The App Ad Monetization Dilemma: Striking a Balance Between UX and Revenue
Are natural ads UX-friendly?
“Users are starting to churn because of the ads.” VS. “We reduced the ads, and our revenue got cut in half this month.” If you’re a mobile app publisher, you’ve probably wrestled with this dilemma at least once. The biggest challenge publishers face when attempting ad monetization is finding the balance between profitability and usability. Many publishers strive to implement UX-friendly ads, but flawed approaches frequently lead to losing out on both fronts. In particular, people often mistakenly equate UX-friendly ads with simply “unnoticeable ads.” So, what exactly is a UX-friendly ad, and is it inherently incompatible with profitability? In this post, let's dive into the myths and truths surrounding UX-friendly ads.
The essence of advertising
To understand UX-friendly ads, we first need to look at the very nature of advertising. Ads operate on the market principles of supply and demand, and they have evolved specifically around the needs of the demand side—the advertisers. (Reference: What to consider first when starting ad monetization)
From an advertiser's perspective, the core purpose of an ad is to grab the user's attention. This inevitably creates some level of interference with the user experience. Advertisers expect better performance from ad placements that effectively capture the user's gaze, which makes them willing to pay a premium for those spots.
On the flip side, ad placements that fly under the user's radar have the advantage of not harming the user experience, but they can be quite limited in terms of profitability. Therefore, publishers are tasked with finding that sweet spot between monetization and user experience.
UX-friendly ads ≠ UI-friendly ads
If you have to show ads anyway, you naturally want the ones that annoy users the least. Occasionally, some publishers try to design ads so naturally that they are nearly indistinguishable from in-app content. However, contrary to the publisher's intentions, this approach can severely damage user trust. When a user clicks on something thinking it's content, only to discover it's an ad, they feel deceived—a highly negative experience. That is why ads must be clearly distinguishable from in-app content.
This example clearly illustrates that in ad monetization, a UX-friendly ad is a different concept from a UI-friendly ad. The core of UX-friendly advertising is not about hiding the ad, but clearly revealing it as an ad and appropriately integrating it alongside the app's core values. The key is to place ads naturally—without compromising the app's core value—and to provide an ad experience that users are willing to tolerate for the sake of the app's sustainability. Ultimately, successful ad monetization is the process of finding that delicate balance between profitability and user experience.
10 native ads VS. 1 rewarded video ad
Let me throw a question out there: Between 10 native ad placements and 1 rewarded video placement, which one is more UX-friendly? Truth be told, there is no right answer. The optimal choice varies depending on the specific characteristics and context of your app.
Having 10 native ad placements might make users perceive it as an ad-heavy app, but you can offset this by delivering small bits of value throughout the entire app experience. This relatively unobtrusive native format is especially useful for non-core features, or when the core feature hasn't quite delivered enough value to earn high user loyalty yet. However, as mentioned earlier, the less noticeable an ad is, the lower its unit price. Therefore, the strategy here is to drive enough revenue by increasing the volume—showing these ads more frequently across multiple screens.
A single rewarded video placement, by its very nature, has a high chance of triggering user resistance. But unskippable, full-screen video ads lasting 30 seconds or more guarantee the user's attention, meaning they boast a relatively high unit price. So, if you can provide enough value through the app's core feature to offset this friction, users might find the ad a bit inconvenient, but they'll tolerate it. It's a direction where publishers can generate substantial revenue while maintaining an appropriate balance.
Know yourself, know your advertisers to win at ad monetization
As you can gather from everything above, establishing a UX-friendly ad strategy requires a deep understanding of your app's core values and user characteristics. You need to intimately know what your app's core value is, what your user personas look like, and the journey users take to experience that value, so you can place ads in the right place at the right time.
For example, in the early exploration stages, users haven't yet experienced the app's real value, so you should tread lightly when exposing them to ads. Native formats that blend well with in-app content work nicely here. Then, on the screens where they actually feel the app's core value, you can be a bit bolder in adding ads—so long as it doesn't disrupt their experience. In this scenario, it's crucial to position the ad close to that core value so that the value itself offsets any user resistance.
Ultimately, the heart of ad monetization lies in finding that perfect equilibrium between UX and profitability. To judge which ad placements will perform best, you have to look through the advertiser's lens; to judge which ones will be the least annoying, you have to wear the user's shoes. Unfortunately, there's no neat mathematical formula like "one ad per one feature," which makes hitting that optimal point tough. I hope you thoroughly grasp how much value your users derive from which features, and discover the perfect balance unique to your own app.
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