Q&A with Miniclip, N3TWORK, and Tripledot Studios

The biggest trends in performance marketing and ad creatives from those on the front lines

We’re wrapping up our five-part analysis that features all the latest trends and developments in the mobile gaming industry.

If you’re new to this series, we’ve recently teamed up with Luna Labs and interviewed 21 different industry experts from multiple areas to get you all the insights you need.

In a nutshell, here are the areas we have covered:

• Trends in Monetization Mechanics, Product Design, and Social Gaming with Snap, GameRefinery, Department of Play and Liquid & Grit. (Read here)
• Trends in Investment and Mergers & Acquisitions with Play Ventures, Deconstructor of Fun, Elite Game Developers and Mail.Ru Game Ventures (Read here)
• Trends in Gamer Behavior, Motivations, and App Download with Newzoo, Quantic Foundry and Adjust — Part One (Read here)
• Trends in Gamer Behavior, Motivations, and App Download with App Annie, Appsflyer, GameRefinery and Appsumer — Part Two (Read here)
• Trends in Creatives and Performance Marketing with N3TWORK, Miniclip, Tripledot Studios, ironSource and Luna Labs

For the grand finale, we first sat down with Nebojsa Radovic, Growth Lead at N3TWORK, Jonathan Winters, Director of Performance Marketing at Miniclip, and Mark Beck, Chief Marketing Officer at Tripledot Studios to pick their brains on recent performance marketing trends. Then, we had our Chief Design Officer, Dan Greenberg, as well as Steven Chard and Adam Stevens from Luna Labs, join in to share their insights on ad creative trends.

Performance Marketing

What type of changes did you expect to see in performance marketing at the beginning of this year — and what actually changed?

Miniclip: My expectation for 2020 has been that Performance Marketing will continue to have an increased focus on two crucial areas: Marketing Automation and Creative Optimization. Scalable user acquisition campaigns require a robust creative strategy with an increased amount of testing within a highly competitive environment. In a bid to make creative production more scalable, a range of companies have created tools and services.

Moreover, playable ads have become more accessible due to various third party solutions, which offer production without the need for coding. The success of UA is more dependent on creative than ever before and therefore it made sense.

It is also great to see users gain more control over their data with the announcement of Apple’s AppTrackingTransparency framework. User privacy has been a prominent topic within the UA space for quite a while now, especially since the 2018 introduction of the GDPR. It was clear that performance marketing needs to adapt to a new environment without complete access to device-level data. I think most of us were expecting a step towards the depreciation of device IDs at some point, which is now beginning to become reality. These privacy changes will change the way we plan, manage and optimize our performance marketing activities going forward.

Nebo from N3TWORK: I expected to see more rich ad formats and some innovation on that front. However, what actually happened is that the trend of misleading ads continued and some game developers really doubled down on getting the most of it.

On the cost side of things, I expected CPMs to continue rising which, at least temporarily, stopped due to the fact a lot of eCommerce and brand advertisers scaled down their advertising spend due to Covid-19. This helped game advertisers significantly improve their performance which led to record high revenue months to quite a few of them.

Tripledot Studios: We expected performance marketing to continue to mature across most game genres. We thought the overall volume growth would reflect the increasing competitiveness of mobile games & CPIs would continue to rise.

COVID obviously had a huge impact on this year so far across so many dimensions. We are fortunate to be in the gaming sector, which obviously is one of the rare sectors that has seen an uplift in unit economics. Specifically, we have seen a decrease in CPIs in March / April, corresponding with other sectors pulling back their advertising budgets, while in May / June we experienced CPIs increase back to and even above pre-COVID times.

To what extent, were these changes brought upon by Covid-19?

Miniclip: The impact of the global pandemic on the mobile games industry has shown how important it is for marketing teams to be quick on their feet and meet changes in user behaviour and the mobile economy, while accurately measuring opportunity cost. We knew we could not lose momentum; however, it was crucial not to become careless as numbers went up.

People found themselves staying at home and, with the extra money that they may have spent at the pub or cinema, they increased their spending on home entertainment. This directly correlated to the surge in user engagement within mobile gaming. This led to more opportunities for UA scale and we revised our marketing budgets quickly. Still, as the pandemic started, there were many unknowns about how sustainable the uplift really was and how the increased number of new users impacted long-term LTVs. Just because cumulative ARPUs went up in the short-term, we still need to evaluate the long-term effect. For example, we asked ourselves whether a lot of those additional users were just looking for some easy distractions during lockdown and therefore may show lower retention. It was important to pay close attention to our daily KPIs and observe any significant changes in in-game behaviour.

It was also important to note that other mobile app segments, such as E-commerce, have not experienced the same kind of surge. Many advertisers have had to work in the opposite direction and therefore paused down their marketing campaigns in order to avoid losses. As a result, the demand-side shifted and mobile gaming saw lower CPMs.

Nebo from N3TWORK: The initial CPM decrease can definitely be attributed to Covid-19 as well as the revenue increase. As players suddenly started spending more time indoors, this had a positive impact on engagement rates and, combined with the decrease in cost, this led to better ROI and ultimately higher revenue.

Tripledot Studios: We believe that pandemic profoundly impacted people’s playing habits. The downward movement of CPIs in March/April was solely due to Covid-19 in our opinion, but we have also observed increased engagement as a result of the pandemic in our games.

Has the goal/role of the UA team changed? If so, do you see it changing even more for the rest of the year? If it hasn’t, how do you see it evolving for the rest of 2020?

Miniclip: First of all, it is always fascinating to see how much the UA space is changing year on year. In general, I do not think that the goal of UA has changed dramatically. Profitable scale is still pretty much the most common goal across the mobile gaming landscape. However, the upcoming privacy changes on iOS mean that UA teams have to build new ways to measure the success of their campaign activity.

Depending on user consent, a lot of the deterministic device-level attribution will need to be replaced with probabilistic models. We may see that alternative measures of marketing success, such as Media Mix Modeling, become more relevant going forward. Therefore, UA teams will need to learn more about attribution modelling and adapt to campaign activity with fewer user-level signals as IDFAs are deprecated.

Nebo from N3TWORK: The new circumstances enabled quite a few advertisers to spend more aggressively which shifted the focus from optimization to discovery on both creative and media buying fronts. This will probably slow down in the months to come as other industries are scaling their advertising efforts, which will lead to an increase in prices. Speaking of discovery, another interesting trend is that TikTok arose as a new relevant channel and a lot of teams felt the need to test it.

Tripledot Studios: Disruption creates both risk and opportunity if handled appropriately. What 2020 has shown, both in terms of COVID and the iOS 14 IDFA changes, is that the UA team needs to be effective managers of change. This requires close collaboration with all areas of the business (development, data science, creative, monetisation etc.) to minimize risk and maximize any opportunity impacted by these disruptions. In this way, the role and goals of the UA team continue to evolve, while the fundamental principles remain the same. The UA team is responsible for driving growth at the company and growing the game’s user base profitability.

As we can see, more people are playing mobile games (and for a longer period of time) than ever before. How would you/have you been evaluating LTV for the users you’re acquiring now?

Miniclip: There are multiple ways to evaluate LTVs and we have found that it is important to consider that every game is different. The overall type of game, along with the ratio between IAP, subscription and advertising revenue, impacts the LTV analysis. Plus, the change of user behaviour during the pandemic meant that we had to pay closer attention to the impact on our usual metrics. Even more importantly, it is crucial to build LTV models by UA channel and campaign type. For example, channels such as Facebook and Google are much better at finding paying users with options such as ROAS and Value Optimisation (although iOS14 will have a big impact on this). Their LTV curves can be quite different from other channels with fewer targeting capabilities.

Depending on your game, it is useful to look at short-term predictions such as D30 LTVs as well as long-term estimations. Overall, the actual LTV methodology has not changed significantly. However, an increase in engaged users means an increase in segmentation opportunities and more information for data analysts to work with.

Nebo from N3TWORK: I would focus on trying to understand the incremental lift and the impact on ROAS. Additionally, I think it’s important to err on the side of caution as lifting preventive measures may lead to people spending less time on their phones which could significantly change the look of the LTV curve after 30/60/180 days. Thus, I’d be very careful when scaling the spend aggressively and ensure that early good signals don’t mislead the team to spend more than they actually should.

Tripledot Studios: There are too many changes that 2020 brought to give a simple answer to this. Covid-19 has impacted all our metrics — UA, product, engagement and monetization — so we spend a lot of time thinking about if and when our metrics will return to normal. At the same time we are spending a lot of time thinking about how to incorporate iOS14’s changes into our forecast, and therefore if we should be changing our UA strategy now.

Your LTV models need to be robust enough to handle such changes in assumption but what is important is that they continue to evolve — meaning not only more sophisticated but more critically, more accurate.

Will the effect of 5G have a lesser impact as we’re seeing more people play games at home rather than on the go?

Miniclip: I think that it is still too early to say whether 5G will have a lesser impact on gaming behaviour or not. Obviously Covid-19 has changed all of our lives and we are currently far more likely to spend time at home to play games. That does not mean that playing on the go will be less relevant in the future. 5G has the potential to significantly reduce lag during online play, giving users a better gameplay experience. Cloud-gaming could eventually see more popularity with 5G. Also, it is easy to forget how powerful mobile devices have become. It is impressive how many high-quality games we can carry in our pockets.

Nebo from N3TWORK: 5G might be actually faster than home wifi in a lot of cases which will lead to richer experiences and lower times to download games. This might fundamentally change the way we advertise as the friction between the ad and the gameplay might disappear (due to low mean time to install).

Tripledot Studios: We are focused on being able to create an agile infrastructure that would allow us to adapt quickly to the realities of the present day. That said, we do believe gaming will continue to grow, driven mainly by high-quality experiences on mobile gaming. It’s important to note that 5G will take time to roll-out to all users in all markets.

Ad creatives

To what extent would you say lockdown/Covid-19 had an impact on creative production?

ironSource: From our experience, lockdown had a pretty positive effect on productivity. Our teams are composed mainly of designers and developers — these kinds of professions require a lot of concentration in order to be effective. So most of our team experienced a rise in productivity working from home. The main downside is the collaborative part of the creative process is now done via video conferencing, but overall it didn’t significantly affect the quality of work.

As we enter a more creative first world, how should creative teams assess their own performance, and what are the challenges of this?

ironSource: I think that this is actually one of the most challenging things today. Once you crack the production and operation challenges of a mobile game ad creative team — no small feat — almost immediately the next priority should be tracking performance.

After you start uploading tens or hundreds of creatives, the first issue you’ll encounter is closing the loop in each and every creative you produce. And by closing the loop, I mean tagging each creative and uploading it to the platforms in a way that will allow you to track the specific creative and gauge its performance on live traffic. If tagged and tracked properly, you can evaluate your win rate, i.e. how many creatives you produced that actually drove higher performance. You can even evaluate specific creative team members’ performance.

The last layer of complexity comes from working on multiple networks. Different UA platforms use different creative optimization models, and it can be hard to correlate or to pin down the reason why the creative sticks or flops.

This is why it’s crucial to analyze ad creatives in the right context: one creative might perform amazingly well for a specific segment, but overall it might be performing underwhelmingly. Without understanding this, you risk optimizing your ad creative in the wrong places.

How do you see creative production evolving for the rest of 2020 and beyond (especially given Apple’s most recent announcement)?

Luna Labs: Game studios around the globe have already been shifting their focus and resources towards creative production, and we believe this will only continue in the second half of the year.

Apple’s iOS 14 announcement at WWDC has created many questions around ad targeting and attribution for marketing teams. As a result, studios will need to focus on what levers they have to control and drive performance — with creatives being a significant part of this. There is even more incentive for teams to increase their in-house capabilities around production, testing and data science to keep ahead of the competition and ultimately attract the right users to their games. They will, of course, also need to hire the right people and source the best tools.

In terms of the hiring profile, we think studios will continue to expand their creative departments to include developers who have UA experience (marketing devs). Doing this will enable them to explore new concepts and push the quality and diversity of their creatives.

As for tools, creative automation will be key. Not only will studios need to concept test their creatives a lot more than before, but they must also understand those tests on a whole new level. This is why we think machine learning at the creative level can fill some of the gaps that the IDFA will evidently leave.

As more studios recognize the impact of creatives on the success of their game launches, how do you see them adapting their team structure in the future?

Luna Labs: For a studio to have the “perfect” creative team in the future, they must think about how they can build it around their creative process — starting from concept ideation and creation, to management, optimization and analysis.

This new team will be data-first and prioritise flexibility, which allows them to build concepts and test iterations quickly. They will also span across multiple disciplines and even functional units. For instance, developers will be a key part of the creative team and as such will be able to understand the marketing requirements directly. This increased efficiency and understanding of requirements won’t only have a direct impact on the end result and user experience, but it will also create a vital feedback loop that can be beneficial to upcoming projects and creatives.

But, to make sure this new team is as effective and efficient as possible, it will be important for all team members to have visibility into the creative process and understand what each other’s responsibilities are. This could be allocating owners to each stage or even finding a way for everyone involved to communicate and share their updates and learnings. Doing this will then ease and accelerate the transition between the different stages of the creative process, and make sure the entire team knows how they can contribute to the success of the studio.

TLDR:

• Performance Marketing will continue to have an increased focus on two crucial areas: Marketing Automation and Creative Optimization.
• The success of UA is more dependent on creative than ever before.
• There was a decrease in CPIs in March / April, corresponding with other sectors pulling back their advertising budgets, while in May / June we saw CPIs increase back to and even above pre-COVID times
• UA teams will need to learn more about attribution modelling.
• 5G might fundamentally change the way we advertise as the friction between the ad and the gameplay might disappear.
• When it comes to tracking performance of creatives, it’s crucial to analyze them in the right context.
• Studios will continue to expand their creative departments to include developers who have UA experience
• Creative automation will be key