Ad revenue (also called in-app advertising or IAA revenue) is what an app earns by showing ads to its users. The core identity is simple: ad revenue is essentially the number of [[ad-impression]]s served multiplied by the price each earns, expressed as [[ecpm]] (effective cost per thousand impressions). Everything else is a refinement of those two numbers.
The chain from session to revenue
- Impressions — driven by sessions, session length, and how many [[ad-unit]]s each session exposes.
- Fill rate — the share of ad requests actually filled with a paying ad. See [[fill-rate]]: an unfilled request is inventory that earned nothing.
- eCPM — the realized price per thousand filled impressions, set by demand, geo, format, and the auction.
- Mediation — [[ad-mediation]] auctions each impression across networks to maximize the filled price.
The levers that move ad revenue
| Lever | How to pull it | Trade-off to watch |
|---|---|---|
| Impressions | More sessions, more ad units, higher ad density | Density hurts retention if pushed too far |
| eCPM | Better mediation, premium formats, Tier-1 geo mix | High-eCPM formats are often the most interruptive |
| Fill rate | Add demand sources, set sensible floor prices | Aggressive floors raise eCPM but lower fill |
| Format mix | Shift toward rewarded and native units | Requires design integration, not just placement |
The levers interact — pushing eCPM via high floor prices can drop fill rate, so net revenue (fill × eCPM) is the number that matters, not any single metric.
Ad revenue is one of the two pillars of [[app-monetization]], alongside in-app purchases ([[iap]]). Pure-IAA apps (most casual games, many utilities) live entirely on ad revenue; subscription- and IAP-led apps may run little or none; hybrid apps blend both, often using ads for non-payers and purchases for the rest. Normalized per active user, ad revenue shows up as the ad portion of [[arpdau]].
The defining tension of ad monetization is the retention trade-off. Every extra ad raises impressions today but adds friction that can erode [[retention]] and, with it, lifetime value. The objective is never to maximize ad revenue per session in isolation — it is to maximize [[ltv]], which means testing ad load against retention rather than chasing the highest short-term eCPM.