What's next for in-app purchases, in-game ads and mobile monetization

To make a successful mobile game, monetisation can't be an afterthought; it has to be an integral part of the development cycle from the beginning.

It's dangerous to go alone, 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 monetisation.

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

Meta Audience Network recently surveyed more than 500 mobile game businesses across 17 countries. What was the goal?

We commissioned and worked with the IDC - who developed our Ads, IAP, and Beyond research report - in an effort to uncover insights and growth strategies for gaming businesses. We wanted to answer three questions: what role should in-app ads play in a developer's monetisation mix, which player acquisition strategies are effective in a changing app ecosystem, and then how are mobile game businesses thinking about future monetisation and growth?

What did the report reveal?

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

They saw this specifically when shifting away from "waterfall" to in-app bidding for ad mediation, and this confirms the revenue potential of in-app ads.

The research also revealed that games companies should focus on the combination of in-app ads (IAA) and in-app purchases (IAP) together. The majority of respondents agreed that this combo, more often than not, outperformed their targets versus games that solely focus on IAP monetisation.

Another key finding was that 93% of developers say they now use in-game ads as part of their monetisation mix. 2019 data from App Annie [now data.ai] detailed that at that time, just 83% of mobile games featured installed ads, so we're seeing that there are fewer mobile games monetising with in-app purchases alone.

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

With the 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 revenue, 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 that it's the most important ad format, and - as a matter of fact - Supersonic, one of our games publishers, has seen a significant business impact since incorporating rewarded video alongside IAP, leading to a 7-10% uplift in LTV.

I'd like to give a full picture about 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 most important ad format - which is a bit of a surprise - but we see banner ads used often in social, casino and hyper-casual games. Only 7% said interstitial ads were most important.

Are there any additional strategies that may have been overlooked?

Having effective IAPs has to be a priority in strengthening your player acquisition mix.

A strong community can't be sustained only by its loyal users - it has to have the strength to pull in new ones. So Meta's suite of UA solutions and in-game ads are designed to support the creation of this mix, along with a few complementary strategies we learned from our survey respondents.

More than half of them use one or more additional acquisition strategies, such as working with social media influencers and content creators, and creating social communities and networks outside the game. Another one is using social or viral uptake features that are built directly into their games.

How are mobile game businesses thinking about future monetisation and growth?

"53% of developers believe ads can indeed work well in VR"

What will be standard three years from now is still speculation, but there are many ideas of how advertising will fit into evolving play-to-earn game models, more robust 5G-enabled cloud games, VR games, and more.

Mobile is still a priority with significant monetisation and revenue uplift to realise, and developers can also monetise ads on browser-based and cloud platforms.

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

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

First, focus on maximising your monetisation potential. Next, you want to evolve your new game or acquisition strategies and lastly, focus on building for the future. To maximise monetisation, try testing ad placements with players in mind, and prioritise rewarded video. When considering future best practices, diversify your revenue streams and your monetisation base and build a balanced player acquisition mix.

And I want to highlight a few ways the developers we surveyed explored new avenues for monetisation beyond IAA and IAP. 53% leveraged sponsorships or licensing deals. 44% are looking to gaming portals or other app stores, 42% expanded their distribution to new partners, while 28% are exploring organic discovery. The next step should be to consider which growth area makes sense for you.