In the fourth episode of “What I Wish I Knew When...”, our series for indie developers, Melissa Zeloof is joined by Bozo Jankovic, who heads up Business Development at GamesBiz Consulting.
Bozo and his team spend a lot of time working with indie developers to strengthen their game's monetization performance, so we thought it would be a good idea to pick his brain on this topic and discuss what he wishes he knew about game monetization earlier on in his career, to help devs starting out themselves get on the right track.
Listen to the podcast here or continue reading for the editing transcript.
Honing his skills
My journey in the game industry started a few years ago back at Nordeus, one of the leading game developers in South East Europe, widely known for their Top 11 Football Management game - one of the most successful football games on the planet.
I later decided to move into the consultant space and my focus now is on ad monetization and helping developers maximize their potential. We work with a lot of free-to-play games from a range of genres, from action to puzzle. Some focus a lot on ad monetization, others use it as a smaller piece on top of IAP revenues.
The IAP playbook
It all started with simple transactions like buying hard currencies, or buying soft currency through hard currencies, but as time has passed, developers have become much more creative with how they monetize IAPs. They started making faster progressions, opening up chests, decorative elements like skins. I should add that games focusing on decorative elements rely on a huge daily active user base.
There are various ways developers are trying to increase conversion rates. Traditionally only a very small number of users actually buy something, so developers have to be really resourceful to attract them. That’s why we’ve seen monetization mechanics like Battle Passes rise to popularity, which don’t provide a single purchase but actually give upgrades to rewards your users would get anyway and make it more attractive to users in a bundle with all kinds of different rewards.
All about timing
You should start as soon as possible with both your ads and IAP monetization strategy. There are two main things to think about: How do i make my game fun? And, how do I make a living out of this game?
You have to make the game fun for everyone while motivating users to buy stuff. So before your game even hits the app stores, you should be really thinking about how you’ll make money from this game.
IAPs and ad monetization go hand in hand; there is no reason to wait until you start thinking about ads. The earlier you start, the better they’ll be integrated into the core experience of your game, and the better your chances of making a successful game.
Impact of genre on hybrid monetization
Hybrid monetization is pretty much the default in the F2P space. Any F2P game can benefit from implementing ads. The balance between ads and IAPs will differ by genre - in a hardcore game with really core users, you don’t want to overwhelm them with ads; in a mid-core game you’d have the liberty to use ads more heavily; and in a casual game you’d be focusing an even more significant amount of your revenue on ads. Many games using a hybrid monetization model make up to 70% of their revenue from ads, then of course you have ad-based games like hyper-casual games that only make a tiny percentage of revenue from IAPs.
How developers see ads
I was researching this, and the view that ads are “a necessary evil” was pretty common a few years ago. But in the last few years, the percentage of developers who think this is becoming smaller and smaller; more are becoming aware of the fact that you can implement ads into games without hurting the UX. However, there’s still many developers who shy away from ads, or particular types of ads at least. For example, some developers think interstitial ads are always a bad user experience, that will lead to churn and reduced retention. But based on dozens of games I’ve worked on, this is not true. If you implement the ads in the right way, you’re only going to gain something for your business, and not the opposite.
Start with rewarded videos
Developers super unsure about ads and want to play it safe, should start with rewarded video ads. That’s because you’re not pushing these ads to users, you’re giving the control to them. If they want to watch the ad, they can, if not they can skip. All the tests my clients and previous employer conducted show that retention stays stable if not higher with rewarded video ads.
Once you build the trust that ads can be beneficial, you can start experimenting with other ad formats. With interstitial ads, the most important thing is timing - you don’t want to show the ad in the middle of the user playing a level. Show them at natural breaks during the game - after or before levels.
For offerwalls, which are also commonly used, there’s no danger in driving away users because they’re opt-in and usually placed within the game’s shop. The only thing to be careful about is not damaging your game’s economy (by giving too many high value rewards out for free).
How do you segment users for your ad strategy?
I often see a model where devs only show ads to non-payers, and don’t show any to paying users. This makes sense for interstitial ads - for users who are spending real money inside your game, you want to provide a “premium” game experience, which means not bombarding them with ads that they don’t choose to see. So segmenting your ad strategy according to payers and non-payers makes sense in this case.
However for rewarded video and offerwall ads, I advise my clients against this strategy (only showing ads to non-payers). That’s because it can often backfire. One thing that can go wrong is that by not giving paying users access to rewarded videos, you’re causing them to feel some kind of disadvantage. These users will ask themselves, ”I’m paying inside the game, so why can’t I get any free stuff?” They’ll view it as a punishment as a result of paying. Also some of the most engaged users of rewarded videos are in fact your paying users (because they’re generally more engaged in the game), so you’re limiting your potential for ad revenue as well as frustrating users.
I like to segment users so RV ads are provided to everyone, and maybe some parts of the system design are specific to certain segments. For example, paying users would have lower caps, while non-paying users would have higher caps - you’d allow them to view more ads. You can also tweak the rewards depending on the users’ level. In the beginning, maybe 50 coins as a reward will be enough for a user to make a purchase for something they need, but as they progress in the game and in-game items become more and more expensive, those 50 coins lose a lot of their value and might not even be relevant anymore.
You really need to think about your game’s user experience, and think beyond just paying vs. non-paying users when it comes to segmentation.
Increasing ARPDAU early on
Sometimes devs think that by adding complex features and systems will help them increase ARPDEU, but sometimes there is a way simpler solution. For IAPs, a few tweaks in the existing economy design can make a big difference: piggy banks and starter packs for example are good ways to convert users to payers early on. Also tweaking the difficulty of levels can help: if the game is too easy at the start, it can lead to IAPs happening too late. So read the data carefully and look to the easy wins.
For ads, it’s really important to choose the right partners: the right mediation platforms, ad networks, and to spend some time optimizing your hybrid monetization setups (that combine waterfalls with bidding). For ads it's sometimes as easy as adding a new placement or ad unit. Try introducing new placements at highly visible points in your game, or increase the caps. Sometimes it can be as easy as changing one parameter in your dashboard to increase revenue 30%, 50%, 100%. I’ve seen clients of mine switch their mediation, added a few ad networks, and doubled their ad revenue.
Big mistakes indies make with ad monetization
Going to the extremes: doing too little, e.g. 1 ad placement, 1 ad network, and leave it be without any optimization, then saying ads are not working for me. The other extreme is doing too much, cramming too many ads into a game and losing focus on the important stuff.
What I wish I knew when I got started
I think that there are so many low hanging fruits that developers should make sure they’re taking advantage of. Do you have a piggy bank implemented, starter packs, do you have a daily login reward? Those very common best practices that don’t take a lot of time to develop and bring really good results.
I would also say it’s super important to get the benchmarks for your genre really early on: know the numbers you should be aiming for.
Third, I’d emphasize the power of data - if you read the data correctly, you’ll be doing user segmentation the right way and other things that can be easy wins for developers.