Three things came out of the recent deltaDNA F2P in-game ad-serving survey, which struck home. Firstly, developers are getting more and more cautious about the way they implement their ads. Secondly, developers are more worried about player enjoyment and progress than they are about player retention, and thirdly, developers mainly see ads as a necessary evil.
The message this sent to me, is that there is a big data gap between ad network analytics and player behaviour analytics, and this is causing frustration for developers and suppressing the monetization of games through ad revenue through a fear of IAP cannibalization and undermining player experiences.
This is why smartads is the perfect solution at just the right time. It is vital to understand how ad interaction affects player and monetization behaviour and build well-balanced and targeted strategies that can be proven to enhance player engagement and prioritize IAP monetization through a complete data view of the game economy.
1. Analyze your whole game economy
Ask anyone how to improve their ad revenue, and they are likely to talk about choosing the ad network with the best eCPM (effective cost per thousand impressions) as being a big part of the answer. This is the most dangerous assumption made in advertising. It assumes that everything else is working well, and so the only thing you can choose between is eCPM. It does have a role, but in fact, this is the last element you should optimize, as it makes the least difference to your results. The The most important aspect of advertising monetization is protecting your IAP.
As you can see in the table below, games running interstitial or rewarded ads are outperformed in terms of ARPDAU (average revenue per daily active user), which accounts only for IAP revenue, by games running no ads at all. This shows that you can increase your IAP revenue by up to 100% by understanding what it is about your ad serving that’s stopping players from buying.
Nearly all the top grossing F2P games run ads, but they are very careful to make sure the ads are set-up right and not cannibalizing IAP. With only 2% of players paying, you need to monetize the remaining 98%, and ads are the best way of doing it, but not if you treat them as a bolt-on.
2. Treat ads as another game mechanic
DeltaDNA data shows that more than 70% of players don’t interact with rewarded ads. This situation can only be improved through evaluation and testing and data that connects ad consumption to game interaction. Understanding the placement of rewarded ads, the consequences of making design changes, the amount and type of reward, and its impact on IAP and future game play are all aspects that should be optimized.
Building an iterative process that includes A/B testing modifications is essential as there is possibly a 25% uplift in ad revenue that can be achieved, as rewarded video ads are paid on a cost per click (CPC) basis. Ignoring this and relying on impressions by hiding them away in a far corner of your game loses a lot of potential revenue for games. Conversely, the most successful approach for rewarded ads is making them an integral part of the game play.
3. Stop being too cautious
Another typical misunderstanding is that a high frequency of in-game advertising causes players to abandon the game. A recent study undertaken by the University of San Francisco, using deltaDNA data, shows that ad frequency is not a contributory factor in players leaving, but the in-game experience is a significant factor. Developers are more often taking cautious strategies including showing fewer ads and later in the game, but it’s a strategy based on fear rather than one based on data.
In the last year, our in-game ad survey has shown a two-thirds drop in the use of interstitial ads, and this is likely to be due to the fears around in-game experience. While it is true that a bad advertising experience can affect retention if it adversely affects gameplay, a high frequency of neutral or positive advertising experiences will not make a difference, so a lot of money is being left on the table because of misplaced caution.
4. Segmented monetization strategies
IAP engagement has to be your top priority, but this only accounts for 5% of players. While your IAP engaged players shouldn’t be excluded from seeing ads, particularly as many will see rewarded ads as an essential part of supporting their progress, the level of reward received by these players and the timing and positioning of rewarded ads needs to take into consideration IAP cannibalization. Examples of these are when a rewarded ad is shown at the end of a level, in place of a targeted offer, or the level of reward prevents or delays the need to make a future IAP purchase. This is what we mean about treating advertising as a game mechanic and understanding the player interaction.
There’s more than 70% of players who don’t interact with rewarded ads and a high proportion of these won’t be making IAP purchases either. Because rewarded advertising only pays on a CPC basis, these players are not directly contributing to the game economy. There is another classification of player, who is not directly active, but useful to the game economy and these are socially active players who drive acquisition. For everyone else, there’s no reason not to serve banner or interstitial ads which generate revenue based on impressions. The approach you take here can again be optimised by tracking and testing.
5. Use independent dynamic mediation
Only 11% of games use a dynamic mediation tool to optimise fill-rate. Smartads connects to more than 30 of the biggest ad networks to optimise eCPM and fill-rate. We set-up a dynamic waterfall of ad networks that changes for every player, depending on criteria such as their location and ad engagement, to ensure the highest eCPM ad is served. The results achievable from ad networks vary all the time due to the campaigns they are running and the programmatic tools they use to minimise expenditure for advertisers, so dynamic waterfalls are an important way to protect your revenue.
Often, user acquisition can be more valuable than serving an ad, so smartads lets you prioritise your own in-house ads at the top of your dynamic waterfall. DeltaDNA smartads is the only independent ad mediation provider and we don’t act as an ad network, so there is no conflict of interests and we are always on your side.
If you are setting-up your advertising strategy based on achieving the highest eCPM, throttling back ad frequency to protect player retention and are trying to optimize fill rate with a static waterfall, you are seriously compromising your in-game economy. If you can’t see how ad interaction affects IAP purchases, then your advertising strategy is probably costing you money. The only way to be sure you are making money with advertising is tracking ad interaction through to individual players’ in-game behavior, with smartads.
Download the deltaDNA ad serving survey.