For the last few years, deltaDNA has looked at the mobile game economy and wondered why most publishers and developers agonize about their retention and conversion rates, but spend limited time thinking about their ad revenue.
All too often we have see a cautious approach to ads as many developers were rightly concerned about churn. This led to ad strategies where new players were commonly excluded from ads for the first 10 sessions or even up to 30 days or more.
A lack of technical confidence in the implementation, concerns about impact on player experience and obscurity on the revenue calculations all led to developers seeing ads as a 'necessary evil'.
But over the last 12 to 18 months, we have started to see the industry embracing a new approach to ad strategies and consequently have seen ad revenues rise from about 20% of all income to 30% or more.
This trend is set to continue as new ad mediation tools become available, while at the same time, the options of working with a handful of ad networks or building your own mediation tools are becoming less viable.
The move into ad mediation
In the first instance mediation tools were provided by organizations that had ad content to sell. Of course, these 'biased' mediators would never advertise themselves as such, but rather than being solely focused on optimizing your monetization, their primary goal is to make money from advertising clients and make sure their inventory was prioritized.
However, there's a lack of transparency and trust with this approach as a publisher or developer can't be certain that their ad partner is maximizing their income stream by delivering the best ads and CPMs for their circumstances. Although this type of mediation is 'free', there are (of course) hidden charges and the results are often impossible to analyze and optimize.
However, the mobile ad tech scene evolves rapidly and there are now a number of ad mediation platforms on the market, like SmartAds, which use a fully transparent, unbiased approach, independent of any ad networks, yet are still able to deliver high fill rates and strong eCPMs.
While unbiased mediation is certainly a great step to achieving ad revenue nirvana, to fully maximize their ad revenues, developers need to be able to view the entire game economy. By being able to see how ads impact key metrics like retention and IAP consumption, developers can make smart decisions while effectively balancing their ad strategies and maintaining the best player experiences.
We know that ads should reward players for their consumption as a natural game mechanic, and should be thoughtfully placed and balanced by targeting appropriate player segments.
However, while thoughtful placement is key, publishers and developers shouldn't be afraid to increase the frequency of ads in their games. In fact, a recent study showed that the number of impressions from a basket of high performing games could be tripled without any impact on retention or IAP revenues.
Taking a player-first approach to ads ensures that the game produces high levels of revenue opportunities. Removing concerns about trust, control and technical robustness is compelling enough, but the revenue increases speak for themselves with at least a 50% improvement on most games compared to other biased solutions.
Smart developers see the game economy as a subtle balancing act ensuring players are engaged and motivated to enter into a value exchange with the game publisher. With the rise of unbiased mediation, another powerful set of tools become available and show a clear route to higher profits by optimizing engagement, in-app purchase and ads in one place.
Afraid of churn and reducing player enjoyment and engagement, most developers are overly cautious with their games, being too generous to non-spenders. The key to unlocking game profitability is a segmented approach to the placement and density of ads, rewarding the players and generating a significant revenue stream. While we have seen progress towards optimal in-game advertising, there is still a good way to go before we master the challenge.