Diversify your mobile games’ revenue with rewarded ads
Part 3 of 5 — New monetization trends to diversify your games revenue
This is the third post in our series looking at the importance of diversifying revenue streams in games and exploring the practical approaches you can take to implement a diverse monetization strategy.
My colleague Adi Haddad has already provided an overview of the landscape in the first article in this series. In the second, I shared some learnings around in-game subscriptions. In this post, I partnered with Tammy Levy, VP of Insights and Analytics at Kongregate, to explore rewarded ads, and share how you can integrate them into your diversified monetization strategy.
Rewarded ads are not new; in fact, they’ve been around in mobile games for several years now. However, there is a new trend of hybrid monetization models: developers who have historically only relied on IAP are diversifying their monetization models, and adding rewarded ads as a result. There are three main reasons why these developers are reconsidering rewarded ads:
Firstly, they enable you to monetize non-payers, especially in emerging markets. For non-payers, who may be reluctant to using IAP, rewarded ads provide an alternative payment method: their time.
Secondly, rewarded ads can also increase overall engagement across payers and non-payers, as many developers design rewarded ads to gift premium currency or extend gameplay. Increased engagement, in turn, increases social liquidity, or the critical mass needed to make PVP games fun and the gamer community vibrant. This increased participation consequently helps to enhance the experience of everyone, including the buyers.
While you may already know the first two reasons, the third reason may come as a surprise to you. Kongregate, an indie publisher with a portfolio of diverse games, conducted a correlation research across their portfolio, and found that rewarded ads viewership also predicts IAP conversion. Kongregate found that, across six of their games, people who watched an ad in their very first session are 2.5 to 5 times more likely to make subsequent in-app purchases. We will go over their case study in more detail below.
Before we analyze the Kongregate research and their interesting findings, we wanted to recommend a handy framework to consider when optimizing your rewarded ads design, from our AdMob colleagues:
- Placement: What should a rewarded ad offer? How does it complement the game’s IAP economy? Where are the entry points of the ad experience in the game loop?
- User targeting: Who should see the rewarded ads? How do you segment? What’s the user experience like?
- Cadence: How often should a user see rewarded ads? Should there be a cap per user per day?
- Measurement: Consider the success metrics to be used ? What are leading indicators of the rewarded ads’ effectiveness? How do you measure cannibalization?
Let’s now take a closer look at how Kongregate was able to predict IAP conversion through rewarded ads through the four sections of the framework introduced above.
Kongregate case study
“Rewarded video engagement is a clear signal that a player understands the value of virtual goods. Ad views, then, are a correlate with IAP conversion.”
— Tammy Levy, VP of Insights and Analytics, Kongregate
Kongregate is an indie publisher based in San Francisco. They have a diverse portfolio of games across different genres, from casual (AdVenture Capitalist) to mid-core (Animation Throwdown). Diversifying business models is Kongregate’s company-wide strategy, as have reported that this is a great way to drive substantial incremental revenue without much cannibalization.
Kongregate found that, across six of their games, people who watched an ad in their first session are 2.5 to 5 times more likely to make subsequent in-app purchases. It isn’t that watching ads causes people to buy IAP, but rather that people who understand and accept the value proposition of a rewarded ad — making a voluntary exchange of their time for in-game currencies or resources — are more likely to make similar exchanges with their money.
In that sense, ads may provide a step toward showing non-payers the value of spending through a low-friction means of accessing more premium components of the game experience. But how can developers best design ad units that feel natural and rewarding and optimize those ads for business success?
If we apply AdMob’s framework above, this is how Kongregate thinks about ads implementation for optimized efficacy.
Placement of the ads
Just like any other part of a game’s monetization, rewarded ads will be most successful when integrated into your game’s core loops and economy. The rewards should be useful, meaningful, while not competing directly with IAP.
User-initiated: everyone has access to ads, but the user initiates the ad viewing experience, as to not interrupt their gameplay.
More ≠ better: more isn’t always better. Kongregate found that 6–8 ads/viewer/day maximizes return, with the option to watch at least one per session.
Viewership & frequency: segment your core health metrics by ad viewership and frequency. If a cohort is retaining or spending worse, iterate and test new designs using this framework.
Rewarded ads in midcore games: Animation Throwdown
Animation Throwdown, a midcore CCG (card collecting game) that Kongregate launched in September of 2016, has seen significant engagement and revenue from rewarded video ads. Below we will examine each rewarded ad’s design and implementations, and their collective impact.
The game launched with a standard ad unit that provided better rewards for all battles played while the bonus is active. There are two design principles that this ad unit leverages:
- Design ads into the core-loop of the game: in this case by tying them to a core game mechanic — battles.
- Grant meaningful rewards that scale as players progress: by applying a bonus as a percentage the boost provided by the ads will always be meaningful regardless of the player’s level.
- The ads encourage repeated engagement as players can “stack” the bonus, or combine the percentage multipliers, by watching multiple ads.
Learning from Casual Games
Soon after the Animation Throwdown launch, Burrito Bison (one of the more casual games in the portfolio) offered a new type of ad unit: a piñata which was an “ad loot box” that dropped randomly.
The second ad unit in Animation Throwdown was inspired by Burrito Bison. After seeing great results in Burrito Bison, Animation Throwdown also implemented this by randomly dropping locked crates as battle rewards, which can be unlocked by watching an ad.
Tying back to the design principles:
- Once again, ad reinforced the core game mechanic of battles.
- Two, because it’s randomized, the reward doesn’t have to be the same each time, and thus can scale up based on the player’s level. This allows the game designers to tune them based on the player’s level without breaking the game economy.
The lesson here is that you can always adapt an ad unit from one genre to another. You just have to be creative.
Integrate into different mechanics of the game’s core-loop
To set the stage, one of the core mechanics in Animation Throwdown is combining two cards during a battle to create a “combo” that is more powerful. But, before being able to use a “combo” players need to discover it through research as an appointment mechanic. At launch there were only two research “slots” and research takes time, making these slots a valuable and limited resource the players have.
Knowing that research is an action players engage with every day, the Throwdown team added an additional research slot available to all players. This new slot requires the player to watch an ad before they can activate it every time they want to use it.
The design principles behind this ad unit focus on three areas:
- Core-loop: Tying rewarded ads options to a key progression area, such as deck improvement in this case.
- Meaningful rewards: Providing an additional research slot added clear, tangible value to players. This encourages the users to engage with the game further.
- Prominent placement: Since the “ad research slot” is presented next to the other research slots.
On KPIs and impact, Kongregate said that the two most important metrics to track are:
First, the number of ads viewed per player per day, or frequency.
Second, how many players watch ads as a % of DAU, or ad engagement.
Kongregate measures this with ads viewed per player. Adding the ad crate increased the number of ads to Kongregate’s target of ~7 / day and has remained stable ever since.
Remember! More ≠ better, making it important to keep this balanced and steady to not overwhelm your players.
Viewership, or ad engagement, is how many players watch ads as a % of DAU. This is the most important KPI to maximize within each game.
Strong engagement comes from diversifying the ad units you offer to players, thus increasing the % of players engaging. That’s why Kongregate designed three different ad units that we just shared.
Looking at the result, you can see that:
- Adding the ad crate clearly increased the % of players engaging up to ~40%. But, due to other changes in the game the % declined over time.
- Thanks to the release of the research slot engagement increased substantially reaching Kongregate’s target of ~60%, which is on-par with more casual games.
You might consider giving rewarded ads another try, on top of your existing IAP based monetization. There are three potential benefits that might derive from this:
- Firstly, they enable you to monetize non-payers, especially in emerging markets.
- Secondly, rewarded ads also increase overall engagement across payers and non-payers.
- Thirdly, as Kongregate has shown, rewarded ads viewership also predicts IAP conversion.
We recommend using AdMob’s framework above to guide you through your rewarded ads implementation and optimization.
Lastly, if you are interested in testing out rewarded ads, Google Play has partnered with AdMob to make it even easier for game developers like you to integrate them in your game. We recently launched the Google Play Rewarded Products, available directly through the Google Play Console. You can try it in your games with no additional SDK integration required.
What do you think?
Do you have thoughts on rewarded ads? Let us know in the comments below or tweet using #AskPlayDev and we’ll reply from @GooglePlayDev, where we regularly share news and tips on how to be successful on Google Play.