App Monetization

5 Ways to Lose Money by not Attributing Ad Revenue

Not attributing your ad revenue is like shreding your dollar bills in the air

If your company is making a significant amount of ad revenue it should consider attributing this revenue to users, cohorts, and sources. You might ask yourslef what is the meaning of significant in this context – I would say that $1M of annual ad revenue is the minimal amount to start worrying about ad revenue attribution. However, if you are making over $5M / year from ads and you are not attributing revenue you are really leaving a big sum of money on the table. Here are five ways in which you are losing money by not attributing your ad revenue:

#1 – Shutting down ROI positive campaigns

The first reason why companies worry about attribution is to measure their marketing efforts. Some companies might call it user acquisition or media buying but these are all different names for a situation where you spend money in order to attract customers and need to know if your marketing efforts have ROI. If you are only attributing your IAP revenue to your marketing efforts you are missing out. There are ad-groups and campaigns that are attracting good users that might not spend so much in your game but they do generate ad-revenue and this revenue makes the campaign ROI positive. Not attributing ad revenue properly means you will be shutting down campaigns and ad-groups that are ROI positive and will not be able to enjoy this revenue.

#2 – ROI negative campaigns are kept running

Many companies do the following when it comes to in-game ads:

  • They don’t show ads to paying users
  • They attribute ad-revenue by assuming it follows the same split as the IAP revenue
You probably figured the irony here. If you are not showing ads to paying users than neccessarily segments that are heavy in IAP revenue are light in ad revenue. If you are assuming even distribution between all installs you are a bit better off but you are still over attributing revenue in IAP heavy segments. The impact of this is that mostly likely many campaigns that should have been shut down are kept running.

Lets look at this example:

  • An app makes 50% ad revenue and 50% IAP
  • The company spent $100K on a campaign that brought $60K in IAP revenue
  • Since the split is 50/50 they assume that they made additional $60K in ad-revenue so $120K in total
  • In reality they only made $20K from ad-revenue on that segment so the total was $80K (less than the $100K they spent)
  • The result is that the campaign is kept running although its losing the company money

#3 – Can’t create lookalikes of VIP players with the most ad revenue

Facebook ad campaigns targeted to lookalike audiences of your VIP users are typically the most profitable campaigns. Most companies start off with this method when they start buying media. However, if your app is ad-supported you don’t know who are your VIP users unless you attribute your ad revenue. Not knowing who are you your most profitable users means you company is deprived of this profitable marketing method.

#4 – Can’t use A/B testing to optimize ad exposure levels

A/B testing is a core method of smart marketing in the last few decades. Companies that make most of their ad-revenue from IAP are A/B testing their apps to death and are able to significantly improve conversion rates and other factors. Not being able to attribute ad-revenue means you are not able to measure the impact of different ad-exposure levels and you can’t make data driven decisions when to introduce your cross-promo ads vs. revenue making ads. Not being able to makde data driven decisions about your ad revene could be a major weakness of your compnay.

#5 – Making ad mediation rules on a country level

If your app is making over $1M in ad revenue you are most likely using several ad-networks with a mediation platform to control which one gets what impressions. The logic of the mediaiton platform is limited to the country level unless you are attributing the ad-revenue to users and segments. The mediation platform is assuming that all the users in a given country are the same. Obviously this is not true. For example, if you have brand oriented ad-networks who pay CPM and performance oriented ad-networks who pay CPI. In this situation you would want your ad-mediation to show the performance ads in situations where users are more likely to click and install. Mediating only on a country level basis means you are losing a lot of potential ad revenue.

If you want to start attributing your ad revenue with minimum effort you should check out SOOMLA Traceback – Ad LTV as a Service.

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