What is in-app advertising?

In-app advertising definition: paid promotions that appear inside mobile apps, delivered through an ad SDK/mediation and sold via real-time auctions. Think banners, interstitials, native tiles, rewarded video, or playables that show up while someone is using the app.

If you came here wondering what is in app advertising, it’s simply how many free or freemium apps make money — and how advertisers reach people when attention is highest: during app sessions.

Mini-example

A puzzle game offers a hint pack for watching a 15-second rewarded video. Opt-in rate hits 45%, completion 88%, and D7 retention improves because players feel in control. The team rotates five intros and three end cards; top combo wins 60% of impressions that week.

How it feels for the user (and what’s happening behind the scenes)

A person opens your app and keeps scrolling. When there’s a natural break—level complete, feed refresh, article end—the app quietly asks ad partners who wants that spot. Buyers bid in milliseconds. The winner’s creative loads, shows smoothly, and the app logs what happened (view, click, install, purchase) to fine-tune the next auction.

Formats & where they work best

• Banner / native: light, blend-in units for feeds and utilities. Use when you want gentle, steady monetization with minimal disruption.
• Interstitial (full-screen): between actions or screens. Use when there’s a clean break—never mid-task.
• Rewarded video: user opts in to watch for value (coins, extra lives, premium content). Use when you have a clear value exchange and want high completion rates.
• Playable / interactive: short, try-before-you-install demos. Use when performance matters and your audience likes to test things.
• App-open & MREC (300×250): session start or content blocks. Use when you want high viewability without heavy intrusion.

Pricing models

• CPM – pay per 1,000 impressions (brand reach/viewability).
• CPC – pay per click (traffic).
• CPI/CPA – pay for installs or actions (performance).
• Hybrids – a base CPM with automated optimization toward CPI/CPA.

Pro tip: if you care about profit, back into bids from target payback period or ROAS instead of chasing the lowest CPI.

Why it matters

• Users spend their mobile time in apps. ~70% of U.S. digital media time is in mobile apps, concentrating attention where in-app ads show. Buildfire
• Budgets follow attention. In the U.S., in-app is forecast to be ~82% of mobile ad spend (2025), highlighting where advertisers see ROI. Udonis Mobile Marketing Agency
• It’s a high-growth channel. Estimates put the global in-app ad market around $180–192B in 2024 with strong double-digit CAGR through 2033. Grand View Research+1
• Performance edge on mobile. Studies consistently show higher CTR for in-app vs. mobile web (e.g., ~0.56% vs. ~0.23%). Embryo

Measurement & KPIs to track

• Reach & delivery: impressions, unique reach, viewability.
• Engagement: CTR, video completion rate (VCR), playable engagement.
• Acquisition: CPI, CPA, CPP (cost per purchase), conversion rate (CR).
• Revenue: ROAS/ARPU/LTV; payback period; incrementality.
• Quality: retention (D1/D7/D30), cohort LTV, fraud rate, frequency capping.

Privacy & attribution realities

Apple’s AppTrackingTransparency (ATT) lowered deterministic IDFA access; recent global opt-ins hover in the mid-teens, so plan for modeled or SKAdNetwork measurement and stronger first-party data strategies. Singular+1

Pros & cautions

Pros:

• rich formats (video, rewarded, playable),
• high session-time attention,
• strong contextual signals,
• better brand-safe environments vs. open web.

Cautions:

• SDK weight & UX timing,
• higher CPMs in premium apps,
• signal loss (ATT), fraud to monitor (invalid traffic),
• and the need for robust creative testing.

Best practices (what actually moves the needle)

• Match format to moment: use rewarded video where value exchange is natural; interstitials between “natural breaks,” not mid-task.
• Invest in creatives: rotate 5–10 variants; iterate winners weekly; localize copy/screens.
• Hedge attribution: combine SKAN, MMM, and incrementality tests; don’t chase last-click.
• Respect consent: pre-permission screens can lift ATT opt-ins; time prompts after value. playwire.com
• Guard brand safety: prefer curated app lists; monitor viewability & context as leading indicators of conversion. Amra and Elma LLC