Mobile gaming continues to thrive, yet the industry is evolving. Studios are exploring new revenue streams to bolster their existing strategies and many studios managing live games are adjusting their models to enhance player retention and engagement.
In this article, Gradient Universe’s Oxana Fomina examines the channels and options open to those seeking to monetise their titles and explores how, increasingly, a mix of strategies ensures that no money gets left on the table.
A balanced game economy for free-to-play mobile games typically revolves around three main revenue channels: in-app advertising (IAA), in-app purchases (IAP), and offerwall.
According to the 2024 Unity Gaming Report, studios are diversifying their revenue approaches. While IAP revenue faces challenges, IAA revenue is increasing. Despite a 13% decrease in average revenue per daily active user (ARPDAU) from in-app purchases, ARPDAU from in-app advertising has seen significant growth, up 26.7% year over year, from $0.030 to $0.038.
This trend suggests that it might be time for studios to expand their monetization strategies, especially by further incorporating in-app advertising.
In-app advertising (IAA) is particularly successful in certain types of games. Simulation games see a 41% increase in daily IAA revenue, while casual games see 33%, and puzzle games 31%. However, not all game genres benefit equally; role-playing games (RPGs) and shooter games still earn more from in-app purchases (IAP), with increases of just 2% and 1%, respectively.
Games that use rewarded videos and offerwalls engage players more. On average, these games have just over three active sessions per day, compared to a little more than two sessions for games without any rewarded IAA strategies. Additionally, combining ad formats like rewarded videos and offerwalls also improves player retention. Games employing both strategies see a 4% increase in player retention after seven days and a 2% increase after 30 days, compared to those without rewarded ads.
To enhance monetization strategies, game studios should focus on these key areas:
1 Maximize Rewarded Video (RV) Opportunities
Enhancing player engagement through increased opportunities to watch rewarded videos is effective. Notably, participation rises significantly when players can view these videos between five and 15 times daily. According to Monetizr survey, nearly 40% of players watch six or more ads per day, indicating a strong engagement with this approach.
2 Implement Context-Sensitive and Randomized Reward Systems
Offering context-sensitive and randomized rewards can significantly increase user engagement. The most effective rewards include additional moves (30.5% increase in engagement), daily rewards (30.3%), and gacha systems (31.1%).
Studios can significantly enhance their monetization efforts by strategically placing ads, optimizing rewarded video opportunities, and tailoring reward systems to the gaming context. Players are willing to engage with advertising if it becomes part of the gameplay, where watching ads provides in-game advantages.
Source: Monetizr
I analyzed the advertising strategies of over 170 games through the Playliner system and identified the top five non-standard rewards or placement options implemented in 41 games across various genres in 2023 and early 2024.
a) Receive a random reward before starting a level by watching an ad
This feature is present in 20% of games that incorporate non-standard rewards ads. Before beginning a level, players are given the opportunity to watch an advertisement to receive a reward that can be used within that level. Players are particularly likely to accept this offer if they are eager to preserve their streak or if completing the level would yield a reward three times greater than usual—an example from Matchington Mansion game.
b) Daily Ad Viewing Rewards
Players can earn rewards daily by watching advertisements. The mechanics of ad viewing and the number of ads vary across different games. This feature is presented in 17% of games incorporating non-standard rewards ads in 2023.
On Hay Day, players can watch up to five ads per day. Each ad viewed grants the player a random reward, providing a unique incentive to engage with the game every day.
Furthermore, the Monetizr survey reveals that only 24% of players are opposed to introducing restrictions on ad viewing, suggesting a general acceptance of this advertising approach among most players.
c) Advertising in the in-game store
Fifteen percent of games implemented the option to display advertisements in the in-game store, which enhances player engagement and daily store traffic.
In Gossip Harbor, the players can see the reward ad in the Daily Specials section of the in-game store. Occasionally, the opportunity to refresh the “Hot Sales” section for free by watching an advertisement is also available. The “Hot Sales” section features six unique items purchasable with premium currency, each with a purchase limit based on rarity. This section refreshes offers every 24 hours, but players can choose to refresh more frequently by spending 20 premium currencies. This approach not only keeps the game interesting but also cleverly integrates advertisements into the in-game store.
d) The advertisement as a part of a promotional campaign and includes a distinct bundle
The campaign features special offers that can be purchased with real money. Additionally, certain offers can be accessed by watching advertisements.
e) Advertising Integration in Events
Advertisements are seamlessly integrated into event tasks and stages, allowing players to modify their assigned tasks or shorten the wait time for new tasks. In the game War Robots, these tasks are intricately linked with the game’s fundamental mechanics, advertisement viewership, and social media engagement.
3. Focus on the Location and Timing of Ads
The effectiveness of an ad heavily depends on its timing and location within the game. In 2023, placing a rewarded ad right after a player has depleted their resources led to a 38.1% increase in engagement. Similarly, ads displayed in pop-up messages or strategic game locations such as lobbies, maps, or pre-level areas also performed well, achieving a 25.2% engagement rate.
4. Leverage the Potential of Brand Advertising in Games
Incorporating brand advertising can open additional revenue channels. According to Monetizr, a recent A/B test with a notable hypercasual game publisher demonstrated a significant retention rate increase after introducing brand ads through the Monetizr system: a 10.3% increase in the US and a 23.2% increase in the EEA over 14 days.
Advantages of Brand Advertising Implementation
- Players remain in your game Brand ads do not take players away from the game
- Engagement Users receive prizes for interacting with brand advertising through game currenccy, a booster, etc. For example, an unlimited boost in a match-3 game for 15 minutes or more will increase the session duration.
- Access to top brands Even for smaller publishers, Monetizr (a system that Voodoo uses) provides the opportunity to partner with major brands like Tide, Gillette, Coca-Cola, etc., which would otherwise be difficult to attain.
- Incremental revenue stream This creates a new revenue stream from big brand budgets, allowing publishers of any size to tap into previously unavailable funding sources without replacing existing monetization methods.
- Diversified revenue stream By diversifying income sources through brand partnerships, publishers become more independent and resilient to market fluctuations, reducing dependency on competitor’s user acquisition budgets.
A great example of working with brand advertising is how Voodoo raised revenue from both ads and in-app purchases. The game’s revenue graph shows that they increased their in-app purchase revenue from 6% to 24%. They have also increased their advertising income. One of the reasons for this is a new way to monetize non-paying users that have appeared in their games – brand ads.
This type of ad actively appears in all kinds of games: hyper-casual, hybrid casual, casual games, and mid-core games.
By leveraging brand ads, game publishers can expand their revenue opportunities, enhance player experiences, and establish valuable partnerships with renowned brands. Opening partnerships with top brands also lends credibility to the game, improving its market appeal and trustworthiness among players.
