How to Monetize Bodybuilders with Advertising — Social Quantum Experience

Article — edited transcript of the speech by Alexander Bezobrazov, Marketing Director of Social Quantum, at White Nights St.Petersburg’19

Alexander Bezobrazov

This material will be useful to those who are interested in looking at the nuances of the implementation of advertising monetization in already launched casual projects, where the main revenue has historically been made on IAP, and those who are still thinking about the introduction of advertising monetization in their games.

Monetization of Social Quantum games

Social Quantum has two main games: Megapolis (strategy-citybuilder) and Wild West: New Frontier (farm simulator).

Megapolis was first released on mobile platforms in 2012. By 2014, it appeared not only in the main app stores, but also on Amazon, Samsung Galaxy Store and the “exotic” Kakao. “Wild West” was released five years later, in 2017.

Despite the long time between game releases, in terms of monetization, both games were focused on In-App Purchases.

At the beginning of 2018, Social Quantum realized that the monetization strategy should be updated, so in the summer of 2018, additional advertising monetization appeared in games.

Why did they do it? To explain this, we will have to go back to the beginning of 2019: Google Play in its blog on Medium began to release a series of articles on the monetization of games. The first of them contains an interesting graph about the approach to monetization of games depending on the genre.

Source: Rethinking your game monetization strategy (medium.com/googleplaydev )

I am somewhat confused by the fact that genres and platforms are mixed in this graph, but the picture itself is obvious: if you look at the left part of the graph with hyper-casual games, it becomes clear: their main approach to monetization is advertising. In the right part, for example, strategies or games for PC and consoles have user payments (either direct IAP or subscriptions).

In Social Quantum, the idea of introducing a hybrid — based on IAP and advertising — monetization strategy appeared about a year before the publication of this article: as a rule, trends in the market are clear to all major developers much earlier than articles appear about them. But successfully changing the monetization of an “adult” project, which, for example, is Megapolis, is not an easy task, requiring time and good analytics.

How was advertising monetization implemented?

The first stage

The first thing we had to think about was advertising networks and mediation.

When selecting advertising networks, you need to decide whether to conclude an exclusive contract with one network, or to organize competition between several networks for your inventory.

The advantages of the first option are the ease of management and the “buns” from the grid. The advantages of the second one are in the potential for revenue growth. Although, of course, you can lose if you do something wrong.

In the first case, it will be enough for you to implement the SDK of the network or even connect it via the API. In the second case, you will need one or another mediation solution. There are several of them.

In other words, there are four main approaches to working with advertising partners:

• Without mediation at all. You have implemented exclusively one network (its SDK).
• Managed-mediation. This is an option for indie or very beginners. You implement the mediation SDK and give them control of everything that is shown to you. As a rule, it costs either a commission of 10% of advertising revenue, or some minimum amount.
• Self-Service. You register in mediation (usually one of the top ones), implement their SDK plus what are called “bundles” or “adapters” for the necessary networks, and then manage your mediation yourself. Do you remember about the free cheese? You still have to pay for it somehow. As a rule, you pay either with information or with a share of traffic that is taken by the advertising network that made the mediation. In order not to offend anyone — I don’t name names, but we remember about free cheese — any company that does free mediation somehow wants to earn.
• In-house. If there are developers, we take and write our mediation. It’s not fast, it’s not cheap, sometimes you have to invent bicycles.

We at Social Quantum have chosen the latter approach. He has a number of advantages. Among them: transparency, full control, the ability to get much more information, and it is also possible to conclude “individual” deals with advertising networks.

The second stage

Then we faced the question of choosing the types of advertising and user interaction with it.

We looked at classic banners, offervalls and videos. They usually dominate the types of advertising playlists.

Yes, I know, User Acquisition specialists will most likely ask: “And where is the game advertising (Playable)?”. Colleagues from the hyper-casual segment will say: “What about Interstitial banners?”. Someone will also remember about native advertising.

All this has the right to exist, taking into account a number of nuances. However, Social Quantum decided to introduce an exclusively “nonviolent”, rewarded user interaction with advertising into the game. Accordingly, the options to show something between the screens were not even considered. As for game advertising, it is usually shown on the same inventory of placements* as the video.

* Fundamentally, you can come up with a lot of names for what you show to the user. It will always be based on images (banners), videos, perhaps with some degree of interactivity, or – I had to separate it into a separate type — a “wall of offers”, which is a set of offers “Download the game N, get so many coins in our game”.

It was decided that Social Quantum games will have video placements initiated by the user only for a reward. The advantage of this approach at the level of the premise is: “If the user starts interacting with advertising himself, it will give better advertising, therefore, they will pay more for it.” In addition, since the user initiates the advertisement himself, it will not cause him unpleasant emotions.

First results

On the slide you can see an example of one of the placement ads in Megapolis. This is a tooltip with the icon of the hard currency of the game – Megabucks.

When you click on the bubble (bubble) the user has the opportunity to interact with the promotional video for a reward.

This placement appeared first in the Megapolis game. It is not available to all users, but only from a certain level. In addition, from the point of view of integration, the bubble is part of the mechanics of the game. With standard gameplay, bubbles appear on buildings, symbolizing, for example, income from it. Accordingly, the mechanics of interacting with it are well known to users, it was not introduced just for the sake of advertising.

The first question that always interests the developer when introducing advertising into the game is “What about Retention?”.

There are those who are afraid of advertising, believe that it spoils the User Experience and reduces retention. However, we conducted a study that shows the opposite — retention of users interacting with advertising, on the contrary, is better than without it.

The graph below shows the results of comparing the normalized retention of two cohorts of users: the “green” cohort watches more than two videos a day, the “gray-blue” cohort — less than two.

The charts are normalized in such a way that the retention of those who watch less ads is always 100%. In addition, the days are counted here not from the moment of installation, but from the moment players reach the level where they can watch ads. The data on the graph are cohorts with a volume of about a third of a year.

In our case, it turns out that users who watch more than two commercials stay in the game for 28 days after the advertising level almost twice as often as those who do not watch ads. Or, simply put, their retention is 2 times better than those who watch less than two promotional videos a day.

Our second game, which has advertising, is Wild West: New Frontier. Historically, advertising appeared in it about a month earlier than in Megapolis.

In the Wild West game: New Frontier The first placement is the “Order Board”, part of the main cycle (Core-loop) of the game. Usually, a player harvests (say, corn) or creates more complex items (say, butter from milk given by cows) for a reason, but to fulfill an order, for which he receives experience and soft currency.

If the user can display ads according to the settings, he may have a separate order to view the advertising video. The user chooses whether to fulfill the order or not. Accordingly, there is no negative in connection with viewing ads.

As in the case of Megapolis, we checked the change in retention depending on the interaction with advertising.

However, here I show a slightly different graph — it shows normalized retention for three cohorts of users who have made at least one IAP:

• less than one video per day,
• 1-2 videos per day,
• more than two videos per day.

As you can see, those who watch at least something have a much better retention rate than those who don’t watch. This is a very important moment for us, because we understand that the introduction of advertising did not just “do no harm”, but even helped one of the main metrics for free-play games — retention of paying users.

Changes in the number of placements

Another point that we had to think about when implementing advertising monetization is the number of places where it is located:

• do we want to start with one or several placements?
• will there be more than one ad placement in our game at all?
• if there are several placements, will we “rotate” them or will they work in parallel?

Megapolis added a second placement just two months after the first one. By that time, preliminary results on the impact of advertising on monetization and a number of other metrics of the game had already been collected.

The new location is called “Construction” and it is also built into the mechanics of the game in a way that is understandable to the player.

In the standard version, the player does not build the whole building at once, but gradually develops it. In the screenshot, this is, for example, Solar Expo Hall. The player does not yet know that he has an advertising option — for him it looks like standard gameplay.

At the moment when the player opens the “Construction” window, where he can improve / develop the building to the next level, he has the opportunity to spend limited resources.

By default, the player had a choice: buy hard currency, earn money in the game or ask friends. Later, the “get paid for viewing ads” option was added.

How did the appearance of an additional placement affect Megapolis?

The first thing you can see just below on the chart is the change in the number of impressions to users. In the case of Social Quantum, the number of impressions increased by more than 2 times. The graphs, as in the previous cases, are reduced to 100%.

By itself, the growth of impressions, although pleasant, is not the only metric that needs to be monitored. For example, your impressions may grow simply because you forgot to put a total limit on impressions on placements, and your “automatic” limit of impressions increased by 2 times. Therefore, impressions are not the most important metric.

Already this year (2019), the second advertising placement appeared in our Wild West game: New Frontier.

A chest periodically appears in the game containing certain game content (resources), which the player can get in the game in a standard way. I will not pronounce the terrible word with the letter L, but the amount of resources in the chest is unpredictable for the player.

When a player tries to open a chest, he has two options — to do it for hard currency or watch a promotional video.

The first thing we looked at in Social Quantum was, of course, the impact of advertising on monetization (ARPDAU from advertising).

The graph below shows, again, the normalized ARPDAU: 100% is what we had with one placement; the moment of adding the second placement on the graph, I believe, does not need to be specified separately.

The green curve is the normalized Avg. ARPDAU by week, gray curve — Avg. ARPDAU for a longer period. Fluctuations are possible from week to week, but in the weighted average version, the introduction of the second placement has definitely increased the advertising ARPDAU.

What metrics are useful to monitor?

I divide all metrics into four groups, conditionally, Tier-s:

Tier-1 includes key metrics for money, audience, and retention:

• revenue from advertising (Ad Revenue);
• Active Users;
• advertising revenue per daily active user (Ad Revenue per DAU);
• retention or churn level (Retention or Churn).

Intermediate metrics for advertising fall into Tier-2, which, as a rule, lead to an increase in revenue if their value is increased without compromising the rest of the metrics:

• views (Impressions);
• views per daily active user (Impressions per DAU);
• cost per thousand views (CPM);
• the level of ad Engagement.

As an example of monitoring another indicator, I will show you how the involvement of our users in interacting with advertising has changed after the introduction of the second placement in Wild West: New Frontier.

Taking the base for 100%, we see that after the addition of the second placement, the share of active users interacting with advertising increased by almost 20%.

What does it mean? This means that with the new placement we have involved those who have not previously interacted with advertising. We offered the players something they were interested in and made money from it.

Tier-3 includes metrics that do not directly affect revenue, but can be used to benefit the company.:

• percentage of Completed views (Completed Views Rate);
• number of clicks;
• ad clickability (CTR);
• the voice share of the advertising network (Advertiser’s SOV).

For example, we can look at the CTR of creatives that advertisers spin in our games. Naturally, the ideas from the videos with a high CTR are used in the development of our UA creatives. The result? According to benchmarks from advertising grids, Social Quantum creatives in some cases work 2-3 times better than the creatives of competitors by genre.

Tier-4 will include technical metrics that depend very much on developers:

• Requests (Requests);
• the ratio of the number of successful ad impressions to all ad requests (Fill Rate);
• automatic Network Status detection (ANR);
• Crashes.

For example, for one of the advertising networks, we found that if you send too many requests to it and do not show ads, you can “drop” CPM.

Conclusion

I shared our path in the implementation of advertising monetization and some interesting statistics that we are observing.

Let me remind you once again that we have two games — a farm simulator and a bodybuilder; we are not engaged in hyper-casual games that earn the main revenue from advertising. Moreover, we introduced advertising into existing games that have their own balance and audience, which we wanted to preserve, and not scare with advertising.

We implemented monetization a little less than a year ago, in the second half of summer. They began to monetize those users who had not been monetized before and along the way made sure that advertising is not only not dangerous for retention, but also has a positive effect on it. Then we moved on to expand this experiment and were able to increase both the indicators of user engagement in viewing ads and advertising monetization per user.

In general, the introduction of advertising into an existing project with proper planning, a careful approach and the right people who do it all turned out to be not a terrible and very useful project for Social Quantum.

Also on the topic:

• The study of market saturation by the example of the analysis of the niche of culinary time managers