Should You Allow Mobile App Ads for Your Mobile Application?

Many clients consider allowing mobile application ads, particularly if they are going to offer the app at no charge.

Can you recover your cost or earn a profit this way?

Ads have become a regular choice to monetize free applications. Customers tend to expect apps that they have paid for to be ad-free, and apps that they have not paid for to display some ad.

Our clients usually want to know what kind of return they will get for allowing ads on their application. Although we cannot guarantee your results, we can provide some useful information to help you with this decision.

Using mobile application ads can pay back the cost of development over time.

For example, if your mobile app costs $10,000 to develop, how many app downloads will it take to recover the cost of advertising revenue?

It depends on how many times a typical user launches your application in a day, and how many ad impressions they see with each launch.

We will use a case in point to make an estimate. Let's say that a user will start your application five times per day, and they see five ad impressions every time a user opens the app. If you know that your advertisers pay $0.00875 every time there is an ad impression (this is called CPI), you can figure the number of downloads you will need to recover your cost by using this formula:
Development Cost /[ # of launches per day x # of ad impressions per launch x cost per impression (CPI)]

Using our example:

$10,000/ (5 launches per day x 5 ad impressions per launch x $0.00875 CPI ) = 45,714 downloads.

Can you earn a profit?

The number of downloads that an app receives can vary. Statistics show that a free iPhone/iPad application could receive from 5,000 up to 150,000 downloads per month.
If your app performs well in the market, there a possibility of not only recovering cost but gaining a profit over time. At a minimum, the use of advertisement can help offset your costs. For this reason, you might want to give mobile application ads a try.