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In-app advertising

In-app advertising lets an app earn from users who never pay. For a subscription app it is a second revenue stream with a real cost: every ad competes with the paywall for the user’s patience.

Updated

The term covers two sides of the same trade. Publishers show ads inside their apps and get paid by advertisers, usually through ad networks and mediation platforms. Advertisers, including many app marketers running user acquisition, buy those placements to reach people while they use other apps.

How in-app advertising works

The app integrates an ad SDK and defines placements: where and when an ad may appear. When a placement is triggered, the SDK requests an ad from one or more demand sources. Mediation or bidding picks the best-paying ad, it is shown, and the publisher is credited. Publishers track yield with eCPM, the revenue earned per 1,000 impressions.

Common in-app ad formats

Main in-app ad formats
FormatWhat it looks likeTrade-off
BannerA strip at the top or bottom of the screenLow disruption, low revenue per impression
InterstitialA full-screen ad between screens or levelsHigher yield, more disruptive
Rewarded videoA video the user chooses to watch for a reward, such as extra content or a feature unlockOpt-in, usually well tolerated
NativeAn ad styled to match the app’s own content, labeled as sponsoredBlends in; must stay clearly marked

Interstitials have their own design and frequency rules that deserve a separate discussion; the key point here is that full-screen formats earn more and interrupt more. Rewarded formats are often the easiest fit for subscription apps because the user decides when to watch.

In-app ads and subscriptions: hybrid monetization

Most users of a subscription app never pay. Hybrid monetization shows ads to that group while keeping the subscription as the main business. Common patterns include:

  • Ads for free users, removed for subscribers, which makes “no ads” part of the paid offer.
  • Rewarded ads that unlock a premium feature for a limited time, giving free users a taste of what the subscription includes.
  • Ads shown only after a user has declined the paywall or let a trial lapse, so they do not compete with the first purchase decision.

The risk runs the other way too. Ads can lower retention and trial starts, especially if they appear early in onboarding or before the first paywall view. If the ad revenue per user is smaller than the subscription revenue it displaces, the app is worse off.

How to tell whether ads help revenue

  1. Compare cohorts: users who see ads against users who do not, over the same period.
  2. Measure total revenue per user in each cohort: ad revenue plus subscription revenue.
  3. Check the funnel: trial starts, trial conversion and early retention in each group.
  4. Keep the decision tied to the acquisition channel. A user bought through paid search has a known cost, and ads should raise, not lower, the return on that spend.

Buying in-app ads as an advertiser

For UA managers, in-app inventory is a large source of reach, bought through ad networks or DSPs. Its traffic is interruptive rather than intent-driven, so it usually converts differently from App Store search. Judge it on cost per trial, cost per subscription and cohort revenue, not on installs alone.

Common questions

Do in-app ads hurt subscription conversion?

They can, especially when shown early or often. Test with a cohort comparison and look at trial starts and subscriptions, not just ad revenue.

Which in-app ad format suits a subscription app best?

Many subscription apps start with rewarded ads because users opt in and the reward can preview premium features. The right choice depends on your audience and when ads appear.

What is the difference between in-app advertising and in-app purchases?

In-app advertising earns money from advertisers for showing ads. In-app purchases earn money directly from users who buy subscriptions or items.

Protect the subscribers you paid to acquire

Adapty Ads Manager joins Apple Ads spend with installs, trials, subscriptions and revenue, so you see what each campaign and keyword really returns.