Back in May, Google Ads had announced its intentions to move toward real time bidding auctions for apps. This would present major change for publishers and had many concerned over ad revenue. However, the deadline for this change has now been delayed.

In this guest post, head of ad monetisation at GameBiz Consulting, Božo Janković shares his insight on the latest update, noting what will happen now and what the consequences are of the original announcement for game publishers.

This post will be different from the previous ones. Like most of them it will be about news coming from Google. Unlike most of them, it will be short, and unlike most of them, it will be sweet - bringing some good news to the mobile game and app publishers out there.

Let's get started!

So what happened on September 7 2023?

In its newest blog post, published by Carlos Façanha, Director of Product Management, App Ads, Google announces that it is essentially delaying its deadline for publishers to switch from waterfall instances (line items or fixed price points) to bidding.

So what happening instead?

• Google will gradually, until the original deadline (31st October 2023), stop responding to waterfall calls that don't contain the bidding ad unit. Over the next few weeks, Google Ads will begin to reduce spending on multicall requests in waterfalls that do not contain a bidding ad unit. On Oct. 31, Google Ads will stop buying on multicall requests in waterfalls that do not contain a bidding ad unit.
  
• After the deadline, Google will still respond to non-bidding waterfall calls, but only as long as there is a single call within the waterfall: Google Ads may still buy on mediation waterfalls that only make a single call to Google Ads demand.
• After 31st October 2023, Google will still respond to non-bidding waterfall calls, including the waterfalls with multiple non-bidding calls, as long as they contain the bidding ad unit from Google (hybrid-waterfalls). As per the announcement, Google Ads will still respond to multiple calls within hybrid waterfalls on supported partner platforms. This is the key part of the announcement and the one that publishers will most look forward to. What ruins the happiness is their clarification that they still intend to stop responding to any non-bidding calls by early 2024: After Oct. 31, Google Ads plans to gradually transition away from responding to waterfall requests in hybrid, and we expect to complete this transition by early 2024.

Now that we covered the essentials let's dig a bit deeper into this and the previous announcement and what it means for publishers.

What happened earlier this year?

In May, Google announced that starting 31st October 2023, it will stop delivering its demand via non-bidding calls. What this meant for publishers is that the network, which has traditionally refused to open its demand via bidding (outside its own mediation - AdMob), was suddenly shifting strategies and was asking all publishers using the AdMob network (which means virtually all publishers using ads to monetise their games and apps) to use AdMob via bidding, instead of via waterfall instances (fixed price points).

The justification was that this would ensure more effective media buying on apps, benefiting the entire ecosystem.

Consequences of the original announcement

The consequences were immediate. In most apps and games, AdMob is the biggest or one of the biggest contributors to ad revenue, so naturally, any changes regarding it can dramatically impact the publisher's overall ad revenue. Google's shifting to bidding only had several implications for publishers:

• Updating mediation SDK and network adapter was necessary to be able to run Google bidding, which requires development work.
• It was necessary to execute a two-week AB test in which the test group was running on a hybrid setup: previously used AdMob instances plus Google bidding (as instructed by Google)
• The destiny of GAM (Google AdManager) partners was sealed. Most of the traffic delivered by GAM partners is actually Google demand, which they wouldn't be able to resell via multiple calls after the deadline. But more on this later on.

There was one more consequence and the most important one - impact on eCPM and overall ad monetisation performance. At GameBiz, we ran dozens of AB tests for our clients. In many cases, the results were positive (switching from a multi-call setup to a hybrid setup). However, we had more than a couple of cases where results were negative - adding a bidding ad unit from Google meant lower overall performance - even up to 10%. The results varied depending on the game, platform, ad format, and country - there was no one-size-fits-all solution, even though Google tried to implement one.

What was even more worrying was this. Google instructed tests weren't telling us what would happen after 31st October. We were only testing multi-call setup vs. hybrid setup, while after 31st October, there would only be bidding setup, which we actually never tested. The big concern was (and still is but is only postponed) - how the performance will look once we remove calls with fixed price points from the waterfalls. We ran several tests in which we simply turned off AdMob instances and kept bidding only (simulating what would happen anyway after the deadline) and the results were as expected - negative. For those wondering how negative - it again varied by game, platform, format, and country, but in general, they were more negative in waterfalls in which AdMob instances were taking a higher share of the revenue. And this wasn't even taking into account that we wouldn't be able to access Google demand via GAM partners (keep on reading).

GAM partners

For a while now, mobile publishers have used the strategy of adding GAM partner line items into their waterfalls to improve the competitiveness of their waterfall. The demand coming from GAM partners was comprised of their own demand (direct or reselling), and more importantly, the majority of the demand was actually coming from Google. This way, publishers could get more access to Google demand, increasing their eCPM and overall ad ARPDAU. With Google switching to bidding only, this meant that this tactic was not valid anymore. It meant a further decrease in eCPM for publishers and uncertain faith for GAM partners - which either needed to stop relying on Google so much and diversify their demand - or, perhaps, completely shift their business.

Timing

Let's not forget about the timing in which this news about deadline delay comes. We are approaching Q4 - the most sensitive time for the advertising industry. Anyone monetising their games via ads knows this is the most lucrative part of the year. Advertisers are opening more budgets for holidays such as Thanksgiving Day, Black Friday, and Christmas. And the company via which brands probably spend the most in mobile games and apps - that's right - Google. So the move that Google made here not only gives developers more time to adapt to the change, as they pointed out in their blog, but it also avoids creating major issues or losing the market share at a critical part of the year for Google.

Bottom line

Good news from Google for once. Mobile game and app publishers can continue using multiple calls in their waterfalls as long as they ensure a bidding ad unit is used. This is true throughout Q4 2023. As they point out, in early 2024 the transition will be completed and Google will only respond to bidding calls.

Edited by Paige Cook