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90% of your players prefer ads over paying - now what?

Four industry execs discuss the best ways to implement rewarded ads
90% of your players prefer ads over paying - now what?

Guest post by Peggy Anne Salz at Mobile Groove.

Rewarded advertising isn’t new, but it is poised to have a new impact and potentially shape the future of gaming app monetisation.

Sensing this business opportunity, app publishers are doubling down on rewarded models to diversify revenue streams and wring more value out of engaged audiences. It's a smart strategy at a time when data warns CPIs, which hit their lowest levels ever, are out of sync with other key metrics across the funnel.

While Game Analytics reports time spent playing mobile games was up 62 per cent due to coronavirus lockdowns, the latest research from Liftoff shows a darker side to the data. Specifically, install-to-purchase rates from gaming apps are up to 2x the average cost of $40.40.

Unfortunately, high costs to acquire a player who will make an in-app purchase are matched by low conversion rates that have declined to 2.3 per cent. The upshot: players in self-isolation are spending loads more time in games, but their spending patterns don't match.

Publishers have a choice. They can fine-tune growth engines and loops to net highly-engaged users primed to make a purchase, from the get-go. Or they can focus efforts on adapting models to incentivise and monetise players. It's an approach that cashes in on players' keen interest in rewarded ad schemes, according to App Annie. Its ad monetisation report highlights massive opportunities in a market where players are warming to advertising in games.

But what are the best practices? What are the pioneering models that power a virtuous loop and unlock growth – and where are the pitfalls? What are the merits of approaches that reward consumers for time spent while compensating advertisers and publishers? Finally, why is personalisation destined to be the biggest "growth hack" of all and the most effective way marketers can make their game (and their advertising) habit-forming?

As inspiration for marketers during year-end strategy planning, I draw from a recent panel with four industry experts to provide actionable answers.

  • Lomit Patel, Vice President of Growth at IMVU, a game/3D avatar-based social networking universe.
  • Lenny Rabin, Vice President of Revenue and Business Development, Prodege. The Prodege platform, which Lenny helped design, offers advertisers the opportunity to connect their brands with a unique member base of 120 Million registered members globally.
  • Jonas Thiemann, co-CEO of the applike Group and managing director of adjoe, an ad tech company, which has developed Playtime, an innovative time-based rewarded ad unit.
  • Dan Beasley, Co-Founder of Viker, the London-based independent mobile studio focused on designing for retention and rewarding players in new and innovative ways.

Check out the list for a deep dive into the best practices from the panel.

#1: Follow the player signal to define the winning proposition

Should you offer players the option to make a purchase or watch an ad? Don't be tempted to decide this on the fly. Viker's Beasley suggests the best approach is to bake rewarded mechanics in your game from the start.

And don't limit it to one game in your portfolio. His team believes that players who like being rewarded for their attention and participation in one game will grow to expect the same mechanic in your other games.

"We use global mechanics across all of our games," he says. He also emphasises making the right fit between the experience and the call-to-action.

"Whether you want to engage only on an advertising basis with us, or if you want to engage through IAPs, [users] have a great experience that we are designing from the ground up, as opposed to retrospectively trying to shoehorn rewarded videos or interstitials into the experience,"

Any way you cut it, Viker adds, it starts with understanding the player's "propensity to engage with us."

At IMVU, Patel takes it a step further, drawing from user behaviour in the first 24 hours to "predict whether the best way to monetise them [players] is going to be either through in-app purchases or through advertising."

Once that is established, efforts focus on creating a social loop to increase stickiness and interest in earning credits to cultivate friendships in the game and have fun. In this scenario, IMVU makes a bet that many users won't be able to pay for the credits and will want to earn those credits either through rewarded video ads, adjoe's Playtime ad unit, or offer walls.

IMVU also cashes in because it draws from what it observes early on in the user experience "to expose users to ways they can either get more discounts on buying IMVU credits they want."

The bottom line, adjoe's Thiemann says, is understanding that ads are a value-add. "Having ads doesn’t mean that you will cannibalise revenues or diminish interest in IAPs, he explains.

Viewing rewarded advertising as "an incremental revenue source" is the right mindset to have. But having the right mechanics is essential. It's all about “getting the user into your engagement loop and then, in a fast way, making them used to your rewards,” he says.

#2: Positive experience = positive returns

After you mine the data to determine which audience is suited to rewarded ads, marketers have to draw from that same data to deliver an advertising experience aligned with user expectations.

In practice, Beasley says this means making sure rewarded videos appear in "a place where they naturally fit." More importantly, the placement and approach need to deliver value. "It's always about making sure that the time spent, from a player's perspective, is worth that reward," he adds.

Prodege's Raybin agrees. The advertising experience is important, but building trust is paramount. "It's literally keeping your promises," he says.

This means making sure that whichever advertiser you send them out to, they get the reward they expect and appreciate." In the best-case scenario, Patel adds, the publisher uses the rewarded ad formats to get players to a point "where they can enjoy the app even more."

This is also where the right approach can build "engagement value" that benefits players and publishers, according to Thiemann. Imagine a scenario where you want to encourage players to extend a session from 20 minutes to 30 minutes.

"It's very hard to create engagement value for these additional 10 minutes," he says. This is a reward ad format that introduces players to new games and new ways to earn credits or currency for their favorite game, creating a virtuous cycle, he adds. In fact, players exposed to the Playtime ad unit engage in "up to 10 more sessions within the first week" than users who did not install a game through the ad unit.

#3: Personalisation powers the new growth engine

An incredible 98 per cent of marketers agree that personalisation helps advance customer relationships. It's the winning factor that delivers better customer experiences at a high level, increases loyalty, and generates measurable ROI.

But this panel of experts takes it a massive step further, discussing how publishers can and must prepare for a new phase in personalisation, powered by AI and predictive analytics. In this scenario, publishers harness rewarded ads to complement the experience and drive recurring (and lucrative) revenues.

The takeaway: nudges matter and choice should be calculated and limited. Don't just tell players they are getting a reward. Help them visualise what they can use it for and how that can enhance their gameplay experience. Finally, mix it up. Showing the same ad to all players might seem like a smart shortcut. But you'll end up shortchanging your users and yourself in the end.

To learn more about how to harness the power of rewarded ads and how they can kickstart growth, check out the full video embedded above.