The great debate – IAA or IAP? Publishers weigh in

AdColony and Fyber’s teams have teamed up to present a wide view of current trends in the in-app monetization ecosystem. Our Mobile App Monetization survey was sent to our partners: app publishers, small developers to large, from all over the world to inform the outlook of what the future holds for the industry.

While the full report is 22 pages long, we gathered a few quick insights. Take a look. 

 

One of the most interesting topics we tackled is how publishers of both gaming and non-gaming apps split their revenue between In-App Ads (IAA) and In-App Purchases (IAP). These were the results:

 

But what do they tell us? Historically, in-app purchases have powered the profits of many mobile games.

 

At the same time, numbers consistently show that no more than 5% of users are payers on any given game, and optimizing monetization for the 95% of users who do not pay offers a significant revenue opportunity.

 

For some verticals, particularly Gaming, most app developers won’t be able to generate revenue from IAP alone. Softer genres such as hypercasual and casual games lean more on an IAA model to grow, but we’ll get into more detail on that soon.

 

Most gaming apps (hardcore would be an exception) naturally lend themselves to an ads model. With the natural pauses, loading levels, transitions, or rewards, the ads drive engagement and don’t disrupt the gameplay too much. Of course, this is true if your balance of gameplay and ads balance each other out.

 

Non-gaming apps dominate the IAP monetization strategy

 

On the same note, non-gaming apps such as eCommerce should resist using IAA, as any distraction from completing a purchase can result in a lost sale.  

 

With the dynamic evolution of the app environment, the great debate continues on what is more effective – but from our data research, it really depends on the type of app.

 

We took a deeper dive into how this affects gaming genres.

 

Advertising in casual mobile games has always offered a revenue source, considering it did take some time for players to accept them and engage with them. 

 

Hyper-casual games are driving the most revenue with IAA

 

From a gaming perspective, the report findings point to hyper-casual games are driving the most revenue with IAA. This is no surprise, based on their business model and loop of “play, ad,  reward, progress, repeat” – it makes sense. For other game genres such as casual games, the revenue is split on both spectrums of the scale. Casual games monetize by providing boosters, extra lives, or other incentives to keep the player playing and progressing in the game. This can be achieved through IAPs or IAAs, such as rewarded video. One thing to keep in mind is making sure the incentives are different. IAP is considered as more premium content, whereas IAA is a “quick fix” to progress. 

 

 

Your in-app monetization strategy should already be part of your game from the development stage. Knowing how to balance your game economy and the currency mechanics.

 

 

Video ads lead the pack 

 

As for ad formats, most gaming and non-gaming apps contain video ads, and for good reason – they are the most lucrative. From our report, we learned that across regions and categories, video ads bring in the most revenue according to publishers.

 

To learn more about the trends, insights and how gaming and non-gaming publishers see the industry now, download the full report! 

 

We also covered:

  • The most used monetization methods
  • Monetization effectiveness
  • The impact of ad formats on UX
  • Early indicators of high-quality users who are likely to make IAPs
  • And more!

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