Video ads have been taking the mobile industry by storm as the new business model and with that, comes an abundance of questions as to how to optimize and what are their effects on users. Depending if you are a monetization manager or a product manager, your KPIs may vary, however the ultimate goal is the same: A successful app that maximizes it’s potential.
In a recent panel at GIAF (Games Industry Analytics Forum), Sharon Biggar, Chief Analytics Officer at Social Point led a captivating talk on their personal journey through a series of tests with their users on the effects of video ads and their various formats. The official title was “Video Advertising Strategy in F2P Mobile Gaming”. The video runs for about 25 mins, so if you have the time, give it a watch. Here are the topics covered:
Social Point sought to answer 3 main questions internally before coming to any conclusions regarding their F2P video advertising strategy and I’ll give a break down for each one.
What design options exist for video ads in F2P games?
Generally speaking, there are 4 main ways to integrate video ads into F2P games. Each one has it’s pluses and minuses and are used in different ways. Sharon broke them down into two main categories:
- Pull Advertising – Pull referring to giving the user the choice to “pull” the video towards them, thus initiating the video ad.
- Push Advertising – Push referring to forcing the user to watch the entirety of the video in order to continue.
Method 1 – Pull – Gain Currency
I’m sure we are all familiar with this method as its possibly the most prevalent in mobile games. While there are usually daily limits to prevent abuse, the general idea is a user can request to watch a video in return for a reward in forms of gold coins, gems or some other form of in game currency.
Method 2 – Pull – Double Rewards
These rewarded videos tend to appear in two forms as well. One being before initiating a level, the player can watch a video to double the effect bonuses received (gold, gems, experience) upon completing a level. Alternatively, the player is given the option once they’ve completed the level to double their rewards. Generally speaking there are no daily limits on these as they are based upon a user’s direct engagement with the app. Why limit your user’s engagement right?
Method 3 – Pull – Speed Up
I’ve encountered (and used) these countless times. Sometimes they come in forms of using in game currency, but specifically here we are talking about watching a video ad in order to speed up an upgrade or improvement. Why wait 5 hours for an upgrade when you can watch a 30 second video to complete the upgrade immediately. Overall it’s a win – win and keeps user’s active.
Method 4 – Push – Forced Video
An intrusive and often causes some heat from users, due to it’s method, these video interstitials take over the full screen, and force the user to watch / interact with the ad. Some show a countdown before the X appears, others will appear after a few seconds. No reward / incentive is given to the user aside from waiting it out to allow them to continue to play.
Most Requested Video Ad Type
Looking specifically at their game “Dragon City”, in October, they took note of “pull” types of video ads and found some interesting things. *Note: “Dragon Cinema” refers to the gain currency type of rewarded video.
- Double Rewards was the most requested type of video ad
- Interestingly enough that the “Speed Up” type of video ad was less used considering the time spent waiting vs. time spent watching the ad
Do Video Ads Increase Churn?
I think this is one of the most discussed topics right now in the industry. Before I dive into Social Point’s specific study, make sure you check out SOOMLA’s recent report on Lotum and their study on the effect on advertising direct competitors as well. It goes a bit more in depth into the effects on eCPM, churn and has surprising results. We’ve also published a series of blog posts on rewarded video ads which you can find here.
Touching upon Social Point’s study, they found that pulled video ads on similar cohorts (users that played 7 days and that had 14 sessions) had some interesting results. The users that did in fact engage with video ads within the first 7 days, churned significantly less than those who did not watch any video ads. Clearly indicating that for Social Point, video ads were NOT causing an increase in user churn.
What About Push Video Ads?
Social Point ran an A/B test where they allowed a control group to see 0 video ads and the second group that saw skippable video ads. There was a clear decrease in retention once forced (push) video ads were displayed. More interestingly, as pointed out by Sharon, is the minor difference between 1 and 3 skippable video ads displayed effect on retention.
Do Video Ads Cannibalise IAP Revenue?
Social Point ran an A/B test intending to test the theory that video ads cannibalize the in-app purchase revenue. The results were rather surprising as they did in fact find that the video ads resulted in an 8% decrease in IAP revenue in the control group, however when looking at the overall revenue, the ad revenue resulted in an overall 5% increase in total revenue despite the drop in in-app purchases.
The tests ran were under the condition that users could watch up to 4 video ads a day, as was the limit set at Social Point. However due to an intentional development change, users were able to watch up to 8 per day. Therefore the results changed a bit.
They quickly found that 39% of their payers (users who were doing IAPs), were watching up to 8 videos resulting in a significant drop in IAP revenue, and even further, the ad revenue was not off setting the drop in IAP revenue and cannibalising the revenue.
- ”PULL” video ads have no impact on churn
- ”PUSH” video ads have a small negative impact on churn
- Video ads DO canniablise IAP revenue
- IAP + AD revenue can be greater than IAP alone
- Be careful – don’t allow Payers to watch too many ads
There were two great questions raised by the audience members which really touch upon the importance of analyzing advertisers, churn, eCPM as key drivers.
- Q1: In the place where you raised the cap on video ads, did you see a drop in the eCPM and was that what impacted the video games short fall in the IAP?
- A: Yes exactly. As soon as you go to a higher number of video ads, the players are less likely to convert on those video ads.
- Q2: It is possible to optimize your ad stack to make up for the drop in eCPM?
- A: Possibly, one of the challenges we’ve had is quite often the mediation platforms don’t have enough inventory.
To close, SOOMLA provides a series of tools helping monetizers, marketers and even product managers analyze critical KPIs on their app’s performance.