April 4, 2024

Clicks to coins: Your guide to in-app advertising for mobile game monetization

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What is in-app advertising?

What is an IAA-based monetization model for mobile games?

How does in-app advertising work in mobile games?

6 types of in-app ads for mobile games

1. Playable ads

2. Video ads

3. Interstitial ads

4. Rewarded ads

5. Banner ads

6. Intrinsic ads

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In a mobile gaming landscape marked by fierce competition and fleeting trends, publishers strive to capture and continuously maintain their players’ attention. This requires a delicate balance between crafting engaging gameplay experiences and implementing effective monetization strategies that don’t detract from those experiences. As the freemium, or free-to-play model, dominates the scene, in-app advertising (IAA) has emerged as a popular avenue for publishers to generate revenue while keeping games accessible to a broad audience.

In this article, we’ll cover some of the most popular in-game advertising formats and monetization strategies you could tailor to suit your game genre and target audience. Dive in to see how clicks can pave the way to coins and unlock the potential of in-game advertising for your mobile titles.

👀 Related reading: Mobile gaming trends of 2024: Top 7 developments set to define the year

What is in-app advertising?

In-app advertising (IAA) refers to the strategic integration of advertisements within mobile apps. This monetization model is particularly popular in the mobile game industry due to the prevalence of free-to-play games that monetize through ads, in-app purchases, or a mix of both.

This form of advertising allows publishers to monetize their apps by displaying various ad formats directly within the app experience. While traditional banner-style ads exist in mobile apps, modern IAA is often more interactive and engaging, as it intentionally enhances the user experience rather than disrupting it.

💡 Fun fact: According to our 2023 Mobile Gaming Loyalty Report, mobile game ads are the most popular discovery source for mobile gamers, with just over a quarter (25.7%) reporting that they actively pay attention to in-game ads no matter what type of game is being advertised. The audience’s focused attention here makes this an effective strategy for mobile game publishers to both acquire new players and monetize their games.

What is an IAA-based monetization model for mobile games?

An IAA-based monetization model is a type of freemium model for mobile games in which players can install the game for free while interacting with ads integrated throughout the gameplay experience. While players don’t pay for the app with this model, a publisher still makes revenue by selling ad placements in the game.

According to Data.ai’s State of Mobile Gaming 2024 report, mobile game ad revenue is forecast to reach $402B in 2024 – an 11% increase from 2023 – indicating that an in-app-advertising-based monetization model for mobile games is a solid path to explore for building revenue.

👀 Related reading: Play and profit: A developer’s guide to in-app purchases for mobile game monetization

How does in-app advertising work in mobile games?

The process of displaying ads from one app publisher to the players of another publisher’s game is a tricky one that involves a whole ecosystem of advertising partners, alongside the mobile game publishers themselves.

Who is involved in in-app advertising?

  • The publisher is the company that has built ad placements into their mobile game for advertisers to display ads in.
  • The advertiser is the company that is advertising their product/service.
  • The data management platform (DMP) collects, organizes, and analyzes data related to user behavior and preferences that enables advertisers to target specific audience segments, optimize campaigns, and enhance overall ad performance.
  • The demand-side platform (DSP) allows advertisers to purchase ad inventory across multiple ad exchanges in real time, so that advertisers can reach target audiences effectively with automated bidding processes.
  • The ad exchange is the digital marketplace where publishers and advertisers come together to buy and sell ad inventory, with the exchange facilitating real-time bidding (RTB) processes.
  • The supply-side platform (SSP) allows publishers to manage and optimize their ad inventory and connect with multiple ad networks, demand sources, and ad exchanges.

How does in-app advertising actually work?

  1. A mobile game publisher strategically embeds advertisement slots within their mobile game.
  2. A player reaches one of those points in the game where an ad is set to appear.
  3. The game sends a request to a mobile ad network or ad exchange.
  4. The ad network/exchange utilizes algorithms considering user data and game context to select the most suitable ad.
  5. The chosen ad is displayed on the player’s phone within the game.

Finally, if the ad is relevant, engaging, and enjoyable, the player would ideally click on the ad to install the game or purchase the product or service advertised. Advertisers and publishers alike can then track the effectiveness of ad placements and campaigns with the metric of “eCPM.”

💡 Fun fact: According to the 2024 Mobile Gaming Spender Report, the top reason for a mobile game IAP spender to engage with an ad is that it has relevant gameplay they think they would enjoy (72%) and eye-catching visuals (32%).

What is eCPM? 

The metric eCPM stands for “effective cost per mille” and measures the ad revenue based on 1,000 ad impressions within the game, making it one of the most important metrics to know within IAA monetization.

In an in-app advertising monetization model, advertisers set a price to pay publishers per 1,000 impressions of the ad. In turn, publishers can use eCPM to assess how well the ads are performing in terms of the earning power of that ad’s real estate in the game. If an ad placement has a high eCPM, that means it’s performing well for advertisers, and you can charge advertisers more for that slot as it’s proven to be effective.

On the flip side, “CPM” (“cost per mille”) is used by advertisers to control their spend in an ad campaign, as it refers to a predefined cost they pay for every 1,000 ad impressions.

Other popular cost models and metrics within in-app advertising include:

  • Cost per click (CPC) in which the advertiser pays the publisher every time a player clicks on an ad. 
  • Cost per install (CPI) in which the advertiser [pays the publisher when a player clicks the ad and actually installs the app/game
  • Cost per action (CPA) in which the advertiser pays the publisher when a player interacts with the add, installs the app, then completes an action within the game 

6 types of mobile game ads

1. Playable ads

A playable ad is a popular type of in-app ad that allows players to actually experience gameplay through the advertisement displaying a mini version of the game. For example, a Match 3 game could offer one match board for players to engage with through an in-app ad. This ad introduces them to the mechanics and concepts of the title, so they’re prepared to jump right in.

While playable ads are a popular choice in the gaming space, only 16% of mobile game spenders cite interactive elements within an ad as a top motivator for installing a game, according to Mistplay’s 2024 Mobile Gaming Spender Report. Instead, ensuring that the ad (playable or not) is relevant to the audience and includes eye-catching graphics and animation is even more essential than just making the ad an interactive experience.

2. Video ads

Video ads are short clips that play within a mobile game ad. They’re not restricted to just showing gameplay either, and often consist of user-generated content like paid endorsements or skits between paid actors. While this is a popular way to advertise your game through video without focusing solely on gameplay, you should keep in mind that players do become frustrated with “fake” gameplay footage. In fact, 72% of players report that seeing actual gameplay footage in ads is crucial, as per our 2023 Mobile Gaming Loyalty Report.

Rewarded video ads, or video ads that offer in-game rewards for a player to engage with them, are another effective monetization strategy. One 2021 study by ironSource found that “Rewarded video has the most profound effect on retention of any ad type. 30-day retention steadily increases with each video view, ranging from 53% to 68%, which is 3.5–5 times greater than the benchmark.”

👀 Related reading: What are rewarded video ads and how do they work?

3. Interstitial ads

Interstitial ads are full-screen mobile gaming ads that appear generally during natural breaks in gameplay, such as between levels, during a loading screen, or following a “game over” message. An interstitial ad can take different forms – from video or static ads to playable or rewarded advertising.

When it comes to the placement of interstitial ads, Google AdMob recommends that they be placed between different levels, and strongly suggests that those ads between levels appear before any “Continue” or “Next level buttons” to reduce accidental ad clicks.

Interstitial ads are a popular in-app ad type due to their ability to drive results, in part thanks to their natural placement within the gameloop. For example, when Brighthouse integrated interstitial video ads in White Tiles 4, they grew their revenue by 130%, with interstitials now accounting for 60% of their app income.

As of December 2023, interstitial ads on Android apps in the US have amassed an average eCPM of $12.81 USD.

4. Rewarded ads

Rewarded ads are a form of IAA that encourages players to engage with an ad in order to receive in-game benefits, like in-game currency or special items. Rewarded ads are particularly popular in-game ad types as they’re a win-win-win for the player, publisher, and advertiser. This is because the player is more likely to engage with the ad in order to receive the in-game rewards.

The numbers back this up too, with Business of Apps reporting that rewarded playable ads have a 37% lower CPI and a 2.5% increase in return on ad spend (ROAS) when compared to non-rewarded ad inventory used for app-to-app promotion.

When it comes to placing rewarded ads in your mobile game, Unity reports that more than half of rewarded ad placements (55%) are between levels, and some of the best rewards provided from this type of ad to prompt engagement are in-game currency and gachas.

As of December 2023, rewarded ads on Android apps in the US have an average eCPM of $14.39 USD.

👀 Related reading: Rewarded advertising: The complete guide for mobile marketers

5. Banner ads

Banner ads are a type of mobile gaming ad that appears at the top or bottom of the screen during gameplay – very similar to banner ads you might see while browsing the web. While banner ads tend to be more simple, often with just static text and images, the format does also support video.

This type of ad is more effective for games with simple mechanics and short gameplay loops as they can be present during gaming sessions without interfering with the player’s engagement or interactions.

One thing to consider with banner ads is “banner blindness,” which is a phenomenon where players have learned to subconsciously ignore banner ads during their mobile game, app, or web browsing experience.

As of December 2023, banner ads on Android apps in the US have an average eCPM of $0.86 USD, making them one of the weaker performers in terms of in-game ad types.

6. Intrinsic ads

Intrinsic ads are a newer, non-disruptive format for in-game ads. They are less intrusive and more seamlessly built into the gaming experience by design, so as to blend into the game world directly. The appeal here is that they appear as natural elements of the environment, much like billboards along the boards of a hockey mobile game.

Intrinsic ads are most suitable for games made up of digital worlds for players to explore, where in-world advertisements wouldn’t look too out of place. Think of Sports, Racing, or Simulation games.

💡Fun fact: A 2023 report by Tinuiti found that 15% of gamers would prefer brand ads featured intrinsically in a game, such as through stadium banners or billboards in a game map.

Find loyal players and foster long-term growth with Mistplay

When it comes to advertising your mobile games through IAA, crafting a strategy tailored to your game genre and audience is crucial, but the journey toward long-term success really lies in cultivating player loyalty to your game. By partnering with a loyalty-first UA and engagement platform like Mistplay, you can reward players for playing (and spending) in your titles to increase your LTV.

Read up on how publishers like VividJoan Games achieved 10% higher ROI with Mistplay and contact us today to unlock the power of your player loyalty.


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