Steve Webb is the Director of Global Publisher Sales & Operations at Facebook Audience Network.

Audience Network helps publishers and developers make more from their games by delivering relevant, targeted ads. The recently launched App Growth Academy is an in-depth learning program designed to help games publishers supercharge their monetisation strategy. Learn more about the program and register your interest here.

More mobile game publishers now rely on advertising as a revenue driver, and advertisers spend more on mobile game placements. Worldwide in-game mobile ad revenue in 2019 nearly hit $20 billion-- 40% higher than 2018-- according to IDC's Mobile Worldwide In-Game Advertising Forecast, 2019-2023.

Growing faster than direct game spending revenue (including in-app purchases), advertising revenues are thriving at a healthy expansion rate of 26% per year to reach $45.2 billion by 2023; compared to IAP's and paid mobile games' 6.2% spending growth (IDC, 2019).

According to the same report, nearly 70% of this advertising revenue went to developers and publishers, fueling more growth throughout the developer ecosystem (IDC, 2019).

Trends we began to observe last year continue to catalyze developments in advertising revenue models, and in some cases, have accelerated the rate of innovation:

● Increasing adoption of ad-driven and hybrid monetisation models with gaming publishers and audiences
● The continued evolution of player-friendly ad formats like rewarded video and playables
● Operational efficiencies gained by the growing adoption of bidding technology.

Let's dig a bit deeper.

1. Adoption of Ad-driven and Hybrid Monetisation Models Hits Hyper-Speed

IDC research concluded that "six of the top 10 most downloaded iOS games in the United States as of late October [2019] were effectively ad-driven games from a business model angle". Eight of these games classified as hyper-casual, and it bears repeating that this game type has been a critical contributor to the rise of mobile gaming ad spending in recent years.

Mid-way through 2019, in a study conducted with Walnut Research, we noted that the hybrid approach to monetization was considered the best way to deliver ROI by over 1 in 4 developers.

But it's also important to note that player popularity hasn't been negatively impacted by ad placements.

Considering that, 3-4 years previous, nearly all free game downloads in a similar line-up would have leveraged in-app purchases, and very few of them would have incorporated in-game ads, it's clear that a transformational shift has taken place (IDC, 2019).

2. Players Love Interactive Ads: Rewarded Video & Playables

In-game video ad payout for developers/publishers (including rewarded video and playables) is forecasted to grow a CAGR of 33% worldwide through 2023, compared to in-game display ads (including banner display and offerwall/affiliate ad revenue) at 23% CAGR (IDC, 2019). IDC also reports that gamers prefer rewarded video ads, followed at a short distance by playables (IDC, 2019).

This industry-wide revenue wave attributed to rewarded video and playables echoes the reliable performance results and increased player satisfaction we've observed with our gaming publisher partners, and signals market maturation for these interactive ad formats.

For example, CEO of Gogii Games (and our client) George Donovan noted an increase in time spent and in player satisfaction after adding rewarded video to four of their most popular titles. "Players spent 10 percent more time in those apps, and at the same time, we were getting calls to customer service asking us to add rewarded video to more titles."

The same Walnut Research study revealed that, when used in a hybrid monetization approach, rewarded video is seen as highly complementary to driving increased in-app purchases by 56% of developers (Walnut, April 2019).

Our North American Gaming Lead Nate Morgan summed it up succinctly in a recent article:
"It's time to think about ads as a positive enhancement to the user experience, rather than an intrusion. Rewarded video is the ad format that has helped the gaming industry move ad experiences from tolerable to preferable."

3. Open & Transparent Ad Ecosystem Increases Revenue & Frees Up Time

Rising in-game ad revenue can also be attributed to increasing adoption of bidding and the shift away from manual waterfall mediation.

Working with select mediation partners and with publishers building in-house solutions, Facebook Audience Network has continued focusing on making bidding a reality for the entire market.

For many developers and publishers in our partner community--like Rovio Entertainment Corporation and Melsoft--the programmatic approach continues to prove more efficient as it delivers significantly better results (more money per ad served).

IDC presently estimates that about 5% of in-game ads are now fulfilled programmatically, and anticipates bidding to continue taking share from waterfall mediation in mobile games through 2023 (IDC, 2019).

This transition should further catalyze mobile game revenue growth, since, traditional brands are more comfortable with programmatic ads and are capable of attributing ad campaign performance to ROI models.

We know in-app, in-game advertising will continue this growth trajectory through 2023, at a CAGR of 20% worldwide. And as your 2020 revenue growth plan is shaping up, it's the perfect time to consider new monetisation solutions and strategies.

Audience Network's recently launched App Growth Academy can help you to do this. It's an in-depth learning program for mobile gaming app publishers and developers built to help fast-track ad monetisation success. You'll learn how to onboard and use the high-value ad formats and innovative publisher tools available through Facebook and get valuable insight from our team on how to optimise your performance using our deep demand pool of Facebook advertisers.

The program also includes a one-day masterclass event where program participants can attend workshops with our Facebook technical experts and hear learnings directly from game publishers who have grown their business through ad monetisation.

So if you're committed to growing a sustainable gaming business this year, register your interest for our App Growth Program before 24th February 2020.

Sources:

IDC Market Forecast: Worldwide Mobile In-Game Advertising Forecast, 2019–2023. December 2019. #US45637219
“Mobile Games Monetization Research” by Walnut Unlimited (commissioned by Facebook) qualitative and quantitative research via 173 online interviews in US, EMEA and APAC, April 2019.
“Gogii Games Reveals How to Monetize with LTV in Mind”, Audience Network, September 2019.
“Rewarded Video: Changing Our Relationship with Ads”, Audience Network, October 2019.