F2P game developers have always had an uneasy relationship in-game advertising, mainly because of the perceived impact ads might have on the player experience. However, the revenue they offer, particularly from committed non-paying players, is significant.
As a result, in-game advertising, mostly in the form of rewarded video ads, has become ubiquitous in F2P mobile games. Just looking at games tracked via the deltaDNA platform, we can see that roughly 65% of games use some form of in-game advertising. Of these, 20% use our smartads mediation service to source ads.
The traditional approach to in-game advertising is to source ads from one or more networks who control the ad experience via their SDK. However, ad networks operate in a completely detached way from the rest of the game experience and so in-game monetization becomes fragmented between ads and everything else. One of the motivating principles behind smartads was to eliminate this divide, bringing the analytics and operation of all in-game elements into one place.
At deltaDNA we are uniquely positioned to investigate how different approaches to monetization elements impact overall game monetization. To begin, we took IOS and ANDROID games in Tier 1 regions and looked at their retention, ad and IAP monetization KPIs. The results of this are summarised in the table below.
Perhaps unsurprisingly, games without ads have the best IAP ARPDAU, although they have the worst retention of any group. Games with ‘normal’ ad ops have the best retention but worst IAP, Ad and total ARPDAU. This illustrates the danger of taking a fragmented approach to monetization. Without the ability to easily balance IAP, Ad revenue and retention it is hard to find the optimum monetization strategy.
With smartads we can see that while IAP revenue is slightly lower than games without ads, this is more than offset by the ad revenue. This is mainly because smartads users are driving much higher ad usage rates, as well as increases in ads per DAU and eCPM.
Ultimately, this smartads boost comes from the ability to adjust ad placements, frequencies and rewards quickly and easily and see the impact on retention and IAP monetization in real time.
In-game advertising has become a staple of the F2P game economy, with most games making 20-30% of their revenue from them. Similar to how game designers have learned to incorporate ads in natural and engaging ways; analysts and producers need to be able to track, test and adjust ad strategy as they would any other game mechanic.