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Why in-game mobile advertising has become the most effective monetization strategy

By Shani Rosenfelder
Mobile game ads featured - square

Quarantine during the height of the pandemic wouldn’t have been the same without Candy Crush, Fruit Ninja, or Clash of Clans. The COVID-19 pandemic, lockdowns, and stay-at-home lifestyles have driven massive growth in the app economy for traditional gamers and first-time gamers alike. 

Mobile games, in particular, exploded in popularity, seeing over a 45% increase in game installations from 2019 to 2020, blooming into a $120b+ industry. As a result, in-game advertising has become much more sophisticated over the years, proving to be one of the most effective revenue channels for mobile apps today.

In this blog, we’ll cover everything you need to know about in-game advertising including the benefits, formats, expert strategies, and more.

What is in-game advertising?

In-game advertising sells ad space within mobile games as a monetization strategy. These ads come in multiple formats. They can be integrated directly into the game by rewarding users for watching video ads or the ads can show up like traditional banner ads at the bottom of your game screen. We’ll come back to different ad formats in a later section.

What are the benefits of in-game advertising?

In-game advertising provides a symbiotic relationship between publishers and advertisers. For advertisers, in-game ads are a highly interactive and engaging way to interact with users. For publishers, ads are an effective revenue driver and provide a gateway for users to spend more within the app. Let’s dig a little deeper.

Generate revenue – and lots of it

Mobile in-game advertising and revenue

In a world where free-to-play dominates the marketplace, integrating advertising into your mobile game can generate scalable revenue. According to Venturebeat, in-game ad revenue is projected to reach $56b in 2024.

Increase in-app purchases with psychology

Rewarding players with in-game currency for interacting with ads can show users the value of in-app purchases without committing to anything besides watching an ad. Ultimately, it utilizes the foot-in-the-door technique, or getting a prospect to agree to do something small to increase the likelihood of getting them to accept a bigger task. In this case, spending money for in-game benefits.

Get your gamers to game some more

The most effective in-game ad strategy pairs good user experience with an effective rewarding system. Offering your players high-value rewards can keep them engaged for a longer period of time, incentivizing them to come back and continue playing your game. Feeding the reward loop is both an art and a science that requires testing.

Reach new audiences far and wide

Long gone are the days where you could only target young male teenage gamers. Surprisingly, the gender split for mobile game audiences is 51% female and 49% male. And against conventional wisdom, advertisers can now use gaming apps as an effective and diversified marketing channel instead as mobile game adoption continues to accelerate. While the demographic data skews to a younger audience, two-thirds of all internet users aged 55 to 64 play video games, and the number continues to climb by the day. 

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8 types of in-game advertising formats

Rewarded ads & rewarded video ads (RV)

Rewarded video ads offer users in-game bonuses in exchange for watching a full-screen ad. These ads range from 15 seconds to 1 minute and usually cannot be skipped. Rewarded ads provide a positive experience for both users and publishers, as users don’t have to pay for superior in-game content such as winning in-game currency, unlocking new levels, or receiving unique items. In return, publishers gain exposure and have incredible engagement rates.

Reward Loop definition: A system that rewards users for certain behaviors to encourage habitual behavior to keep users engaged for longer periods of time.

Interstitial ads

Interstitial ads are full-screen and interactive advertisements that appear between in-game activities or levels. These ads provide high visibility, but due to their potentially disruptive nature, it’s important for advertisers to use interstitials sparingly and non-invasively.

In-game mobile advertising: interstitials

Users are then prompted to do one of the following:

  1. Watch through the entire ad
  2. Engage with the ad and visit the promotional page
  3. 5-second delay before skipping the ad

Interstitials also typically end with a call to action to download the app. Interstitials are most effective in between stages without having to interrupt the flow of the game.

Interstitial definition: To be in between two things. In advertising, interstitial ads play in between levels or achievements.

Display banners 

The most common type of ad is the display banner. They’re often at the top or the bottom of your screen with rotating designs and creatives. However, due to banner blindness, performance on native banners is trending down. They have low viewability, recall, and oftentimes generate little to no revenue. On the other hand, ad placements are cheaper for advertisers who want to run a large-scale branding campaign.

In-game mobile advertising: Display banners

Banner Blindness definition: Advertisements and ads appearing in locations traditionally reserved for advertising are increasingly being ignored by users.

Playable ads

Playable ads are interactive ads where users are prompted to play a quick demo of the game they’re advertising. According to SmartyAds, this gamified ad format performs 8x better than traditional interstitial ads. The ads come in three parts:

  1. A quick explanation of game mechanics
  2. Short, playable demo
  3. A call to action to download the game
In-game mobile advertising: Playable ads

Gamify definition: to include elements of a game to reward interactivity with something that traditionally does not engage with the user.

Offerwall

Similar to rewarded ads, offerwalls ask users to install other apps, fill out surveys, or play games in exchange for in-game rewards.

In-game mobile advertising: Offerwall

While payout for publishers were high, many ad networks have banned offerwalls due to low performance. In 2018, Apple began cracking down offerwalls as they deemed it to be a way to manipulate the App Store charts.

Coupon ads

Coupon ads provide users unique voucher codes to redeem prizes and discounts in the real world. This online-to-offline strategy targets advertisers focused on driving foot traffic with physical brick-and-mortar locations. 

Online to Offline (O2O) definition: a marketing strategy to draw sales in physical stores using online channels

Cross-promotional ads

Cross-promotional advertising is the marketing strategy to promote a parent company’s apps on their own network of apps, especially when they notice a higher likelihood to churn. This strategy is a free way to promote their highest revenue-generating game at no cost besides the opportunity cost of not selling ad space to other advertisers. However, we recommend you exclude your highest spenders in cross-promotional ads to keep them spending on the games they already love. 

The 13 most popular mobile game genres

In-game mobile advertising: most popular game genres

Action: Ranging from platformers, to beat ‘em ups, action games focus on dexterity, reaction-time, and hand-eye coordination to overcome difficult challenges. Rewarded video ads work exceptionally well for players who want to boost their stats or obtain new items. Additionally, action gamers are more likely to become paying players once they realize the exponential benefit of paid or gifted items, so be sure to reward your players who engage with your ads and increase your opportunities for in-game purchases.

Examples: Brawlhalla, Mortal Kombat, Walking Dead

Arcade: Classic-style games that require skill for one unique game mechanic. Rewarded video ads and interstitial ads work well if the arcade game has multiple levels. Consider offering extra lives or reward multipliers for engaging with an ad.

Examples: PacMan, Doodle Jump, Subway Surfers, Monster Dash

Battle Royale: Online multiplayer games that use the elements of survival, last-man standing, and scavenging. Similar to action games, consider a luck wheel or rewarded video ads when a player needs an extra boost. You may draw inspiration from Call of Duty’s $559 million mobile monetization strategy. Consider offering free bundles, crates, or even credits for engaging with a video ad. 

Examples: PUBG, Fortnite, Call of Duty Mobile, Brawl Stars

Casual: Low-stakes games targeted at a mass-market for hobbyists. Similar to arcade games, consider non intrusive interstitial ads in between levels to create a seamless gaming experience.

Examples: Bloons TD, Stack, Crossy Road

MMORPG: Massively multiplayer online role playing games that involve online-play, controlling and growing your own character, and role-playing. Due to the immersive nature of MMORPGs, in-app advertising is more difficult than other genres. Hardcore gamers play for hours a day and constant engagement is a priority for publishers. 

Examples: Genshin Impact, Raid: Shadow Legends, Adventure Quest, Albion Online

MOBA: Multiplayer online battle arena games involve two teams of players competing to score goals or take over opposing team structures. Most common ads include interstitials and rewarded video ads. 

Examples: Vainglory, Mobile Legends, Arena of Valor

Puzzle: Require logical and conceptual skill to beat. Similar to casual games, interstitial ads in between levels are the most common form of advertising.

Examples: Two Dots, Move the Block, Sudoku, 2048

Sports: Games that emulate sports including basketball, soccer, baseball, and more. Rewarded video ads are very common for sports games.

Examples: FIFA, Golf Star, MLB 9, NBA 2K series

Trivia: Games that test extensive and broad knowledge across multiple subjects. Trivia games often involve lightning-fast rounds, which makes quick and snappy interstitial ads an effective form of advertising.

Examples: Who Wants to Be a Millionaire, Trivia Crack, Brain Test 

Word: Involve wordplay, spelling, or rearranging of letters. As a subgenre of puzzle games, word games also involve levels which makes sense for interstitial ad placements. However, for longer crossword or sudoku games, banner ads are also very common. 

Examples: Wordscapes, Crossword, Four Letters, Wheel of Fortune

How to identify your target audience

In-game mobile advertising: Identifying target audience

As we discussed previously, mass gaming adoption has allowed advertisers to reach a wide range of audiences across the world. The ‘typical’ gamer profile is no longer relevant. When targeting your advertising to your most relevant audience, you must understand the psychology and behaviors of your key personas. 

This includes the wants, needs, and challenges your audience faces. A good place to start is to conduct a survey or leverage research companies to help you form your personas. 

Alternatively, GameRefinery developed eight key player archetypes that can help inform your decision. Once you’ve built out your ideal customer profile, map them to the types of games your audience would most likely connect with.

In-game mobile advertising: GameRefinery example
Source: GameRefinery

4 expert in-game ad strategies

Obsessively iterate to generate great creatives

There’s no better way to get people excited about your game than producing great ad creatives. Show the most fun aspects of your game while staying true to your game experience. Show the pivotal aspects of your game first as a hook, be quick to reveal the punchline, and have clear call-to-action (and A/B test everything).

Leverage remarketing for gaming apps

In our State of Gaming report, our research shows that apps utilizing remarketing as an ad strategy significantly increases retention, share of paying users, and average revenue per paying user. Remarketing campaigns are most effective when paired with push notifications, email marketing, and social media marketing to re-engage with your paying users off-platform.

Set clear goals

The best way to determine the success of your in-game ads is by setting clear metrics for success. Rewarded traffic, for example, requires extensive testing to maximize your revenue and app retention. Is your ultimate goal to boost volume? Or is it to maximize ROAS? Are you measuring your success based on cost-per-action or cost-per-click? In order to answer these questions, watch this whiteboard session about maximizing rewarded traffic.

Hedge against fraud

According to our research, gaming apps see low install fraud rates but are at higher risk for in-app fraud. Fraudsters are targeting post-install in-app events to tinker with CPA events beyond the download. Invest in fraud protection technology to avoid wasted dollars.

Measure your success

Dumping money on advertising without measuring performance is the equivalent of “spraying and praying” in a shooting game. Mobile advertising is an investment that can pay off handsomely when you pay close attention to attribution. The worst thing you can do is leave it to ‘best guess.’ 

Set up proper ad revenue attribution to pinpoint your best sources of traffic. With more data, you can start delivering to the right users who are most likely to engage with your ads – at the right place and at the right time. Who wouldn’t want that?

Key takeaways

  1. In an increasingly crowded marketplace, you need ad creatives and formats that stand above the rest. Have clear KPIs to track performance and always be experimenting with new ad formats to improve performance and reduce staleness.
  2. Leverage in-game advertising to entice non-paying users to purchase in-game items using the foot-in-the-door technique.
  3. As mobile game adoption grows, you can now target very diverse audiences that were once not reachable outside of traditional advertising channels.
  4. Invest in mobile attribution so you can identify your most profitable audiences without leaving it up to ‘best guess.’
  5. Build an ideal customer profile to help target your campaigns to your most relevant audience.

Shani Rosenfelder

Shani is the Head of Content & Mobile Insights at AppsFlyer. He has over 10 years of experience in key content and marketing roles across a variety of leading online companies and startups. Combining creativity, analytical prowess and a strategic mindset, Shani is passionate about building a brand’s reputation and visibility through innovative, content-driven projects.

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