What’s next for in-app purchases, in-game advertising, and mobile monetization?

To make a successful mobile game, monetization can’t be an afterthought; it must be an integral part of the development cycle from the start.

Going it alone is dangerous, though, so GamesIndustry.biz sat down with Meta Audience Network’s Michael Bertaut to talk about in-game advertising, player acquisition and the future of monetization.

Check out some key takeaways from our conversation with Bertaut below, and be sure to listen to the full episode to learn more.

The Meta Audience Network recently surveyed more than 500 mobile game companies in 17 countries. What was the goal?

We commissioned and worked with the IDC, who developed our research report on Ads, IAP and Beyond to uncover insights and growth strategies for gaming companies. We set out to answer three questions: what role should in-app ads play in a developer’s monetization mix, what player acquisition strategies are effective in a changing app ecosystem, and how do mobile game companies think about future monetization and growth?

What did the report reveal?

The study found that while several developers noticed advertising loss due to App Tracking Transparency (ATT), 61% saw an increase in their average revenue per daily active user (ARPDAU) in 2021.

You’ve seen this particularly with the switch from “waterfall” to in-app bidding for ad mediation, and it validates the revenue potential of in-app ads.

The study also found that gaming companies should focus on the combination of in-app ads (IAA) and in-app purchases (IAP). The majority of respondents agreed that this combination exceeded their goals in most cases compared to games that focus solely on monetizing in-app purchases.

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Another key finding was that 93% of developers say they now use in-game advertising as part of their monetization mix. 2019 data from App Annie [now data.ai] detailed that at that time only 83% of mobile games had installed ads, so we see that there are fewer mobile games that only make money from in-app purchases.

What do you recommend for developers trying to manage this ideal monetization mix?

From IDC research, we learned that after adding IAA to an IAP model, developers saw increased revenue and lifetime value. In fact, over half of them saw an increase in ARPDAU, 30% saw an increase in IAP earnings, and 33% saw an increase in lifetime value.

I can’t stress enough that rewarded video ads are a proven tool. 47% of developers agree it’s the most important ad format, and in fact, Supersonic, one of our game publishers, has seen significant business impact since integrating rewards videos alongside in-app purchases, resulting in a 7-10% increase led in the LTV.

I would like to give a complete overview of other ad formats. 23% said native ads, which can be integrated into the game’s look and feel, are the most important ad format. Another 23% said banner ads are their top ad format – which is a bit of a surprise – but we see banner ads being used frequently in social gaming, casinos, and hyper-casual gaming. Only 7% said interstitial ads are most important.

Are there other strategies that may have been overlooked?

Effective in-app purchases must be a priority when strengthening your player acquisition mix.

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A strong community cannot be sustained solely by its loyal users — it must have the power to attract new ones. As such, Meta’s suite of UA solutions and in-game ads are designed to help create this mix, along with some complementary strategies we learned from our survey respondents.

More than half of them use one or more additional acquisition strategies, such as collaborating with social media influencers and content creators and creating social communities and networks outside of the game. Another uses social or viral recording features built right into their games.

How do mobile games companies think about future monetization and growth?

“53% of developers believe ads can actually work well in VR”

What will be standard in three years’ time is still speculation, but ideas abound for how advertising will fit into evolving play-to-earn game models, more robust 5G-enabled cloud games, VR games, and more.

Mobile remains a priority as there is significant monetization and revenue growth to be realized, and developers can also monetize ads across browser-based and cloud platforms.

At the same time, developers are planning for the future – many see the potential for monetization and growth across multiple platforms, including cloud or HTML games. It’s early days, but it’s encouraging for us to glean from research that 53% of developers believe ads can indeed work well in VR.

What three things can developers/publishers implement today to improve their business?

First, focus on maximizing your monetization potential. Next, you want to advance your new play or acquisition strategies and eventually focus on building for the future. To maximize monetization, try player-testing ad placements and prioritize rewarded videos. As you consider future best practices, diversify your revenue streams and monetization base, and build a balanced player acquisition mix.

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And I want to highlight a few ways the developers we surveyed have explored new avenues for monetization beyond IAA and IAP. 53% used sponsorship or licensing agreements. 44% are looking for gaming portals or other app stores, 42% have expanded their distribution to new partners, while 28% are exploring organic search. The next step is to consider which growth area makes sense for you.