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Posted on: Wednesday 02 December 2020 | AppsFlyer
AppsFlyer delve into the key format and creative decisions needed to make Mobile and In-app advertising stand out
There is a diverse range of in-app advertising options available to marketers, each with unique qualities and pros and cons depending on your product, service or target audience. In this guide, AppsFlyer gives an overview of the main ad formats available on mobile - particularly within in-game advertising - as well as a breakdown of key measurement techniques and an explainer on Apple’s impending IDFA changes.
Banner ads are one of the most popular forms of in-game advertising on mobile. They consist of simple, small and fairly-unobtrusive banners that usually sit at the top or bottom of the screen.
That unobtrusiveness is a double-edged sword in that they do not interrupt the user’s experience with the game, but also run the risk of being overlooked altogether. As a result, although they are low cost to the advertiser and very easy to integrate, they also have low engagement and conversion compared to some other ad formats. They can, however, be leveraged effectively by bigger brands who have the kind of brand recognition that will readily draw the user’s eye even on a banner that is typically only a few hundred pixels wide.
Interstitial ads, adopted from web advertising, typically cover the entire mobile screen and can take the format of either a single image or a video. By filling the screen, they demand a user’s full attention, and will require an action – such as a tap or a swipe – to close or act upon. In almost all cases, there is a five second wait before a user gets the option to close the ad – those first few seconds are vital and where your creative needs its key message to land.
It is good practice (and also tends to lead to the best results) to serve an interstitial ad during a natural “break” in the game’s action – for example, at the end of a level. They can be intrusive and off-putting for the user if served at an inappropriate time.
Overall, interstitials tend to have high impressions and high click-through rates relative to other ad types thanks to their large screen real estate and required action on the user’s part. Install conversions are frequently low compared to a rewarded or playable ad.
Native ads fit – as the name implies – the native look and feel of the rest of the app, to try and sit within the architecture and design that a user is already familiar and comfortable with. Native ads are highly effective due to their non-disruptive nature. Users will often view the ads as new content within the game environment and be much more likely to interact with it.
Rewarded video ads
Video ads themselves have exploded in the last few years, with very high engagement rates. A typical ad runs for 15 or 30 seconds and, like interstitials, tends to command the user’s full attention as it typically plays over the top of the app itself.
Of course, the creative needs to be appealing and engaging. The ad is delaying the user from playing the game for the next 15-30 seconds, and if it doesn’t satisfy a basic level of engagement then there’s the risk that the user will simply close the app. For example, it is common practice for autoplaying videos to trigger without audio, and allow users the option to turn sound on if they wish.
Rewarded video ads are common in gaming and offer users a simple proposition: they will receive an item or other in-game bonus, in exchange for watching a short video ad, usually up to 30 seconds in length.
Game mechanics and systems offer plenty of opportunities to incentivise users to watch an ad for a reward. On one level, the reward could be an item that helps the player with progress: for example extra lives, hints or the opportunity to continue without losing progress if they’ve failed. On another, the reward could be a desirable cosmetic item, or in-game currency that can be used to purchase other in-game items.
Rewarded video ads have extremely high completion rates vs other types of ads, because a user needs to watch the full video in order to receive their reward. On the flip side, there can be low interactivity because the user is only interested in reaching the end of the video for their reward, and is not interested in the video content itself. A particularly engaging creative is vital from the marketer’s perspective.
Playable ads act on the principle of “try before you buy”. They are a pared-down snippet of another app, which the user can interact with directly before they are directed to the full app experience. These are ideally suited to gaming, as they can offer a simplified version of another game as a playable ad – for example, letting the user take a single shot in a game of pool, or run through a simple maze. This leads to extremely high user lifetime value, as players are already confident that they like a new game before they go ahead and download it.
Playable ads aren’t just restricted to gaming though: they can be used to advertise anything, as long as the ad experience itself is playable. This does present creative costs and challenges, particularly to give an engaging experience that will lead to a successful conversion.
Offer Walls are similar to rewarded video in that they offer an exchange proposition to the user: a reward for completing an action. These actions can include installing another game (commonly from the same developer), reaching a certain level in the game, filling in a survey, or watching an ad.
Offer Walls can be effective ways to keep users engaged if the rewards are enticing – it’s common practice to scale the rewards based on the action the user is required to complete. For example, downloading another game and reaching a certain level is a high-effort request, and could be rewarded with premium in-game currency or items.
A/B Testing & optimisation
We’ve looked at the different formats of in-app advertising, and some of the creative considerations around making them successful. Linked to those creative considerations is a method used by marketers to test different elements of their ads and campaigns: A/B testing.
Each ad contains elements – not only in the creatives themselves, but in how they are targeted at specific user demographics – that dramatically affect the conversion rates of those campaigns. Finding the best-performing variation of your ad elements can have a significant impact on the bottom line of your mobile marketing.
Some of the many things that can be tweaked in creatives in order to deliver optimum results include:
Font styles and sizes
Button size, format and placement
Marketers should also A/B test the placement of ads in the app – for example, it may be that a banner placement at the top of the app is much more effective than one at the bottom. The only sure way to determine that effectiveness is through testing and optimisation.
The evolution of gaming audiences
Gaming has come a long way in the last few decades, blossoming into the most lucrative entertainment industry in the world. A recent study showed that global gaming revenue absolutely dwarfed that of box offices and music in 2019, with a total revenue in excess of $140 billion.
A huge part of this growth is powered by mobile. Indeed, 45% of that $140 billion figure was generated by mobile alone, compared to a 32% share for console and 23% for PC. Blockbuster cross-platform titles like the Call of Duty or FIFA franchises always catch the eye with their splashy marketing campaigns and movie-level revenue, but games that can be played on a device carried around in your pocket have been the real driver of the gaming industry’s rise.
The boom in mobile gaming has brought about a shift in audience demographics. With the advent of accessible, free-to-play mobile games, along with a huge diversification of genres, practically everyone can now consider themselves a gamer.
This is a big deal for advertisers as it offers a vast range of marketing opportunities. There is no single audience demographic when it comes to gaming – in fact, there isn’t even a particularly dominant one. As gaming has evolved into mainstream entertainment with mass appeal, it has moved beyond boundaries like age, location or gender. Here are some of the factors that have led to this audience shift:
Access to gaming devices
One of the big drivers of gaming’s growth and spread across demographics is the accessibility of gaming devices. Console and PC gaming is still hugely popular and profitable, but it’s no longer the case that you need the latest Xbox or a top-of-the-line desktop in order to play.
Over a billion new smartphones were sold in 2019, and there are now over 2.5 billion active Android devices out there, along with close to 1.5 billion active Apple devices. The vast majority of these devices will have access to a huge range of games via the App Store or Google Play, opening up a massive new audience to gaming right in people’s pockets.
These devices are no longer simply for keeping in touch with others. App Annie recently reported that there were over 200 billion app downloads in 2019, of which 33% were games. On iOS alone, $120 billion was spent on mobile apps – of which a massive 74% was in gaming. Mobile has brought gaming to the masses, who have responded enthusiastically both in terms of engagement and spend.
This has been a key driver of gaming’s explosion and mass appeal, particularly on mobile. There is simply an incredible diversity of games available to play, split across a wide range of genres: action, adventure, arcade, casual, card, puzzle, racing, role-playing, strategy, sports, trivia, word – and that only really scratches the surface. Ultimately no matter who you are or what your interests, there’s a game out there for you.
New genres are popping up all the time, such as battle royale (popularised by titles like Fortnite and Playerunknown’s Battlegrounds) or MOBAs (multiplayer online battle arena – made popular by the likes of League of Legends or Clash Royale). The hypercasual genre – games designed for very short, “snackable” play sessions – has gained increasing traction in the last few years, particularly during the COVID-19 pandemic as more and more people turn to their mobile devices for entertainment and distraction.
There are almost a million apps available on Apple’s App Store, and over 350,000 on Android’s Google Play, representing an astonishing range of titles to appeal to players of all demographics. Of course, this variety and scale presents problems with discoverability, with user acquisition and Apple’s own App Store curation team helping to bring games to players’ attention.
The rise of free-to-play
We take it for granted now, but the rise of the free-to-play business model (F2P) has opened games up to new audiences like never before. F2P works in different ways, but all start with the same principle: the game is free to download and play for (at least) a limited amount of time. Some games then require players to make a purchase to unlock the rest of the game, and others remain free to play forever but monetise through extensive in-app advertising or by offering in-app purchases, microtransactions, subscriptions, or a combination of these models.
King’s match-3 game Candy Crush is one of the titles that led the way in free-to-play monetisation. The game is free to download and there is no limit on how long you can play it for – until you hit a point where you run out of “lives” trying to complete its puzzles (in theory, if a player was skilled enough, they could avoid reaching this point and play indefinitely). After which they would be invited to purchase more lives, or earn them in other ways, such as watching a rewarded ad or even sending out a message to their Facebook friends to help them out. This has the benefit of spreading the word about Candy Crush and potentially acquiring new players.
Naturally this has been transformative for the accessibility of gaming on mobile. There is no financial barrier to trying a game: simply tap to download and away you go. If a player happens to like it, they may later choose to make a purchase, or in the meantime they monetise through advertising. The fact that this has swiftly become by far the most dominant business model in mobile gaming speaks volumes for its success in terms of both reach and revenue. It has also led to a boom in casual and hyper casual genres.
Standards & measurement
We’ve looked at the different ways to build a mobile ad, as well as the audience out there – but all of that is worthless without the ability to measure, optimise and adapt. There are a huge range of key performance indicators (KPIs) used to measure advertising performance in mobile gaming, but there are several constants that are invaluable when it comes to delivering the best return on ad spend.
Here are some of the key ones to pay attention to:
Cost per install (CPI)
Simply, the cost of generating one new install through your ad. CPI is used to determine the price of acquiring a new user. CPI is affected by many variables, such as geography, platform and device.
Cost per mille & Effective cost per mille (CPM & eCPM)
CPM is the rate an advertiser pays for 1,000 impressions of their ad. On top of that, eCPM measures the revenue generated per 1,000 impressions, and is calculated by dividing the total earnings from advertising by the total number of impressions, and multiplying by 1,000. eCPM offers a basic approach to reviewing the value of your ad traffic.
Average revenue per user & Average revenue per paying user (ARPU & ARPPU)
ARPU is used to evaluate user value and includes all revenue-generating events in the app: in-app purchases (IAPs), ad views, subscriptions, and paid-for apps. Building on that is ARPPU, which only measures players who have made a purchase in an app. This is used to evaluate the efficiency of existing IAP events or the effect of other events on revenue (eg, the option to see an ad rather than pay for an in-game item).
Retention rate is the percentage of players that return to your app during a defined period of time after the install. Typically, this is measured at 1, 3 7, 14 and 30 days post-install. Retention rate is a key indicator of an app’s performance over time: a high rate shows that a game provides value with users sticking around for a long time before they “churn” and stop playing. This is the basis of app monetisation.
Return on ad spend (ROAS)
This is the metric of profitability, and one of the most important metrics in mobile advertising. It’s calculated as the money spent on marketing divided by the revenue generated from the ad campaign in a given time frame. For example, a Day 7 ROAS of 50% means that a player generated revenue that was equivalent to 50% of the money spent to acquire that user.
Lifetime value (LTV)
This is the revenue generated by a user over the course of the entire time that they use an app. It’s calculated as the number of days of engagement, multiplied by the average revenue generated per day by that user. LTV helps evaluate the total revenue or value of a game or individual user, and is the strongest indicator of how much can be spent on user acquisition. Through this advertisers can also identify high-value users to target, with profitable games keeping a balance where the CPI is lower than the LTV.
In June 2020, Apple held its annual Worldwide Developer Conference (WWDC) and revealed a piece of news that has far-reaching implications in the world of mobile advertising. iOS 14 was on the way, and with it would come the deprecation of the unique identifier that mobile marketers use for campaign management.
The Identifier for Advertisers, better known as IDFA, is the unique ID used to differentiate one device from the next. It’s an anonymous identifier, but has been used extensively to report on user behaviour and enable marketing techniques like remarketing.
It should be noted that this revelation was not a surprise: Apple have made privacy a central pillar of its marketing strategy for several years, and marketers should welcome this move despite the seismic shift it will cause in how mobile advertising works. Trust is what powers the ad industry, and it’s in everyone’s best interest that consumers have faith in how marketers collect and use their data.
When Apple’s new App Tracking Transparency Framework rolls out sometime in 2021, users will need to give explicit consent in each app in order for the IDFA to be shared. The language around this consent message may be quite intimidating for the user, and thus may lead to very low opt-in rates (although, the same was also widely believed about the cookie opt-ins that were introduced on the web with GDPR, where the reality was very different).
As well as technological solutions implemented by major players in mobile measurement, there are other things that app marketers and developers can explore to prepare for IDFA deprecation. Permission priming is a technique that can reassure a user that their right to data privacy will be respected, and explain how their data will be used, before they are asked to opt-in. Onboarding journeys can be extended to allow time to show the value to a user of giving their consent. There should also be extensive experimentation into the exact timing of the consent request – for example, delaying the message until further into the user journey may increase opt-in rate.
There are still plenty of unknowns around the impact of this change, and Apple’s decision to delay its rollout into 2021 is likely to have been motivated by wishing to give the mobile industry ample time to prepare. Testing, learning and adapting will be crucial to mitigating the impact of IDFA deprecation.
One final thing to bear in mind on this subject is that Google is yet to confirm the future of its Google Advertising ID (GAID) in response to Apple’s announcement. With Android powering the majority of devices globally, any change here would also have huge implications for the industry.
One of the reasons that IDFA deprecation is a big deal for marketers is remarketing. This is one of the most effective ways to improve user engagement and increase purchase activity. It is based on advertising specifically to users who have installed an app, but have stopped using it for a period of time (sometimes known as “lapsed” users).
There are two types of remarketing conversions: re-engagement and re-attribution. Re-engagement is when a user still has the app installed, and comes back to it after viewing or clicking on a remarketing campaign. Re-attribution is when an install is generated by users who have uninstalled the app, but then come back to it after interacting with a remarketing campaign themselves.
Remarketing has a huge upside in gaming and other sectors like ecommerce. For example, if a marketer sees that a user has made a small in-app purchase in a game some time in the past, but no longer plays the game, they could target this user with a specific discount or offer to try and persuade them to return.
This technique can also be used to drive repeat conversions, or even upsell users to other items in the app. For gaming, there may be other actions developers would like their users to take, for example sending invites to the game to their friends in exchange for in-game items. Remarketing can be used to help users complete these steps.
Naturally, a user’s IDFA is an important component of remarketing, hence why app marketers and developers should be prioritising a solution to its deprecation heading into 2021.
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