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The Importance of User Engagement in App Monetization

Mobile advertising is crucial in generating income for developers and publishers, determining the success or failure of apps and games within a highly competitive market. Research reveals that, in addition to in-app purchases and subscriptions, an overwhelming majority of the highest-earning games rely on advertisements as a monetization strategy.

To maximize earnings, however, it’s vital to understand and improve the key indicators of monetizing mobile ads. In the past, most developers mainly concentrated only on short-term indicators such as download numbers, which could impede long-term success as this often overlooks user experience and retention. At present, however, more and more developers have recognized the value of user engagement. A report shows that ninety percent of users continue using an app, even if they engage only once per week. Below, we summarize why user retention and engagement can eventually generate higher revenue specifically for in-app ads.

The Role of User Engagement in Monetization Through In-App Ads

The role of user engagement is paramount when it comes to monetizing through in-app ads. User engagement refers to the level of interaction, involvement, and interest that app users have with the app and its content. The higher the user engagement, the more effective and profitable the in-app advertising strategy can be. This is because, ultimately, the goal of most advertisers is to generate genuine user interaction. Delivering this can encourage more investments into your apps. So when does user engagement specifically come into play?

Choosing the Right Ad Format
When selecting an optimal ad format for in-app advertising, it is important to understand user behavior, preferences, and interaction patterns. This will inform you which ad format best aligns with the user experience and maximizes monetization potential. For example, if you’re targeting mobile players, you want an ad format that seamlessly integrates with the app’s design and content. This maintains a smooth and uninterrupted user experience and, in best cases, even contributes positively to the overall gaming environment.

User engagement data can also provide insights into users’ tolerance for different levels of ad intrusiveness. By examining user feedback, monitoring drop-off rates during ad experiences, or conducting user surveys, developers can gauge user sentiment toward various ad formats. This information can eventually help select ad formats that strike the right balance between generating revenue and maintaining a positive experience.

User Targeting and Ad Frequency
User engagement plays a significant role in identifying ad relevance and targeting. User engagement data provides insights into user preferences, behavior, and demographics. Leveraging this data enables developers, publishers, and advertising platforms to deliver ads that are relevant and targeted to users’ interests.
This metric also significantly affects ad frequency and timing. By tracking user engagement, you can prevent excessive ad interruptions and maintain a smooth app experience. For example, choosing native ads that blend organically with the app’s interface can enhance the user experience by providing a seamless transition between content and ads.

Creating Attractive Incentives
Creating attractive incentives is another aspect where user engagement can significantly affect the effectiveness of in-app advertising. Once developers understand user preferences and motivations, they can design incentives that capture users’ attention.

For example, if users are highly engaged with specific content or features within the app, offering incentives related to those areas can be more appealing and drive higher engagement. These incentives could include completing levels, achieving milestones, sharing content, inviting friends, or providing feedback.

Developers can tailor incentives to specific user groups by segmenting users based on their engagement levels, preferences, or past behaviors. Personalized incentives have a higher chance of attracting users’ attention and motivating them to take desired actions within the app.

Tips for Improving User Engagement

Here’s how you can significantly improve user engagement.

Humanize Messaging
Humanized messaging involves crafting communication in a way that resonates with users on an emotional level, making them feel understood, valued, and engaged. It creates a sense of trust and credibility among users. A conversational and relatable tone establishes a connection beyond a transactional relationship. When users feel a genuine human touch in messaging, they are more likely to trust the brand and its monetization strategies, leading to increased engagement and conversions.

Monitor In-App Ad Quality
Ad quality refers to the level of relevance, engagement, and effectiveness of an advertisement in capturing the attention and interest of the target audience. It’s important for developers and publishers to establish a process to monitor in-app ad quality because when in-app ads are too intrusive or are not delivered to the right user at the right time, it can also affect user engagement and retention. By monitoring the ad creatives served in your app and blocking demand sources that serve bad, malicious, or misleading ads, you can protect your users from having a negative experience. In the long run, this can establish a long-term relationship with them, which can contribute to higher engagement. Tracking metrics such as successful ad delivery, users’ ability to close ads, click rates, engagement rates, and more can also help you determine how to optimize your monetization strategy so that it actually helps contribute to in-app user engagement.

Invest in Gamification
Gamification introduces challenges, goals, and rewards that motivate users to actively participate in the app. Incorporating elements such as levels, achievements, badges, and progress tracking motivates users to continue engaging with the app to unlock new rewards or achieve higher rankings. This increased motivation leads to higher user retention and a greater likelihood of users exploring monetization options.

Gamification also transforms the user experience into an interactive and enjoyable journey. This heightened engagement and enjoyment creates a positive user experience, leading to increased satisfaction and loyalty.

Gamification often includes social features, such as leaderboards, multiplayer challenges, and social sharing. These elements encourage users to compete with friends or other app users, fostering a sense of community and friendly competition. Social interaction not only enhances the app experience but also promotes user engagement and organic growth as users invite others to join in the fun.

Monetize With Improved User Engagement

Understanding and implementing strategies to improve user engagement on in-app ads allows app developers to not only maintain a great user experience but also increase revenues. As technology advances, app developers must prioritize user engagement to stand out and thrive in this evolving landscape. An app’s success lies not only in its functionality but also in its ability to captivate and engage users. This is how you can foster long-term loyalty and financial success.

Knowing this, AlgoriX has developed our own proprietary technology to monitor ad quality in our network. We’ve also partnered with industry leaders to proactively scan ad creatives, check for offensive, illegal, and malicious ads, and block low-quality demand sources. This way, we can maintain a high level of ad quality, contribute to safeguarding our partners’ brand quality, and provide a clean and transparent marketplace.

Find out how AlgoriX can help you monetize your app without compromising on user experience. Connect with our experts today!



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Pranav Kataria

Associate Director, Programmatic Strategy

As the Associate Director of Programmatic Strategy, Pranav brings over 8 years of experience in the adtech industry working with Publishers, DSPs, Agencies, and Advertisers from global regions to improve their monetization, performance, and strategies. With great understanding of the mobile market, his expertise lies in analytics, account management, strategy, and ad sales. With this refined skill set, he brings customer-centric mindfulness that enables growth and innovation.

Before joining AlgoriX, his keen business perspective and skills have earned him opportunities to work across different organizations and verticals in the advertising ecosystem; be it improving the processes, sales enablement, and managing client relationships.

Ray Xia

VP, AlgoriX Partner Studio

Ray Xia was a mainstay at Tencent Games, having worked at the company for 13 years. There, he took on various roles including backend developer, application development manager, and game producer. During this time, he actively participated in the development and operation of popular titles such as QQ Pet, QQ Pet Fight, and games involving the Naruto franchise. To date, these games have over 10 million daily active users. Through this rich well of experience he has accumulated covering all aspects of game development and operation, he aims to spearhead more creative endeavors via AlgoriX Studios.

Naomi Li

VP, Research and Development

Naomi Li has a decade’s worth of experience in research and development for the adtech industry. She started her career at Baidu where she was mainly responsible for the Automation Testing of the Baidu Fengchao Ad Search Engine. There, she focused on the fields of overlapping experiment infrastructure, rich media ads rendering, and ad antispam technology. Moreover, as part of Baidu’s International Group, she led the research and development of various monetization and advertising mechanisms for Baidu’s overseas app store, SDK, and AdNetwork. At present, she is responsible for the overall direction of AlgoriX’s R&D efforts, which include product planning, technical architecture design, and talent training.

Frederic Liow

SVP, Revenue Growth & Strategy

A veteran in the digital advertising industry, he began his career during the early days of the dotcom era. To date, his passion for the digital industry is still as strong as ever (and getting even stronger). Spanning twenty years of his digital career, he has worked for leading companies like Nielsen, MRM McCann, Omnicom Media Group, Millward Brown and Smaato. Currently, Frederic is the revenue officer for AlgoriX spearheading global revenue growth, business expansion and strategic partnerships. He has set up and built AlgoriX’s global mobile ad exchange, hiring talents, establishing best practices, and injecting global industry standards into the company. Prior to his current role, he was the Head of Demand for Smaato, overseeing the demand business and operations in APAC. Frederic is currently based in our Singapore HQ.

Xinxiao Guo

Chief Operation Officer

Equipped with a decade’s worth of experience in global product operation as well as a deep understanding of emerging markets, Xinxiao brings her expertise in mobile traffic monetization and programmatic advertising to the table. Before her role at AlgoriX, she was a core member of iQIYI’s research and development unit. After that, she moved to Baidu as Head of Programmatic Advertising.

At present, she is AlgoriX’s co-founder and Chief Operation Officer. Together with the team, she aims to help game developers effectively reach global audiences and implement better monetization strategies.

Ruiz Xie

Chief Executive Officer

With nearly 20 years of business experience, Ruiz Xie founded AlgoriX with the vision of creating a global advertising platform and entertainment ecosystem. Through AlgoriX’s services, he aims to create a more inclusive tech ecosystem by providing customized solutions that meet the needs of businesses at every stage. At the same time, through AlgoriX Studios and its third-party partner studios, the company is currently bringing to life a greater goal of providing a comprehensive entertainment platform for people worldwide, which covers games, IP, comics, movies, and more. At present, he leads nearly a hundred employees with concrete plans to expand the company by establishing more offices worldwide.

Before founding AlgoriX, Ruiz Xie joined CoreMail in 2002. There, he created the first Ajax version of the mailbox in China for NetEase, which was the largest Internet company in China at the time. After that, he joined Tencent in 2005 and contributed to the creation of Tencent Games while also building a large scale distributed storage system. In 2013, he moved to Baidu where he took part in developing Baidu International’s overall architecture and search advertising system. During his tenure, he was also the Chairman of the Baidu Global Technical Committee and Baidu’s chief architect.