One of the things that were a part of mobile apps since the early days is the REMOVE ADS button. The idea is simple – ads generate low amounts of revenue per user and getting $0.99 or $1.99 from them is better from the app publisher stand point.
Not showing ads to payers is the standard practice
Even in games that don’t have a specific purchase option around removing ads it became a standard practice to not show ads to depositors. This is based on the same approach that ads yield low amounts of revenue while purchases yield higher amounts.
Rethink what you know – ad whales exist
In recent posts we covered the existence of ad whales. Individuals who generate large amounts of ad revenues for their app publishers. Here is a user who generated $74 in ad revenue in November, and this user generated $52 in December. While these levels of revenue per user are quite rare for ad monetization, they are also quite rare when it comes to in-app purchases.
How many users generate enough ad revenue to level with payers
If we consider how much revenue is generated by a payer – the minimum is $0.7. The lowest purchase by a user is $0.99 and given that Apple and Google take a cut of 30% the publisher gets 70 cents.
Based on the data SOOMLA Traceback is collecting we can check how many users go over the point. How many monetize with ads at least to the same level as payers. The result is that in some games that relay heavily on ads it’s more than 10% of the user base. This is higher than a normal conversion rate to payers. We can also check how many users went over $3.5 which is the publisher share of a more $4.99 purchase by a user. The result is that it’s over 2% in some games.
Rewarded videos offer incentives to users
Let’s start thinking about a different approach. Should we allow any type of advertising to people who paid? One area to consider is the type of advertising in question. Ads that may annoy a paying user could be a bad choice from a user experience perspective but what about incentivized formats such as offer walls and rewarded videos. These formats are loved by users so the question becomes more about optimizing the revenues.
Option 1 – reversed approach
Let’s imagine for a second a complete mirror image of the “no ads for payers” approach. What this means is that we set a threshold of $0.7 and the users who have made at least $0.7 in ad revenue are considered ad-whales. Once we classified someone as an ad-whale, we don’t allow him to make purchases in the game. That would be the reversed approach to the “no ads for payers” approach. If it sounds silly to you – it’s because it is silly. Blocking someone from paying in a game is just nonsense but so is the “no ads for payers” approach. Why block someone from making revenue for you through watching ads?
Option 2 – balanced approach
A more reasonable approach to the problem is to simply allow users constent access to all methods of getting benefits. A user can get benefits by buying them, by watching video ads, or by taking on offers. Since the payout of a video view by a user is normally determined in retrospect, the publisher could apply a model where the rewards are dynamic based on the past payouts received for that user. If such a model is implemented, the publisher can guarentee that the price of getting the benefit is balanced across the different methods the user has for getting them. For example, if the eCPM of a user starts falling after a while, his rewards for watching videos will decrease and he will be more inclined to make purchases. If however, the eCPMs for a specific users are growing over time, the rewards he will get from watching videos will increase and he will have more motivation to keep watching them as opposed to buying something.
Ad measurement tools are becoming a must have
This type of innovative monetization strategies are becoming critical for the survival of game studios. We covered before the increase in CPI rates and how companies needs to adapt to stay relevant. Advanced segmentation and monetization measurement tools that can find the ad whales segment for you are becoming a must have in today’s mobile eco-system.
If you want to start measuring your monetization and find ad whales you should check out SOOMLA Traceback – Ad LTV as a Service.