Why mobile game developers need to shake up their monetization strategies – VentureBeat

Why mobile game developers need to shake up their monetization strategies – VentureBeat

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Conventional wisdom advises that to monetize core mobile games, developers should stick with in-app purchases (IAPs). Core mobile games — which consist of everything from open-world titles to battle royale, fighting and shooter games to platform, racing, sports and more — are all about longer, more immersive game sessions. The assumption and a common misconception is that in-game ads disrupt gameplay, frustrating players with interruptions and ultimately driving them away.
But player sentiments toward in-game ads in the core space have undergone a change over the past few years, says Chitra Kannan, Product Manager for AdMob, as evidenced by Google’s latest Action Mobile Genre Report.
“The report presents a unique perspective on insights and trends in the mobile games industry, especially for game developers who want to better understand the behaviors and motivations of action mobile players,” Kannan explains. “So, it’s significant that over three-quarters of action mobile gamers we surveyed said in-game ads have a positive or a neutral impact on their gaming experience, and 85% of them report having at least some level of interest in the ads they see.”
Google’s 2022 Action Mobile Genre Report is the latest resource to help game developers figure out where to go next. It covers a broad array of topics, including mobile player profiles, game discovery, monetization, engagement, community and more to help developers navigate the entire game development lifecycle.
While specific monetization strategies will vary from game to game depending on mechanics, core game developers should consider implementing a hybrid monetization strategy that mixes in-game ads with IAPs, as this offers a higher potential for revenue growth than solely focusing on IAPs alone.
A successful hybrid monetization strategy requires a number of elements to work smoothly together, including serving up the right ads at the right time to your player base, segmentation and a well-designed game economy. Here’s a closer look at each of these essentials.
Figuring out which ad formats to use, and when to use them, is a key part of your monetization strategy. How you implement ads will also depend on the type of players you have, and where they are within the game. For example, if a player is struggling to achieve a certain goal, that would be a good time to display a rewarded ad or an IAP that helps them reach the next level.
Rewarded ads are especially successful when there’s an existing, well-developed in-game economy with a large store of virtual items. Even in a hyper-casual game with a more simplistic game economy, you can drive incremental revenue by rewarding players for watching a video ad to remove ads for the remainder of the session or to continue playing after exhausting in-game lives.
“Studies have shown that rewarded ads where players receive virtual goods for engaging with ads can actually upgrade the app experience, resulting in an increase in IAP revenue, retention and engagement,” Kannan says. “More specifically, rewarded ads can give players a taste of premium in-game items, motivating them to purchase those items in the future, ultimately increasing IAPs.”
Another ad format to consider are interstitial ads, which are full-screen ads that work best when shown during natural breaks and transitions in your app (e.g., after a player completes a level). Unlike rewarded ads, interstitials are a push format that can help you monetize all of your users without waiting for them to opt-in.
AdMob is designed to help developers leverage new, innovative ad formats as well. For example, an app open ad format in AdMob shows players an ad on the loading/splash screen as the app loads.
“This means that publishers can start monetizing users from the moment they open the app, rather than waiting for additional engagement to trigger ad opportunities,” Kannan says. “We’ve witnessed many success stories with this new ad format, including CrazyLabs, which managed to achieve a 3-5% increase in ARPU after incorporating app open ads into their games.”  
Segmentation helps developers leverage behavior-based targeting to increase the success of monetization strategies. For example, developers may consider offering more substantial rewards to non-paying players who are unlikely to make in-app purchases. Alternatively, they might show more ads to players from regions that are accustomed to greater ad density.
A well-designed game economy is the key to ensuring that IAPs aren’t cannibalized by other monetization avenues. One way to do this is with a dual-currency mechanism that uses both “soft” and “hard” currency. Soft currency is in-game currency that cannot be purchased with real money — it’s available only through rewarded ads and other in-game achievements. Hard currency, on the other hand, can only be obtained through IAPs and can also be used to purchase soft currency.
“Ultimately, you want your game to scale,” Kannan explains. “The more players you have, the greater your chances of generating revenue from a combination of ads and purchases. The more revenue you generate, the more you can invest in making your game even better.”
User acquisition thus becomes an important part of your long-term growth strategy. Using Google App campaign’s advanced bidding solutions, you can optimize your own ad campaigns for app installs, retention or purchase. For example, Target Return on Ad Spend (tROAS) bid strategy helps you acquire users who are more likely to engage with in-app purchases or ads. With tROAS for ad revenue, developers can use App campaigns to acquire players who engage with ads at scale, and directly improve revenue earned from ads shown in-app.
For more insight into changing attitudes and trends for action mobile players, read the 2022 Action Mobile Genre Report. To learn more about Google’s full suite of products and solutions to help take your game to the next level, visit the Google for Games website.
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