Many mobile developers know there is significant overlap between “players and payers” — the users who obtain premium app content through ads and in-app purchases, respectively. The question is how apps can reach both groups in the most effective and optimal way. For the Naver Z Corporation, publisher of the popular ZEPETO app, the solution lies in an offerwall that drives gains in ad and IAP revenue.
Tapjoy met with ZEPETO product manager Hwa Young Kim to discuss the unique challenges of app monetization in 2020.
WHAT WE LEARNED:
- An offerwall gives users who rarely complete in-app purchases a chance to experience premium content — and convinces many to become paying customers.
- User expectations, preferences, and behaviors vary from region to region. Publishers should anticipate and account for differences in app preferences, purchasing power, and more when planning a global UA push.
- Users are spending more time at home during the COVID-19 pandemic, driving massive demand for digital content, particularly in the gaming and social categories.
Since launching in 2018, ZEPETO has become increasingly popular. Can you tell us about ZEPETO, and the factors that led to its success?
ZEPETO is a 3D avatars platform. Our users design unique in-app characters so they can create content, socialize, and play games using their avatars. Customization is ZEPETO’s biggest differentiator: We offer a powerful facial customization tool and a vast catalog of fashion and beauty items that allow you to create highly unique avatars.
We also partner with the world’s biggest IP holders — like Disney, Nike, and various K-POP companies. Through these partnerships, we’re able to provide wildly popular content to our users. Our users can even use these elements to create unique content of their own.
Even after two years, we have lots of new users joining us organically every day. We’re seeing organic users grow exponentially in many different countries around the world. We’ve identified a few focus regions and expedited growth through targeted marketing strategies.
What is ZEPETO’s current approach to monetization?
We’re currently testing various models for monetization, but our primary revenue source is in-app purchases of items and accessories. However, we’ve found that the straightforward approach of selling these items at high prices doesn’t match the purchasing power of our user base.
Today, most of our users are Gen Z — a generation that is notoriously budget-conscious. Many of these users also have yet to enter the job market, so in-app purchases might be a bit of a hurdle. We decided to implement an offerwall and create a new in-app currency so users would have an alternative way to access premium IAPs. We focus on creating a positive loop, where users can earn rewards and use them to purchase items and grow to understand the appeal of premium content.
What made you take the step to implement an offerwall, and why now?
In 2019, we introduced a new in-app currency called “Zem,” a virtual currency that could only be earned from IAPs or by chance. This decision was intended to encourage IAPs, but users were frustrated that earning opportunities for Zems were limited compared to Coins, our other currency. So we needed to provide another viable way for users to earn Zems while still generating revenue.
When we reward our users, we always take into account its potential effects on our bottom line. We thought an offerwall would be an appropriate solution as the user activity and corresponding rewards directly lead to revenue. Users also could choose what appeals to them from various tasks, and they would take comfort in that once completed, they will receive rewards 100% of the time. This keeps them motivated and interested in earning opportunities. After evaluating these advantages, we decided to implement Tapjoy’s offerwall.
You currently use in-app advertising as well as IAPs. How would you say that both interact with each other? We sometimes hear publishers fear the risk of losing IAP when they implement ads.
We were in the same boat. We were concerned that our IAPs would be negatively affected by implementing Offerwall within our service. Furthermore, we were worried about usage rates, as we figured that it might be too difficult to earn rewards.
After implementing the Offerwall, however, we saw a tremendous increase in revenue from in-app advertising without taking a hit on in-app purchases. On the contrary, users who previously did not have access to certain content because they could not purchase in-app currencies welcomed Tapjoy Offerwall as an opportunity to earn in-app currencies. This also helped remove some barriers to entry for new users, who otherwise had to go through IAP to experience the service more fully.
Do you notice any significant differences when marketing or monetizing your app outside Korea or even APAC?
Each country’s users have different preferences, purchasing power, and in-app behavior. We must tailor our branded messaging and ad creative to highlight the benefits for the users in each region.
For instance, our Japanese users have a clear preference for 3D world maps. For our Japanese audiences, we use creative that shows the maps our Japanese users interact with. Meanwhile, in Southeast Asia, other users show an overwhelming interest in K-POP. That’s why we feature K-POP creative in those regions to improve our ad efficiency.
What emerging channels or trends are you most interested in looking forward to as you plan for 2021?
We saw strong growth in video content consumption in 2020. Due to COVID-19, people spend more time at home, creating a subsequent surge in demand for digital content. As a result, watching, creating, and sharing videos became second nature to our users.
We found this trend exciting, so we embraced it. We recently collaborated with Blackpink and Selena Gomez to create a dance performance video for their new single. Within a month, we reached 70 million YouTube views (as of October 2020). Previously, using avatars to create new videos was a limited feature, but now their utility has expanded.
ZEPETO also has its own social media feed where users can post video content made using their characters. We also offer video editing tools within the ZEPETO app. In 2021, we hope to improve these features and let users enjoy even more fan-made content.
Tapjoy would like to thank Hwa Young Kim for taking the time to join us. For more mobile game UA insights, check out our Mobile Champions interview with Alex Zhang of GOAT Games.