Does in-app advertising in iOS and other mobile apps actually generate revenue, or is it a worthless business model?

In-app advertising works well for some apps.  Pandora, Twitter and Facebook generate hundreds of millions of dollars a year in mobile ad revenue.  Unfortunately, not many apps generate the kind of traffic those do to generate large sums of revenue.  Most apps today generate revenue between advertising and in app purchases like virtual currency.  iAd works for some people and doesn't for others.  It depends on the nature of your app and the kind of ads you want to run in it.

I'd take a look at http://www.massiveimpact.com-- a company that says they focus on "conversions, not clicks." They've got a cost-per-installation (CPI) model in which advertisers pay only per installation (or any other desired action) and not per click or impression. In my experience, cost-per-action (CPA) advertising often delivers greater ROI than CPC or CPM models. If you're interested, my agency published an essay looking at the current online-advertising market in this context: http://www.theclinegroup.com/2012/11/28/ppc-is-dead-long-live-cost-per-action-ads/. Hope this may help!

In-app advertising does generate revenue. The amount of revenue depends on where in your app you are willing to place ads, as well as what type of ads are offered. Deciding where to place ads within your app is a double-edged sword; more ads means more money, but can come at the cost of user retention, resulting in decreased ad supply in the long run. When deciding the types of ads that you are willing to place within your app; banners, interstitials, rich media, or video; you should choose the type that is least interruptive to your users while simultaneously maximizing your monetization abilities. When deciding which ad network to work with, your main questions should be regarding the quality of the ads that they serve, and the rates that they will provide for your supply of ad space. Rich media and video have result in much higher quality users than traditional banner ads by providing an improved user experience.  Ad networks that guarantee the quality of the ads they serve are hard to come by, as creative efforts cost time and money; however, Aarki (http://aarki.com) guarantees its ad buyers free high quality creative services, and by extension ensuring that its publisher partners only serve well-developed ads.

The fact is that most publishers will never see their app dev investment returned to them, more than none if said publishers rely solely on banner advertising without providing some monetization soluotion such as in-app purchases in some way or another creating a 2nd revenue source. Also, it all depends on how many users are visiting / downloading the app actively to make any revenue through banner ads. Banner ads at best achieve a 1.5% click-through on impressions, CPMs across networks, as it is always being measured differently, will most likely show standard publishers below the $1 CPM on average. The key is to know how to generate more users using your app as well as monetizing them effectively throughout their visit. www.ezmob.com