In-app advertising monetisation is software that helps app and game makers earn money from the ad slots inside their apps, by offering each slot to the ad networks and exchanges that will pay the most for it. To monetise something means to earn money from it. Most free apps in India earn this way, because few users pay for apps.
An app has places where an ad can appear. There may be a banner at the bottom of the screen, a full-screen ad between two levels of a game, or a rewarded video, which a player chooses to watch in return for a prize. When a slot comes up, the app must find an ad within a moment. Many ad networks and exchanges could fill the slot, and each pays a different price at different times. Choosing among them is called mediation. A monetisation tool does the mediation: it asks the buyers, compares their prices and shows the ad from the one that pays the most.
Consider a word-puzzle game made by a small studio in Coimbatore, with 5 lakh players a day. It is a free-to-play mobile game: free to download, and paid for mostly by ads. A player runs out of hints. The game offers her a 30-second video in return for three extra hints, and she agrees. The game's monetisation software asks six buyers at once, including two mobile ad networks and an ad exchange. Their bids range from ₹90 to ₹210 CPM, meaning rupees per thousand showings. The ₹210 bid wins, and a video ad for a shopping app plays. The studio earns 21 paise from this one view, before the tool takes its share.
Apps measure their earnings in eCPM, the effective cost per thousand impressions. It is the money that an app actually earned for every thousand ads shown, whether the buyer paid per view, per tap or per install. These prices are explained in impressions and CPM.
The tool also helps the studio decide how many ads to show. With too few ads, the game earns little. With too many, players delete it. The tool's reports show, for each kind of slot, how much it earned, and whether players who saw more ads stopped playing sooner.
There is a fraud risk on this side as well. Some apps fake ad views with bots or with ads hidden from the user, in order to collect more money. This is called ad fraud. When buyers find fake views, they pay less for every app sold through the same channel. So monetisation tools watch for such patterns, which protects the prices of honest app makers.