In-app ads (IAA) today make up nearly half (47%) of an app developer’s business model. Gone are the days when ads were considered evil or an afterthought. Some of the biggest casual- and midcore-focused mobile game businesses from King and Zynga to Glu and Playtika consider IAA as a critical part of their app monetization strategy.
Peek under the hood of these businesses and you’ll find a team of data scientists and business intelligence practitioners at the wheel of intricately-designed technology controlling and measuring in-app purchases (IAP) for each user. But for their ad monetization business model, it’s a totally different story. The majority of mobile gaming businesses aren’t making the same technological investments in controlling and measuring ad monetization, let alone for each user. Heck, one mediation provider recently recommended mobile game developers to run one “worldwide waterfall” for all users.
With data from only half of their total monetization strategy, these businesses are largely flying blind when it comes to making business decisions to their UA strategy, monetization tactics, and the product as a whole. Though, it’s not mobile gaming businesses that are at fault. An ad revenue business model is close to impossible for these businesses to accurately measure at the user level because each ad impression isn’t sold and charged in real time to the buyer willing to pay the most. Rather, an impression is offered to one ad network buyer (representing upwards of hundreds of advertisers) at a time in accordance with a ranked list of other ad network buyers known as the “waterfall.” And this “list” ranks ad network buyers from highest expected—emphasis on expected and not actual—eCPM to lowest.
So what are mobile gaming businesses to do? How can they accurately measure the ad monetization experience for each user for their now indispensable business model? They make do with the aggregated ad revenue data from mobile ad tech providers at their disposal. At best, they can take this aggregated ad revenue data, grouped by something like country, and divide it by users who’ve interacted with mobile ads in a single country to formulate some semblance of an ad LTV calculation—albeit deceptive calculation—for their users.
This is the current state of affairs for ad monetization at mobile gaming businesses. Over the past two years, Fyber, as well as other ad tech providers, have been inching closer to solving this issue. The first wave of change came to the waterfall, no pun intended. Unified auctioning and real-time bidding technologies were introduced to move the market away from sequential waterfall ad mechanisms. As game developers adopted these technologies, ad providers then released capabilities to formally share committed bid values for each ad impression. With it, game devs can finally get their hands on disaggregated, impression-level ad revenue data in order for their LTV forecasting model to fine-tune a clearer and more accurate ad LTV metric.
But like we said, some mobile gaming businesses generate revenue through multiple business models, including both IAP and IAA. Therefore, forecasting a more accurate ad LTV for each user isn’t enough. Users don’t interact with ads in a vacuum. A user can watch a rewarded video, view an IAP storefront, and buy an IAP for a consumable good, all within a single game session.
What does this mean for the future of monetization and growth for a mobile game business?
It means that the possibilities for optimizing against a complete user-level LTV metric are endless. Simple A/B and multivariate tests through our platform can reveal unique monetization traits of users previously grouped into the same segment. For example, a developer could test what effects showing fewer interstitial ads would have on a specific group of users, discovering that showing fewer ads decreases retention, has no effect on ad revenue, and increases conversion. Simple or complex, the bottom line is that gaming devs will soon be able to look holistically at IAP and ads to intelligently increase user-level LTV and grow their business.