I look at a lot of games to figure out how best to integrate advertising into the user experience.  The revenue potential from advertising can be nearly as great as the revenue derived from in-app purchases: a recent survey of 8,000 developers by Developer Economics estimates 2015 revenues of $40.5 billion in app store sales and in-app transactions and $34 billion from ads.

Advertisers: What they really really want

The bottom line metric for advertisers is engagement – that can be new customers (e.g. game downloads) or actions (e.g. purchases, clicks, invites, shares, calendar-date setting).  The more effective the creative in generating this engagement, the higher CPMs a publisher can attain.  This is an oversimplification, but here is a general benchmark of the different creative types and approximate CPMs:

• Video interstitial ads can generate from $6 to double-digit CPMs – the higher the completed video ad rate, the higher the CPM that you may be able to capture.  This is also where may brand advertisers with bigger budgets are focusing
• Rich Media and playable interstitial ads are typically for game app installs and drive better conversion rates, so you cn see $4-6 CPMs
• Static or slightly animated interstitial ads can drive $2-$ CPMs
• Banner ads can run $0.05 to $0.50 generally

The balancing act for a publisher is how to incorporate these ads without ruining or denigrating the customer experience.  Video interstitial ads drive the most money, but they create a big break in game play, especially when you’re compensated to get users to watch the entire video ad.

How to Integrate Without Hurting the User Experience

Publishers can do a lot of targeting to minimize the perceived negative impact of these ads

• Don’t show video ads to paying users who are driving In-App Purchases – you can tweak this based on recency of purchase as well
• Testing different frequency caps per user per day – in some testing we did, the frequency of static interstitial ads had no impact on new user retention, but each game has different sticky factors
• Picking spots where ads fit into the user experience seamlessly

This last point is a key take away.  In some games like SongPop, where I helped optimize revenue, there are natural breaks between rounds of play where interstitial ads fit cleanly without breaking the user flow.

But what if your app doesn’t have a natural break?  And how do you drive completed video views?

Integrating Ads Into Your Game Loop

What’s been successful in recent games is a value exchange between the player and the game developer: by watching video ad to completion, the player receives a desired currency or a limited time boost that is directly tied into the game loops.  They provide a desirable benefit for the player and done correctly can drive revenue from engaged players that whether they do or don’t open their wallet to buy in-app purchases.

Here are some examples:

Tiny Tower Vegas: Video Ad Views <> Rare Currency

Tiny Tower Vegas (iOS | Android), by Nimblebit, has in-game Chips that are used to play the Poker, 21 and Slots games; The winnings from those casino games can be turned into Cash which can be used to expedite the time to generate Coins and build up your tower.  During game play, you are being alerted with little icons along the bottom that let you know when a floor can be restocked, cash is ready to collect from rooms or when a Bitizen is ready for an elevator ride to a floor.  These icons are a core part of navigation and game play.  Periodically within this stream of icons, a Chip icon is floated into the mix. Tapping it provides the user the ability to watch a video ad in return for getting two chips.

By placing this in line with other game loop icons, it’s just another task to perform.  Setting the initial value of currency to provide needs to be tested: early on Nimblebit  worked with it’s ad provider Vungle and adjusted the payout from 1 to 2 chips to improve the conversion rate.  They can also pace the how often the chip icon appears, either to manage the economy or based on whether there are ads available from Vungle.

AdVenture Capitalist!: Video Ad Views <> Multiplier Boost

Newly released AdVenture Capitalist! was released last week by Kongregate (almost forgot they were bought by GameStop) and it’s been hanging in the top 25 games thanks in part to being promoted by Apple in best new games of the week.  The app is a simplified Make It Rain app, with money accumulating every second with the more properties you own. 

In the lower right corner is a blue indicator that shows time in 00:00:00 – clicking on it lets the player earn a 4 hour 2x boost in earnings in return for watching an ad – with a brutally honest and humorous pitch of “It’s back scratching at its finest!”

In addition to providing the player value by doubling the output during the four hours, it also creates a strong retention hook by creating a relevant app notification moment, letting the user know that their boost is over, so come back and watch another ad.

On top of making an estimated $15K per day from In-App revenues* by staying within the Top 150 grossing games on iOS, it’s smart integration of ads using AppLovin into the game loop is drawing additional revenues

Fine Tuning and Caveats

As we noted before, Tiny Tower Vegas had to tweak their payouts to optimize their ad conversion rate.  On the other end of the spectrum, AdVenture Capitalist! needs to throttle the number of ads available per day – you can’t stack multiple boosts and even then there currently appears to be a cap of 2-3 per day (initially you can see it was 5).  This might be based on the impact on the game economy, but it can also be the reliance on a single advertising partner.

The pros of using a single ad partner for your advertising include only implementing a single SDK and that it provides a consistent experience for your users.  One of the reasons I typically look to use multiple providers are many:

• With one partner you are stuck with their fill rate – if your game takes off, like getting promoted by Apple, you may very quickly outstrip the demand of a single provider
• Unless you get a guaranteed CPM, you may not see a consistent CPM from a single network (networks are only as good as their sales pipeline) so diversifying helps ensure you’re maximizing revenues.
• Many of the networks are heavily skewed towards game ads – generally someone else competing for your player’s time; being able to mix in networks with brand ads can help retention.
• Most networks don’t have a large ad sales team outside the US and English speaking countries – you could be limiting your potential in those markets if your network can’t fill the inventory.

Integrating Ads as Part of Game Design

Ultimately though, these are tweaks and modifications – your core focus is finding the right implementation of ads that fit easily and seamlessly within the user experience and ideally enhance the user experience.  To effectively maximize revenue from both in-app purchases and ads, where you integrate ads need to be in the design process at the early stages of development rather than an afterthought.

Does your company think of ads within the design process?  Who is the best provider you’ve dealt with in terms of mediating rewarded video ads?

* In-App Revenue estimates are from ThinkGaming.com