Mobile Mavens

How do mobile game developers balance their ad and IAP monetization strategies?

How do mobile game developers balance their ad and IAP monetization  strategies?

The rise of rewarded video ads have radically changed the business model for many mobile game developers.

Previously, there was a hard split between payers and non-payers, with developers trying hard to push players over that line, sometime with rather aggressive retailing techniques.

Rewarded video ads have soften the divide, however, allowing developers to generate large amounts of indirect revenue from non-payers, as well as educating them about the value proposition of in-game currency.

But what's the best way to balance a game economy in terms of advertising revenue and IAP?

In this special sponsored Mavens articles with mobile analytics and monetization company deltaDNA, we asked a selection of developers: 

  • How do you balance your ad vs IAP monetization strategies?

 

Mark Robinson CEO DeltaDNA

With over 15 years’ data mining experience, Mark co-founded deltaDNA, formerly GamesAnalytics, to unlock big data to drive player understanding, introducing the concept of Player Relationship Management to build better games.

All too often monetization can jar with the player experience. Whether it is ads or in-app purchases, many monetization techniques get in the way of the fun and the challenge of gameplay.

However, as a developer you need to make money, so what are the best techniques to employ to engage your players and make profitable games?

Our recent survey highlighted that developers are being cautious about showing ads in games, as they are concerned about frightening players off, and in some cases ads and in-app purchases strategies can harm retention - but this need not be the case.

Correctly targeted ads can increase revenues dramatically, while maintaining retention rates.
Mark Robinson

Your game is a marketplace and considerate deployment of offers and ad content can actually enhance engagement. The way to unlock this value is by making your monetization strategy much more responsive to the different types of players in your game.

We have found that correctly targeted ads can increase revenues dramatically, while maintaining retention rates.

Using segmentation, we know novice players are ad responsive, especially to rewarded ads, whereas expert players find that ads served at too high a frequency can diminish playing experiences.

So the answer is understanding your different player segments, then planning and deploying your monetization strategy, so that the game becomes responsive to each player in real time – creating a unified experience combining gameplay and monetization.

Finding a balance between the two is about using the right tools to match the monetization experience to the right player.

Personalization is the key. Everyone wins - players enjoy the game more and developers make more money.

Andres Constantinidis CEO & Co-Founder TinyBytes Games

Some of our games focus more on IAP revenue, whilst others focus more on ad revenue. In free-to-play, both revenue sources can co-exist in the same game.

Games in genres like social casino, arcade or endless runners, fit well with ads.
Andres Constantinidi

Players that want to buy in-game currency for spending on additional content can do it this, whilst non-spenders (the vast majority of players) contribute to the game's monetization by watching and interacting with ads.

We put more focus on one or the other, depending on the type of game and core game loop.

Games in genres like social casino, arcade or endless runners, fit well with ads, as these games have shorter gameplay and frequent sessions, so there are more opportunities to interact with interstitial ads.

On the other hand, action shooters or management games have longer gameplay sessions, so there are less moments for serving ads, their in-game economies are deeper and the options to spend in-game currency are wider.

In these cases, rewarded videos can work better with consumables or speed-up mechanics.

The optimal point is having the ability to serve ads to users depending on their in-app purchase habits.

Why expose In-App Purchase spenders to ads? On the other hand, it's fair to serve ads to users who don't spend. That's the right balance!

Céline Holzmann Data Analyst Bandai Namco

Balancing between ads and IAP is critical for free-to-play business.

Depending on game genre, we target the part of the revenue that should come from both of those sources, and then design the game in this direction.

Soft launch is the important point for this matter: it’s a time to tweak revenue for both sources and get the most out of it.

With our game PAC-MAN 256 designed to be ads monetization driven, we put our efforts in tweaking rewarded video ads placement - comparing eCPM from various ad networks and imagine and test new Ad placement linked to player journey in the game, leading to a great monetization improvement.

Christian Calderon CEO Gamejam

When incorporating both ad and IAP monetization, you want an overall and sustainable lift per user revenue by incorporating both methods, and a positive experience for players.

The challenges we all face in monetization are the same - a majority of our players are not going to spend money on IAP.

Building a game with good IAP monetization is not easy, and mixing in ad revenue into your game’s economy adds an extra layer of complexity.

There are two major risks that developers face when trying to balance both Ad and IAP monetization within a game:

  • Economic risk: poorly designed IAP and ad monetization systems could potentially lead to a decay in new payer conversion on IAP, a decrease in retention or an overall decrease in Lifetime Value (LTV) - a negative impact is possible.
  • Developers should take the time they need to design good monetization systems.
  • Technical risk: many developers run into technical problems when incorporating ads into a game, such as pre-caching too many videos, app bloat, crashing, faulty ad display, decreases in retention, or negative reviews. You don’t want to run into these issues when your game is live.
  • Developers should give ad integrations sufficient technical due diligence and QA.

Economic and technical risks need to be managed to make any lift in per user revenue sustainable, and create an overall positive experience for players.

George Donovan Founder Gogii Games

With the right placement we not only doubled our ARPU, we increased conversion rate.
George Donovan

We originally looked at rewarded video as the last chance for revenue on non-converting players.

What we learned over time, and with volume, was with the right placement we not only doubled our average revenue per user (ARPU), we increased conversion rate overall by getting non-converting players to spend for the first time.

You need to watch your payouts to ensure it is not abused, and the overall currency model needs to be monitored, or tightened in some cases; but players now expect videos in certain game styles and know how to leverage them.

If done well RV can increase retention and re-engagement, which will eventually lead to a lift in conversion rate.

Bryan Davis SVP of Business Development Big Blue Bubble

All of our games are designed to be IAP first, and ads as a supplemental revenue source.

We look at all of our games in terms of how can we monetize based off of core gameplay.
Bryan Davis

We look at all of our games in terms of how can we monetize based off of core gameplay.

We do put measures in place to capture ad revenue from non-paying users in as seamless and as least disruptive manner as possible.

The different ad units available are integrated into various events, whether that be rewarded video to help complete a task or give users a multiplier with rewards, native ads, and even offerwalls.

IAP will still be the main focal point, however understanding our audience behavior will ultimately shape the balance between IAP and ad monetization.


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