Is it even possible?
A few days ago I was eavesdropping on a conversation at a local coffee shop. The two gentlemen were discussing a recent study by Venture Beat around mobile monetization. They were kind enough to let me look take a quick look at it (purchase the full download here). I noticed some really interesting stats that got me thinking about a few things.
Here are just a few of the many nuggets the report had:
- Less than 1% of all games surveyed use native ads
- More than 50% use interstitials
- Nearly 60% of games use 2 or less monetization solutions simultaneously; only 4% use 6 or more
- No one ad network/solution provider dominates from an effectiveness standpoint
- There are more than 100 ad network/monetization products available for app developers
- For games with less than 200K in downloads none see more than 10K in monthly revenue
Looking at these stats as a developer, one might think the outlook is pretty bleak. If you don’t have a home run hit, then making money from ads seems unrealistic. But I don’t actually think that’s the case. It’s a matter of implementation.
Lets look at two key factors:
Ad Formats: Fixed permanent image banners can work in just about any app, but these perform the worst and most app developers don’t want to use them for a variety of reasons — most obvious being they look terrible, not to mention perform poorly.
Interstitials pay the best and work well between levels and at natural breaks in gameplay, but inventory is incredibly limited. This is primarily why they really only work for games with massive user bases. Video ads also perform well, but you’re pretty much limited to the same spots as interstitials.
Incentive based ads like offer walls, surveys and social sharing, those that give you in-game currency or real-world benefits, are a good option because you put them in menu screens and users are driven to engage with them because they offer real value. These units can be more complicated to integrate and tend to get saturated quickly, ultimately bringing down eCPM.
The report also shows that native ads perform incredibly well; potentially better than any other — but most games don’t have an interface to implement native ads. Or developers will have to do a lot of work to create a home for them.
Variety: Only 60% of games use 2 or more monetization solutions. This is probably due to the obvious level of effort integrating more than one ad unit and network. Most developers pick one solution and stick with that. This is a bad decision because it’s the only one that you actually have a lot of control over. Variety takes two shapes: ad unit and provider. If you are limited by ad locations and can only fit one or two units in your app, you should consider integrating multiple networks that deliver the same format. But this is incredibly difficult to do and very time consuming. Moreover, every network has their own SDK and implementation methodology, which means an increase in upkeep and overhead with each provider — this is probably exponential rather than linear. And with over 100 solution providers, the task is pretty daunting — where to start?
Like I said, bleak. So most developers just do what they can, but I say you’re leaving a lot of money on the table.
Solutions: For new projects, think about advertising from day one. Ask yourself where in your game or app ads can be integrated in a natural way, particularly native to the user experience. You would be surprised at all the places you can put an ad that is not disruptive to the user experience. Even existing games have potential to find more locations without completely starting over. Some thoughtful experimentation will lead to interesting discoveries — with more places to put ads, you open the potential to connect with more networks.
Ask for help. Many solution providers can provide best practices for implementation — after all, they want you to create as much inventory as possible. Heck, we'll even do an audit of your app to help you find more opportunities.
Track the data. One of the biggest things I see from developers is a lack of visibility and understanding around how ads are performing. Simply looking at your eCPM and monthly revenue is not nearly enough. Fill rate is one of the most important things to track, but also one of the most difficult to understand.
Fill rate can mean something different with each ad network. Some networks like AdColony will show you a fill rate and pay you directly on that number. Others will fill an ad but ultimately pay you based on many other factors, much of which is opaque to you. But true fill rate is the key to revenue. Shoot to fill 90% of your requests with payable impressions. So if you make 100K requests per day, you should aim to get paid on 90K of those impressions. This cannot be done with one provider, even if they pay on what they fill, which most providers don’t. I call this the fulfillment shuffle.
It’s up to you to track which requests get filled and which ultimately result in a payable impression. If you know this on a provider-by-provider basis, you can continue to make requests until you get a true paid impression. This approach is often called “waterfalling” and some networks do it for you, sort of.
Mopub for example has the ability to connect a variety of ad networks via a single implementation, but you still won't fully beat the shuffle. Only when you integrate the specific SDK for each ad provider can you get enough information to make your own decisions about which ad to fill, from which provider and when.
I'd bet that a random selection of 100 games running ads would show that most are getting only 30–40% actual fill-to-paid impression rates. That means as much as 60% of your potential inventory is being wasted.
There aren't really any solutions I've seen that address this issue out of the box. We developed adtech to do this in our chat platform, but as of now it can't be extracted for use by developers (not yet anyway).
I also suggest looking at external ways to create new inventory. I wrote a post that will be appearing on Gamesbeat next month which outlines the benefits of adding chat to your app (follow me on Twitter @sollytweet to get a link when its available).
This is one of potentially many methods to engage your users in a secondary behavior that creates more ad inventory. Chatting is also very impression-centric so it has the potential to create a lot of incremental ad revenue. You’ve already done the hard work to get users to download your app, so why not give them other things to do before they leave.
Conclusion: The truth is, running ads in your app is still the best all-around solution to monetization. But maximizing revenue takes as much effort as building your game in the first place. Don't throw the baby out with the bathwater as they say — do yourself a favor and look at advertising as a primary component of your app. Take the time to build an interface that works with ads vs. against them and do the hard work to integrate multiple providers to reach your full revenue potential.
If you like this essay, please consider recommending it by clicking the little heart at the bottom. And please follow me to get notified when I post something new. To learn more about how my company Affinity Networks is helping apps maximize advertising revenue, or to add chat and social features to your app for free, please visit http://afty.co.