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2021 opportunities for growth-minded game publishers

As IDFA shakes up the advertising world, Facebook Audience Network offers insight on how to keep revenues flowing
2021 opportunities for growth-minded game publishers

Guest post by Shri Gunasekera, strategic partner manager, EMEA at Facebook Audience Network

Many game publishers and developers are turning over the same weighty questions in their minds: What does advertising look like in a post-IDFA world? Should we pivot our monetisation strategies to minimise risk? Where are the greatest opportunities for gaming companies to grow and scale?

We'll recap some of the biggest gaming monetisation shifts that are creating momentum moving into 2021. Then, we'll look ahead to the opportunities for publishers to monetise successfully in the future.

Ad monetisation momentum continues into 2021

First, let's set one thing straight. Despite the turbulent, cross-industry challenges of 2020, mobile gaming continues its growth trajectory. Moreover, mobile/in-app ads continue to make up a massive and growing slice of overall digital spend.

Despite the impact of COVID-19, mobile in-app and in-game advertising are expected to “rapidly grow”, according to IDC's Worldwide Mobile In-App and In-Game Advertising Forecast 2020-2024. Total worldwide mobile in-app and in-game ad revenue is predicted to rise 17.8 per cent in 2020 to more than $93.6 billion (IDC, December 2020).

This growth should be no surprise for those who have been observing the rise of advertising platform SDK installs over the past few years. As of December 2019, 89 per cent of top games worldwide had an advertising platform SDK installed according to the Facebook Audience Network-commissioned March 2020 report with App Annie: Ad Monetization in Mobile Games: The Untapped Potential.

As more and more publishers opt to balance in-app purchase revenue with in-app ads, we've continued to observe the impact of this shift on player experience and game revenue.

According to Forrester’s 2020 Consumer Technographics® Benchmark Survey, 40 per cent of online adults in the US and Europe continue to see the benefit of ads as a channel to learn about new products.

Players surveyed shared that in-game advertising encouraged them to play longer (47 per cent) and more frequent (51 per cent) sessions, which means more exposure to ads, according to the July 2020 2CV Report: Why the Ad-Supported Model of In-game Advertising is a Win-win-win.

For the long-term, in-app ads will continue to thrive despite short-term data limitations.

In this video - The Future of In-App Advertising - Joanna O'Connell, VP Principal Analyst at Forrester Research, shares her perspective on the future of mobile advertising and what brands and publishers can do to prepare for 2021 and beyond.

As you develop your monetisation strategy and seek opportunities to grow your gaming business this year, read on for 3 key trends shaping the mobile gaming landscape.

Hybrid monetisation & revenue diversification becomes key with signal loss

To minimise the impact of signal loss on revenue streams, we recommend that our publishers implement a hybrid monetisation model. This means incorporating a healthy balance of both ads and in-app purchases in their games, to minimse risk when major industry changes like IDFA loss happen.

Hybrid monetisation has been gaining popularity over the past few years, and in fact, this approach was ranked as number 1 for best ROI for revenue generation by over 1 in 4 developers (28 per cent) in Walnut Unlimited’s May 2019 report Ads, IAP or Both? Game Developers Reveal Their Preferred Monetisation Mix.

To continue their growth trajectory, mobile gaming companies must adopt ads. A monetisation strategy that relies solely on in-app purchases can lead to missed opportunities to grow revenue and improve user experience without impacting retention.

Taking revenue diversification a step further, publishers should also consider investing in alternatives like Facebook's Instant Games and Cloud Games. These platforms can offer publishers access to totally new revenue streams, to ensure that their businesses are more resilient to shifts in the industry.

Rewarded video becomes a must-have (as players actually like it)

In 2020, some developers still needed to be “convinced” that rewarded video would not hurt their game. But in 2021, players in all mobile genres will expect rewarded video in the games they play.

Rewarded video is a flexible format that can be highly effective in developing richer user experiences, improving player retention, and driving significant revenue for publishers. IDC Gaming Research Director Lewis Ward shared: “Video and rewarded ad revenue is forecasted to rise particularly quickly” in IDC’s September 2020 Market Analysis Perspective.

Gamers surveyed in the July 2020 2CV report shared that rewarded video is the most useful and least disruptive ad format, leading to longer gameplay sessions and more opportunities for content discovery. Specifically, 32 per cent of gamers see rewarded video as being twice as useful as all other formats, because it gives them something to use immediately in their game (2CV, July 2020).

This makes sense, as the vast majority of players will never make an in-app purchase, but they still have a desire to unlock content quicker in the games they are playing. Rewarded video offers them that alternative.
We anticipate that player-friendly-ad units will continue to drive higher LTV and as such, we recommend adopting rewarded video ads.

In-App bidding helps publishers maximise revenue and efficiency

As in-app ads continue their growth trajectory despite IDFA loss in 2021, bidding puts publishers in the best position to deal with the changes coming. Even before IDFA uncertainty became a concern, we envisioned the future of ad monetisation as a fair and efficient ad ecosystem where competition can thrive.

Also in IDC’s September 2020 Market Analysis Perspective, IDC VP of advertising Karsten Weide suggested: "In-app advertising's hotspot #1 for 2021 is in-app bidding;" which helps developers "maintain innovation." (IDC, September 2020).

Based on the bidding adoption we've observed, we couldn't agree more.

Now, as publishers face a future where IDFA loss makes traditional waterfalls even more inefficient, in-app bidding offers publishers a key lifeline to ensure they are getting the maximum value from every ad impression shown in their games.

And as more gaming publishers have experienced the financial and operational benefits of bidding - like a number of our partners, including Voodoo, Tripledot, FUN-GI Games, Melsoft and Game Insight - this ad monetisation approach has become more standardised for the industry.

David Ribeiro, user acquisition and monetisation team lead at Voodoo shared their experience: “After switching from waterfall mediation, we saw a significant uplift in ARPDAU, and operational efficiency improved. Now, we've adopted bidding across all of our inventory.”

In our report The New Era in Ad Monetization, our publisher partners told us that moving from waterfall to bidding significantly reduced time spent on ad operations--by up to 50 per cent.

Now more than ever, in-app bidding can help free up valuable time and resources to enable your team to navigate this period of change. To mitigate the impact of CPM volatility, publishers may also want to consider repackaging their inventory to optimise bidding results.

As you navigate a changing mobile landscape in 2021, keep these trends and opportunities in mind. And remember that we remain committed to investing time and resources into building monetisation products that help the thousands of developers and publishers that rely on ads from Facebook Audience Network.

CTA: Find out more how to prepare for 2021 in the blog: The Future of Mobile Ads: 2021 Trends and Opportunities. Or, listen to our recorded webinar with PocketGamer that covers these 4 trends in more detail.