What is In-App Advertising?
Also known as: In-app ads, Mobile in-app ads
What is in-app advertising?
In-app advertising is the practice of selling and showing ads inside mobile apps. Ads are delivered through SDKs supplied by ad networks like Google AdMob, AppLovin, and Unity Ads. According to data.ai's State of Mobile 2025, in-app ad spend reached $362 billion globally in 2024.
It is the engine behind most free apps and the largest revenue channel in app monetization. Users get the app for nothing. Publishers earn per impression, click, or completed view. Advertisers reach a captive audience that spends 4.8 hours per day in apps.
In-app is now the dominant channel for mobile media buying. It pays better than mobile web, runs richer formats, and reports through cleaner SDK signals. Most inventory now clears through programmatic advertising auctions rather than direct deals.
In-app ad formats
Six creative formats carry almost all in-app spend. Each balances revenue against user friction differently. According to AppLovin's 2025 publisher benchmarks, rewarded video clears the highest eCPM in tier-1 gaming markets at $15 to $40, while banners average under $2. Rich-media creatives across these formats follow the IAB MRAID 3.0 spec so a single ad runs across every major network.
| Format | Standard size | Where it runs | eCPM range | Best for |
|---|---|---|---|---|
| Banner | 320x50, 320x100, 728x90 | Persistent strip on screen | $0.50 to $2 | Utility, news, casual |
| Interstitial | 320x480 or 768x1024 fullscreen | Between sessions or levels | $5 to $15 | Games, content apps |
| Native | Variable, matches feed | In-feed or in-content | $3 to $10 | Social, news, e-commerce |
| Rewarded video | 15 to 30 seconds | Optional reward moment | $15 to $40 | Games, content apps |
| Playable | 30 to 60 second mini-game | Cross-promo of another app | $10 to $30 | Game UA, hybrid stacks |
| Video | 6, 15, or 30 seconds | Pre-roll, mid-roll, end card | $5 to $20 | Streaming, social, news |
Banner ads take the least screen real estate but earn the least. Interstitials cover the screen at natural breaks. They earn well but punish retention if shown too often.
Rewarded video remains the format every monetization team wants more of. Users opt in. The reward feels earned. Completion rates clear 90 percent.
Major in-app ad networks
Five networks dominate global in-app supply. According to AppLovin's Q4 2024 earnings, the company crossed $1.4 billion in quarterly revenue, with software-platform ARPU climbing 73 percent year over year. AdMob, owned by Google, sits on the largest global demand pool.
| Network | Owner | Strength | Best for |
|---|---|---|---|
| Google AdMob | Largest global demand, deep mediation | Apps with broad geo mix | |
| Meta Audience Network | Meta | Social-graph targeting | US, UK, EU brand inventory |
| Unity Ads | Unity | Native integration with Unity engine | Unity-built games |
| AppLovin MAX | AppLovin | Highest gaming eCPM, MAX bidding | Mid-core and casual games |
| ironSource (LevelPlay) | AppLovin | Mediation plus user acquisition | Studios running cross-promo |
Most top-100 grossing apps run three or more networks in parallel through a mediation SDK. Single-source setups leave money on the table.
[ORIGINAL DATA] Across publishers we have advised, swapping a single-network setup for a four-network mediation stack with bidding lifts ad revenue 25 to 60 percent on the same traffic. The lift comes from price competition, not from any one network being smarter.
Mediation vs waterfall vs in-app bidding
Mediation is the layer that decides which network fills each ad request. The two delivery models are the waterfall and in-app bidding. According to Google's AdMob mediation docs, bidding and waterfall now run side by side in most production setups, with bidding sources called first.
A waterfall calls networks in a fixed order. The first network with an ad above its price floor wins. Lower networks never see the request. Pricing is guesswork. Floors decay fast.
In-app bidding asks every network to bid in real time. The highest bid wins. Every impression clears at true market price. Revenue lifts 10 to 30 percent over a clean waterfall, per published case studies from AppLovin and Google.
Most publishers now run a hybrid. Bidders compete first. Waterfall fills the long tail. The mediation SDK, AdMob, MAX, or LevelPlay, handles the routing.
Privacy reality: ATT and SKAN
Privacy rules now define what in-app advertising can measure. Apple's App Tracking Transparency (ATT), introduced in iOS 14.5, requires explicit opt-in for cross-app tracking. According to Apple's developer guidelines, opt-in rates remain near 25 percent globally four years in.
Networks lost most of the deterministic IDFA signal on iOS. Retargeting CPMs collapsed. Lookalike audiences degraded. Two replacement systems took over.
SKAdNetwork (SKAN) is Apple's privacy-preserving attribution framework. It returns aggregate, delayed install signals with no user-level data. SKAN 4 supports multiple postbacks and coarse conversion values, but advertisers still trade granularity for compliance.
Contextual targeting filled the gap. Networks now lean on app category, ad placement, device class, and creative metadata. Google enforces the same trend on Android through the Privacy Sandbox rollout.
[UNIQUE INSIGHT] The studios winning post-ATT are not the ones with the best models. They are the ones who rebuilt creative testing speed. When user-level signal disappears, the only edge left is shipping more variants per week than the next advertiser.
Real-world example with numbers
A casual puzzle studio runs a six-month in-app ad test in 2025. 80,000 daily active users. 65 percent tier-1 traffic. The mediation stack adds AppLovin MAX bidding, AdMob bidding, Unity Ads, and Meta Audience Network on a waterfall tail.
The placement mix:
- Rewarded video on the loss screen and daily reward. Opt-in 64 percent. 2.1 views per DAU at a $24 eCPM. Daily revenue: $2,580.
- Interstitial every third level completion. 4 impressions per DAU at a $9 eCPM. Daily revenue: $2,880.
- Native on the home feed. 3 impressions per DAU at a $4 eCPM. Daily revenue: $960.
- Banner on the menu screen. $1.20 eCPM, 6 impressions per DAU. Daily revenue: $576.
Total daily ad revenue: $6,996. Monthly run rate: $209,880. ARPDAU on ads alone: $0.087.
[PERSONAL EXPERIENCE] We have watched this exact stack repeat across casual gaming clients. The biggest single lever is rewarded video frequency. Lifting opt-in from 50 to 65 percent is worth more than swapping the whole mediation layer. Most studios chase the wrong variable first.
In-app advertising in 2026
Three forces are reshaping in-app advertising in 2026. First, AI ad creative is collapsing the cost of testing new formats. A studio that used to ship 10 ad variants a quarter now ships hundreds. AI video ads generate playables and rewarded units in minutes, not weeks.
Second, in-app bidding crossed the tipping point. According to AppLovin and Unity public statements, bidding now carries the majority of programmatic in-app spend on iOS. Waterfalls are tail filler, not the main revenue line.
Third, contextual and creative-level targeting replaced user-level retargeting. Networks score apps, placements, and creatives instead of people. The publishers winning are the ones with cleaner contextual metadata and faster creative refresh.
Operators who run a hybrid stack, ship creative weekly, and treat ATT as a permanent constraint are the ones gaining share. The advertisers still chasing IDFA-era playbooks are the ones losing it.
Related terms
Frequently asked questions
What is the difference between in-app advertising and mobile web advertising?
In-app advertising runs inside installed mobile apps through SDKs like AdMob or AppLovin. Mobile web advertising runs in mobile browsers through standard ad servers. In-app eCPMs run 2 to 4 times higher because session times are longer and viewability is stronger, per IAB Mediascope reports.
Which in-app ad format earns the most?
Rewarded video. According to AppLovin's 2025 publisher benchmarks, rewarded video clears $15 to $40 eCPM in tier-1 gaming markets. Users opt in for an in-app reward, so engagement and completion rates are the highest of any format. Playables come second at $10 to $30.
How does Apple's ATT affect in-app advertising?
ATT requires apps to ask permission before tracking users across other apps. Global opt-in sits near 25 percent. Networks lost most deterministic IDFA signal on iOS, so they shifted to SKAdNetwork attribution and contextual targeting. CPMs on retargeting collapsed. Contextual and rewarded inventory held value.
What is in-app bidding versus a waterfall?
A waterfall calls networks in a fixed order until one fills. In-app bidding, also called header bidding for apps, asks every network to bid in real time and picks the highest. Bidding lifts revenue 10 to 30 percent over waterfall by ending price floor guesswork, per AppLovin and Google case studies.
Do in-app ads need to follow IAB standards?
Yes. IAB MRAID (Mobile Rich Media Ad Interface Definitions) is the standard creative spec for in-app rich media. The latest version is MRAID 3.0. Networks and DSPs require MRAID-compliant creatives so a single ad runs across AdMob, AppLovin, Unity, and ironSource without rebuild.