It's been another busy year for the analytics industry. We've seen a doubling of incoming player data since September, major new games are making more and more use of our services and deltaDNA has exponentially increased our volumes of SmartAds ad mediation data.
The more we do, the more we discover, and so we'd like to share some interesting facts we've recently uncovered from the data on the deltaDNA platform - data which may well change people's perspective on some of the best practices and processes for commercial game design.
"While player experience is vital, sensitively accommodated ads don't have to scare players away"
Price demand elasticity
When preparing for our presentation at GDC last week, we looked at the differences between the highest monetizing games and their competitors. Several factors stood out, but chief among them was that the more you charge, the more money you make! As obvious as that may seem, it illustrates the principle that there exists an inelastic relationship between price and demand within the in-game economy.
If you stop to think about it, there's little competition to drive down prices, so players will often pay whatever you charge. As you can see from the chart below, a higher ARPDAU of over 10c cannot be easily achieved with a lower minimum price point.
The received wisdom is that the more ads you show, the more frequently players are irritated, increasing player churn. However, it turns out that this isn't necessarily the case. Our annual in-game advertising survey showed that 60% of respondents are taking a strategy that is either cautious, unsure or experimental, but work undertaken by Zachary Burn and Nicholas Ross at the University of San Francisco, along with our own Head of Insight, Isaac Roseboom, using deltaDNA SmartAds data, on The Sensitivity of Retention to In-game Advertisements, showed no evidence that first session ad density detrimentally affects retention.
The research evaluated the deltaDNA game data which associates ad engagement to the individual player, and enables its comparison with players' in-game behaviour. What the team found was that there is no evidence to suggest that the density of ads shown by a game in the first session affects whether or not a player returns for a second session.
It shows that while player experience is vital, sensitively accommodated ads don't have to scare players away, and ad strategies can confidently support higher ad frequencies.
"There is no evidence to suggest that the density of ads shown by a game in the first session affects whether or not a player returns for a second session"
So, what does make players leave? It turns out that it can be very dynamic. A factor which encourages players to stay in the early part of the game can become a significant cause of churn for players who progress deeper into the game. A perfect example of such a fluctuating metric is game difficulty: the game can be too hard for players at the start, but become too easy for the players that make it through the first few days. This understanding is invaluable for developers.
Our Insight team creates churn prediction models for clients' games. To do so, they identify the core metrics that most contribute to churn. Typically, these very specific metrics can be broadly classified within the generic categories relating to activity, competency, spending behaviour and progression. The first 5 days of game play is when most churn occurs, so we build models to predict and understand what happens on each day, and which factors are contributing the most, to help developers adjust their games accordingly, or analyze performance further, using data mining tools.
It can be very hard to get above 10c ARPDAU without at least three IAP purchases per spender. While many games focus on achieving the first spend, it is much more important to establish a core loop within the game that encourages repeated expenditure. It is often thought that Whales (defined here as players who spend more than $100/mo) are big spending players who make high value IAPs, but the evidence shows that the size of their expenditure is actually quite moderate but very frequent.
Ads cannibalizing IAP
With most games only having around 2% of players paying via IAP, it can be very appealing to monetize the rest of your player base with ads. Considering what has already been established about the absence of a connection between ad frequency and player retention, it can seem that the best way to go is to fill your game with ads. Before you do though, you need to consider where the real threat to monetization lies.
The table below, based on aggregated deltaDNA platform data, shows ads can seriously impact average (IAP) revenue per daily active user (ARPDAU). Whether it is because ads can move the player away from the game, cannibalize IAP or that inconsiderate placement is spoiling the experience. On average, games that show poorly implemented ads make less money.
There are many games that successfully monetize with ads, and that is because they understand how ads affect player behavior and in-game spending. With SmartAds, we track ad engagement just like any other game mechanic, which gives you a full picture of monetization, so you can make changes to optimize IAP expenditure and rewarded ad engagement.
We wish you well with your game monetization efforts. If there is any way we can help, don't hesitate to contact us. You may like to check out our website blog, which has many helpful insight articles, compiled using our platform.