Focus on what you can control to get more mileage out of your ad spend

February 27, 2019

In the era of programmatic buying, much of the monetization process has been taken out of app creators’ hands. Algorithms are doing the job for you, but that doesn’t mean there isn’t plenty to consider. Focus on what you can control, that’s the advice of Jeff Gurian, VP of Marketing and Ad Monetization at Kongregate--a leading mobile & PC game developer, publisher, web gaming portal, and creator of Kartridge, a new downloadable PC gaming platform. What’s your fill rate? How many players are engaging with your ads on a daily basis? Our host and Chief Content Officer, Peggy Anne Salz, talks about this and much more with Jeff. Learn how to create an ad experience that compliments play and doesn’t cannibalize other aspects of the gaming experience, hear about the importance of video ads, and find out which combinations are right for your gaming experience.[ultimate_exp_section title="Transcript" title_alignment="left"]Peggy: Welcome to Mobile Growth, the podcast series where frontline growth marketing experts share their insights and experiences so you can become a better mobile marketer. That's what it's all about here. I'm your host, Peggy Anne Salz from MobileGroove. And on my watch, this series will introduce you to the people who know how to drive growth.

 

It's either because in many cases, as you've heard in the past, they are themselves growth marketing ninjas, and we have them here to tell us how they do it. Or in this case, our guest is gonna tell us about the landscape that you need to function and work in, in order to achieve your goals. So in other words, how are you gonna grow in 2019 given that the landscape is so different and monetization models are evolving?

 

So my guest today is Jeff Gurian. He is VP Marketing and Ad Monetization at Kongregate. Hey Jeff, great to have you here on Mobile Growth.

 

Jeff: Thank you for having me.

 

Peggy: So I build it up. We're going to talk about what matters out there in the landscape. A lot has changed. But just to be very clear about Kongregate, you know, it's about supporting publishers but also having some of your own titles. Maybe you just want to give us an update on Kongregate because now it is, of course, a decade after you kicked off.

 

Jeff: Kongregate started in 2006 as a web gaming platform. In 2012, we evolved into mobile publishing. And by 2014 we evolved into first-party mobile publishing, having acquired two of the studios that we did third-party publishing for. For the specifics of this podcast, I will definitely talk about mobile...nothing related to the web since this is not on a preview of mobile games forum so that I will focus around a mobile supply and demand.

 

Peggy: So absolutely, Jeff, it is, you know, mobile first, mobile only. It is after all Mobile Growth. So we are going to stay on the topic of mobile, but we're looking out you know, early 2019 where we are, we're looking out into the landscape. I mean from my vantage point what I'm reading and seeing, you know, it's that tidal wave of programmatic, not only, but that's a big part of it, lifting all boats. When you look out to the landscape, Jeff, what is it? It's not only programmatic but what is it out there? What's changing? What do we need to have top of mind?

 

Jeff: Yeah, I'd like to list a few. And I think programmatic is probably a great starting point. Programmatic is definitely having an impact in the marketplace, starting first with banner advertisements and allowing a lot of the traditional remarketing programs. So you shop on Amazon, you look at a vacuum, you see that vacuum follow you around on adverts. That has crept into banner ads first and foremost, and that has helped raise the eCPMs in banners, fairly significantly over the past one to two years.

 

On the more rewarded video side, programmatic hasn't taken off in the same regard. There's right now no one producing kind of remarketing videos. Again, the Amazon example, you're not seeing that vacuum follow you around into video format. It's probably a matter of time before that happens, but that's not happening quite yet. What is happening on the rewarded video side, that is the programmatic real-time is kind of benefiting, is it's eliminating a lot of the guesswork that's been done in the past.

 

So prior to the past year, year and a half, you had two systems making guesses as to performance. The first one being the network supplying the ad would generally have to figure out the eCPM that that ad was backing into, and that's a combination of what the buyer was paying and how the ad was converting. And they would then make that conversion to eCPM.

 

But you also have platforms like mediation platforms, estimating how the eCPM would evolve over time, because the networks that were supplying the ads weren't providing with real-time bids, the mediation platforms and systems were looking back historically how ads were performing and optimizing based on a historic look-back window, which was fairly inefficient, because that window could change or that window could be replaced with a new, higher performing ad that would then take the mediation system some time to catch up with.

 

So real-time bidding has enabled at least the networks supplying the ads to come forth with a bid in the real-time and eliminate some of the guesswork that the networks and mediation platforms were having to do to figure out what the best CPM and ad combination was to show to a user at any given time.

 

Peggy: So we're more efficient because it's now near real-time, it's real-time bidding. But you know, it's much, much better. Are you proposing to listeners, of course also but also the publishers that you're working with to monetize their games more effectively and more efficiently? Are you saying look at eCPMs buying on CPM basis, or is it still very much CPI?

 

Jeff: Well, the buyer in gaming at least, the buyers who are serving the most of the advertisements at least on rewarded video, this a little bit different for banners. But on rewarded video, the bulk of the impressions is still going to gaining advertisers, and the bulk of those buyers are buying on a CPI basis. So then it's up to the networks that the buyers are buying from to convert that CPI to an eCPM.

 

And the real-time bidding environment has just helped them get more efficient. So on the supply side, you still want to look at your eCPM, it is still important, but it's just one of the components of many metrics, you should also be looking at your fill rate, engagement rate, and other KPIs to help maximize your ad revenue. The programmatic real-time bidding again just helps the systems that are doing the bidding become more efficient at doing the bidding, which in turn leads to better eCPMs on the on the supply side.

 

Peggy: Your formula, your algorithm for success as it were, I mean, is this what you're watching, what you have top of mind, or do you take a different approach may be to extract even more value out of your buys?

 

Jeff: That's a good question. We kind of take a different approach. The programmatic improvements that I mentioned are very nice, and they've definitely lifted overall revenue. But by and large, they're out of the control of the game developers. You can't ultimately impact who's buying ads on your app. You can block people for sure. But you can't go to networks and say, "I wanna see an ad from this advertiser," it's kind of up to that advertiser to decide if the app they're buying on is performing for them or not.

 

So really, because that is a little bit outside of the control of developers, what we tend to focus on are the things we can control, and those are looking at deep KPIs for ads, similar to how you would look at deep KPIs for game performance. In a game performance you might look at D3, D7, D21 retention, what are the buying rates, what do tutorial completion rates look like? We have the same set of KPIs for our ads. And amongst those are...CPM being one, fill rates. How many percentage of your ads that are being filled by ads. And that is important because if you have too low of fill rates, those are ads that are not being displayed, and that's revenue you're not earning.

 

The other elements we look at are things like how many players per day you are engaging with ads. And we have some targets on that, we try and generally don't want to go too few because that means you're leaving ad opportunities and revenue on the table. But you don't want to go too many either where people are just watching ads and potentially cannibalizing other aspects of the gameplay. We also look at...so that ties into how many impressions per daily active user people are watching.

 

And then the overall engagement rates with different ads and ads units. So what percentage of DAU are looking at ads at any given time? That percentage varies by game type, but that can range on the low side 40%, on the high side 80%. And that's again, how many users are watching those ads. And you can also do things within the game to encourage that percent of users who are not engaging with ads just to watch more ads or to watch ads in the first place. Things like CRM popups, in-game messaging, letting people know about the rewards they're missing out on because they're not watching ads. So we tend to look at those as core KPIs that every game should strive to achieve that in turn helps maximize the ad revenue.

 

Peggy: It's not a fear to show ads to players. Whereas, you know, just a year ago, it was like show ads, but you'd have to figure out something so you're not annoying your players with ads. But in many cases, I'm seeing reports that say, you know, there is a level of that being okay. There's also a level of that being overkill. I'm hearing from you that you can show ads to players, just take it carefully. Is that your advice here?

 

Jeff: Yeah, and that again would vary significantly by game type. A super casual game, like word games, tend to have very high DAU, and because they have a very basic mechanic there's not a lot you can add on with additional ad placements. So that's where a placement like a banner ad or interstitial video would be perfectly appropriate.

 

In more hardcore games, the ads become complimentary to gameplay, and that's how we kind of strive to make them integrated, so giving away boosts, giving away time reductions. One thing we never do is tie ads to currency because then users will just watch ads in lieu of purchasing currency, and it also devalues your currency just because if a user does that, if they watch a number of ads in a row, each ad is devalued relative to the ad prior in terms of how much money you're gonna make. So you're basically effectively losing currency by making less on each ad view.

 

So one thing we strive to do is make sure the ads are, at least on rewarded video, are completely decoupled from any currency action and are more tied to boost, timers and other things you can get through an ad that have a good amount of value to the player but something that they maybe might not spend hard currency to purchase.

 

Peggy: That's a really good piece of advice, because if you think about it, people are going a little...well, I wouldn't say we're going crazy with rewarded video, but I'm hearing and seeing so much about it and how to do it, and it's basically you know reward, and it's working, and make it worth their while to stay in. But it's also really important not to give away value for free. We do have to go to break right now, don't go away. We'll be right back.

 

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Peggy: And we are back with Jeff Gurian. He is VP of Marketing and Ad Monetization at Kongregate. And we got on the topic of ad formats because it's so hot. I mean mobile video you know hailed as the hottest revenue generator for 2019 and for the industry overall formats. Now we don't have to go down to the campaign level, but I would love to hear from you about the top performing formats from your vantage point, maybe from your experience. I mean video, what is it Jeff, that's the number one for 2019?

 

Jeff: Yeah, video has been 90% plus of our ad revenue for the past two or three years now.

 

Peggy: Wow, that's quite a large number, I wasn't expecting that. So video is definitely crushing it. What about banners? I'm hearing that there's a lot of mileage left in them, particularly if you work on the creatives and mix up the creatives very, very frequently. What is your view?

 

Jeff: Yeah, banners have their place in certain games. And we do cater ad units per title, so we don't take the approach of every game will have every ad unit. Our super casual games will have...could include banners, they could include interstitial, we generally lean towards video interstitial just given the higher CPMs on those. Pretty much every game we have will have a rewarded video component. And the higher-end games, and I kind of count this as an ad unit, but the higher like IAP-driven, mid to hardcore games will also have an offer wall.

 

And that's a little bit separate from a traditional ad unit, but it does contain advertisements in it, and it is a decent driver of revenue, especially for IAP titles that have a strong economy because users can use the offer wall to get a taste of their currency. They'll do a few offers to get kind of their initial reward, and they'll eventually get tired of doing that and go back and purchase hard currency, and we actually see a much higher conversion rate to purchasing hard currency from users who interact with the offer wall first.

 

So that would be kind of on the high end, but offer walls don't really have their place in casual games that don't have that rich economy. So it's kind of finding the right ad unit to fit within the game itself rather than taking a shotgun approach and putting in every type of ad you can just to see if you can maximize your ad revenue. Ultimately, that will do the game a disservice.

 

Peggy: Are there certain combinations that work better together? Because you mentioned you know offer wall. I imagine you can do offer wall and still be doing some display and you know mixing it up, you don't have to have one type of ad per game.

 

Jeff: Yeah, yeah of course. And we generally if you look at the three major ad units...I think it's four, banners, interstitials, rewarded video and offer wall generally are casual. And most casual titles will have banner, maybe interstitial, definitely rewarded video. And more hardcore or mid-core titles will have rewarded video and offer wall. That doesn't mean you can't have an offer wall on a casual title, you just need to make sure that there's enough that the user can buy through the offer wall to make the offer wall placement worthwhile.

 

If you only have two things to purchase in your shop and they're both five bucks, users will use the offer wall to get those $5, purchase and they don't interact with it again, versus a kind of a more hardcore or mid-core game that's constantly coming out with new features, content, and new things to buy, the offer wall generally then has a permanent value because users can keep coming back to it to complete offers and get their currency. So again, it's trying to find that right mix per title. The other element that we're kind of exploring this year too is native ads. And again, we think that's something that will fit more in the casual titles than anything, but we'll evaluate those on a title by title basis also.

 

Peggy: How would that fit with casual? I mean, I know native and I know where it fits really well in sort of like games that are more focused also on becoming their own brand as well, that seems to be a really good fit. But some of these titles aren't thinking that long-term or might not even be designed to be long-term, so what would native in casual for example look like?

 

Jeff: Yeah. A native ad would just be kind of a built-in placement within the app itself that shows off the small ad unit. And the thing that you have to remember between native ads and banner ads is the CPMs on those are on the low end. And so to really effectively make money from those ad placements is you really need to have good DAU base. So, new users coming in, feature traffic, however that is.

 

If you get a bunch of installs and then don't support the game through UA and it trails off, you're not going to have enough DAUs to really show meaningful impressions to make meaningful ad revenue from those placements. So things like native and banner ads, the reason we put them mostly in casual games is because they tend to have the DAU levels to support those ad units to make sufficient revenue from them to make it worth your time.

 

Mid to hardcore games generally are because it's more expensive to acquire users in those games, don't tend to have as high a DAU, and making it more difficult to earn money from those native ads and banner ads. Also because those games tend to be driven by IAP you tend to be able to make a lot more through driving IAP purchase than even by showing just those...the lower payout ads. So because they do pay out so low, we tend to keep them out of games of smaller DAU or games that are more IAP driven just because we don't want them interfering with those purchases at all.

 

Peggy: I think your high-level advice here is really valuable, Jeff. I'm really also enjoying the fact that it's so incredibly straightforward. It's like, this is the way it is. So based on the fact that you have, obviously vast expertise in this area, I would just be very interested in a growth hacking tip or trick or shortcut from you without maybe giving it all away. But I imagine there are some combinations maybe of ads or approaches, something that's gonna move the needle that our listeners would benefit from, and maybe that has even surprised you.

 

Jeff: Sure. Well, first and foremost, I would suggest using a mediator. And mediation platforms are just kind of an aggregator of one tech that wraps up different network SDKs allowing you to put in multiple SDKs and manage those networks from within one platform. There's a lot of good mediators out there, I'm not going to lean on...we tend to lean on one just to simplify things from a portfolio standpoint, but there are a lot of good mediation platforms out there, and it's just a way to simplify the management of ads.

 

The other thing you want to keep an eye out for is to have the appropriate number and the correct networks in your ad stack. So we generally tend to aim for a minimum of five, but usually maximum of seven networks within any one game. And once you get by seven, you tend to not really see any meaningful lift beyond those. A lot of these networks tend to get the same campaigns from the ad buyers, so you tend to see a lot of the same traffic. There are a few gotos that we would recommend for pretty much any app like the Facebook audience network was pretty much universal in all of our apps at this point.

 

And then after that, it's kind of going through for the remaining network spots to fill, you should look at each network's strengths or weaknesses because there are certain networks that work better or worse for certain app types. So without going into specifics around all of them, but there are networks that specialize more in casual apps and there are networks that kind of tend to get more of the hardcore traffic. So it's kind of doing your homework to figure out which of those networks would be appropriate for your app.

 

And again, that's where having five to seven of these networks put in place will help, because if you're not sure you can generally get a good idea, and at least you have enough redundancy and alternative traffic sources that if one of the networks doesn't pan out as planned, you still have two, three, four other ones that can make up the slack by having one network underperform.

 

And then to that, you should always be evaluating your network stack looking at who else to be putting in, who could be taken out, who's not performing consistently. You know, one thing we've been doing a lot of is adding AdMob to a lot of our titles. They've come a long way in the past two years, and they have a lot of brand new inventory. And so we're playing around with putting them in more titles as a way to kind of fill with some ad units that we traditionally haven't gotten from the game-specific performance networks.

 

Peggy: And also in that stack, we'll call it your network stack because it's got a mix of different types of networks. I mean, Facebook is probably always a given just because of what it is, what it offers, the reach, the look-alike targeting, the whole works. You mentioned AdMob as well, but could you maybe define what types of ad networks belong in there? I guess we need a video ad network, we need a couple of X and Y. Maybe just give me the formula for establishing my mix.

 

Jeff: Yeah, that again could vary by app and also by which type of ad units you are going to be supporting in your app. So if you are heavily into banner ads, you probably want to find a way to get MoPub integrated because that's traditionally where they are very strong in. If you're heavily rewarded video, MoPub might not be the best network to go with at this point in time. They're expanding it, but they're just not quite there relative to some of the performance networks.

 

You know, and then performance networks you have your standard list of Unity, AppLovin, IronSource, Tapjoy, Bungle, Chartboosts of the world. And it's again figuring out what are the ad units in place, and then what are the strengths and weaknesses of those ad units. A lot of them say they can support all different ad types, but truth be told, some are just much stronger in rewarded video and much weaker in banner ads. So if you do have all the ad units in there, you probably need a pretty good mix of networks just because you'll need...those networks will have different strengths and weaknesses to support that ad type.

 

If you are more limited, say you just have rewarded video, you want to try to identify the networks that have strength in rewarded video and make sure that those are integrated. So again, it's kind of an evaluation on the title and network level, and not just throwing in a bunch of networks because those are the ones you have heard of or because they have an industry known name. It's really matching the networks to the game and the ad types.

 

Peggy: Is there something different that we need to be doing this year as opposed to all the years before? Because your advice is very much on the money, but things are changing out there. Maybe there's a tweak or a twist to your advice that we need to know about.

 

Jeff: Yeah, probably the main key one I think that we'll be playing around with this year is the number of ad impressions users watch in a day. In the past, we would cap that, we would only...our best practice was to let users watch no more than seven to eight ads per day. And that again is related to the decay in ad revenue you see from subsequent impressions. So your first impression is always the most valuable, and then every subsequent impression goes down in value from there.

 

So basically what we were seeing is beyond eight or so impressions, the value of the ads that we were showing were so low that it just wasn't worth it. We would actually rather have the user cap out on ads, not be able to watch anymore, and force them to come back the next day and restart the ad watching process because it resets the eCPMs and you started back at the highest paying ad unit again.

 

But now with the rise of like Facebook and AdMob is they're bringing more brand ads into the fold, and those brand ads, although the CPMs are not as good as performance ads, those brand ads are pretty good and could be used to shore up your later stage impression. So rather than making one-quarter of a cent off your eighth impression, now you might be able to make $2 or $3 because you're showing a brand ad there instead.

 

And so one thing we're gonna be doing is looking to push kind of the envelope of instead of capping out at say eight ads, what happens if we go to 10 or 12 or 13? Is there enough brand inventory and can CPMs maintain themselves for us to let users watch more ads without us taking a consumer hit in revenue, and see if we can eke out more revenue by having those stronger brand campaigns shore up those later eCPMs.

 

Peggy: There's probably also the advantage of having branded ads that will probably be stronger or at least more creative, potentially more interesting, entertaining. I mean, it might not seem like an ad, is that also a thought here?

 

Jeff: I do think they do seem like an ad, but you're definitely right, it does mix up the ad inventory mix. And in gaming, I think the past two or three years because the ad landscape has been dominated by the gaming ad networks, all users would see, if they watched eight ads a day they would see eight gaming ads. And now at least you're able to mix in e-commerce, you know just other...TV, entertainment, film. So it just kind of varies the ad stack and doesn't make it so reliant on gaming advertisement for you to make kind of good ad revenue from.

 

Peggy: Well, Jeff I've really enjoyed this. I hope to have you back again because there's something to be said for just straightforward, actionable advice. This is the way it is, this is what you need to look for, this is how you mix it up. This all makes perfect sense. I'm sure our listeners will want to come back to you, follow you, find out where you're writing or sharing your insights. Where would they get in touch with you? What's the best way?

 

Jeff: Specific question on ad themselves, they can write to us on mobileads@kongregate.com. They can also check out our Kongregate blog, we have a specific section on the blog about ad monetization. So I think it's just blog.kongregate.com/monetization.

 

Peggy: Well, I'm going to make that into my regular read because this has been very valuable. And listeners, thank you for listening in to this episode of the Mobile Growth podcast. A quick reminder to visit mobilegrowthsummit.com for a complete list of our upcoming events. And don't forget to use the very special promo code MGSPODCAST30 for 30% off of your offer.

 

We hope to see you there, and we encourage you to check out this and every episode of our series by going to mobilegrowthsummit.com or checking it out on SoundCloud, and coming soon to more channels, providing you more ways to listen in. And you watch for that, we'll watch for you, and we'll see you soon.

 

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