Monetizing games with ad revenue after iOS 14.5

Over the past year, we have been talking to advertisers and ad networks about how they will be impacted by the changes introduced by iOS 14. Something that is clear from these conversations is that advertising will remain vital — even without the IDFA.

In this blog we summarise some of the advice for gaming apps.

For extremely data-driven verticals like hyper casual games, user acquisition relies on precise campaign data so that marketers know which channels to invest their budget and how to optimize the performance of their campaigns. They’re usually using specific KPIs like d0/d1 retention, user LTV or ROAS to drill down into which campaigns are driving the best performance.

All of these metrics need exact data, as marketers operate with very thin ROI margins. Knowing where to invest and where to scale down is a matter of just a few percentage points.

With less deterministic data to rely on, understanding which channels to focus on to get new users will bring back the guesswork that performance marketing on mobile had evolved beyond in recent years. However, because advertising will remain a key piece of the mobile ecosystem, measurement and performance marketing will remain as prevalent as ever, just how they are deployed to aid apps’ growth will shift slightly.

Marketers will rely more on models and context, with less deterministic data to rely on.

Leveraging deterministic data is the one way to keep your operations as close to the status quo as possible and having a higher user consent rate is set to be a key competitive advantage — both for maintaining the precision of measurement and keeping cost per mille (CPM) high.

Once the automatic IDFA access is gone, CPM will be heavily impacted. In the absence of identifiers, the deterministic link vanishes and DSPs/ad networks will need to take into account multiple parameters that can only indirectly tell if the user is a high spender or not (time of the day, device model, operating system, etc). This uncertainty will be priced in, as the lack of deterministic data imposes a greater risk, which will be reflected in the price.

On the flip side, inventory that still has IDFA access will likely become more valuable — and many industry players will compete for access to this known quantity at a premium price point.

There are a number of strategies that can be used to ensure opt-in rates are high. Developers relying on advertising for revenue will need to iterate their prompt strategy fast to get high opt-in rates, as their CPM and revenue will be at stake from day one after the ATT rules begin to be enforced. For detailed information on how to build an app in the iOS 14 era, make sure to check out best practice examples.

Beginning with iOS 14.5, any user who does not opt-in will not be served targeted ads, which means that the publisher will see a drop in revenue per ad. This is why some publishers may warn their users that opting out will mean seeing more ads — since they need to make up for that loss in revenue with volume if they’re missing out on quality.

In research carried out by Adjust in 2020, we found that hyper casuals can display more ads than gameplay within a minute and still generate profit. But there are diminishing returns on displaying ads. Hyper casuals that show more than four ads per minute hit a ceiling at around $35,000 per month in revenue.

The sweet spot appears to be between two and three ads per minute, a total that enables hyper casual game companies to boost their revenues by as much as 10%. This demonstrates the careful balancing act that will need to be considered when deciding on an ad monetization strategy for iOS 14 — publishers will need to show more ads to compensate for lost revenue, but not so many that they cause users to churn.

What kind of ads developers display is also an important consideration. It is likely that the drop in price for banners and mid rectangles will be more than for video, rewarded and rich media. Those formats are highly engaging and retain their performance levels even without the IDFA.

For gaming verticals that monetize via ads, estimating the opportunity for revenue generation within an app can help to determine a healthy Cost Per Action (CPA) — which is key for their success. If you are optimizing toward CPA, we highly recommended using “adrevenue” conditions.

For a SKAdNetwork (SKAN) set-up, the “adrevenue” condition in our advanced solution allows developers to track ad impression and ad revenue counters.

In the below example, the conversion value ‘1’ will be returned if the user generated between $0.20-1.00 (or app reporting currency) in revenue.

{
"adrevenue": {
"revenue_min": 0.20,
"revenue_max": 1.00
}
}

Up to 63 Ad revenue or Ad impression buckets can be configured. 24 hour conversion window is recommended. On-device ad revenue integrations (like MAX, Mopub and others) is substantially more reliable for conversion value management compared to the s2s next day solutions.

The iOS 14 changes will be a big adjustment for how app marketers operate on Apple devices, but with the right strategies, you can protect your growth trajectory and ensure you are primed for success in the post-IDFA world.

If you have any questions about the implementation of iOS 14, don’t hesitate to reach out to your CSM or account manager. Our latest guide is available for download here or check out our iOS and SKAN Solutions.