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Three gaming monetization trends that will shape the future of mobile advertising

SponsorPay looks into its crystal ball
Three gaming monetization trends that will shape the future of mobile advertising

This article is co-written by Jessa Moon, communications manager at SponsorPay, and Projjol Banerjea, the company's VP marketing and business development.

156,967,020 is half the U.S. population - and by 2016, it will represent the number of people that will play mobile games at least once a month.

Advertisers should be ecstatic about mobile gaming's high potential, especially with 53 percent of smartphone users already playing games daily.

Yet, while mobile comprises 12 percent of consumer media intake, the platform only received three percent of advertisers' budgets last year - a striking disparity.

Naturally, the disconnect between mobile usage and associated advertising spend is evolving and three trends defined in the gaming sector are helping to drive this transformation.

1. Publishers Turn to Mediation

Monetization remains a challenge for publishers.

Advertising can, of course, be an effective revenue driver, but it demands a significant investment of time and resources to effectively integrate, manage and optimize advertising from numerous sources.

The voracious consumption of certain formats of mobile advertising - video in particular - results in user demand consistently outpacing ad supply.

To meet these challenges, we see an increasing number of publishers turning to mediation platforms as one-stop shop solutions.

These platforms provide a single point of integration for publishers and they also solve fill rate problems by aggregating, evaluating and serving optimized campaigns from a full collection of sources (agencies, demand-side platforms (DSPs), exchanges and networks).

Intelligent ranking algorithms, including ad filtering tools and algorithms based on historical campaign performance and user preferences, ensure both optimal eCPMs and effective content control.

In short, mediation platforms minimize overhead for publishers while helping maximize ad revenues.

This allows publishers to focus on doing what they do best - making great games and apps.

2. Consumers crave interaction

With an annual growth rate of 112 percent, video is the brightest spot in the mobile advertising ecosystem.

This success has been especially true on social and mobile gaming applications where ads see 30x the click-through rate of standard banner advertising campaigns.

Reasons for this include the high frequency with which mobile users play games and the immersive environment these games offer. A high level of video consumption within games translates directly to increased ad revenue, especially when advertisers understand how to adapt strategies for mobile devices.

In short, consumers on mobile expect interactive experiences.

Advertisers who use video as a stepping-stone to deeper engagement with consumers are likely to find the most success. Recently, to promote The Hobbit: An Unexpected Journey, Warner Brothers ran a unit that prompted users to watch the trailer and then like the movie on Facebook.

The campaign was particularly successful because it ran in a game environment that matched the fantasy theme of The Hobbit.

This not only meant smart integration, but intelligent targeting (gamers who enjoy fantasy games will likely enjoy fantasy movies).

Beyond sharing on social networks, users are commonly encouraged to visit a website, purchase a ticket or redeem a retail voucher. Click-through and conversion rates are higher than 20 percent when these engagement elements, or triggers are placed immediately after a video ad.

As the ecosystem develops, brands will abandon display and static ad units in favor of more interactive formats. Doing so will allow them to maximize their ad allocation and ensure that users are actually watching their ads.

3. Advertisers adopt value-exchange models

You might have heard of the value-exchange model back in June, when Jay-Z promised early album access to Samsung users who downloaded his app.

The same value-exchange approach - a model in which users unlock premium content in return for engaging with advertisements - is proving to be incredibly successful within the mobile gaming industry.

In games, these value-exchange rewards are built into the infrastructure of the app and usually take the form of virtual currency, lives, or animations.

With its opt-in mechanism, the value-exchange model is respectful of users' time while simultaneously providing access to otherwise unattainable or costly features and content.

In other words, advertisers access highly engaged audiences while publishers monetize non-paying users.

As an agile industry largely drawing on freemium models, social/mobile gaming has been quick to adopt value-exchange.

Despite initial skepticism and a sometimes-lingering stigma, the model has proved lucrative, often driving more revenue than in-app purchases.

In Creative Mobile's Drag Racing, value-exchange ads deliver 1.5 to two times the revenue of in-app purchases - rather striking for one of the highest-grossing Android apps of all time.

In coming months, the value-exchange approach will spread rapidly to other verticals where the freemium model is popular.

Communication, dating, streaming media and news, among others, will soon adopt value-exchange advertising as an additional monetization channel/alternative to dreaded paywalls or restrictive subscription models.

SponsorPay's advertising solution drives the monetization of premium content on platforms such as iOS, Android and Facebook through the mediation of brand engagement, user acquisition and direct response ad campaigns.

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