Industry News

Industry News, Marketing

Apple search ads - what's the master plan - header image

About a week ago, Apple launched it’s Search Ads platform into existence and there are many app publishers who are trying different tactics to use this medium to their advantage. You can read about some of these here:

Once the dust settles, you might want to ask yourslef what is Apple’s master plan for this? Why is Apple doing it? Here are my thoughts on this subject.

Search Ads aren’t enough for Apple

Apple’s revenue is well over $200B. When they go after a new revenue stream they ask themselves – is this channel going to be meaningful for us. If the channel has the potential of being at least 5% of their total revenue or in other words $10B/year they might consider it. If it’s lower, it might not be worth the efforts and risks. For example, the app-store revenue for Apple were $6B in 2015 but it’s growing fast and are likely to reach $15B in a few years. App-store search ads can’t deliver these revenue volumes on their own. There is simply not enough supply.

Apple is looking at the mobile ad spend forcasts

Some of you might have seen this report by eMarketer forcasting $195B in mobile ad spending by 2019.

Emarketer's forecast showing global ad spend on mobile will reach $195B by 2019

[Image credit: www.emarketer.com]

Everything we have seen until now tells us that this forecast is going to come true. Apple is 75% percent ahead of Google when it comes to App Store revenues but it knows that it’s far behind when it comes to advertising. The Apple ad-network – iAd was shut down as of June 30th 2016 after failing to become a major monetization channel for apps but Apple didn’t give up hope. Their mistake was that they didn’t understand the importance of consistent demand. They were fucosing on bringing big brand campaigns which is important in order to drive eCPMs up and stay competative but without consistent demand, publishers remove your SDK in favor of other SDKs. Apple learned from this mistake.

When Google launched their search ads product Apple were watching and they realized that Google did a sloppy job this time. Unlike Adwords, the Google Play search ads are not available as a market to the public but are instead offered as a managed service through Google account managers. Apple saw this opportunity to create a more appealing open product that allows anyone to set up their own campaigns. They created high demand for it’s search ads and more importantly this time the demand will be consistent.

Apple’s next move is for the supply side

The revenue potential of search ads alone is limited as we mentioned before. The demand is huge but the supply is the problem. Following the moves of other tech giants can give you a hint as to what Apple’s next move might be:

  • Google generated consistent demand with Adwords and then launched Adsense to improve supply
  • Facebook generated consistent demand with Feed Ads and then launched Facebook Audience Network (FAN) to enhance supply.

It’s likely that Apple will try to do the same once they aggregate enough demand for their ad products. They have tons of data about their users so they can offer the same levels of demographic targeting offered by facebook in addition to leveraging search data to indicate interests of users. Since they are the platform owner, developers will trust their SDK and give them a shot again. This time the demand will be consistent and allow developers keep them as part of the monetization mix. It might take a year or even 2 years but eventually this has to be Apple’s plan.

 

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Industry News, Marketing

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In the last WWDC, Apple announced that they will be launching Search Ads into the App Store in one of the biggest changes since the App Store was first launched. Later in Jun/16 they also revealed additional details about how the new feature will work. The release date was recently announced as October 5th – today. If you haven’t done anything about it yet, now will be a great time to start moving so you don’t get surprised and might actually benefit from the chaos that will break lose following the launch.

Bidding on brand searches for your own apps

One of the standard practices from search ads in Google will also work well here. Buying the name of your own app as well as small variations and mistakes allows you to to defand against Conquesting.

Conquesting – getting the top search result when the user was clearly searching for a different app than yours


I can imagine that its frustrating to pay for something you used to get for free. However, not doing this will be much more painful as your competitor will conquest your brand searches. In addition, Apple explained that they will optimize the algorithms based on user interaction and relevancy so even if you place a low bid you are likely to win as your app is the most relevant one.

Conquesting your competitor brand searches

The flip side of this is that a few of your competitors will be less prepared and you can catch them off guard to conquest their brand searches. This will give you highly targeted users and can work especially well in genres where apps offer similar services or gameplay. For example: casino games, card and board games, dating apps.

A mile wide and a cent deep

One of the interesting choices that Apple made is not to enforce any minimums on the bidding. That’s right – you can bid as low as $0.01 per click. This calls for a wide net strategy. If you set up enough keywords at $0.01 there will be a period of time where demand is still picking up and it will allow you to get some really cheap installs.

 

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Industry News

Header image - new breed of companies get 7 funding deals in 2 months

In a previous post we presented 3 case studies starring a new breed of game companies. Companies who are both publishers and advertisers at the same time. These companies have in-game advertising as a significant part of their monetization strategy but can still see high enough ARPDAU and LTV to be able to effectively do paid user acquisition campaigns.

This summer we have seen this new breed of companies catching fire with 7 of these companies getting additional funding or engaging in M&A activity for a total amount of $300M. The market is telling an interesting story through these acquisitions. Companies who can effectively trace-back their ad revenue and manage their monetization smartly can often reach monetization levels where they can show ROI on their marketing spend. Moreover, by demonstrating their ability to be on top of their moneitzation, these companies are able to convince investors that they will be able to scale fast with additional funding.

 

If you also want to stay on top of your ad based monetization and be able to show investors that you know how to smartly invest your UA budgets you should check out SOOMLA TRACEBACK.

Learn More

 

Studio Press release Date Transaction Amount 
futureplay logo - the company is pioneering a new way to monetize they are calling view to playFutureplay  PR Link  Aug 25th 2016 $2.5M
huuge games logo. The company CEO commented in a panel at casual connect that the company is making 50% of their revenues from advertisingHuuuge Games  PR Link  Aug 4th 2016 $4.6M
Rocket games logo. The company was recently acquired by Penn Nat'l for $170MRocket Games  PR Link  Aug 3rd 2016 $170M
Scopely recently announced a funding round of $55M. Both their hit games utilize ads for monetization while investing heavily on paid UAScopely  PR Link  July 26th 2016 $55M
Flare games recently bought Kopla games following the success of their hit Nonstop KnightFlare games  PR Link  Aug 2nd 2016 Undisclosed
Tinyco was bought by SGN for an undisclosed amountTinyco  PR Link  July 75h 2016 Undisclosed
Firefly recently announced a funding round of $10MFirefly Games  PR Link  Aug 11th 2016 $10M
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Industry News

Machine zone logo 2 swords and shield with MZ on top

In a recent news release, Machine Zone, developer of Game of War and Mobile Strike announced that they are rebranding as MZ and will launch a cloud platform to allow other game developer to leverage the infrastructure they have built to support their massive scale.

My analysis is that the cloud platform move is a mistake. Here are 3 reasons:

Content is King and Middleware is the Peasent

When we started SOOMLA, one of the gaming gurus I consulted with advised me: “In Gaming, content is king, there are no successful Middleware companies”. This was 100% true 4 years ago and it is 99% true today with one exception – Unity. As a startup company you are in a position to bet your life and believe you will succeed where others failed before. An established company however, with an ability to create content hits should avoid such risky moves.

NIH is Strong in Gaming

If anyone should know this it’s MZ. About 90% of the revenue in the mobile gaming space is now concentrated in the top 50 companies. Almost all these companies suffer from NIH mentality. NIH stands for Not Invented Here and is mostly refering to companies with a strong bias against outsourcing. The game backend is considered core by most companies so the chances of outsourcing is low.

Game Publishers Protect Their Data

For MZ to be successful with their B2B business, other game publishers will have to trust them with their data. I know very few companies who are willing to share their data with 3rd parties. Even fewer will be willing to share their data with their competitor. The only companies who might be comfortable with their data being at the hands of MZ are the small companies and they typically don’t have the money to pay.

The fact is that many companies try to provide cloud services to game developers and none of them was successful in building a significant business. No reason to believe MZ found the secret sauce here.

 

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Industry News

Zynga ship is landing in tel-aviv and looking for Israeli companies to onboard

It was recently published in some of the Israeli tech publications that Zynga intends to buy a studio in Tel-Aviv. Mark Pincus himself was quoted as saying that the gaming giant is interested in tapping in to the local talent. As a local Tel-Aviv resident and a gaming industry insider I decided to make Mark’s life a bit easier and offer a short list of companies Zynga should be looking at.

Luckyfish – social games company

Luckyfish specializes in social casino games such as casual slots games. The team’s background is from gaming company 888.com which was one of the innovators in the online casino space. The company received an investment from Carmel Ventures in 2014 but didn’t require additional investments due to cash flow from the games themselves. Luckyfish is the biggest social casino company in Israel yet to be acquired.

Jelly Button – maker of Pirate Kings

Jelly button started as a studio for super successful Playtika. They have since developed their own successful games and mostly known for their mega hit – Pirate Kings – which combines innovative game play with extremely high levels of virality.

Plarium – the Israeli response to Machine Zone

Plarium was one of the first companies to introduce the hard core genre to Facebook games and have since shifted their focus to mobile games. Their biggest hit is Total Domination but in the mobile space they are known for their medieval themed hard core game – Vikings.

TabTale – counting towards 1 billion downloads

When you go to the TabTale website you can’t ignore the counter showing the total number of downloads. The company has dominated the top free charts in the last few years and has shifted their focus from kids games to other casual genres by leveraging their massive platform for both in-house development as well as publishing partnerships. The company received investments from Magma Venture Partners and Qualcomm Ventures.

Tacticsoft – the hidden gem

This studio is the smallest of the bunch. Tacticsoft started as a maker of PC games and have hit the jackpot with BattleDawn – a hard core world domination game. They have since shifted their focus to mobile and are now in alpha version of their new strategy title. The company has raised angel investments in the past but mostly relied on their game cash flows to fund the new projects.

Hope this list helps Zynga and their post. The local industry would surely benefit if Zynga sets up an office in Tel-Aviv. If you have any thoughts or comments about this list feel free to respond below or tweet me @y_nizan.

 

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Industry Forecasts, Industry News

My Learnings from China Joy

Last week I attended a huge conference in Shanghai called China Joy. It was fascinating and awesome and like everything in China it was really, really big, but I’m not here to talk to you about that.Your Ad Here Icon

One of the things that took me by surprise was that games in China don’t have ads in them. I mean, that’s almost embarrassing to admit. How did I not know such a thing about an industry I live and breath? And…if I missed something like this, what else did I miss about China?

Where are the Mobile Ads?

You might think that Chinese users are less receptive to ads, so game designers choose not to include them in favor of superior user experience. However, the reality is a bit different. It is not the game publishers choice not to include ads, but actually the App Stores in China that object to ads. There are roughly 300 App Stores in China, so users can install apps from multiple stores. This creates quite a competitive atmosphere between the various App Stores, so they do everything in their power to prevent users from downloading games from other stores. They want to own the user exclusively and that can’t be done with the way ads are managed today.

Mobile game advertising in China could be a huge thing. Mobile game advertising is already worth about $5B in thChinese Appstorese US. Think about how big it could be in China. Maybe it would be smaller, but we are looking at a billion dollar opportunity at the very least. In addition, unlike in other parts of the world, the biggest advertising company, Facebook, doesn’t exist. While this could potentially be a huge opportunity for ad networks, there are some pretty big challenges to get there.

What the Future Will Hold

My estimation is that by the end of 2016, there will be ads in mobile games in China. The more innovative ad networks, will find a way to work with the App Stores to offer ads inside games while respecting the needs of such App Stores. One way this could happen is via white labeling. Basically, the stores will take the part of the ad network by leveraging advertising technology from ad-networks outside of China. For the App Stores it seems like the best move. They will make additional revenue while keeping their game publishers happy. However, there is one problem, ad networks tend to be better when they are bigger. There are advantages to scale for both sides of the network. For advertisers, bigger networks means they have to deal with less interfaces and get more reach for their ads. For publishers, scale means better fill rates and more ad diversity.

Therefore, I’m anticipating that soon after, the App Stores will grow their own networks. Therefore, three types of services will evolve:

  • DSPs focusing on aggregating all the App Stores into a single interface for advertisers.
  • Network-to-network marketplace between the App Stores.
  • Publisher side dashboards allowing publishers to monitor and manage their ad monetization across different App Stores while still respecting the boundaries.

These are, of course, my opinions and estimations. I’ll be monitoring this market closely to see if I was right. If you have other thoughts about how this market will evolve, feel free to share.

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Industry News

During the last decade, one of the biggest trends in the startup world has been lean startup and the push to release an MVP to the market early. In the gaming space, however, I have seen many companies shy awayLean Startup? from this approach. Obviously, a game success is greatly dependent on the quality of the art work and how lovable the characters are. Well, maybe it’s time to revisit that assumption.

At a recent event I attended, MGF Asia in Hong Kong, I sat-in on two sessions that discussed a very similar concept. Can a studio release an MVP and if so, what does it look like? Roy, the CEO of Forgame, argued that you can actually. He asked the crowd, “would candy crush be engaging with squares, rectangles, circles and triangles?” He then rhetorically answered that from their experience you can optimize the core loop without the graphics. He challenged the crowd to think about the production quality of Flappy Bird and had them ask themselves if a game could be enjoyable regardless of the art level. Roy explained that his studio is practicing the concept of a Minimal Playable Product and puts the focus on making the core game loop extremely engaging by iterating with a rather sketchy level of art.

In a subsequent session, Chris Natsume, of Boomzap, explained how investing in art at an early stage can lead you down a bad path.  If you invest in art in the early stages then it can sway your decisions, probably for the worse, to justify your earlier decisions since you’re already heavily invested. “Those littles cute monsters are now sitting on your back and making you less agile.” According to Chris, their approach is to “build dirty and change big” and never be afraid to kill a game if its not good. He explained, “you have to pretend you are the publisher and ask yourself, would I invest the marketing dollars.”

While the video from MGF might not be available for a while, I did come across a lecture on the same topic from Gabby Dizon, CEO of Altitude Games and a past employee of Boomzap. The same concepts are conveyed in this lecture.

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Events, Industry News, Research

e3Gaming and technology conferences are a great place for consumers and enthusiasts to come and get a sneak peak on what’s cooking in the near future. It’s also an instrument for developers and companies alike to showcase the results of hard work and get the much needed media exposure.

Just like everyone else, these technology conferences also live off sponsorship deals, often agreed with various game and software development studios. But just how big are the marketing budgets of such companies? How much are they willing to spend on a conference that promotes not only them, but also everyone else participating, including their competitors?

Getting the big picture

We tried to get a general image on the sponsorship deals, as well as who are the biggest spenders in the gaming and technology industry. We looked not only at some past conferences around the globe, but at future ones too, trying to understand who supports which conference, over a one year period (from late 2014 until late 2015) and to what extent.

As the results started coming in, we found that Unity, AdColony, and StartApp were the biggest spenders.

Unity was the only company with more than $100,000 spent, where both AdColony and StartApp spent more than $60,000 on various conferences. Even though there are events that haven’t disclosed the pricing of sponsorship deals, using only publicly available data, Unity spent a total of $135,000 over a one year period. With five conferences supported, Unity was also the most frequent sponsor, where AppsFlyer, StartApp and AdColony supported four.

Biggest events

The popularity of conferences can also be measured by the number of high paying sponsors willing to participate.

With such statistics, it’s plain to see that Casual Connect’s Amsterdam event (4-6 February 2015) was the biggest conference so far, attracting dozens of companies and having the biggest number of platinum sponsors (seven), out of 20 companies observed. Casual Connect’s San Francisco conference, planned for August 2015, comes as second best, with five companies willing to support the venue with platinum sponsorship deals.

Below is the table of top ten spenders in terms of marketing budget and the number of conferences attended. It’s important to notice that not all events share the prices for sponsorships, which is why these numbers are a (close) estimate.

Company Name Conferences Attended Estimated Minimum Conference Budget
 Unity Logo Unity 5 $132,500
 AdColony_Logo AdColony 4 $62,000
 StartApp_Logo StartApp 4 $60,000
 Admob_Logo AdMob 2 $50,000
 Supersonic_Logo Supersonic Ads 2 $34,000
 Appsflyer_Logo AppsFlyer 4 $33,000
 Tune_Logo TUNE 2 $27,000
 NativeX_Logo NativeX 2 $24,000
 PaymentWall_Logo PaymentWall 2 $22,000
 Mopub_Logo MoPub 2 $22,000

Getting the data

In order to get the bigger picture on the spending in this industry, we had a look at some of the biggest, as well as smaller conferences all around the world. We looked at how many sponsors they had, how the sponsorship tiers have been established, and how much each tier costs.

Most of these events have a pdf price list file with different sponsorship tiers and prices for each tier, available for download at their website. So, for starters, we looked at five Casual Connect events.

Even though every conference has the same pricing method (Platinum, Gold, Silver and Bronze sponsorship deals), every conference has a different pricing.

The Belgrade event, which took place in November 2014, had a four-tier system: Platinum ($15,000), Gold ($6,000), Silver ($3,500), and Bronze ($2,000). The Amsterdam event was more expensive: Platinum was €20,000, Gold €10,000, Silver €3,500, and Bronze was €2,500.

Next one up will be in Singapore in May, and its prices match Belgrade ($15K, $6K, $3.5K, $2K). The Casual Connect event in San Francisco will take place in August, and in order to become a Platinum sponsor, each company must pay $30,000. Gold is $12,000, Silver is $5,000, and Bronze $3,000.

The Tel Aviv event, planned for fall of 2015, has no data yet.

The PGConnects conference in London, which took place in January 2015, had a three-tier system: Platinum ($40,000), Gold ($16,000), and Silver ($8,000).

The Winter Nights mobile game conference, taking place in February 2015 in St. Petersburg, Russia, is one of the most expensive conferences. It is organised on four tiers: Diamond ($50,000), Platinum ($15,000), Gold (10,000), and Silver ($5,000).

Aside from these conferences, we also analyzed the Game Developers Conference (GDC) in San Francisco and Cologne, the GlobalMGF (Mobile Games Forum) events in Asia (Hong Kong), and Europe (London), all of which decided not to publicly display the prices of their sponsorship deals.

The Global Mobile Internet Conferences in the Silicon Valley, Bangalore and Beijing had very little or none information about their sponsors on their respective websites, and when reached out to, decided not to reply.

The biggest gaming show, The Electronic Entertainment Expo in Los Angeles, has a list of sponsors, but no prices.

Crunching the numbers

We looked at a total of ten conferences, spanning from November 2014 to November 2015, and every one of them has tens, some twenty and more sponsors.

We tried not to get lost in the forest of sponsors, so we focused on 20 companies we thought were the most relevant and / or most present in the monetization landscape of the mobile gaming industry.  So we paid special attention to Chartboost, Appsflyer, StartApp, TUNE, AdMob, NativeX, Vungle, RevMob, HeyZap, Flurry, AdColony, Unity, Playhaven, TapJoy, Supersonic Ads, SponsorPay, NextPeer, MoPub, PaymentWall, Inneractive and Fortumo.

Unlike Unity, AdColony and StartApp, which are fairly present in the world of conferences, companies like Inneractive, Playhaven, Flurry, or HeyZap have not been seen as sponsors at any of the examined conferences.  It’s very important to stress that these numbers might not represent the exact budgets of the companies involved, nor the exact prices of different sponsorship deals.  The numbers and data presented here are based on publicly available information and represent non-confirmed, estimation-only budgets.

The source data we collected is available in this Google Spreadsheet.

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In App Purchase Tips, Industry News

Google recently announced that they are considering adding In-App Purchase price ranges to the Play Store. This comes on the heels of Google’s loss in court that forced them to pay $19M in IAP refunds as well as the fire Google and Apple have been receiving for the poor control users have over their IAP payments especially when it comes to children. Apple also faced the same problems and were forced to add more controls and more transparency and today it’s Google’s turn. in app purchase price ranges to be added to google play store

Password requirement and price ranges

Google already made one change earlier this year. They improved the control users have over In-App Purchases by adding more configuration options regarding the password requirement. This week Google also hinted that they are going to display the price range of virtual goods offered in any app in the store.

What developers should know?

One impact of this change on developers is that these moves by Apple and Google potentially increase users’ trust in their stores. Developers that considered alternative stores should check to see where the wind is blowing with regards to store download volumes.
The more important change is how the new change might impact users’ decision to download the game or not. Parents might not allow their kids to download games with IAP items that reach $99 so savvy developers might limit the items in their in game store to $19.99 or $29.99. The change unintentionally gives advantage to games that focus on selling consumables. Even when the biggest item in the store is $9.99, payments can accumulate quickly if the game allows the user to purchase them over and over again. I expect to see more developers adopting a virtual economy model that includes single use items, resources and other consumables such as: lives, shots and fuel.
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SOOMLA - An In-app Purchase Store and Virtual Goods Economy Solution for Mobile Game Developers of Free to Play Games