Tabarak Paracha
In the ever-evolving world of mobile gaming, understanding the dynamics of ad revenue is crucial for developers and publishers looking to maximize their monetization strategies. We sat down with Google’s Mariusz Gąsiewski to discuss some of the latest data points on gaming revenue. Believe it or not, the potential for ad revenue looks pretty bright.
Watch the full video to learn why.
IAA vs IAP share by genre
One of the key insights Mariusz shared was the varying distribution of ad revenue across different game genres. By analyzing data from various industry sources, he was able to paint a comprehensive picture of how ad revenue is allocated within the mobile gaming ecosystem.
Mariusz explained that certain genres, such as board games, solitaire, and word games, tend to have a higher share of ad revenue compared to their in-app purchase (IAP) revenue. This is because these genres often cater to a wider audience, where even a small amount of revenue per user can add up significantly due to the massive scale of the user base.
On the other hand, genres like action RPGs, strategy games, and match-3 titles typically have a lower share of ad revenue, as they are more focused on monetizing their core, high-value users through IAPs. In these cases, developers are often hesitant to risk losing their whales by heavily relying on ads, which could potentially disrupt the user experience.
What Ad Formats to use?
Mariusz also delved into the intricacies of different ad revenue formats and their impact on overall monetization. He highlighted the importance of rewarded ads, which he likened to a “low-value in-app purchase” in the sense that they are user-initiated and often provide a seamless experience to the player.
In genres where IAP revenue is the primary focus, rewarded ads tend to make up a significant portion of the ad revenue pie. This is because they are less disruptive to the core gameplay loop and can be strategically integrated to provide value to both the player and the developer.
On the other hand, in more casual or hyper-casual games, where user retention tends to be shorter, developers may opt for a more diverse ad revenue mix, including interstitial ads that can be served to a wider audience more frequently. This approach allows them to quickly monetize a larger portion of their user base, even if the individual ad revenue per user is lower.
User Acquisition for IAA and IAP games
Mariusz also shared insights into the shifting trends in user acquisition (UA) strategies, which have a direct impact on ad revenue dynamics. He highlighted the growing importance of value-based UA campaigns, where developers focus on acquiring users who are more likely to become high-value spenders or engage with ads.
This shift away from pure cost-per-install (CPI) campaigns has led to a more diverse ad revenue landscape, as the influx of users from non-gaming verticals, such as retail and consumer packaged goods (CPG), has introduced new revenue streams that are less prone to cannibalization between in-app purchases and ads.
Mariusz explained that the increased participation of these non-gaming advertisers has created a more balanced ecosystem, where developers can potentially monetize their users through both IAPs and ads without the risk of directly competing for the same revenue sources.
Predictions for IAA and IAP
Looking ahead to 2025, Mariusz shared three key predictions that shed light on the future of ad revenue in mobile gaming:
- Continued Growth: Mariusz believes that the overall ad revenue in the mobile gaming industry will continue to grow, potentially outpacing the growth of in-app purchase revenue. This is driven by the increasing sophistication of ad monetization strategies and the continued expansion of non-gaming advertisers into the mobile gaming ecosystem.
- Increased Focus on Monetization: As the competition in the mobile gaming market intensifies, developers and publishers will place a greater emphasis on optimizing their monetization strategies, exploring hybrid models that combine IAPs and ads, and leveraging new tools and technologies to enhance their ad revenue streams.
- Emerging Market Opportunities: Mariusz anticipates that the growth in ad revenue will be more pronounced in emerging markets, as these regions often have a more favorable economic outlook compared to their Western counterparts. This shift could lead to developers and publishers reevaluating their geographic focus and adapting their monetization strategies to capitalize on these emerging opportunities.
