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How game developers can optimize their in-app advertising strategies even further

How game developers can optimize their in-app advertising strategies even further

Pavel Golubev is the CEO of intelligent ad mediation company Appodeal.

Thousands of apps launch each day, so the mobile app business must be booming, right?

Not exactly, as many of these apps will fail to ever make money.

According to a recent Vision Mobile survey, 60 percent of developers make less than $500 a month - below the "app poverty line" - from their creation.

New deal

In-app advertising presents a promising way for gaming apps to make money.

But generating revenues from in-app ads can be tricky, and few gaming apps have truly mastered the perfect strategy.

Ads are often perceived as annoying, disruptive, bandwidth-hogging nuisances - having the inadvertent effect of driving app deletion versus monetization.

The key for gaming apps to maximize in-app ad monetization is to display smart, sound ads that users find helpful, versus irksome.

Here are some tips.


Click here to view the list »
  • 1 Learn from the failure of mobile web

    In recent years, many mobile sites - particularly media sites - have simply overloaded their pages with ads. The result has been slow, heavy sites and a poor user experience.

    This, of course, has led to the recent uptick in ad blocking across not just mobile websites, but inside mobile apps as well.

    Earlier this summer, PageFair issued a report with a disheartening finding: one in five mobile devices worldwide is now using ad blocking.

    While ad blocking software is still primarily used on desktop and mobile websites, the appetite for it may easily transfer to apps, unless in-app advertising practices adjust.

    Ads we like, ads we don't

    Gaming app users in particular expect experiences that are fast, enjoyable and convenient, so if ads detract from this, they can be blocked - or, users will simply stop playing the game.

    However, there's a silver lining to the ad blocking backlash - and gaming apps can see the glass as half empty or half full.

    In a recent Accenture survey, half of respondents said they'd be interested in mobile ads if those ads meet their interests.

    So the key is not to inundate app users with ads, but to find the right place and time to show ads so users perceive them as helpful and additive.

    Power of mediation

    As gaming apps evaluate ad networks and mediation services, they need to consider, who does the best job at doing this, while maintaining a fast, reliable user experience.

    Finally, they need to remember that certain types of ads (for example, native ads and rewarded videos) tend to be viewed as less intrusive and are more well-received than others types, like interstitials and banner ads.

    However, native ads and rewarded video often require more development work, so there is a trade-off.


  • 2 Optimize the right metrics

    eCPM - 'effective cost per mille'

    eCPM is the outcome of a calculation of the ad revenue generated by a banner or other type of ad, divided by the number of ad impressions that the banner or ad expressed in units of 1,000.

    eCPM can help app publishers determine what ads generate the most revenue for their in-app real estate, as well as help advertisers compare two or more similar apps and determine where they can get the most bang for the buck.

    While eCPM can be a good indication of users and traffic, it does not convey app engagement - how many users are actually visiting the app regularly, spending money and likely to be engaged.

    In addition, eCPM can be a skewed by numerous factors, such as an ad server going down or running slowly. For these reasons, publishers should supplement eCPM with ARPDAU information.

    ARPDAU - Avenue Revenue Per Daily Active User

    ARPDAU is basically total revenue of a game or app on any day divided by the unique users which logged into the app that day.

    The higher the overall ARPDAU is, the more likely the audience is to be engaged, enthusiastic and receptive/likely to act on ads.

    ARPDAU information can help smaller gaming apps better compete with games with larger user bases, if the smaller ones can show their ARPDAU is significantly better.

    Increasing ARPDAU is usually good

    In spite of these benefits, ARPDAU can also be a bit misleading when it comes to determining audience engagement for different types of ads on a site.

    For example, ARPDAU for interstitials and banners tends to be greater than videos and native ads, but this is only because in most apps, there is a much higher overall volume of interstitials and banners.

    Layered approach

    To maximize monetization, gaming apps should consider a tiered compensation model whereby they are first compensated based on their traffic quantity and quality, but then receive additional 'bonuses' based on user actions like video views.

    For example, game publishers should go beyond offering in-app purchases (whereby users can purchase tokens and other incentives to help them advance through games), to actually offering incentives to users who watch a video.

    In-app purchases can be the 'touchdown' while click-throughs and video views can provide an 'extra point' from an incentives perspective. Gaming apps can be compensated for these video views, lending good support to existing in-app purchase revenues.

  • 3 Placement, timing and other considerations

    Ad placement is especially important in gaming apps.

    In the case of full screen ads (interstitials or videos), these should never interrupt gameplay, so they should not be displayed midgame.

    For ads that are visible midgame (banners or native ads), these should be placed as far away from controls as possible. Nothing harms the user experience more than accidental clicks and unintended redirects.

    Don't interrupt

    Timing of ads is also critical, particularly for full screen ads, static interstitials and videos.

    Gaming apps need to be extremely judicious when deciding the ideal period between consecutive ad impressions, and this may vary depending on the type of ads being displayed. For example, the period between two video ads should be longer than two interstitials, since interstitials tend to be perceived as more intrusive.

    Showing too many of the wrong types of ads, too closely in succession, has a tendency to just scare users away.

    Segmentation

    It is also important to segment users and define custom monetization strategies for each user segment.

    For instance, gaming apps can define a segment of 'whales' (high paying users) and opt not to display any ads to them.

    Or, gaming apps can dynamically change in-app purchase costs based on the day of the week and time of the day, or battery state - all of which can indicate when users may be more or less inclined to pay.

    Power of mediation

    In addition, gaming apps can benefit from working with programmatic mediation services that essentially can conduct A/B tests of ads on the back-end, in order to deliver the best performing, most profitable ads to apps in real-time.

    Segmentation is important for optimizing revenue

    Some advanced programmatic mediation services can help gaming apps ensure they get paid promptly, in the currency of their choice, for both their baseline impressions and any additional agreed-upon metrics. These services help offload this type of administrative work, allowing publishers to devote more time to their creative efforts.

    Finally, new, advanced user analytics capabilities are available to help game publishers optimize their in-app advertising strategies even further.

    For example, by analyzing data on how users interact with ads, publishers can determine which ads and ad networks tend to provide the best performers, which can help prioritize app real estate.

  • 4 Conclusion

    For gaming apps, in-app advertising is a double-edged sword.

    Done right, it can be a highly effective means of generating revenues and supporting ongoing endeavors to create the best, most exciting and unique game offerings.

    But when it is done wrong, in-app advertising can do more than just fail to make money - it can alienate users, decrease in-app purchases and even incite app deletions.

    Gaming apps considering in-app advertising only get one shot and they can't afford a haphazard strategy.

    Delivering ads that are targeted, contextualized and user-friendly; establishing well-rounded compensation models; and leveraging key insights into user/ad interactions can be the keys to success.

    These tips should always be front of mind, as well as serve as the basis for evaluating all potential partners - ad networks, mediation services, and others - involved in the monetization effort.

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