short term. However, the product was later removed from the shelves due to violations, which was not worth the cost.

The key to increasing click-through rate is: Is the content you recommend interesting to users?

This requires using big data and artificial intelligence to analyze user behavior and make good advertising recommendations, which requires relatively high technical capabilities. For general developers, they can only optimize the design and style to increase the number of clicks.

AIPU: Average number of ad impressions per person

AIPU=Number of Impressions/DAU : This value is the average number of ad impressions per person, which mainly depends on the current impact of advertising on users. For example: AIPU=20 is equivalent to a user watching ads 20 times a day, so the impact on retention is huge. At this time, it is necessary to adjust the ad display strategy.

This value is usually also considered when calculating the input-output ratio, such as what AIPU is required to break even for ROI.

ECPM: revenue per thousand impressions

The money for an ad to be shown 1000 times, for example: one ad display is $0.001, then the ECPM is 0.001*1000=1 dollar.

It was said before that the number of clicks will affect revenue, but after all, the number of clicks is a relatively small part. Most ads are just displayed. What affects the majority of revenue is ECPM. If the same ad is displayed 1,000 times, the one with a higher ECPM will definitely have higher revenue.

There are many factors that affect ECPM:

1. First, different ad sources have different ECPMs, for example, FaceBook’s is higher than Google AdMob’s;
2. The second is the form of advertising. Interstitial ads are 2 to 3 times more expensive than native ads.
3. Ad conversion rate: If an ad is shown many times a day but few users install it, the ECPM of the ad slot will gradually decrease.
4. Time factor: During the off-season, advertisers place fewer ads and the prices are lower. However, on days like Christmas and Black Friday, ECPM will increase significantly.
5. Due to regional influence, ECPM for developed countries such as Europe and the United States is much higher than that for countries such as Africa and South Asia.

ARPU: Revenue per million users

ARPU=Revenue/DAU*1000000 : ARPU is the main indicator for evaluating the monetization ability of a product. This indicator eliminates the impact of DAU and allows products with different user volumes to be put together for comparison to view their monetization capabilities.

The monetization capabilities of products of different types and in different countries will be different. ARPU is an important indicator for calculating ROI (return on investment).

Whether it is monitoring or effect evaluation, the basic foundation is to have data that can be analyzed. Therefore, management is of utmost importance and there must be no mistakes in this area. Once a problem occurs, a series of subsequent data analyses will be wrong. In my previous work, I also encountered the problem of data mismatch. After checking for several days, I finally found out that I had made a mistake in typing. It was very painful to encounter such a situation.

By extracting the corresponding indicators from the recorded data and making monitoring reports, warnings are issued when some indicators behave abnormally, and then specific problems are found based on the recorded data analysis. Because it is aimed at overseas markets, one product will be sold to many countries, and the situations in different countries are sometimes very different, so it is also necessary to look at the data by country. At the same time, the network conditions in some countries are very poor, which will also affect the display of advertisements. Therefore, you can consider giving up such countries when promoting.

As for the newly added ad spaces, we will first observe whether there are any abnormalities in the data after they are launched. After the data stabilizes, we will strive to evaluate its monetization performance, including: overall, by country, etc.

There is another evaluation here, which is the input-output ratio of the product. If the revenue of the product is greater than the promotion cost, then the product can be promoted quickly. Otherwise, the corresponding strategy needs to be adjusted to achieve the sign of rapid promotion.

The above is a summary of the relevant content about advertising monetization and indicator calculation. Welcome everyone to discuss it in depth. Come on!

Source: Products in those years