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Monetizing games with ad revenue after iOS 14.5

By: April Tayson, Regional Vice President INSEA, Adjust

Consumers are gaining more understanding of the risk of sharing personal data, and they are now looking at privacy considerations when making purchase decisions. PwC’s Global Consumer Insight Survey 2020 states that nearly 30 percent of respondents from Southeast Asia have mixed perceptions about sharing their consumer data with organizations. This suggests that businesses need to increase consumer trust by being more transparent in explaining to consumers the value of sharing data in order to get relevant ads Recently, Apple released iOS 14.5 with privacy updates that give users more control over the data they share. Starting with iOS 14.5,app developers will no longer be able to target users that have declined to share their Identifier for Advertisers (IDFA). 

According to NewZoo insights, more than 80 percent of the urban online population in Southeast Asia are gamers, and Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam were identified as the region’s top markets. As a burgeoning gaming market, the release of iOS 14.5 will have a significant impact on digital advertisers, as well as mobile gaming apps in the region that rely on trackers to identify and reach their target audience. However, despite the changes introduced by iOS 14, advertising will remain vital — even without the IDFA.

How to make data-driven decisions in iOS 14

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 use specific KPIs such as d0/d1 retention, user Lifetime Value (LTV) or Return on Ad Spend (ROAS) to drill down into which campaigns are driving the best performance. All metrics need exact data as marketers operate with tight Return on Investment (ROI) margins. Knowing where to invest and where to scale down is a matter of just a few percentage points.

Mobile marketing has progressed substantially in recent years, but with less deterministic data marketers will rely more on models and context to understand which channels to focus on to get new users.

Press your advantage

Leveraging deterministic data is one way to keep operations stable and having a higher user consent rate is a key competitive advantage — both for maintaining the precision of measurement and maintaining the cost per mille (CPM).

However, once the automatic IDFA access is gone, CPM will be heavily impacted. In the absence of identifiers, the deterministic link vanishes, and Demand Side Platforms or ad networks will need to take into account multiple parameters such as time of the day, device model and operating system, which can only indirectly tell if the user is a high spender or not. The lack of deterministic data imposes a greater risk, which will be reflected in the price. On the other hand, inventory that still has IDFA access will likely become more valuable, and many industry players will compete for access at a premium price point.

Marketers should establish new plans to ensure high opt-in rates, and developers will need to make iterations on prompt strategies to minimize the impact of the change on their CPM and revenue. For example, app developers can use simple terms such as “Later” and “Next” and position them horizontally next to each other to prompt users to take affirmative action. Using the positive acceptance on the right-hand sign aligns with how people understand moving on to the next step.

Keep it on prompt

With the release of iOS 14.5, users who opt out will not be served targeted ads, which means that the publisher will see a drop in revenue per ad. Some publishers may warn their users that opting out may mean seeing more ads.

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

The sweet spot appears to be between two and three ads per minute, which enables hyper casual game companies to boost their revenues by as much as 10 percent. Publishers should find the right balance when deciding on an ad monetization strategy for iOS 14. Showing more ads to compensate for lost revenue may cause users to churn.

In addition, the type of ads developers display is also an important consideration. Highly engaging formats such as video, rewarded and rich media will retain their performance levels even without the IDFA. Thus, it is highly likely that the price of banners and mid rectangles will drop more.

Set your KPIs

For gaming verticals that monetize via ads, a robust Cost Per Action (CPA) is key for their success. Estimating the opportunity for revenue generation within an app can help determine the CPA. When optimizing for CPA, the conditions embedded in the app allow developers to track ad impression and ad revenue counters.

Apple’s attribution framework, SKAdNetwork, gives media channels the ability to have a source of truth on attribution in this new privacy-centric world, and marketers can leverage more tools to better understand their users. For example, leveraging parameters such as time of click, time of install, and basic device information can estimate the source of an install for a few hours after a click.

Setting up the right conversion value strategy will be key to success on SKAdNetwork. For hyper casual game clients looking to measure ad impressions by range count, they would need to create ‘buckets’ that will categorize users based on the number of ads they view.

The changes on iOS will trigger substantial adjustments in how app marketers operate on Apple devices, but with the right strategies, marketers are primed for success in the post-IDFA world. Apple’s step toward improving security measures for users is just the beginning; many other companies will soon follow, and as platforms evolve, agile businesses are in a better position to innovate and succeed in the digital economy.

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