Top 2021 trends for app growth, with game publishers leading the way
Rina Hahm, head of North America West, Facebook Audience Network
It has been a year to remember in the gaming world and beyond. In 2020, stay-at-home orders fueled mobile gaming consumption, delivering new audience insights and evolving monetization strategies.
While iOS 14 privacy changes take hold and competition increases, forward-looking gaming companies are focusing on surmounting these obstacles and continuing their growth trajectory by doubling-down on a few key opportunities in 2021.
With that in mind, what follows are three trends top mobile gaming publishers are tracking, leading the way for other gaming companies looking to monetize during this complex time.
1. App bidding adoption is rising as publishers seek more transparency and efficiency
- The challenge: Many publishers are already seeking pathways to mitigate the anticipated impact of IDFA deprecation on their revenue channels.
- The solution: Adopt bidding now to free up valuable time and resources and navigate this period of change and uncertainty.
A move to app bidding is one of the primary components of a fairer, more competitive and higher-yielding monetization strategy. But to further maximize inventory value in a less personalized world, publishers may also want to consider repackaging their inventory to optimize bidding results and mitigate the impact of CPM volatility. In an all-bidding environment, over time, yield can rise to previous waterfall levels, but it also will have the potential to climb higher. Early adopters of bidding will also be poised to monetize increased brand demand as ads oriented around higher-funnel objectives become more competitive.
As analyst Yory Wurmser stated in eMarketer’s App Monetization Trends 2020 report in September, ”The pandemic has had another effect on app monetization, which is the rise of bidding.”
While not every publisher is prepared to make that shift at the same speed, a move to bidding offers many positive benefits for the publisher ecosystem.
2. Revenue diversification is becoming a priority for balancing monetization revenue
- The challenge: While it’s impossible to grasp the changes that will come with IDFA deprecation before they occur, some gaming categories — hypercasual, for example — are expected to be more impacted than others. As eMarketer’s Wurmser reported in September: “Hypercasual game developers will need to reassess what they’re willing to bid for advertising. Eventually, many will come up with a new formula — but at a lower CPM.”
- The solution: Companies should lean on their monetization partners to better understand the growth levers for their businesses — i.e., which balance of in-app purchases (IAP) and in-app ads (IAA) will deliver the best results.
When a publisher has an exclusively ads-based model, IDFA loss should be a catalyst to explore in-app purchases as a potential revenue stream. And similarly, if an IAP-heavy model has helped a publisher reach its current stage of growth, adopting ads can help the publisher get to the next level.
For categories experiencing the highest pressure, user growth is becoming extremely important. CPM volume is one of the tradeoffs of introducing more non-personalized ads. To help mitigate CPM volatility, higher user growth spending is also a likely trend.
3. Growth for in-game mobile advertising will continue in the long-term
- The challenge: In its Global Games Market Report published in Q1 2020, Newzoo reported that mobile gaming in 2020 produced revenues of $77.2 billion and is growing 13.3 percent year-over-year. For the mobile ecosystem to continue this growth trajectory, ad adoption is critical. Relying simply on in-app purchases can lead to missed opportunities to grow monetization with player-friendly ad experiences. Continuous innovation is expensive, and to perpetuate a healthy growth loop, publishers cannot rely on a single source of revenue. Ads can provide a consistent revenue stream that allows publishers to fuel innovation over the long term.
- The solution: Focus on rewarded video to develop rich experiences and a meaningful source of revenue.
According to the Facebook-commissioned July 2020 2CV Report, “Why the Ad-Supported Model of In-game Advertising is a Win-win-win,” surveyed gamers said that rewarded video is the most useful and least disruptive ad format, leading to longer gameplay sessions and more opportunities for content discovery. And 79 percent of mobile developers say that rewarded video is their most successful format, according to a mobile games monetization study by Walnut Unlimited and published by Facebook Audience Network.
In a world where more brand demand starts entering the ecosystem, rewarded video is a flexible format that can be highly effective all the way down through direct response campaigns. In summary, opportunities to optimize and introduce new revenue streams abound for mobile gaming apps. Keeping these solutions top-of-mind will help publishers sustain growth in 2021 while continuing to create enjoyable experiences for players.