Why in-app bidding is the right thing for game developers

Header bidding has been the norm for years in web, and it’s now picking up in mobile apps too as more ad networks and ad mediation platforms are rolling out their solutions. While adoption of the technology is taking time (the reasons for which we’ll cover in a later article), regardless of the slow uptake, the industry is heading there and for good reason.

As the mobile app industry has matured so has the sophistication of the technology platforms which support it. There’s more automation and bigger data, reflecting the increasing complexity and depth of information on app businesses. As Mary Meeker recently reported in her 2019 Internet Trends Report, 33% of time spent in media is done on mobile as opposed to 18% on desktop. Mobile apps — and specifically games — are responsible for a big part of that shift, and with this has come the need for the same, if not better, technology uniquely suited to their specific requirements.

With that in mind, here’s why in-app bidding is the right step for mobile game developers:

Increased competition

The difference between a traditional waterfall and in-app bidding is the way the demand partner (in the mobile game ecosystem this would normally be the ad network) is selected to fill an ad opportunity. In a traditional waterfall, there may be ad requests that networks lower down in the waterfall may fulfill with a higher payout for that particular impression, but they will be overlooked, as those higher up in the waterfall get priority. In-app bidding overcomes this by treating every ad request as a single auction, where ad networks simultaneously bid for every impression. Here, every ad network has full visibility into every ad request, and this flattening of the waterfall increases overall competition so a developer never has to risk losing out on a potentially higher bid with higher revenue.

Efficient operations

A common solution used by developers to minimize the price fluctuations on their waterfall is to make their inventory accessible for a given target price level and only if that price can not be filled with ads by an ad network, to continue down the waterfall with lower target prices. Practically, each one of the developer’s ad networks provide several instances for different target price levels, with multiple instances functioning in some ways as a semi-bidding environment. But manually deploying and managing this strategy across multiple geos and apps is time consuming and prone to errors. By flattening and automating the waterfall and giving the same bidding opportunity to every demand partner in parallel, in-app bidding massively reduces operational overhead for the developer.

Purpose-built tech solution

The evolution of mobile monetization management has seen several stages. It began with a traditional waterfall that was ideal for the games ecosystem, which is highly dependent on ad networks which operated on a revenue share model. This was succeeded by the creation of multiple instances as developers became more sophisticated, and sought to maximize their revenue by deploying increasingly granular waterfalls with multiple unique target price levels per instance.

But this technology was built in response to changing and evolving customer needs and as a result, is built in layers rather than being purpose built. In the case of multiple instances, it has resulted in more operational overhead for the developer. The bidding platform is custom built and is designed to meet the new demands of the current ecosystem. Robust enough to reliably manage the weight of handling bids simultaneously, it is set up to support a monetization ecosystem which is based on much more sophistication, automation and granularity.

Less latency

As mentioned above, latency is a side effect of an evolving technology which has been built in layers. The one-by-one calls, as each line item in the waterfall calls its server and decides if to serve an ad or not, end up being a burden on the technology, creating a lot of unnecessary noise and delays. In-app bidding reduces the dependency on the waterfall and each demand partner responds to a bid simultaneously. The reduction in multiple client-to-server calls means a developer can squeeze the waterfall for high revenues while not compromising on ad latency.

Is in-app bidding the right step for developers? It has its challenges which can’t be overlooked, but the overall benefits for a developer in increased revenues, richer data insights and overall improved technological health will drive this standard forward in 2019–2020.