Mobile Advertising Ecosystem: How Does Ad Monetization Work

ad-monetization-ecosystem

Mobile Advertising Ecosystem: How Does Ad Monetization Work

The games industry is a massive and vital part of the computing world, with mobile gaming leading the charge. 

 

In fact, according to data released by Newzoo, not only did mobile game revenue account for 52 percent (earning $93 billion) of global market revenue in 2021. And that number will grow significantly over time! It’s estimated that mobile gaming will reach a staggering $200 billion in just two years from now!

 

You might be aware of the financial rewards of developing a successful mobile game or using ad formats to monetize it. How do you profit from the ads shown in your games? How can you get one piece of that $200 billion pie? 

 

Know the system.

 

When you think about it, there are several different players in the ad monetization ecosystem. However, the four terms come up more than others as the most significant players in the game.

 

Those terms are:

 

  • Developers
  • Advertisers
  • Players

 

Now, precisely what role they play can be difficult to understand if one has no experience with how mobile game advertising works.

 

Luckily we’re here now! Let’s take the time to figure this three-piece puzzle out together, starting by looking at each piece individually and how each party interacts with the other.

mobile-ad-ecosystem

How Does The Ad Monetization Ecosystem Work?

 

Developers use ads to earn revenue, and they do so because advertisers pay to show ads to their players. More ads might mean more significant revenue, but not necessarily. How your users react to ads and engage with them will determine your ad revenue. Therefore, to maximize mobile game revenue a developer needs to do more than increase the ad frequency.

 

Advertisers pay developers for actions that drive their own revenue. Those may include app installs, selling retail goods, or signing up for their service. These actions are what make the advertisers’ campaigns successful. Simply put, advertisers pay for players who watch their ads, click on them and complete a conversion action. Naturally, there are exceptions, such as brand awareness campaigns. Increasing the number of players who not only watch the ad but complete the action is, therefore, the formula to success.

 

That is the digital advertising value chain in the nutshell. But if you want to understand the cogs that run this machinery better, you’ll need to get more familiar with each one of them.

 

advertiser-ad-monWhat Is The Advertisers’ Role?

 

Advertisers are a big part of the mobile gaming industry. If you have ever engaged in a free-to-play game, you have probably noticed that they have all sorts of ads in them. 

 

The ads that gamers see during gameplay are what advertisers pay for. If their ad is successful, they can make money off it. In turn, they reward the publishers by advertising in their games more often.

 

To get their money’s worth, the ads they choose have to be interesting enough for gamers to click on them. If a gamer clicks on an ad and buys something from the advertiser or completes a specific type of action (such as sign-up to a service), then the advertiser will have achieved their goal of selling a product. This is known as ROI (return of investment), where paying to display an ad eventually leads to money being made.

 

When it comes to advertising, advertisers need a certain amount of return on their investment to keep running campaigns. This means that the ads will only keep showing in your game if an advertiser can generate more value than what they spend during any given period.

 

Advertising has become an essential part of free-to-play games, mainly because most people enjoy playing games on their phones. Still, some are unwilling to pay for them, especially in the mobile ecosystem. Advertising is, therefore, the quid-pro-quo solution that benefits everyone.

 

game-developerWhat Is The Game Developers’ Role?

 

Game developers have one primary goal: to create the best gameplay experience possible.

 

Never lose sight of this when designing your game if you want high player retention and high revenue! 

 

Advertising should never be done for the sake of advertising alone. 

 

Players will pick up on disruptive, overly-frequent, and tedious ads and give up on your game before they’ve had the chance to immerse in it fully. As long as ads don’t interfere with that in any way, implementing them should not be that difficult. 

 

Some players prefer watching an ad to obtain an in-game reward rather than paying for it. However, showing an unskippable, long, and intrusive ad is bound to drive a large number of uninstalls and affect your DAU (daily active users).

 

For an ad monetization strategy to be effective, you need to know your player base. Only then can you offer a suitable ad model. Offering a reward or giving the players an option to view an ad or not can make their experience much more satisfying. This, in turn, makes their sentiment towards ads much more favorable. Figuring out exactly how to do that will drive engagement and advertiser ROI.

 

With better engagement and a substantial player base, your chances of negotiating a better deal with the advertisers or charging more for an ad slot in your game grow much higher. In this scenario, you are in charge not only of deciding which advertising SDKs get integrated into the game but also of what rates advertisers pay to use YOUR audience data and draw high conversions with offers tailored based on the player profile you supply. 

 

ad-networkWhat Is A Gaming Ad Network Then?

 

Ad networks are a provider of ad space for mobile app and game publishers. They are a link between developers and advertisers, allowing advertisers to bid on available advertising slots. Ad networks let publishers post their open ad slots which advertisers bid on in hopes of having the highest bid and winning the slot. This, in turn, shows their ad in that particular slot.

 

Ad networks in mobile gaming allow advertisers to manage their campaigns across a single platform. They can create campaigns, buy ad inventory, place bids, and track ads to estimate ROI. This saves them time by letting them conduct these tasks from a single dashboard. In turn, the gaming ad network makes money by taking a small commission from advertisers.

 

The success of any ad network depends on understanding the audience and choosing which one to use for your app or game. Sometimes, there is not much difference among competing ad networks in terms of performance. However, some ad networks may specialize in specific types of games or ad formats.

 

Ultimately, the success of any gaming ad network depends on how well it can help you increase your revenue and maximize your earnings as a publisher or developer. It needs to be able to deliver high-quality ads to your users and provide accurate data for analytics to help you learn which ads are working best for your app or game.  

 

What Are Mediation Platforms?

 

Mediation and Supply Side platforms help developers using multiple ad networks optimize their ad performance. Original ad requests are sent to mediation platforms that are then forwarded to the most appropriate ad networks. Some examples of mediation platforms include Fyber and Supersonic. 

 

Supply-side or sell-side platforms help publishers manage their earnings by making it easier for them to explore different advertising opportunities. They do this by aggregating performance statistics and inventory across multiple ad networks.

 

There are a few good reasons to choose mediation platforms over using multiple ad networks directly:

 

  • More Efficient

 

Mediation is more efficient in terms of the number of ad network requests being sent out at one time. This means that mediation can usually improve fill rates when used with certain providers in comparison to when the same ad networks are used directly.

 

You can also combine multiple ad revenue streams into one ‘pot’. This allows you to maximize your ad revenue by using the combined strengths of different ad networks.

 

  • More Relevant

 

Mediation platforms provide more relevant, targeted advertising opportunities. They do this by analyzing data gathered from previous sessions in order to predict user behavior and then recommend an appropriate ad network for that specific user.

 

  • Maximizes eCPM

 

Using mediation also helps provide advertisers with more targeted, relevant ads. This allows them to spend more efficiently on advertising campaigns and maximizes the eCPM (earnings per thousand impressions).

 

gamer-graphicWhere Do Players Fit In?

 

Last but certainly not least, we have the players. They are the ones who both interact with your game and the ones who engage with the ads. Therefore, they are of immense value to both the advertisers and the game developers. This is why you should spend some time getting to know your players.

 

Knowing who your players are is the key to successful advertising and game monetization strategies.

 

There are many different kinds of players who will pick your game up. Some are quick to spend money on in-game items, and some are not. Others will prefer watching an ad for a reward instead of paying for it. Some will look forward to a rewarded ad, and some will get frustrated by it.

 

There is no sense in implementing an ad mechanic only to find out the majority of your player base doesn’t care about viewing or interacting with ads at all. If your players aren’t engaging with the ads, that ad revenue will never come.

 

How likely players are to interact with the ads in your game is mainly based on the type of game you are offering. Analytics data can give you a good idea of how players interact with the ads in your game and how relevant they are to them.

 

Consider how intrusive your ads are and adjust ad frequency to optimize their performance based on the available data. Catering to different player types will require you to use various ad types. For example, hardcore and mid-core gamers are very open to rewarded video ads and in fact, welcome them at particular times of the game when they require a boost of in-game currency, experience, or lives.

 

Why Did Players Choose Your Game?

 

Another vital factor to consider is why your players choose to engage with your game.

 

Here are some of the main reasons people in the US play video games, according to Statista:

 

  • 66% play games to unwind and relax
  • 52% play games to fill time while waiting or taking a break
  • 51% play games for the escape and entertainment they provide
  • 48% play games to spend time by themselves.

 

Different motivations for engaging with your game will require distinct advertising strategies. Try figuring out which players are more likely to welcome ads and which ones are more likely to be irritated by them.

 

Start by noting down a few main characteristics of your game. This will help you determine what your ideal audience would be. Players looking to escape are more likely to engage with an immersive RPG and might be most receptive to rewarded video ads. People looking to relax or fill time might be more interested in a fun puzzle game and more open to ad formats such as banners and interstitials.

 

How Can You Benefit From Understanding The Digital Advertising Value Chain?

 

The mobile advertising ecosystem or value chain helps you identify your target audience and determine the best ad monetization strategy. Analyzing your player base and the relationship they have with the advertisers will help you find the critical points of your monetization strategy you can improve on. This might entail trying a different ad format, combining multiple formats, or optimizing ad frequency and performance.

 

Understanding the ad monetization ecosystem is important for identifying areas that boost or hinder ad performance. A comprehensive analysis will show you where you stand to profit by improving your monetization model, what types of ads are most appropriate, and whether the way you are using them impacts your revenue.

 

A thorough understanding of each point within this business model helps you decide how to best approach new advertising opportunities while avoiding costly mistakes along the way.

 

Need Help Understanding How The Mobile Advertising Ecosystem Works?

 

Choosing the right ad network, finding the best ad placement, and A/B testing your game monetization strategy makes a huge difference, and we want to make sure you are making an educated choice every step of your way.

 

Our team has decades of experience in gaming, driving value for our clients and helping them maximize their ad revenue.

 

Our successful track record speaks for us: We have partnered with leading developers and managed games with 200+ million downloads and millions of DAU. Likewise, we have helped numerous indie developers maximize the potential of their games across different genres, including sports, puzzles, action, strategy, and simulations.

 

If you are ready to take a bite at that pie, schedule your free audit today!

 

Schedule A Consultation

 

Sources:

  1. Newzoo. (2021) 2021 Global Games Market.
  2. Clement. J. (2021) Reasons for playing video games in the U.S. 2021.