In-game advertising: The good, the bad, and the marketing impact

In-game advertising, if done right, can be a win-win for both developers and players. Discover how.
pc monitor with digital marketing writing on the screen

Ever played a game on your phone, and then bam! You’re hit with an ad out of nowhere? Of course, you have, and you’ve likely even found yourself wondering about the advertised game and installing it later. Welcome to the reality of the in-game advertising monetization strategies — a game-changer like a well-timed power-up. Developers love it because it keeps the coin coming in, and if done right, players don’t mind it either. After all, who wouldn’t want a few extra coins or an extra life in exchange for watching a quick ad? Let’s dive into this world of in-game advertising, exploring its treasure troves and dodging its pitfalls.

What is an in-game advertising monetization strategy?

In-game advertising monetization strategy involves integrating ads into an application (a game in your case), allowing the app developer to earn revenue whenever users interact with these ads. Different ad formats include interstitial ads, banner ads, video ads, native ads, rewarded ads, and playable ads. The revenue model primarily involves the Cost per Click (CPC), Cost per Mille (CPM), Cost per Install (CPI) or Cost per Action (CPA) strategies.

You might be wondering, “Alright, but how does this all play out in reality?” Picture this: you’re a mobile game developer. You’d weave a monetization strategy into your game by deciding to display video ads at key moments – maybe after the completion of a level or during a pause in the action. Now, here’s where it gets interesting: You introduce rewarded ads into your game. So, let’s say a player is out of lives, an ad pops up offering an extra life in exchange for watching it. Players get to continue their game, and developers get their ad revenue. It’s a savvy move that creates a power-up for developers’ earnings while letting gamers level up. In other words, it’s a high score for everyone involved.

Benefits of in-game advertising monetization strategy

The main benefits of this strategy include:

  1. Revenue generation: The primary benefit is the generation of a continuous stream of revenue. This strategy helps developers to monetize users who wouldn’t otherwise make in-app purchases. For example, consider a popular free-to-play game. Not every player is going to shell out cash for that shiny new skin or that unbeatable weapon. But by displaying ads, developers can earn revenue from every player, not just the ones digging into their pockets for in-app purchases. It’s like having your cake and eating it too, but in this case, the cake is your player base, and eating it is making money from them.
  2. User retention: Reward-based ads can increase user retention. These ads incentivize users with bonuses or power-ups, keeping them engaged and more likely to continue using the app. Let’s say a player of a challenging puzzle game is stuck on a level. They’ve tried all possible solutions, but they’re about to throw in the towel. Suddenly, an offer pops up: “Watch this 30-second ad for a hint!” Relief washes over our player as they happily sit through the ad and get that much-needed hint. They remain engaged, keep playing, and are more likely to come back for more, all thanks to a well-placed rewarded ad.
  3. Targeted advertising: Since mobile apps gather user data such as location, interests, and behavior, advertisers can use this information to target their ads effectively. This benefit is like a homing missile aimed right at the players who’ll appreciate it most. 

Challenges of in-game advertising monetization strategy

However, there are also challenges involved:

  1. User experience: Ads can be like that uninvited guest at a party – nobody wants them around if they’re ruining the fun. Invasive ads can disrupt the game experience, turning an engaging boss fight into a frustrating ad-watching session. It’s like trying to walk a tightrope – you need to strike a balance between displaying enough ads to generate revenue without negatively impacting the user experience. Imagine a player engrossed in an immersive action game only to be constantly interrupted by ads. They might quickly abandon the game, preferring to find another one with fewer interruptions.
  2. Privacy concerns: Now, here’s a boss-level challenge. In our increasingly digital world, user data privacy has become a significant concern. The changes to Apple’s iOS privacy guidelines, for example, have shifted the landscape of targeted advertising. With the introduction of App Tracking Transparency (ATT), apps now have to request users’ permission to track their activity across other companies’ apps and websites. This makes the once-reliable method of behavioral targeting more challenging for advertisers. Developers must navigate these ever-changing privacy policies and ensure they’re compliant to avoid fines, maintain user trust, and keep their reputation intact.
  3. Ad fraud: This one’s a sneaky villain lurking in the shadows. Ad fraud, such as click fraud or fake installs, is a rampant issue in the digital advertising world. Imagine being a game developer spending significant amounts on advertising, only to discover a chunk of your ad interactions is from bots, not real users. Your hard-earned money is going down the drain, and you’re not reaching your real audience. It’s like casting the perfect spell in a game only to find out you’ve been hitting a ghost. Not only does this cause a dip in your revenue, but it also reduces the overall effectiveness of your ads. This challenge calls for constant vigilance and the use of reliable anti-fraud solutions to keep these digital tricksters at bay.

How can in-game advertising be utilized in different genres?

In-game advertising isn’t picky; it can level up revenue generation across virtually all mobile game genres. However, some genres hit a high score when it comes to effectively utilizing this strategy.

  1. Casual and hyper-casual games: Think quick, addictive gameplay with a huge player base – the perfect environment for frequent, short ads. Since these games are generally free, displaying ads can keep the income flowing while players keep coming back for ‘just one more round.’
  2. Puzzle games: Here’s a genre where players and ads can solve the monetization puzzle together. When gamers are stuck on a tricky level, watching an ad in exchange for a hint or level skip can be a welcome option. It’s a scenario where the player gets help, the developer gets revenue, and the advertiser gets eyeballs. Talk about a win-win-win!
  3. Strategy and RPG games: In the intricate worlds of strategy and role-playing games, in-game ads can become useful power-ups. Whether it’s speeding up game progression or getting rare in-game items, players might be more than willing to sit through an ad. The result? Enhanced player retention and consistent ad revenue. 

It’s crucial to remember that in-game advertising isn’t a one-size-fits-all solution. The genre of the game, the temperament of the players, the trends in the industry, and the shifting sands of privacy regulations – all play a part in determining the effectiveness of this strategy. In the end, the key to a successful in-game advertising monetization strategy is understanding your audience and offering them value, even when serving them ads. When done right, it can turn into a rewarding journey for both game developers and players, unlocking new levels of engagement and revenue generation. It’s the ultimate proof that, in the gaming world, the game’s never truly over; it just evolves into something even more exciting.

So, ready to take on this next-level challenge? Let the games begin!

NEXT: Unlocking mobile game user acquisition victory with CTV advertising

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