Ad Monetisation Basics in Mobile Gaming

Why It Matters

Effective ad integration can turn a free game into a sustainable revenue stream while preserving user retention, making ad strategy a critical competitive advantage in the crowded mobile gaming market.

Key Takeaways

• Choose ad format early to align game economy
• Banners suit menus; interstitials need natural breakpoints
• Rewarded videos drive engagement when tied to core loops
• Mediation platforms run real‑time auctions, boosting eCPM
• Monitor ARPDAU, fill rate, and churn for optimization

Pulse Analysis

Mobile gaming revenue increasingly relies on advertising, yet the choice between in‑app purchases and ad‑based models is not merely a financial decision—it reshapes the entire product roadmap. When developers embed ad considerations at the concept stage, they can design UI layouts that accommodate banners without obstructing gameplay and embed rewarded video triggers directly into core loops. This foresight eliminates costly retrofits and ensures that ad placements feel natural, preserving the delicate balance between monetisation and player satisfaction that drives long‑term retention.

Modern mediation platforms act as the traffic controller for ad inventory, aggregating demand from multiple networks and running real‑time auctions to secure the highest eCPM for each impression. Solutions like AppLovin MAX, Unity LevelPlay, and Google AdMob replace the outdated waterfall approach with dynamic pricing, while also feeding performance data back into user‑acquisition campaigns. Although integrating several SDKs adds a layer of technical overhead, the increased competition among demand sources typically lifts fill rates and overall revenue, making mediation an essential component of any serious mobile‑game monetisation strategy.

Revenue optimisation hinges on continuous KPI monitoring. Metrics such as Daily Active Users (DAU), Average Revenue Per Daily Active User (ARPDAU), eCPM, and fill rate provide a granular view of how each ad format contributes to the bottom line and where user experience may be at risk. High CPM bids can depress fill rates, while overly aggressive interstitial frequency can trigger churn. By iterating placement, capping rewarded video caps, and adjusting auction floor prices, developers can fine‑tune the ad ecosystem to maximise LTV without alienating their audience.

Ad monetisation basics in mobile gaming

Ad Monetisation Basics · Masterclass (Part 1)

Getting up one day and deciding to create a game is a worthy endeavour. It takes a good idea, capable hands and a lot of brain power to come up with a winning product.

There is a tough decision to make right at the start – how are you going to get paid? Are you going to monetise through in‑app purchases or ads? Or both?

The type of monetisation dictates how you create and build your economy and it can seriously affect your gameplay loop. You can add advertisements or IAPs later, but it will require more work and will not be as simple as creating a monetisation plan from the beginning.

How to approach ads implementation often requires making a number of choices – picking ad positions, mediation platforms, integrated ad networks, analytics, connecting it all with user acquisition, etc. It can all get quite confusing and overwhelming.

So here’s a guide on some of the basic concepts of ad monetisation – from the most often used types of ads, mediation platforms and ad networks (demand sources) to the various KPIs that need to be monitored.

This is a starting point for you to start diving deeper into the ad monetisation world.

---

Chapter 1: Ads and product integration

Ads are a great way to monetise a free game, but it’s good to actually devise the title with ads in mind. For example, you have to think of the technical implementation consequences of making a responsive UI to integrate banners, think about gameplay loops implementing rewarded videos and incentivising users, and on top of that, devise interstitial transitions that are as unintrusive as possible to not break user flows.

There are a number of steps to follow. While it seems daunting, this can all be a process of iteration – not everything has to be done at once, especially if you are struggling with limited resources.

First we will look at the three basic ad types and their most common uses.

Banners

Banners are the quiet, unassuming ads that rent a small strip of screen space without causing too much drama. They sit in the user’s eyeline but do not break their flow with a full‑screen interaction.

Banner sizes can range from simple 320 × 50 (now mostly adaptive – fitting the entire width of the screen) to 300 × 250 rectangular boxes usually reserved for “scrolling content” (think of an Instagram feed).

Implementation and positioning guidelines

• Place banners where the user's eyes naturally rest – either the top or bottom of the screen. This also depends on your UI / navigation setup. Avoid placing them in the middle of the content to not disrupt any gameplay or app flows.

• Place banners on screens that are not part of the actual gameplay loop – main menus, option screens, pause screens, etc.

• Avoid placing banners too close to any buttons or other clickable elements to prevent accidental clicks and user frustration.

• Make sure your UI is responsive to any potential adaptive banners that vary in height and width.

• Ensure there are no obstructions that could affect viewability (the ad must be visible for at least a couple of seconds).

After the first implementation, you can dive deeper into display and viewability rates, duration tracking, banner rotation, performance considerations, mediation setups, and other technical details. For now, focus on positioning and test it from a user’s perspective – if it annoys you, it will likely annoy your users.

Interstitial

Interstitials are the much more intrusive cousin of banners – they appear suddenly and take up the full screen. Because of their intrusiveness they can drive strong performance, but they also risk higher churn if not used carefully.

The main things to consider are frequency and placement.

Placement guidelines

• Show interstitials at natural break points – between levels, when switching major app sections, after completing major tasks, etc. Choose moments that are least disruptive.

• Consider showing them after specific “failures” (e.g., when the user runs out of lives), but be cautious as this can increase churn.

• Never interrupt core gameplay; avoid showing interstitials while the user is intensely focused on a loop.

Frequency guidelines

• Timer‑based – show an interstitial after a set amount of time or after a certain number of transitions (e.g., every three minutes).

• Event‑based – trigger after a defined set of events (e.g., after three consecutive failures or after winning two levels).

Advanced topics include different interstitial configurations, A/B testing, cohort‑based delivery, ad quality and duration considerations, and churn analysis. For starters, keep the implementation simple and focus on user experience.

Rewarded video

Rewarded video is the least intrusive ad type because it is completely opt‑in. The user decides whether to watch it in exchange for a reward.

It is the only ad type that can tie directly to your gameplay loop and can provide substantial incentive to users, making it a powerful monetisation tool when integrated from the beginning.

Rewarded video guidelines

• Integrate rewarded videos into core mechanics from the start, not as an afterthought.

• Treat rewarded videos as a source of “income” for the user, influencing the game economy. For games without an economy, you can lock certain features behind a rewarded video.

• Define clear reward structures (e.g., “one use per day”).

• Ensure the reward feels natural within the app and give users clear control over the choice.

• Consider capping the number of rewarded videos to avoid endless ad‑watching sessions and to keep the economy balanced.

• Communicate clearly what the reward is and how it can be used.

There is much more to explore regarding positioning, gameplay utilisation, and balancing with other ad types, but the basics above will get you started.

All in all, implementing ads is not a simple switch – it requires thoughtful integration, utilisation, and user‑experience design.

After defining where and how to use ads, you can start planning the technology stack. Will you build your own ad‑monetisation stack or use existing solutions?

---

Chapter 2: Mediation platforms and user acquisition

What is a mediation platform?

Think of ad integration as a two‑layer onion. The first layer is your “inventory” – the ad space you have to fill. The second layer is the mediation platform, which finds the best ad to fill that space. The platform aggregates inventory from various publishers and sells it to demand sources (ad networks).

Popular mediation platforms include MAX (AppLovin), LevelPlay (Unity), and AdMob (Google). You integrate their SDK into your game, and they handle the rest, while you simply request an ad when your inventory is ready.

How does a mediation platform work?

Mediation platforms run an auction each time your app has inventory to fill. Multiple ad networks submit bids, and the highest bidder wins the impression. An older method, the waterfall, requests networks sequentially based on pre‑defined CPM values. Many platforms now use hybrid approaches that combine both.

Mediation platforms and user acquisition

Your mediation platform can also inform user‑acquisition efforts. By analysing which ad placements, CPMs, and user segments generate the most revenue, you can reinvest that revenue to buy ads on other apps, creating a closed loop: earn → spend → acquire → earn again.

---

Chapter 3: Demand sources

Demand sources (ad networks) provide the actual ads that fill your inventory. When you enable a demand source in your mediation platform (e.g., AdMob, LiftOff, Mintegral, Meta, Unity), you increase competition in the auction, which can raise prices.

Each demand source usually requires its own SDK, so you’ll need to integrate and maintain multiple SDKs alongside the mediation SDK. While this adds some maintenance overhead, it gives each network control over ad display, analytics, and performance data.

---

Chapter 4: Making sense of performance KPIs

Once your ads, mediation platform, and demand sources are live, you need to monitor performance.

Key metrics

• DAU (Daily Active Users) – Count each user once per day.

• ARPDAU (Average Revenue Per Daily Active User) – Normalises revenue regardless of DAU fluctuations.

• eCPM (Estimated Cost Per Mille) – Revenue (or cost) per 1,000 impressions.

• Impressions – Number of times an ad is displayed.

• Fill rate – Impressions ÷ ad requests (percentage of requests that are filled).

Balancing CPM, fill rate, and user experience is essential. High CPMs may reduce fill rate, while low CPMs may increase fill rate but not necessarily revenue. Find the sweet spot that maximises revenue without harming the user experience.

Glossary

• ARPDAU – Average revenue per daily active user.

• Bid floor – Minimum price a publisher will accept for an impression in an auction.

• CTR – Click‑through rate (clicks ÷ impressions).

• Conversion rate – Percentage of users who complete a desired action after clicking an ad.

• DAU – Daily active users.

• eCPM – Estimated cost per mille.

• Fill rate – Filled impressions ÷ total ad requests.

• Impression – A single instance of an ad being displayed.

• LTV – Lifetime value; total revenue expected from a user over their entire lifespan in the app.

• SOV – Share of voice; percentage of total impressions your app captures compared to competitors.

---

Wrapping up

This basic rundown covers ad integration, mediation platforms, demand sources, and performance tracking. It’s only the tip of the iceberg – there are many layers of optimisation, technical considerations, and strategic decisions that can further improve your monetisation efforts.