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The mobile gaming industry has come a long way since its inception in the late 1990s. In those early days, mobile games were little more than crude puzzle games and simple arcade titles. However, mobile gaming has exploded in recent years, thanks to the advent of powerful mobile devices and ever-improving mobile operating systems.

Today, mobile games are big business, with some titles generating hundreds of millions of dollars in revenue each year. And as the mobile app gaming industry has grown, so too has the mobile app game advertising market.

In this guide, we will explore the state of mobile app gaming, different revenue models for publishers, different types of mobile game advertising, and how each works. Further, we will share some best practices for publishers looking to use in-game advertising as a revenue model.

The state of mobile gaming

In 2021, mobile games accounted for an astounding 93 billion dollars in revenue. For context, that means that mobile games outpaced the combined revenue of PC and console games. For comparison, global movie box office receipts for 2021 were 21.3 billion dollars. Now consider that the mobile gaming market is expected to grow by 66 billion dollars in the next five years and the rocket ship that mobile gaming represents is hard to deny.

Factors driving this growth go far beyond the global mass adoption of smartphones. Even twenty years ago, games like “Snake,” “Brickbreaker,” and even “Pong” could be found on candy-bar phones and early not-quite-smart devices. Point of fact, the revenue growth in the mobile game sector is the result of improved connectivity to deliver a superior user experience and new revenue models. These revenue models give publishers the ability to generate significant sums of revenue without distracting or interrupting gameplay. These revenue streams then fund more – and better – mobile games, creating a virtuous cycle that benefits everyone with an interest in mobile gaming.

One of the most important things to understand about mobile game advertising is that it is still a relatively young and evolving industry. The mobile game advertising landscape is constantly changing and new ad formats, delivery methods, and measurement tools are being developed all the time. This can make it difficult to keep up with the latest trends and best practices.

Revenue models in mobile games

Most every app developer and game publisher is interested in profiting from their creations. In addition to invested time and energy, some of them also have significant development and marketing expenditures. As a result, it is important for game publishers to understand what options are available for revenue generation and, hopefully, actual profits. Regardless of the app store you use – like Google Play or the Apple App Store – there are a few different mobile game monetization models that a game developer can choose from when it comes to mobile games.

Freemium vs. Premium


The most popular revenue model for mobile games is the freemium model. Under this model, instead of app purchases, the game is offered for free to players. However, players can also choose to pay for in-game items or features that improve their experience. Its popularity is due, in part, to the fact that it allows publishers to monetize a larger number of players while still providing a quality experience.

Often, the freemium model utilizes a combination of in-game purchases and games supported by advertising


In contrast to the “freemium” model of generating app revenue through free apps is the premium model. This is the simplest revenue model for mobile games. In this model, players pay a set price to download the game and can then play it without any further interruptions. The game may have microtransactions, but these transactions are generally used to enhance the gameplay experience and are not required in order to progress. This was the original revenue model for mobile games, and still exists, but it has largely been supplanted in favor of the freemium model.

In-app purchases

In-app purchases (IAP) are a way for developers to monetize their gaming app after they have been downloaded. In this model, players can purchase in-game items, power-ups, and other enhancements that improve their gameplay experience. IAP can be a great way to generate revenue, but it is important to strike the right balance. If IAP is used in a way that feels too “pay to win”, it can quickly turn off the average mobile gamer and damage your game’s reputation.

In-game advertising

In-game advertising (IGA) is a mobile game revenue model that has been gaining popularity in recent years. In IGA, advertisers pay to have their ads displayed within the game. These ads can take many different forms, but the most common are banner ads, video ads, and interstitial ads. In-game advertising can be a great way to generate revenue without asking your players to pay. IGA as part of a revenue mix is critical for generating value from under-monetizing player cohorts.

The mobile game advertising landscape

Mobile game advertising is a rapidly growing industry. In 2020, mobile game ad spending was expected to reach $7.4 billion dollars and it is projected to grow to $17.5 billion by 2024. This growth is being driven by the continued growth of the mobile gaming industry as well as the increasing sophistication of mobile game advertising platforms.

In-game advertising allows developers to place ads within their games, and earn money each time a player views or clicks on an ad.

If you’re new to the mobile ad space, here are some terms you’ll want to know:


“Cost per mille” or “cost per thousand” – CPM is the effective cost an advertiser pays for every thousand impressions (an ad impression is essentially an ad view) within a publisher’s game.


“Cost per click” – CPC is how much an advertiser pays for each user who clicks on their ad within a mobile game developer’s game.


“Cost per install” – CPI is how much an advertiser pays an install that comes via an ad they placed within a mobile game publisher’s game.


“Cost per action” – CPA is what an advertiser pays a mobile game developer for a user who performs a specific action (sometimes called a conversion) through an ad placed in their game.


“Return on ad spend” – ROAS based buying is where an advertiser is willing to bid more for buying from apps and placements that bring them more revenue generating players. This can be done either algorithmically or through manual bid adjustments

While there are different ways an advertiser can purchase inventory – most notably CPM, CPC, and CPI – on the game publisher’s side, almost all inventory is actually sold on CPM. Algorithms can use CPC, CPI, and CPA to help inform the final CPM.

This is because most advertising monetization platforms default to a CPM model for their payouts – developers actually have very little say in how ads are served. Advertisers will often try multiple bidding techniques including CPI, CPA and ROAS based bidding to see what will most effectively achieve their goals. 

Types of mobile game advertising

Mobile game advertising works by connecting advertisers with mobile game publishers. Advertisers pay to have their ads displayed in mobile games and mobile game publishers receive a portion of the ad revenue.

There are a few different types of mobile game advertising that publishers can choose from. The most common kind of mobile ads are banner ads, video ads, interstitial ads, and playable ads.

Mobile Game Ad Types

Banner ads

A banner ad is the simplest form of mobile game advertising. They are typically small rectangular ads that are displayed at the top or bottom of the screen. Banner ads can be static or animated and are usually less than 30 seconds in length.

Video ads

A video ad is a more engaging form of mobile game advertising. A more immersive ad, they are typically 15-30 seconds in length and can be either skippable or non-skippable. Skippable video ads give players the option to skip the ad after a few seconds, while non-skippable video ads must be watched to completion. Often a video ad can also be combined with game mechanics to act as a rewarded video ad.

Interstitial ads

An interstitial ad is a full-screen ad that is displayed between game levels or at other natural breaks in gameplay. They are typically 15-30 seconds in length and can be either skippable or non-skippable.

Playable ads

Playable ads allow users to play a sample of the game before downloading it. These ads are very effective because they make the advertising experience more dynamic than ever before. Instead of a video or static advertisement that can be buried, ignored, or overlooked, playable ads allow users to try before they buy. This is more effective for advertisers, as more downloads come from players that have already tried the game before.

Rewarded ads

Rewarded ads are, quite simply, ads that users are rewarded for viewing. Most commonly these come in the form of rewarded video ads that players can watch in exchange for in-game currency or useful in-game items. 

Incentivized ads

Incentivized ads are ads that reward players in one game for completing objectives in another game. For instance, an ad in Game 1 might tell a user to finish Quest X in Game 2 in order to receive 200 gold coins in Game 1.As you can see, while Rewarded Ads reward simply viewing the ad, Incentivized ads actually move the player into the other game to complete an action and receive their incentive.

Native ads

A native ad, ideally, doesn’t really look like an ad at all. It’s embedded so cohesively with the surrounding game environment that it just seems like part of the game. An example could be a billboard for an actual product in the downtown area of a game or a radio spot that comes on while driving in a car simulator game.

Ad networks, platforms, and agencies

Most mobile game publishers work with ad networks, which are intermediary companies that help connect advertisers with publishers. An ad network is a third-party company that connects advertisers with publishers. Facebook Audience Network is one such example. They typically have a large inventory of ad space from many different games and apps, and they use algorithms to match advertisers with the right publishers.

Ad mediation platforms are a critical piece of technology developed by the most sophisticated ad networks. These platforms offer tools to help publishers manage ad inventory and optimize their revenue. Some advanced ad mediation platforms use a process called real-time bidding (RTB) to deliver ads to mobile games. In RTB, advertisers compete to have their ad displayed in a particular ad placement within a game. The winning bidder is then charged the amount that they bid and their ad is displayed in the game.

Real Time Bidding Explained

There are a number of ad mediation platforms that publishers can choose from. The most popular of these platforms are Google AdMob, AppLovin, and IronSource. AdMob is a mobile game advertising platform that is owned by Google. AppLovin and Ironsource are mobile game advertising platforms focused on user acquisition through rewarded video ads.

Additionally, there are mobile marketing agencies which specialize in different types of ads or marketing strategies. Agencies aren’t plugged into ad networks, but they can be a great source for creatives and strategy. Chartboost specializes in interstitial ads, for instance, while Upptic specializes in videos and game trailers.

From the advertiser’s point of view

To best understand how to optimize the ad experience in your mobile games, it is important to understand the point of view that advertisers are likely to have.

When advertising in a mobile game, advertisers are looking for an immersive and engaging experience for their users. They want their ads to blend in with the game content and not disrupt the player’s experience. Advertisers also want their ads to be as effective as possible, driving users to take a direct response or action that moves their business forward. As a result, they will likely test different ad formats and targeting strategies to see what works best.

Advertisers run the gamut from Fortune 100 companies like Coca-Cola to small and regional companies looking to build brand awareness. In fact, one of the largest segments of in-game advertisers is other software publishers trying to generate interest in new titles and games. The variety of organizations that may take an interest in advertising in your mobile game is nearly endless.

As a result, your decisions about advertising availability, placements, and rates should not be determined or decided based on desperation but rather with an understanding that there are plenty of options so long as advertising in your game provides value to their brand.

Best practices for generating ad revenue

When developing an ad revenue strategy, it’s important to keep in mind the needs of both the game developers and the advertisers. Here are some best practices for game developers to follow when considering ad monetization.

Best Practices for Ad Revenue

Understand your user base

It’s important to understand who your players are and what they’re likely to be interested in. This will help you choose the right ad format and the right placement for your ads.

Go multi-platform with your game

The more devices your game can be played on, the more potential revenue you can generate from mobile game advertising.

Do not disrupt the game experience

Ads should never interfere with the gameplay or the user experience. If done correctly, ads can enhance the game experience by providing additional content or rewards for players.

Experiment with different ad formats

There are many different types of mobile game ads, including banner ads, interstitial ads, video ads, and native ads. Try out different ad formats to see which ones work best for your game and your players.

Track performance

Use analytics to track the performance of your ads and optimize your ad revenue. The beauty of most advertising platforms and ad creatives is that they can be changed quickly to maximize results. Use data to inform decisions about optimizing placements, rotations, and messaging.

Don’t be afraid to try new things

One of the best ways to maximize your mobile game advertising revenue is to be original with your ads. If you can come up with new and innovative ad formats that are interesting and engaging for players, you’ll be more successful in attracting advertisers. Don’t be afraid to experiment with different types of ads, and track the performance of each one to see what works best for your game.

Maximizing placement value

Maximizing placement value is about more than money. Each placement has additional, intrinsic value. It is crucial for both publishers and advertisers alike to capitalize on this additional value.


The most obvious value in an advertisement for the game publisher is revenue. Different placements at different points of gameplay will carry different prices for advertisers. Advertisers will be wanting the greatest possible value for their investment just as publishers will want to maximize their remuneration.

Brand lift and association

In addition to revenue, in-game advertisements can drive brand lift for publishers and advertisers alike. Advertisers want to be associated with successful and innovative products. For game publishers, having big-budget advertisers associated with their mobile games can help to legitimize them in the eyes of players and other potential partners.


Another value that mobile game advertising placements hold is data. Advertisers are always looking for ways to collect more data about their target audiences. In-game advertising provides a unique opportunity for advertisers to collect data about player behavior. This data can be used to inform future ad campaigns and to improve the targeting of ads.

User Acquisition

In-game advertising provides an opportunity for advertisers to reach new audiences that they may not have been able to reach through other channels. Advertisers can use in-game advertising to reach players who are not actively seeking out their products or services.

User Retention

In-game advertising can also be used by mobile game publishers to increase their own user retention for mobile games. Publishers can use rewarded ads to keep players engaged and inside their own games longer. Additionally, they can cross-promote their other titles within their games – which can lead to further engagement and retention.

Understanding mobile in-game advertising

In-game advertising is a great way for mobile game publishers to make money. It can also help to increase user acquisition and retention, and it provides an opportunity for advertisers to reach new audiences. Understanding mobile in-game advertising is crucial for success in this area. By understanding the different revenue models, ad formats, and best practices, you can maximize your mobile game advertising revenue.

Upptic helps games and apps scale profitably by leveraging user acquisition, creative, data science and ASO.

If you’re interested in learning more, let’s talk. 


The mobile games market is making more money than PCs and consoles combined
Mobile Gaming Market by Platform and Geography – Forecast and Analysis 2022-2026



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