Ad Monetization & In-App Purchase: Two Worlds Converge

In-app purchases and in-app ads have traditionally been two very different monetizations strategies for publishers — but they’re starting to converge, especially for gaming apps. Last week, Noam Yasour, MoPub’s Managing Director UK, presented a talk on this topic at Casual Connect Tel Aviv. Read on for key highlights, and catch the full video below.

For app publishers who have traditionally only used in-app purchases, it’s time to consider adding ads to their monetization strategy. Here’s why.

1. It’s become increasingly tough to build a profitable app business using in-app purchases alone.

  • User acquisition costs are increasing. According to Fiksu, cost per install hit well over $4 on iOS in Q4 of last year. We’ll have to see what this year’s Q4 data looks like, but rising user acquisition costs is certainly a challenge across the board.
  • The majority of users never pay for content. On average, only about 5% of users ever make in-app purchases, according to research from AppsFlyer.
  • Mobile game revenue is slowing. eMarketer found that growth of in-app purchases for games has dramatically slowed over the past three years.

2. The in-app ad experience is better than ever.

  • A few years ago, mobile in-app ads were predominantly limited to poorly-designed banners and interstitials. Today, publishers can choose from a wide variety of engaging ad formats to complement their user experience, including rich media formats, rewarded video, native, native video, and playables.
  • Using these engaging, mobile-first ad formats can not only increase your profits, but also increase user retention. A few examples from our clients: by using rewarded video, Ubisoft was able to double user lifetime value (LTV), and Magmic saw user retention increase up to 71%.

3. Brand spend is moving into mobile.

  • Not only is time spent moving increasingly from desktop to mobile, but comScore has also found that mobile ads are 2-3 times as effective as desktop ads in raising key brand metrics such as aided awareness, likelihood to recommend, and purchase intent.
  • Not surprisingly, brands are taking notice. For the first time, earlier this year we saw Fortune 1000 brands represent the majority of advertiser domains for certain formats on MoPub Marketplace, from 43% in Q1 to 66% in Q2.

It all adds up: publishers need to monetize all their users, not just the small percentage who make in-app purchases; and thanks to great ad format options and increased ad spend, ads present a more valuable opportunity than ever. App publishers who have been relying solely on in-app purchases to monetize should consider exploring ads, and publishers already using ads as a part of their monetization strategy may want to evaluate how to increase their ads usage, such as by incorporating new ad formats.

Interested in how this can come to life? Here are two examples from leading publishers.

CallApp

callapp

First Touch Games

first touch games

For a deeper dive into these recommendations and more, check out the full video of Noam’s presentation below.

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