Google AdMob: What is it and How Does it Work?

Google AdMob is a mobile advertising platform developed by Google that allows app developers to monetize their mobile apps by displaying ads. AdMob matches ads to your app based on criteria you set, then you earn revenue whenever users interact with these ads.
Google AdMob: What is it and how does it work?

AdMob supports various ad formats, including banner ads, interstitial ads, rewarded ads, and native ads, and integrates seamlessly with other Google services like Google Analytics and Firebase. 

AdMob is available for Android and iOS platforms and supports popular gaming engines like Unity and Cocos.

How to make money with Google AdMob?

To make money with Google AdMob, app developers must integrate a SDK into their apps, then set up a Google AdMob account and start monetizing by displaying ads. 

The ads are created and paid for by advertisers who want to promote their products, and AdMob ensures that the highest-performing ads are shown to your users.

What are the ad formats in AdMob?

Ad formats used in AdMob are banner ads, interstitial ads, native ads, rewarder video ads and native advanced ads. Different ad formats serve different purposes and are suitable for various types of apps and income goals. 

Here’s a deeper overview of the leading ad types available, plus their pros/cons and tips on how to use them effectively.

Banner ads are small, rectangular ads that appear at the top or bottom of the app screen. They are simple and non-intrusive, allowing users to continue interacting with the app without significant disruption.

Banner ads are best for consistent, passive revenue because they are always visible while users interact with the app. This constant visibility means they can generate a lot of impressions, even if the click-through rate is relatively low.

Apps like casual games or utility apps are ideal for banner ads. Frequent visibility increases the chances of impressions and revenue.

Interstitial Ads

Interstitial ads are full-screen ads that cover the entire interface of the app. They typically appear at natural transition points, such as between levels in a game or after completing a task, catching the user’s full attention.

These ads offer higher revenue potential, but they can also disrupt user experience. Interstitial ads work best in apps with clear breaks in the user flow, like games with levels or apps with defined user tasks.

Native Ads

Native ads blend seamlessly with app content, making them less intrusive and more engaging. Users might not even realize they are looking at an ad, which can lead to higher engagement and better performance.

Keep in mind that native ads require more effort to design and integrate.

Rewarded Video Ads

Rewarded video ads reward users for watching an ad, a reward can be something like in-game currency or extra lives. This reward creates a win-win situation: users get something valuable and a better user experience, while the publishers earn more revenue.

Gaming apps are particularly well-suited for rewarded video ads, as players are often willing to watch an ad in exchange for in-game rewards. 

Native Advanced Ads

Native advanced ads offer high customization options, allowing developers to tailor them to fit their app’s unique needs and design. The flexibility of native advanced ads allows for a more integrated and seamless ad experience.

How much can you earn from AdMob?

The amount you can earn from AdMob varies significantly based on app category, user demographics, ad format and placement, advertiser demand and competition. 

Let’s get into more detail on the mentioned factors that affect adMob earnings:

App category and user demographics

Understanding your audience’s profile is a starting point for setting realistic revenue expectations.

Apps in high-demand categories like gaming or finance typically generate higher ad revenues because advertisers are willing to pay more to reach users interested in these areas. 

User demographics significantly impact earnings. Users from high-income countries generate higher ad revenues due to increased advertiser spending in these regions. 

Ad format and placement

Different ad formats provide different earnings. For example, rewarded video ads usually have higher engagement rates and therefore higher CPM (cost per thousand impressions) than banner ads, which typically generate less revenue. 

Another important factor is the placement of ads within your app. Ads shown at natural breaks in app usage (for example between game levels) usually perform better and generate higher earnings.

Advertiser demand and competition

More competition among advertisers for ad space in your app drives up the price of ads.

High-demand periods, such as holidays, often see increased CPM rates. 

Observing industry trends can help you assess when demand might be higher and adjust your ad strategy accordingly.

What are the typical CPM rates for AdMob?

The typical CPM rates for AdMob depend on the ad format and regional variations:

  • Banner Ads have a typical CPM rate between $0.10 and $1.00.
  • Interstitial Ads’ CPM rate can range from $1.00 to $5.00.
  • Rewarded Video Ads generally have a CPM rates between $10.00 and $50.00.

Regional variations in CPM rates

CPM rates also differ by region. For example, North America and Europe usually have higher CPM rates than regions like Asia or Africa. 

This difference is due to higher advertiser spending in these markets. 

How to calculate potential AdMob earnings based on user count and CPM

To calculate your potential AdMob earnings, multiply your daily active users by the eCPM (estimated cost-per-mile) rate and the number of ad impressions per user. 

For example, if your app has 1,000 daily users, an eCPM of $5.00 ($5.00 per 1000 impressions), and each user sees three ads daily, you could earn $15 daily (3 ads displayed daily to 1000 users = $15).

A small app with 10,000 monthly active users might see earnings between $50 to $500 per month, depending on the eCPM rate and ad engagement.

A medium app with 100,000 users could earn between $500 to $5,000 per month.

What  Admob revenue models exist?

AdMob uses three revenue models – cost-per-click (CPC), cost-per-impression (CPM), cost-per-action (CPA). 

Here’s a short overview of each aDmob revenue model along with their best use cases:

Cost-per-click (CPC)

With this model, you earn revenue each time a user clicks on an ad displayed in your app. The amount you earn per click depends on factors such as the advertiser’s bid, the type of ad, and the user’s location and demographics.

CPC is a popular model for apps that drive traffic to external websites or landing pages. It incentivizes users to click on an ad and actively engage with it, which could bring higher conversion rates for advertisers.

Cost-per-impression (CPM) 

In the CPM model, you earn revenue based on the number of times an ad is displayed or viewed by users within your app, regardless of whether they interact with the ad. 

Your revenue is calculated based on the impressions multiplied by the advertiser’s CPM rate.

CPM is often preferred for apps with high user engagement and viewability. It allows developers to earn revenue simply by displaying ads to their users without requiring explicit user interaction.

Cost-per-action (CPA) 

With the CPA model, you earn revenue when users complete a specific action after interacting with an ad, such as purchasing, signing up for a service, or installing another app. 

The advertiser sets a predetermined amount they are willing to pay for each completed action, and you earn that amount every time a user from your app complies with the desired action.

CPA is a performance-based model that aligns the interests of developers and advertisers, as revenue is generated only when the desired outcome is achieved. This model is particularly suitable for apps that promote e-commerce, subscriptions, or other monetization strategies that rely on user actions beyond ad clicks or impressions.

AdMob integration process 

The first step is integrating the AdMob SDK (Software Development Kit) into mobile apps. 

Here’s how to do it:

  1. Download the SDK – obtain the latest version of the AdMob SDK from the official Google AdMob website.
  2. Add the SDK to the Project – follow the platform-specific instructions to add the SDK to your app’s project files. Include all the necessary libraries and dependencies.
  3. Configure the SDK – initialize the SDK in your app’s code, typically in the main activity or application class. This step ensures that the SDK is ready to serve ads.
  4. Test the integration – use test ads to verify that the SDK is correctly integrated and functioning as expected. 

Set up an AdMob account

Before displaying ads and earning revenue, you need to set up an AdMob account. 

Here’s a step-by-step guide:

  1. Create an Account – sign up for an AdMob account using your Google account. Visit the AdMob website and follow the registration process.
  2. Link to Google Play or App Store – link your AdMob account to your app’s listing on Google Play or the App Store. 
  3. Create Ad Units – define ad units for different formats (e.g., banner, interstitial, rewarded) and obtain unique ad unit IDs. These IDs are used to identify the ad spaces in your app.
  4. Configure Ad Settings – you can customize ad settings, such as ad frequency, placement, and targeting options. 

What are the best strategies to maximize AdMob revenue?

The best strategies to maximize AdMob revenue are targeting ad placement, capping ad frequency and using mediation to boost ad revenue. 

Another great strategy to earn additional app downloads and get more app usage is app store optimization (ASO). We won’t go into the detail of how ASO works, but we strongly recommend ASO professionals to  frequently update and A/B test the ad formats and monitor performance metrics regularly.

Ad placements, frequency and user experience

Here are our tips on the best approaches for ad placements:

Make your ads visible but non-intrusive

Place ads in visible locations that do not disrupt the user experience. For example, banner ads can be placed at the top or bottom of the screen, while interstitial ads can be shown during natural transition points in the app, like between game levels or during loading screens.

Integrate rewarded ads

Offer incentives for users who watch the ads, such as in-app currency or extra lives for ads. This reward will increase the likelihood of ad completion.

Deploy Native Ads

Use native ads that blend seamlessly with the app’s content and design, ensuring a non-disruptive ad experience.

Regarding ad frequency and user experience, always set frequency caps, segment users, monitor user feedback, and conduct regular A/B tests.

Frequency caps limit the number of times an ad is shown to a user within a specific time frame to prevent ad fatigue and maintain a positive user experience. 

Analyze user feedback to better  understand the app users’ tolerance for ads and adjust ad frequency accordingly. Show fewer ads to new users and increase frequency for more engaged users.

AdMob mediation

Now that we’ve covered the basics of best ad practices and where to place them, let’s move on to AdMob mediation

Google AdMob Mediation is a feature within the AdMob platform that displays ads from multiple ad networks. This feature mediates between your app and various ad networks, so that users see the highest-paying ads.

Here’s how to properly set up Ad Mediation: 

  • Add Ad Networks – in the AdMob dashboard, navigate to the “Mediation” section and add the ad networks you want to include in your mediation stack to increase competition among ad networks and drive up the price of ad placements.
  • Configure Mediation Groups – create mediation groups based on criteria such as geography, ad format, and user demographics. Then, assign ad units to these groups to ensure the most relevant ads are shown to users.
  • Optimize Ad Sources – use AdMob’s machine learning algorithms to automatically optimize the order of ad networks in your mediation stack, ensuring the highest-paying ads are shown to users.
  • Leverage Google’s Extensive Ad Network – Utilize Google’s vast ad network to access a wide range of advertisers and ad formats, increasing fill rates and revenue potential.

How to track AdMob performance and revenue?

To track AdMob’s performance and profits, app developers and marketers must combine AdMob’s built-in reporting tools with integrations with other analytics platforms, such as Google Analytics.

AdMob provides comprehensive reporting tools that allow you to track various metrics related to ad performance, user engagement, and revenue. 

Use filters and dimensions to customize your reports based on specific criteria, such as ad units, formats, and date ranges. Filters help you gain clear insights into the performance of different ad placements and formats.

Google AdMob reporting

Setting up AdMob reporting is pretty straightforward.

Log in to your AdMob account and navigate to the “Reports” section. Here, you can create custom reports or use predefined templates to monitor key metrics.

The Key Metrics to Monitor are:

  • Impressions – The number of times ads are displayed to users.
  • Clicks – The number of times users click on ads.
  • Earnings – The revenue generated from ad interactions.
  • Click-Through Rate (CTR) – The ratio of clicks to impressions, indicating the effectiveness of your ads.
  • eCPM (Effective Cost Per Thousand Impressions) – The estimated earnings per 1,000 impressions, helping you understand the revenue potential of your ads.

Google Analytics integration

Integrating AdMob with Google Analytics provides deeper insights into user behavior and ad performance. This integration helps you understand how ads impact user engagement and retention. 

Here’s how to set it up:

  1. Link Accounts – Ensure that your AdMob and Google Analytics accounts are linked. In AdMob, go to the “Settings” section and select “Linked Accounts.” Follow the prompts to link your Google Analytics account.
  2. Set Up Event Tracking – In Google Analytics, event tracking monitors specific user interactions with ads, such as ad clicks and rewarded video completions. Event tracking helps you understand how ads influence user behavior within your app.
  3. Analyze Data – Use Google Analytics to analyze user behavior metrics, such as session duration, retention rates, and in-app purchases. Compare these metrics for users who interact with ads versus those who don’t to assess the impact of ads on user engagement and retention.

Final advice on Google AdMob

Setting up Google AdMob is simple. Sign up, link your app, and configure ad units. Place ads smartly, use rewarded ads, and optimize ad frequency. Choose the right ad types like banners, interstitials, and native ads. Use mediation, monitor performance, and update regularly.

Google AdMob can turn your app into a revenue generator. Now, it’s your turn to apply these tips. Sign up for AdMob, integrate your app, and start experimenting with ad placements and formats.

Or, if you are not sure how to monetize your app, make sure to contact App Radar’s agency too help you get more value from your app.

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