Myth Busting: Five Common Mobile Advertising Misperceptions

By Fyber Team
Tuesday, November 10, 2015 / 3 min read

Fyber’s VP of Developer Relations, David Diaz, debunks mobile advertising myths in PocketGamer.biz 

Mistrust in mobile advertising stems from widespread misperceptions that many developers believe to be fact. Does advertising cause decreased engagement within your app and lead to user churn? Is there IAP cannibalization when you introduce rewarded ad formats? While many of these misconceptions may have circulated, you shouldn’t let the possibility threaten the potential lucrative upside that mobile advertising can bring.

Let’s take a look at five of the most common industry myths and see how top gaming companies have debunked them one by one.

1. Myth: Rewarded ads will hurt in-app purchases.
Fact: Rewarded ads can boost IAP spend up to 100%.

One myth that we hear all too often is that rewarded ads will cannibalize in-app purchases (IAP). When looking to insert new ads, the first question is almost always whether or not it will hurt the paying customer base.

Research has shown that in-app ads, when executed in a contextually relevant manner, are more likely to encourage than cannibalize IAP. In fact, we recently published a case study with a leading international publisher of mobile and social games, showcasing that players who engaged with ads were more than twice as likely to make an in-app purchase and stay active in the game and demonstrated up to a 100 percent boost in IAP spend. Interestingly, users with the lower spending amounts showed the biggest boost in spending after interacting with ads.

rewarded video ads engagement

Players that engage with rewarded ads spend more. Users were divided into six cohorts by the size of their recent spending. Then, each cohort was divided into two groups: those who engaged with rewarded ads (Group A) and those who did not (Group B). Over a period of time, the client compared the amount of spending by Group A & B, both before and after the rewarded ads were introduced. If rewarded ads cannibalized in-app purchase revenue, then the ratio of spending by those who engaged with ads should decrease relative to users in their cohort who did not. Instead, the client found that in all cohorts except one, those that engaged with ad content eventually spent more than their counterparts. The user cohorts with lower spending amounts showed the biggest boost: Spending 40-100% more after interacting with ads.

Source: Fyber’s case study on “Complementing IAP with rewarded ads”

2. Myth: Rewarded ads create low-quality users.
Fact: Targeted, rewarded ads can increase time spent with your app.

Things have changed. Rewarded ads are not only used for charting like they previously were. Instead they can provide ROI-positive users. These ads are like any other type of advertising; however, they still need to be targeted. If done correctly, it could lead to increased engagement and more time spent with your app.

How can you get it right? With rewarded ads, just like with any other type, optimizing campaigns and making them contextually relevant for users is paramount. We know that being smart about finding good inventory can yield big results. For instance, in a rewarded ad campaign by Social Point, their app, Monster Legends, gained 46,000 new users in the first week, with 66% completing the game’s tutorial and saw an average of 7-10% ROI.

Social Point Rewarded Ad Engagement
Social Point Monster Legends
7-10% Average ROI
66% of users completed the game’s tutorial

3. Myth: Ads reduce user engagement.
Fact: Users who engage with ads can have an increased user session time.

You’re proud of your app, and you want more engaged users spending time with it. Some worry that increasing ads will decrease app usage when, in fact, real-world practice shows the opposite. Players find rewarded video ads more engaging and interactive. A leading international publisher of mobile and social games discovered that users who watched at least one rewarded video ad were actually two and a half times more likely to stay active in the game the following month.

4. Myth: Showing more ads will make you more money.
Fact: Spamming your users will not keep them engaged.

Mobile video advertising is extremely performance driven. When determining your monetization approach, it’s critical to add elements of scarcity and rarity and show the most relevant ads to users at the right time to ensure you’re hitting higher KPIs.

For instance, Next Games was able to double their average eCPM from $10 to $20 for “Compass Point: West” by showing less ads. They also went up to 60% engagement with their ads, with average video completions rising to 4-5 per day and with about 10 percent of users leaving a positive App Store review specifically calling out video ads. Sometimes, less can be more.

Compass Point: West Mobile Ads
Next Games “Compass Point: West”
$10 -> $20 Average eCPM
60% of DAU engage daily
4.5 per day average video completions
40% of overall revenues from ads

5. Myth: Mid-core games don’t benefit – and won’t make money – from ads.
Fact: Just using one advertising format can increase total revenue.

The truth is that you can make a significant amount of revenue through ads. After working with DeNA, Fyber found that mid-core games can make significant revenue from ads.

Clients using just one advertising format generate 10% of their total revenue. If you’re a mid-core game, you should be making at least 10 to 20 percent of your revenue from ads. If you are not generating that much, you should be rethinking your ad strategy.

Dena mobile ads

DeNA’s Super Battle Tactics
ARPDAU on iOS $0.05
ARPDAU on Android $0.03
10% Ad Revenue

When it comes to understanding effective mobile advertising, it’s important to distinguish truth from fiction, to determine what works and what doesn’t.

Don’t buy into these aforementioned myths. Instead, use advertising in a smart, efficient and streamlined way to make a positive impact on your app’s bottom line.

Interested in testing the waters but don’t want to jump right in? Try just one ad format to start and see what happens, that’s all it takes. You might be pleasantly surprised.

Source: PocketGamer.biz, November 10th 2015

Tags: Monetization