The User acquisition struggle has given rise to Content Marketing, especially Ad Networks / Direct deals and offer walls for mobile games. The cost per install has doubled or tripled in 2016 alone. Developers have pivoted to video ads than interstitials as the publishers fine tune their performance based UA and see the effectiveness of all the different types of Content Marketing Techniques.
As the bids for marketing placement positioning gets highers this growth has effectively made ad based games a viable business model. Companies like Bit Mango have perfected this space in building a viable business model around ad based games.
What to expect with Ad Revenue model
For the major players in this industry, it’s never a good thing to hear when your product manager is relying on ad revenue to carry your game. If you do hear this from your PM. i suggest you look for new opportunity. For small and mid-sized companies this can be potentially a viable model, but should never completely be relied on as a viable business model in mobile. At least not yet.
Let’s take a look why?
LIGHT CORE GAMES
The barrier of entry is lower because
Smaller download size
Easier, simple games
Perfect for boredom busters
Aesthetically pleasing
Low development times means games can be upto date with current events
Flash marketing is a viable option
The goal for these games is mass market, simple and have them engage immediately.
30 day retention is close to 0
But you can expect 7 day to be higher than your hardcore games.
Rewarding players with hard currency to watch a video, or to continue has seen a lot of success with smaller studios. As long as CPI < ROI regarding ad revenue, you’re doing fine. The good news about this business model is that a lot of advertisement is moving away from traditional media (IE, Television and Radio) and is moving over to internet which explains the through the roof cost of CPI. This means your revenue per video as is going up as well. A studio that has a strong UA team can find success in this space.
MID / HARD CORE GAMES
Bigger downloading size
OTA (over the air) download size
Games are more complex
Takes up a lot of room in your storage
Requires constant upgrading
Currently mid to hard core games make the most money as the development team is setup so that they can constantly funnel new content on a consistent (monthly) basis. A properly operated feature complete game should easily outperform on an IAP level than an ad based model.
You should look to optimize your ad based revenue to be at max 5% – 15% of your monthly revenue versus your IAP model. If not, you’re doing it wrong.
Ad revenue games recently have been effective means for smaller studios because the cost to develop these games are not as expensive and the revenue generated per active user via ad placements has risen.. In the Tier 1 regions (US, Japan, Korea, Canada) you’re looking at a per download basis of up to $1 – $10 in revenue. This is very attractive for Low end games as these product are designed around current events.
No different from keyword blogging, light core game developers will focus on ASO (App search optimization) and SEO to get users into their game. The Offer Wall, adnetwork revenue model is still at infancy stage in innovation and still have issues around their business model as fill rates cap the potential revenue stream for a specific app. Nothing worse than attempting unlock or receive rewards for a game and an ad doesn’t show up blocking you from potentially enjoying this feature in the game.
For these reasons, the high end games look at ad revenue model as a plus alpha revenue stream rather than its main source. The unpredictability and the unreliable nature of the technology has its limitations.
Top Yielding Video Ads
As of Septemeber 2017, the top performing ad networks are:
Admob (Google)
Unity Ads (Unity)
App Lovin
Chartboost