You’ve all heard about the difficulty of getting players to spend money in free-to-play mobile games. You’ve seen the stat about only 1.9% of players make an in-app purchase. And you’ve read about companies succeeding with other business models like Futureplay Games’s rewarded video-based view-to-play model.
In 2017, one thing is certain: Mobile game monetization isn’t as clear-cut as it once was. More simply, the state of monetizing mobile games is best described as human sacrifice, dogs and cats living together, mass hysteria. OK, so maybe not that grim, but you get the picture.
Last week at MGF Seattle, experts who are no strangers to monetization for mobile games explored the strategies at play in today’s market. Henry Lowenfels, vice president of business development at Scopely, anchored a conversation among Fyber’s Director of Developer Relations and Monetization in North America So-Eun Park, AppLovin’s Senior Director of Business Development Sean Webster, Gaming Realms Advisor Paul Brownlow, and DC Games Consulting’s Founder David Chiu. Here are some of the highlights from the panel.
On retaining first, monetizing second
“Even before you look at monetization, a game has to have strong retention,” Chiu says.
“It doesn’t matter if a game has a ton of monetization mechanics. Players won’t stick around to play the game. Make sure that you have strong day 1, 7, 30, and beyond retention.
“Make sure that the funnel is tight and you’ve plugged all of the holes at the top, so people are actually getting deep into your game and building an attachment to your game because then you’re more likely to monetize. Then look at monetization tactics after that.”
On the history of mobile game ad monetization
“We’ve gone through a lot of different phases,” Park says.
“Phase 1, when I first started [at Fyber] about 6 years ago, we were literally trying to convince people that ads are not a bad thing.
“Then 4 years ago [in phase 2], people started to realize that rewarded video was actually complementing IAP, so everybody was rushing to get ads into their apps. But the placements of the ads were very preliminary. Normally, you would go to the in-game store and the option to watch videos would be next to IAP packages.
“We’re at phase 3 where people are getting a lot smarter about customizing the ad experience. We’ve seen a lot of our clients thinking about how to segment their users, and placements has become a big topic. You can A/B test which placements bring in higher eCPM or engagement. And per placement, you can A/B test the networks that you should be showing and how you should be defining the frequency or pacing of the ads. [Monetizing with ads] has become a customized experience, and something that developers should start to think about way ahead of time.”
On deciding to monetize with in-app ads
“Lots of times, people are worried about showing ads for the first time, so start conservative,” Webster says. “You can always start at one ad per DAU. And guess what, at one ad per DAU, you’re monetizing 100% of your audience already—and you’re only showing one ad. Usually you don’t see negative feedback in your reviews or ratings through one ad.”
“A lot of the gaming audience, especially in tier 1 markets, they’re used to seeing ads as a complement to IAP,” Park says. We’ve heard developers a lot of times say, ‘We’re not going to have ads when we launch.’ But they get feedback from the user community on the app stores asking for ads.”
From left to right: Henry Lowenfels, David Chiu, So-Eun Park, Sean Webster, and Paul Brownlow
On choosing the right ad formats
“Whenever we give consultations on what are the right ad formats to use, we look at as wide of a spectrum as possible,” Park says. “On one end, there are casual titles, those that are high DAU, low ARPDAU, popular IAP is probably cheap, and low session length. On the other end of the spectrum is what we define as midcore and hardcore titles. Those are the opposite characteristics as to how we define casual titles.
“You want to place where your game falls in this spectrum. If you’re leaning more toward the casual end, then that’s where interstitial comes in, complementing with rewarded video. As you move toward the other end of the spectrum, we see a lot of people complementing rewarded video with offer wall to a point where a lot of midcore publishers are making half, if not more, [of their ad revenue] from offer wall. There’s a lot [of revenue] to be missed if you just stick to one ad format.”
On competitive ads
“We actually get a lot of good questions like ‘Should we be showing competitive ads?,’ especially from people who haven’t had ads in their games before,” Park says. “There are a few things that you have to consider. One, like Paul mentioned, if it’s social casino ads, users are likely to have five plus other social casino apps that they’re playing. The second thing is that you have to look at it from the other side. The advertisers who are actually bidding for your traffic, they’re going to be paying a lot higher for the traffic that shows similar types of ads. That’s why competitive ads have much higher CPM.
“There’s a fine balance between do we want to block a competing ad, or are we going to be making higher CPM off of the same impression. We have a case study with Storm8 where they saw minimal impact, if not at all, on retention rate while their CPM was much higher showing competitive ads.”
“There was this fear that ‘Oh, you’re going to show casino ads to other casino players?,'” says Brownlow, a former general manager of business at social casino maker Double Down Interactive. “Isn’t that what the movie industry does too? They show us movie trailers when we’re watching another movie.”
On generosity in free-to-play
“It’s a double-edged sword,” Chiu says. “If you’re too generous at the beginning, then that’s the tone you set and people will expect you to be generous in terms of doling out soft or hard currency. If you stop that drip [of free currency], then people might get upset or they aren’t going to monetize. But then there are also players where this would cause them to become more invested in the game.”
“The same conundrum goes for ad monetization too,” Park says. “I get a lot of questions like ‘Should we even include ads at launch, or should we introduce it later?’ That’s along the same lines as ‘Should we be generous up-front, or should we hold off and see if people are going to stick around?'”