Everyone has an opinion on advertising in mobile games, but what exactly is the benefit of ads and how can publishers use them to their advantage?
What’s the perfect way to monetize a game?
The answer to almost every question like that one is “it depends.”
But in 2020, in-game mobile advertising has been skyrocketing and more developers see it as an effective monetization opportunity. It’s even replacing in-app purchases as the go-to choice for monetization. eMarketer predicts that the US market for in-game advertising across all devices will exceed $3 billion this year, with mobile comprising 47% of that spend.
The rise of the advertising model is partly due to the evolution of mobile ad experiences toward more engaging formats such as rewarded video ad units. Google Ads data shows a 400% increase in usage of rewarded ads, following an increased demand from players to see more video ads in exchange for free quality content and rewards. A majority of developers claim that retention rates rose after making the shift to an opt-in ad format.
Mobile advertising is now an important source of revenue for publishers. After being acquired by Activision, King went four years without in-app advertising, relying solely on in-app purchases. We are not surprised that Candy Crush is fully embracing ads again.
IAPs are not going anywhere and still provide significant revenue to mid-core and hardcore genres as well as deeper casual games such as Supercell’s Boom Beach. AdColony’s 2020 Mobile Publishing Survey, showed that video ads and IAP are the top ways publishers choose to monetize. The most effective methods are rewarded video and interstitial video ads.
Though, Chartboost cites that IAPs “never rose above 5% for most games”, developer Hyper Hippo states that players “went from [!saying!] ‘Ads are evil, they’re blocking my game’…to suddenly ‘We want more, we want more!’”
Brands have embraced the trend and have started to target inventory within games. A Fyber study showed that 77% of brands now “report that they have asked their media agencies to invest in in-app advertising inventory.” In addition, “91% of media agencies and 87 percent of brands say they plan to advertise in games.” With such a huge market out there, who can blame them? There were 5.19 billion unique mobile phone users globally and 204 billion apps downloaded in 2019.
Finding Balance with Hybrid Monetization
A hybrid model seeks to optimize a blend of IAPs and in-app advertising. Google AdMob data shows a 50% increase in adoption of hybrid monetization in the last year. But, how can companies combine them effectively? Wooga, may have figured it out.
Wooga’s Ad Monetization Manager, Lisa Pak, wrote on Medium about their experience optimizing revenue with rewarded video ads within their game, June’s Journey. The goal:
“to increase revenue from rewarded video ads to 30% of [!their!] overall revenue” by optimizing IAPs and ads without damaging user experience.
The dilemma many publishers are now facing: too many ads can scare users away, while not enough ads places monetization pressure on the publisher.
Pak says June’s Journey players view about 2.5 ads a day. This number will obviously vary across games and publishers. Wooga has a counter-intuitive view of ads; they place some ads to encourage users to keep playing. Ads become part of a positive user experience driving retention and extending average session lengths.
Wooga has sought to make viewing ads “part of the playing routine.” When done well, players start to expect the ads before they appear.
The Sweet Spot
Jam City continuously assesses player engagement. User experience comes first, and ads are implemented to enhance that experience. Nothing is taken for granted. “We let data talk and sentiment walk” says Jam City CEO, Chris DeWolfe.
In-game advertising is how hyper-casual games monetize and presently, these games are the most common game type in the app store (App Annie uses the term "Tuning" to describe game types. App Annie Tunings include Casual, Casino, and Core). IronSource says that these games “are lightweight with simple mechanics that offer instant gameplay” and are “infinitely re-playable, making them highly addictive and engaging.”
Hyper-casual game mechanics aren’t as sophisticated as those in games like June’s Journey. Such games drive lower revenue per active user than any other game tuning. They are low revenue per user but are immensely popular.
In conclusion, if you are a publisher of a hyper-casual game, be ready to monetize with ads, specifically new ad ad formats. The most successful game makers engrain ads in the user experience.
Want to learn more about tools that help with in-game mobile advertising and monetization practices? Visit our App Annie 1st party data management page to request a trial.
April 17, 2020App Monetization