Designing your ad monetization strategy

This class covers the fundamentals of designing your ad monetization strategy. We discuss when you should start thinking about ads, how to balance ads with IAPs and retention, key insights into rewarded video, offerwall, interstitial, and banner ads, and how to manage your ad monetization operations.

Hey! I’m Adam from ironSource. In the next few videos you’re gonna learn about the key aspects of mobile game monetization. You don’t need an aggressive monetization strategy to make money – just a smart one.

Ad monetization is becoming increasingly popular with developers, and the technology supporting it has become even more sophisticated. When implemented smartly, ads can not only help you drive more revenue but also positively impact core metrics for your game.

With that said, let’s jump in!

Thinking about ad monetization from the beginning of game design

Before we go over the different types of ads available, it’s important to spend a minute talking about when you should start thinking about your ad monetization strategy. While some developers may be tempted to build and launch their game and layer in ads as an afterthought, it’s actually critical to think about your ad strategy from the beginning of game development.

This is because the best ads should feel like they are an integral part of your in-app economy and of the experience. Especially with opt-in ads like rewarded videos and offerwalls, users can get concrete in-game currency in exchange for engaging with an ad, so making sure those ads are in sync with your larger game economy is critical.

Ultimately, ads that perform best are the ones which are integrated directly into the core game loop and complement the in-game economy – in other words, ads that work as a component of your game.

By thinking about ads early on, you can make sure they become natural and important parts of the core loop, and that is key to crafting the best user experience and maximizing your ad revenue.

User initiated ads: Offerwall & Rewarded Video

To start serving ads in your game, you need to integrate a mediation platform’s SDK, giving you a single access point to multiple ad networks like Unity Ads, Google Admob, or ironSource – you learned about this in the previous course.

We split ads into two categories: user-initiated and system-initiated, all of which cater to the spectrum of engagement levels among your game’s users.

You should always begin with user-initiated ads, so we’ll start there.

User-initiated ads are ads that users opt-into, meaning users make an intentional decision to open up the ad – it’s never shown to them against their will or disruptively. This has a lot of great benefits for everyone involved – you, your users, and advertisers!

The main user-initiated ad units are rewarded videos and offerwalls.

These ads encourage users to play for longer and increase retention, by letting them progress in your game, usually at points where they’re stuck, without spending money – instead they spend their time. And because the user chooses to engage with the ad, the ads generally have a very positive user experience.

Advertisers usually pay more for user-initiated ads, because they perform really well – the opt-in UX means users are more positive throughout the ad experience and more open to messaging.

A rewarded video usually lasts around 20 seconds, and will show your users a video or playable ad. As the name suggests, in return for watching the full ad, you reward your users with things like in-game currency, extra lives, or cool upgrades.

Rewarded videos are perfect for players who are engaged enough to watch a 20 second ad, but not willing to complete a more time-consuming offerwall task or spend money on an in-app purchase.

For your even more engaged users – those who are willing to spend significant time completing an event in order to advance in the game, but not yet willing to make an IAP – you also have the offerwall. Offerwall ads look like this *points to the ad on the screen*

These require a little more effort and time from your users than watching a 20 second video, which is why they are most effective with users who are super engaged, but not engaged enough to just make an in-app purchase. Offerwalls work best for games that have a deep in-app economy, with long-term retention and high engagement -like RPG, simulation, and strategy games.

When a user clicks on your game’s offerwall, a list of offers will appear, all from different advertisers. The offers can be anything from “download and finish the tutorial” to “download and reach level 3” or even level 10. The user only gets a nice reward back in your game when the task is completed on the advertiser’s game.

Some developers naturally ask, “isn’t it counterintuitive to send my game’s users to another game?!” and it makes sense to ask that.

BUT, it’s worth taking a minute to think about the user psychology here. The only users who would be willing to spend their time completing an event in another game, are those who really want to get their reward for it back in your game. In that sense, you’re not really risking losing your users to another game – and our data actually proves this.

And, because you’re giving rewards that help users progress in your game at points where they tend to get stuck, offerwalls actually increase your retention rates.

The icing on top of the offerwall cake, which applies also to rewarded video ads, is that they can even help increase your in-app purchase revenue, by giving your users a “taste” of premium content they would otherwise have to pay for.

System-initiated ads

In every game, no matter the genre, there are going to be players who don’t engage with user-initiated ads and don’t make in-app purchases. To monetize these players, you have system-initiated ads, which are ads that the player doesn’t opt-into – you as the developer set when you want to show them.

The main types of ad units here are interstitials, which basically take over the screen with a full page static image, video, or playable ad

….and banners, which look like this…

Banners are just rectangular ads that stay sticky either on the top or bottom of the screen for the entire session. Sometimes the ads inside the banner placement refreshes itself – and you can have moving banners too, like gifs – not just static images.

It’s best to show system-initiated ads to users who you know don’t make in-app purchases or engage with user-initiated ads. This is all about user segmentation, which we’ll discuss in another episode, and needs to be balanced with retention, which we’ll cover in a few seconds.

Thinking about ads’ relationship with IAPs and retention

When designing your ad unit strategy, in addition to thinking about revenue, two other really important things to consider are 1) how they impact your game’s IAPs, and 2) how they impact retention.

When it comes to the relationship between IAPs and user-initiated ads in your game, the single most important thing to consider is cannibalization – you want to avoid giving users too much amazing premium content with your offerwalls and rewarded video.

If you give them too much, users who would normally be willing to pay will have no incentive to ever spend money in your game’s store.

This could limit your game’s ARPU.

For rewarded video, we recommend rewarding players with soft currency and additional rewards that can’t be bought in your store.

For offerwall, we recommend to use hard currency only – these can be high value items like diamonds that are very hard to earn normally through gameplay.

We’ll explain how to set the perfect reward, and other best practices for ads, later on in this course.

Generally speaking, system-initiated ads are more of a concern for your retention. Because users don’t opt-into them (and as a result they can feel disruptive or intrusive), you need to run A/B tests to figure out how many interstitial and banner ads you can show a user in a single session, and where to put them, without annoying your users and negatively impacting your retention. But once you find that sweet spot, it’ll be worth it.

Ad monetization management and operations

The final thing I want to talk about in this crash course is how you actually manage your whole monetization strategy. After putting everything together – like which types of ads you’ll use, where to show them, who to show them to, and so on – it’s time to think about operating and scaling all of this. You want your monetization strategy to run like a well oiled machine…

That’s where mediation platforms come into things. Mediation platforms plug you into multiple ad networks through one single point of access, or one SDK. You’ll use a mediation platform to run your waterfalls or in-app bidding operations.

Waterfall monetization is one kind of ad serving model. We won’t get into the details, but in short – waterfalls let you offer your game’s ad space to multiple ad networks, to help you create strong competition. Based on different descending price points that you set, your ad request cascades down the waterfall of networks until one decides to pay the price point it is asked, and fill the offer. This has been the industry standard for monetization for the last 10 years, but that is changing.

Now, in-app bidding is fast becoming the dominant method for mobile game developers to monetize their users, and the good news is, it requires very little active management from the developer to work as efficiently as possible and maximize your revenue. The in-app bidding ad serving model works like an auction – and asks all the ad networks at the same time how much they’re willing to pay to serve the ad. The ad network that bids the highest in that moment wins the auction and gets to serve the ad.

Many developers go for a hybrid monetization setup that combines bidding with traditional waterfalls. That way if you have a preferred ad network which doesn’t have bidding tech available yet, you can still access its inventory while combining that with all the benefits of bidding from other networks. In a hybrid flow, the auction results from the bidding side are merged with the waterfall results – the winning bid from the auction is placed inside the waterfall, according to the price point of the bid.

In-app bidding maximizes revenue, reduces latency, AND is way easier to manage and operate.

“But why?!” I hear you ask…

It’s easier to operate because unlike waterfalls, it’s basically all automated – you don’t need to place bidding networks in any position or manually write in a CPM.

Latency means users might be staring at a blank screen while the tech tries to fill the ad space, which obviously you don’t want. Bidding reduces latency because there’s no cascading like in waterfalls – bidding tech just asks all the networks at once. Ultimately this preserves a good user experience.

And lastly, bidding increases your revenue because it creates higher competition for your ad space – all the ad networks are trying to win the auction so they can serve the ad, meaning they’ll bid even more to try and outdo each other.

In today’s monetization landscape, in-app bidding is fast becoming the default ad serving technology – and it’s ideal for small game and app developers that don’t have a lot of manpower or resources to spend on monetization optimization.

On the ironSource platform, you can get instant access to bidding without needing approval, so you can start scaling your monetization as soon as possible.