We are living in a mobile era, with our mobile devices growing in importance in virtually every aspect of our daily lives, be it business, household management, hobbies, or simply entertainment. The entertainment part is an especially lucrative part of the whole mobile app business, as mobile gaming is now a massive $70 billion industry, and will continue growing with revenue expected to reach as much as $180 billion in 2021. In fact, mobile gaming apps currently account for 75% of all app revenue.
In-game advertising simply refers to monetizing mobile games by placing ads in them. These ads can take various forms. The most popular type remains rewarded video ads, which allow the player to receive certain bonuses (i.e. rewards) for watching them. These rewards can be anything from in-game currency, extra lives, rare items, etc. Other types include playable ads that allow viewers to interact with them, banners that are shown continually in the app, offer walls for purchasing in-game content, push-notification ads, interstitials, and more.
Introducing ads in your game has a long list of positive effects but here we’re going to look at five that are the most significant:
1. More in-app purchases
When establishing their ad strategy, many mobile games developers fear it might negatively affect in-app purchase (IAP) revenues. However, advertising isn’t a replacement for IAPs and certainly will not drive users away from making purchases in-game. When used together, contextually relevant advertising and IAPs can create a winning combination in a mobile game monetization strategy.
This was confirmed by Rovio, whose VP of Advertising, Jarkko Rajamäki, said that those players who watched ads and installed other games also spent more money on IAPs than others. This is especially true for rewarded video ads.
And vice versa, players who made IAPs in the past are inclined to watch significantly more ads than those who haven’t made IAPs. AdColony’s study shows that only 4.5% of non-spenders view ads, in comparison to almost three times as many spenders viewing rewarded video ads
2. Increased engagement and retention
Properly placing ads into a mobile game can also have positive effects on user engagement and retention. Namely, Rovio discovered that players who devoted their time to watching ads and installed other games also showed higher retention rates than other users. The same was true for session length, which tended to increase among players willing to watch in-game ads.
AdColony found that users who started playing after the introduction of rewarded video ads were more likely to come back to the game in the long run. The same study also discovered that ad viewers had 12% more sessions per day and 28% longer session times than those who did not watch any ads.
If you reward your users for engaging with ads, for instance giving them the exact amount of in-game currency needed to continue playing, they will continue coming back to and interacting with your game, eventually even becoming IAP spenders and increasing your overall LTV.
3. Enhanced user experience
Although publishers sometimes shy away from in-game advertisements as it is traditionally believed that they can negatively affect the user experience, the truth is not that simple. Yes, poorly timed and placed ads can cause a distraction for a player, but a properly balanced ad strategy can make the overall user experience in the game more enjoyable.
This is especially true for rewarded ads as they provide value for players. As a matter of fact, when Rovio removed them from its Angry Birds Transformers, the players were so upset that they demanded that the company brings rewarded ads back. Besides, a study by Unity Technologies found that watching video ads was a preferred way to pay for in-game content for 71% of mobile game players interviewed.
In-game ads provide a unique opportunity to grow the user base for your mobile games. This can be achieved by using your mobile game for displaying ads that promote other brands with a similar audience, while they do exactly the same for you.
Although this might seem counterintuitive, it is actually a good strategy that benefits both you and your competitors. Not only does it help generate installs but it also increases audiences for your IAPs and ads at a small price. This also benefits you in terms of monetizing ad inventory that might be sitting unutilized.
Moreover, cross-promoting similar games can help your users discover other experiences they might enjoy. Consequently, they might show their appreciation through increased engagement and loyalty to your own product. Your users can otherwise look for and find these other experiences on their own so why not help them and get something out of it?
5. Increased game revenue
Not only does in-game advertising increase user experience, retention, and IAPs, it also affects the overall gross profit of your game, as evidenced in AdColony’s survey which showed substantial growth of revenue per user after introducing ads. Specifically, the income climbed from $3.65 to $4.48. We have also reported that rewarded video ads, in particular, can increase app revenue by 20% to 40%, while a study by Dirtybit found that introducing rewarded ads pushed their revenue by a staggering 70%.
On top of that, Unity’s case study with Next Games proved that ads alone can drive $0.06 ARPDAU and $1 ad LTV, without cannibalizing IAP revenue. Supersonic’s data shows CTRs for rewarded video ads range from 20% to 35% as users are aware of the value they receive when clicking on such an ad.
In-game advertising can be an effective marketing technique. Seamless integration of ads delivers multiple positive effects which include enhanced user experience, longer and more interactive sessions, increased in-app purchases, and ultimately the overall revenue.
However, when opting for such a monetization strategy, not only does the integration of ads need to be perfectly balanced but it is important to understand the data behind the in-game ads as well.
In order to better plan your game monetization strategy, you need to carefully choose ad types best-suited for your game and adjust the ad experience to suit different types of users. This can be achieved with a little help from a platform with a job description that, among other things, covers accurate data science, ad controls, ad revenue attribution, ad whale identification, and more.