A Complete Glossary of Ad Monetization Terms

This glossary covers key terms and concepts in web and mobile advertising monetization. It includes definitions. The terms are grouped into sections by category (pricing models, revenue metrics, ad formats, technical concepts, and user engagement/targeting). Each entry provides a clear definition, explains why it matters, and offers tips for optimization.

Advertising Pricing Models (Cost Models)

CPC (Cost Per Click):

An advertising pricing model where the advertiser pays a fixed or bid amount each time a user clicks on an ad. In web and mobile monetization, CPC campaigns mean publishers earn revenue only when their audience engages by clicking. High click-through rates (CTR) can significantly boost revenue under CPC. To optimize CPC revenue, place ads in relevant content areas so genuinely interested users will click. Ensure ads have clear calls-to-action and are contextually aligned with user interests to encourage engagement.

CPM (Cost Per Mille):

A pricing model where advertisers pay per one thousand ad impressions. CPM is one of the most common models for display ads on both web and mobile. Publishers earn a set amount for every 1,000 times an ad is shown, regardless of clicks. This model is favored for brand awareness campaigns and is crucial for publishers with high impressions volume. To maximize CPM-based revenue, focus on viewability and volume. Ensure ads are actually seen by users and optimize page layout or app design so that ads load quickly and in view.

CPA (Cost Per Action):

A model where the advertiser pays only when a specific desired action is completed, such as a purchase, sign-up, or app install. CPA shifts risk to the publisher/traffic source, since payment occurs only upon a conversion. It’s common in affiliate marketing and offerwall ads in mobile apps. For publishers, pure CPA deals mean no revenue unless users perform the action. If using CPA-based ads, align them with content and audience intent. Optimize landing flow to improve conversion rates.

CPI (Cost Per Install):

A model specific to mobile apps where advertisers pay for each install of their app that originates from an ad. CPI is essentially a specialized CPA – the action is an app install. Many mobile ad campaigns are run on a CPI basis. Successful delivery of users who install an app is valuable to advertisers, and high install rates can lead to higher effective revenue for publishers. For app developers showing ads, integrate ad networks that have strong fill and high-quality advertisers to get competitive CPI offers.

CPV (Cost Per View):

A pricing model where advertisers pay for each view of a video ad. CPV is common for video ad campaigns, such as YouTube TrueView ads or rewarded video ads in mobile apps. It often requires that a certain portion of the video is watched. For publishers, this model means revenue is generated when users watch videos, which incentivizes delivering engaging ad content that users will watch through. Optimize video ad placements for high completion rates.

CPE (Cost Per Engagement):

A model where advertisers pay when users actively engage with an ad, such as by hovering, expanding, playing a mini-game, or otherwise interacting beyond a simple view. CPE is less common than the above models but appears with interactive rich media or social ads. It ensures the user not only saw the ad but also did something with it. Implement interactive ad formats in contexts where users are likely to interact.

Revenue and Performance Metrics

Continuing on “A Complete Glossary of Ad Monetization term, some revenue and performance metrices include

ARPU (Average Revenue Per User):

A metric that calculates the average revenue generated per user over a given period. It is computed as total revenue in the period divided by the number of active users in that period. ARPU is a core metric for both web and mobile publishers to gauge monetization efficiency. Track ARPU over time and segment it by user cohorts or traffic source. To increase ARPU, you can increase the number of ad engagements per user or improve the quality/yield of existing ads.

ARPPU (Average Revenue Per Paying User):

The average revenue from each paying user, typically calculated as total revenue from purchasers divided by the number of paying users. ARPPU considers only users who spend money. Use ARPPU alongside ARPU to understand your revenue structure. If ARPU is largely coming from a minority of paying users, ensure that non-paying users are being effectively monetized with ads.

LTV (Lifetime Value):

The total revenue expected from a user over the entire duration of their engagement with the app or site. LTV is crucial for budgeting user acquisition and improving monetization strategies. Calculate LTV by combining ARPU with retention metrics. To increase LTV, focus on retention and monetization per user.

eCPM (Effective Cost Per Mille):

The effective revenue per thousand impressions, calculated after the fact as (total earnings / total impressions) * 1000. eCPM is a critical metric for publishers to compare the performance of different ad networks, formats, or campaigns. Track eCPM by ad unit, placement, and country. Optimize underperforming placements by trying different networks or formats.

CTR (Click-Through Rate):

The ratio of ad clicks to ad impressions, usually expressed as a percentage. CTR is a fundamental measure of ad engagement. Improve CTR by integrating ads that match your content and audience interests. Experiment with ad styles and use clear indicators that something is an ad.

Conversion Rate (CVR):

The percentage of users who take a desired action out of those who had the opportunity to do so. CVR often refers to the percentage of ad clicks that result in a conversion. Show ads that are relevant to your users so that when they click, they are genuinely interested and likely to convert.

Ad Format Types

Continuing on “A Complete Glossary of Ad Monetization terms” some Ad Format types include

Banner Ads:

Rectangular image or text ads that typically appear embedded in page content or at the top or bottom of a screen. Banners are the oldest and most widely used ad format. They are easy to implement and present on both web and mobile. Strategic placement and adaptive sizes can help optimize banner ad performance.

Interstitial Ads:

Full-screen ads that cover the interface of their host app or site, typically displayed at natural transition points or breaks in content. Interstitials are high-impact units and generally command higher eCPMs than banners. Show interstitial ads during natural transition points and limit how often a user sees them.

Rewarded Video Ads:

An opt-in ad format where users choose to watch a video (usually 15-30 seconds) in exchange for a reward, such as in-app currency, extra lives, a premium feature, or other benefits​. The ad must be watched to (near) completion for the user to receive the reward.

Relevance: Rewarded videos have become a cornerstone of mobile app monetization, especially in games. They align user incentives with ad viewing – users want to watch these ads because they get something valuable in return. This results in extremely high completion rates and user satisfaction with the ad experience, often translating to higher revenue (rewarded videos in the U.S. averaged about $9–$17 eCPM per 1,000 impressions, which is very high​). For publishers, rewarded ads offer a way to monetize non-paying users without detracting from the experience; in fact, they can enhance gameplay or app usage by providing bonuses. On web (especially desktop), this format is less common, but variations exist (e.g., “watch an ad to get 1 day of premium access”).

Best Practices:

• Placement and timing: Offer rewarded videos at points where users could use a boost or extra content – for example, in a game, when the user fails a level you can offer “watch an ad for an extra life,” or in a music app, “watch an ad to skip the next hour of ads.” This ensures the reward is contextually relevant and valuable.
• User choice: Always make it opt-in. The user should initiate the process (e.g., by clicking a “Watch for reward” button), which ensures they are not surprised by the ad and are ready for it​.
• Reward balance: The reward should be meaningful enough to entice users (something they’d otherwise possibly pay for or really want), but not so overly generous that it upsets the in-app economy or discourages ever paying. Many games iterate to find the sweet spot – e.g., 1 rewarded ad = 1 extra life, which is helpful but still limited.
• Frequency: You might cap how many rewarded ads a user can do in a short time (to prevent farming and fatigue) – e.g., no more than 5 per day, or a cooldown period between views. However, top developers often allow quite a few per user per day as long as the rewards diminish or have natural limits.
• Ad quality: Use reliable video ad networks – a crashed or stuck ad means a user doesn’t get their reward, which will anger them. Most mediation SDKs handle this and offer callbacks to grant rewards only after a video completes. Always grant the reward if the video was fully viewed (some systems have server-side verification for this). Rewarded ads, when executed well, are a win-win-win: users get free content, advertisers get engaged viewers, and developers get higher monetization and retention​.

Native Ads:

Ads that are designed to match the look and feel of the surrounding content or app design. Native ads tend to generate higher engagement and better user experience. They can achieve good click-through rates and preserve the app’s aesthetic.

Playable Ads:

A sub-type of interactive ads where users can try a short interactive demo of a game or app directly within the ad. Playable ads are popular in user acquisition campaigns for mobile games. They often drive high engagement and have good conversion rates.

Offerwall:

A special ad unit that presents a “wall” of offer-based ads to the user. Offerwalls are common in mobile games, especially in the free-to-play genre. They can generate significant incremental revenue without cannibalizing in-app purchases too much.

Technical Concepts and Platforms

Continuing on “A Complete Glossary of Ad Monetization terms”, some Technical concepts and platform defintitions include,

SDK (Software Development Kit):

A collection of software tools, libraries, and documentation provided to developers to help integrate a specific service or feature into their applications. Mobile app monetization heavily relies on SDKs. Integrating and updating SDKs is part of the ad ops workflow.

Ad Mediation:

An app monetization solution that lets developers manage multiple ad networks through one platform. Mediation is crucial for maximizing fill rate and eCPM. It increases competition for your inventory and centralizes reporting.

RTB (Real-Time Bidding):

A programmatic auction process by which digital ad inventory is bought and sold on a per-impression basis in real time. RTB is the backbone of modern programmatic advertising. It maximizes the value of each impression by finding the advertiser willing to pay the most at that moment.

Header Bidding (Advanced Bidding):

A programmatic technique for web advertising where the publisher’s inventory is offered to multiple ad exchanges or demand sources simultaneously. Header bidding significantly increases ad revenue by fostering greater competition for each impression.

Ad Exchange:

A digital marketplace where publishers and advertisers buy and sell ad inventory, often via real-time auctions. Ad exchanges are a key component of programmatic advertising. They facilitate RTB auctions among interested buyers.

User Engagement & Targeting Concepts

Continuing on “A Complete Glossary of Ad Monetization term,

Frequency Capping:

A technique that limits the number of times a specific user is shown a particular ad or any ads within a period. Frequency capping is crucial for balancing monetization with user experience. It ensures each impression has a better chance of attention and avoids diminishing returns on additional exposures.

Ad Fill Rate:

The percentage of ad requests that are successfully filled with an ad. Fill rate is a key operational metric. Tracking fill rate helps in optimizing how many networks or exchanges you need.

Ad Viewability:

A metric that measures whether an ad was actually visible to the user on their screen. Advertisers increasingly care about viewability. Maximizing viewability is particularly important for web display ads.

Contextual Targeting:

A targeting method that selects ads to display based on the context of the content being viewed. Contextual targeting has gained renewed importance due to privacy changes that limit user tracking. It improves ad relevance and potentially CPMs.

AppLixir Rewarded Video Ad

AppLixir is a leading ad monetization platform specializing in rewarded video ads for web and mobile games, helping developers maximize revenue while enhancing user engagement. With a seamless SDK integration, AppLixir provides high-fill, high-eCPM ad placements that allow users to opt-in to watch ads in exchange for in-game rewards, boosting both retention and monetization. Its lightweight, customizable, and privacy-compliant solution ensures a smooth ad experience without disrupting gameplay. Trusted by developers worldwide, AppLixir offers robust analytics, diverse demand partners, and real-time reporting to optimize ad performance and increase lifetime value (LTV) for every user.