One of the things I learned a while ago but was recently reminded of by one of our advisors is that you can learn a lot from the financial reports of public companies. Lectures in industry events, blog posts and news articles are great sources of data but you never know the exact context and how accurate the data is. Financial reports are much more reliable.
Zynga’s ad revenue is growing
The motivation to check Zynga’s ad revenues came because in the past 3 months I’m suspecting that there is a growing trend in mobile games to rely more heavily on advertising revenues. Most of the data points I had, however, were based on unreliable sources so I wanted to check with a source I can trust as well – financial reports.
So here are the results. Zynga ad revenue grew from $74M in 2011 to $173M in 2015. 2.3x in 4 years while their in-game revenues went down 40%.
Moreover, the ratio of the ad revenue from the overall revenue is also growing dramatically from 7% to 23% in just 4 years. In their last reports Zynga released information that their Q4 and Q1 ad revenues accounted for 30% and 26% of their total revenues. Their Q1/16 ad revenue grew 41% compared to the Q1 revenues in 2015.
What’s driving the trend towards advertising based monetization
There are many drivers for this trend. Here are a few that I’ve spotted:
- Brand budgets are starting to go mobile.
- Video ads bring high eCPMs from brand campaigns as well as app trailers.
- App publishers are learning to integrate more ads in non-intrusive ways and are feeling more comfortable with increased ad exposure
The first driver is the most important one that will lead future growth in the next years. There are forecasts by eMarketer showing that mobile advertising will grow 3x in the next 4 years.
If your company also makes significant ad revenues it’s important to know the Advertising revenue per user. Check out SOOMLA Traceback – Ad LTV as a Service.