Who needs mobile ads?

Few studios will ever make their fortune from simply selling mobile games. While a handful of premium titles do find success, the market remains dominated by free-to-play games.

Developers around the world continue to find innovative ways to encourage players to spend on in-game purchases – and, crucially, keep spending – but even the biggest titles only monetise a fraction of their users. So how are games makers supposed to generate revenue?

For many, the answer is mobile advertising. Not the most thrilling prospect, granted, but in many ways a necessary evil.

“Mobile ads keep games free,” Srinivas K Chaitanya, Gaming VP and GM of InMobi, tells Develop. “They help monetise those free users – the majority of most F2P devs’ audience – who are perfectly welcoming of the thoughtfully tailored ad experiences as part of their gameplay.”

Of course, the use of these ads depends greatly on the type of game you have released. Eric Fang, VP of Product at mobile ads platform Mobvista, observes that “heavy” games such as RPGs or titles where money is already involved such as casino apps are tougher to monetise through ad placement because this would “affect their user experience”. Tougher, he says, but not impossible.

“If the publisher wants to use mobile advertising for monetisation of the ‘heavy’ games, video ads and incentive ads is the best option,” he explains. “Casual games could be monetised easier though ads as a majority of people don’t want to spend money on them."

Justyn Lucas, UK and EMEA sales director at mobile ad agency Appcoach (pictured right), stresses that different types of ad placement each have advantages. But there’s a difficult balance to strike between frustrating your audience and making effective use of any ads.

“Full screen ads mean interrupting the players’ game, whereas a banner ad does not interrupt playtime and can be put anywhere at anytime,” he says. “But from a monetary perspective, full screen ads yield much greater revenue per view as the player is forced to view them and close down manually. On a costs basis, per view, full screen adverts usually achieve at least ten times more ad revenue than standard banner ads, but they are viewed less often than banner ads.”

This is just one of the multiple decisions developers must make on how they show advertisements within their game, as well as how often, and such decisions require a little creative thinking. Fang cites a pirate game where ads were only activated when players tapped on a floating chest marked with a ‘?’ as a prime example.

Chaitanya adds: “When thoughtfully tailored into the user’s gameplay, ads have proven to generate revenue, while delighting users. But overuse or misplacement of ads usually results in a drop in user engagement and retention. Best practices have been established across various game types over the past few years to avoid these pitfalls.”

Full screen ads mean interrupting the players’ game, whereas a banner ad does not and can be put anywhere at anytime. But from a monetary perspective, full screen ads yield much greater revenue per view.

Justyn Lucas, Appcoach

EVERYTHING’S CHANGING

As Chaitanya says, devs today have the upper hand thanks to years of learning from previous experiments with mobile ads. Trial and error has shown what does and doesn’t deter players, with agencies able to advise on the best strategies.

“We’ve noticed some remarkable trends in mobile advertising industry: fewer banner ads, increase in native ads, growing popularity of the video advertisement,” says Fang. 

“With the tech developments as well as faster and accessible mobile internet, we’re seeing a shift to more dynamic and entertaining ad formats. The mobile users’ habits and preferences are also evolving: now they are ready to spend their time on ads on condition that they are interesting and diverting.”

Shani Rosenfelder, senior marketing manager at ad analytics firm Appsflyer, adds: “In an effort to provide better ads for users and tackle adblockers, new advertising formats are all about the user experience. Video, interactivity and native ads have ushered in a new era in mobile advertising: engaging and ultra-quick loading time is in, disruptive, data-consuming and time-wasting is out.

“In gaming this trend is even more evident, as we’ve seen a significant jump in the use of video ads because of their improved performance. Video ads for mobile games are especially effective because they show the user what the gameplay is like, thereby separating the interested from the uninterested users. As a result, video ads enable advertisers to invest in quality users.”

However, Fang (pictured left) warns that video ads present their own problems. Because they’re more data-intensive than simple banners, they can increase end users’ expenses on mobile internet.

“This might become considerable barrier for the monetisation through video advertising in some countries such as India and Indonesia,” he warns. “Not only should game developers make sure that their title support video advertising but also provide the technical opportunity to compress video inside the app for balancing the quality and size.”

Chaitanya reports that InMobi has seen an increase in programmatic advertising: “Machines are buying and selling advertisements based on an audience-centric world-view. We live in a world where ad spends are democratised, and no publisher gets a larger share based on their ‘brand name’ alone. Underlying audiences is what truly drive spends.

“Game developers should worry about the ad experience and how it impacts retention and engagement. Choosing two to three close ad partners who cover a global user footprint, bring in programmatic demand, while also delivering the most user-centric ad experience possible is key.”

In-game ads such as banners around a stadium
are a great way to avoid interrupting players

KNOW YOUR AUDIENCE

Choosing your ad strategy may seem daunting – and, frankly, a far cry from the creative work you’d rather be doing – but devs should already have everything they need to help inform these decisions: their audience.

“In order to harness the best chances for success, developers need to be proactive and absorb the tendencies of their userbase,” Tapdaq’s CEO and co-founder Ted Nash explains. “The importance of context in advertising will continue to grow. The mobile phone already knows so much about its user, enabling it to deliver extremely relevant information and experiences at the right time in the right place so the user will expect nothing less from the adverts their consuming too.”

Lucas adds: “To fully realise an app’s audience potential, it is highly recommended that you work with an third-party mobile analytics company. This will allow you to independently verify impressions, clicks and in-app actions by your users and also to monitor and compare any network or ad platform monetisation data and reports you receive.”

Rosenfelder says games firms have another advantage in that they know one crucial thing about their audience: they are active gamers.

“This means there is a good chance they will be interested in ads of other gaming apps,” he explains. “Also, you can use your inventory to cross-promote any other apps you own. Assuming the vertical is the same, there is already a great fit so these ads can be very effective and help monetise your business as it’s free promotion.

“However, the other side of this sharp segmentation is cannibalisation. After all, you don’t want to send your players to your competitors. It’s a fine line so make sure you’re not running ads of your competitors, but rather those of games that are part of a different gaming segment – although not too different as you’ll use your segmentation edge.”

The importance of context in advertising will continue to grow. The mobile phone already knows so much about its user, enabling it to deliver extremely relevant information and experiences at the right time in the right place so the user will expect nothing less from the adverts their consuming too.

Ted Nash, Tapdaq

SEEKING SUPPORT

Nash also warns that, while understanding your audience is crucial to using mobile ads efficiently, it is unwise to focus too much on a niche group or certain findings. 

“Mobile marketers may favour specific targeted campaigns and whilst these can be effective they are often costly. Using direct and cross-promotional methods also benefit like minded developers facing the same obstacles as you,” he says.

Attend any mobile or casual games conference and you’ll find the expo area packed with mobile marketing platforms, ad agencies, optimisation solutions, retention specialists and all manner of firms promising they have the answer to all your problems. 

It can be difficult to establish what each offers over their rivals, and many will no doubt seek to become your sole ad provider, but Rosenfelder actually recommends casting a wider net: “Partner with multiple networks to maximise your reach and demand for your inventory. Gaming specific networks like Chartboost, Playhaven and Unity are proven sources, but there are many others that deliver solid retention and significant scale.

“Since app performance is a must, you’ll also want to minimise the number of SDKs in your app. One way to do this is to work with mediation platforms that manage supply from multiple sources.”

Nash adds that these companies can also help in spreading the word of your own title: “Advertising is one of the fastest, social, and most efficient ways of raising awareness, but the traditional sense of advertising is also very expensive. The App Store and Google Play are reported to have 3.1m apps hosted between them as of July 2015 – so without advertising it’s almost impossible for a game to stand out from the rest.

“Whilst some may maintain the standpoint that TV advertising establishes a more meaningful connection with the consumer, it’s important to establish where your advertising efforts will be most useful. If you’re looking to raise awareness amongst the mobile community, your best chance of acquisition is most likely going to be via mobile applications. Think about who your target customers are, where they spend their time and how you’re going to reach them.”

You don’t want to send your players to your competitors. It’s a fine line so make sure you’re not running ads of your competitors, but rather those of games that are part of a different gaming segment – although not too different as you’ll use your segmentation edge.

Shani Rosenfelder, Appsflyer

EXPERT ADVICE

The biggest danger, of course, is driving your mobile ad strategy to the point where you’re almost actively pushing users away. Your players are only valuable while they continue to play your game, so fitting the ads around their wants and needs is crucial.

“Let the users make their own decisions whether to watch ads or not,” advises Fang. “For instance, when the gamer fails a level, there might be an options either to start that level from the very beginning or to watch video ads and move forward. In this case, ads are welcomed by audience. 

Also, do not advertise too early. Wait two to three days after the installation before demonstrating the first ads so that you don’t affect the user experience.”

Rosenfelder adds: “Make sure to set a frequency cap because any dent in the user experience creates a risk in losing your users that you worked so hard to acquire. Try using more native and less interruptive interstitials. Finding a way to embed native ads within your game without disrupting the game is a challenge, but it can’t be done."

He cites the example of a football game with banners around the pitch. These don’t interrupt the game experience and are guaranteed to be seen by players.

Tapdaq’s Nash (pictured right), meanwhile, reminds mobile devs that advertising in their games will be “a different beast” to online titles.

“It’s not simply about transferring your online adverts to mobile. It’s vital to ensure that you’re optimising your adverts for mobile,” he says.

Lucas concludes that the key to keeping your audience happy is ensuring any ad content is relevant to them. 

“If a gamer sees ads they deem suitable to them, they will be more accessible,” he says. “This is where a developer needs to fully understand their audience demographics and ensure they choose monetisation partners and networks wisely.”

THE DEVELOP GUIDE TO MOBILE MARKETING

When talking to ad networks and platforms, devs will encounter a whole new world of jargon and buzzwords. We’ve broken down the most important ones:

Programmatic advertising
An automated process that fills ads slots within your game by targeting certain demographics and selecting the ads best suited to them.

Real-time bidding 
Mobile ad spaces are bought and sold based on how many impressions or clicks they get via real-time auction.

Interstitial ads
Full-screen ads that cover the interface of their host game or app. Most commonly used at natural transitions, e.g. between levels, and force users to interact.

Native ads
Paid advertising where the ad matches the presentation of the app or game, making it blend in with the rest of the title. Similar to in-game advertising.

Rewarded ads
Consumers are given virtual items, usually currency or consumables, if they choose to interact with the ad or view a full video ad. Also known as incentivised ads.

CPC
Cost per click, i.e. the amount of money the publisher/developer receives when users click on them.

CPL
Cost per lead, i.e. the revenue earned by the publisher/developer for creating a lead for an advertiser.

CPI
Cost per install, i.e. the amount of money the publisher/developer receives when users install the advertised game or app.

CPA
Cost per acquisition, i.e. the money spent to acquire new users.

Article originally published in Develop: March 2016 issue.