Torulf Jernström is CEO of Finnish developer Tribeflame.

His blog is Pocket Philosopher.

In an earlier post, I wrote about SDKs and ad networks. This post will expand upon that ecosystem.

It was all so simple once. You had a game or website with a lot of traffic, and someone wanted to show ads to all those eyeballs.

So you did a deal. Like this

Now there are three layers in between. At least.

The problem with direct sales are the communication channels.

There's more than one game with a lot of players, and there's more than one company that wants to advertise.

If everyone is talking to everyone then they all waste huge amounts of time just discussing and cutting deals. If a thousand advertisers talk to a thousand game developers, then there are a million deals to be made.

Enter the ad networks.

The ad networks take care of this problem. All the advertisers just talk to an ad network, and all the game companies also just talk to an ad network.

The ad network has made some sort of standard deals that they offer everyone to be efficient. Usually it's some sort of auction that they are running.

Now, with a thousand advertisers and a thousand game developers, there are just two thousand discussions taking place, and they are mostly automated by the ad networks systems.

Clearly this is useful and saves a lot of wasted effort. It's so useful that more than one company got this idea! Now there are a few hundred ad networks around.

What network?

From the game company's perspective, it is now a question of what ad network to use.

Some of them have a lot of advertisers but pay only a little for each ad you show. Others have fewer advertisers but pay more for each ad.

As a game company, you can make several times more money if you do the right choices with how to handle the ad networks.

The solution is to integrate more than one ad network into your game. Your game will then say to the ad network that "here's a spot where you are allowed to show an ad". If the network has a suitable ad to show, it is sent over, and they log what the user did (watched the video, clicked the link, or ignored it completely).

Your game can basically ask the highest bidding ad network to show an ad first. If they have one to show, that's great. If not, you go on to ask the second highest bidder if they have one, then the third and so forth down the line.

This is called the "waterfall".

Unfortunately, it's a lot of work involved in optimising your ad revenue. Who has the best paying ads is always changing, and is different depending on what country your player is in. Which means that you have to have several waterfalls and constantly monitor and update them.

Fortunately, there are now companies that offer this service. A mediation platform basically does this for you. There are several around, some run by ad networks (they swear on their grandmother's grave that they do not favour their own ad network), and others from independent companies.

Helping advertisers

At the advertisers' end, there is a similar problem. There are lots of ways to advertise your service or app, how do you know what's the best one?

You could be running small campaigns on each possible channel, measure how they did and then decide where to spend the big bucks based on that.

This requires quite a lot of skill, math and time to do. Fortunately, there are companies who can do this advertising for you. Companies such as Fiksu and Twigeo are there for you when you want to outsource this job to professionals. To keep track of where you're getting your installs, you need an Attribution partner, such as Adjust, Tune or AppsFlyer.

Now we are left with this picture of the market.

Currently, I'm mostly thinking about which network mediator to choose when we're trying to make money from ads. You know, there are several, and we want to optimize between them…

And I have the same problem when wanting to buy ads. Someone really should offer me a service to choose between the service providers here...