Beyond Banner Ads Part 3: Advanced Use Cases
AdInMo Advisor Tiffany Keller continues to put monetization theory into practice reviewing top hybrid casual game Wordscapes with analysis on the use of Ad Removal IAPs and double stacking ad units
I’ll continue my meditation on the oft underestimated humble banner ad unit by answering the question: “How do I know I’m done?”
Many studios have diligently judged their optimal ad and IAP friction ROI relative to their competitors to mitigate the Substitution Effect (explained more in part 1 of this series) by balancing on the equilibrium between ad revenue, IAP, and engagement. They likely have analyzed each menu screen, wondering if they can fit another ad unit without spoiling the magic of flow states, as explained in part 2 with our deep-dive on match 3D hit Hexa Sort. There are only so many ways to optimize the design of a little rectangle, and at CPMs of about 10% of an interstitial popup many product managers are satisfied if the initial integration proves neutral for retention.
So how do you strive for more performance, more utility?
Today, banners can have anything from multiple backfills in the waterfall, transparent backgrounds to brand in game content, or deep link directly to your store to sell IAPs. This ROI on testing banners with utility for your game– such as selling IAP boosters or cross promotion to other portfolio games- is much higher if we consider banners’ position on almost every game screen as a holistic in-game messaging system. Innovative ad tech providers can integrate discrete ad units into the larger product messaging system in-game that educates players about sales, live ops, and outside brands.
Banners are non-negotiable: the evolution of the “No Ads” IAP in Wordscapes
Wordscapes, developed by PeopleFun and published by Applovin, consistently ranks top three in App Store word games with over 2M DAU (via Sensor Tower estimates) since it was released in 2017. They’ve shown solid returns over consistent banner iteration and banners role in a No Ads IAP subscription (a favourite for ad based games to incorporate as their first IAP from our Hybrid Monetization Trends report in Q2’24). They have long used banners on almost all in-game screens and had a lifetime “No Ads” IAP in their store that upon purchasing allowed the user to never view banners or pop ups again, but retain the value of rewarded video access.
Wordscapes has reached maturity as ARPDAU has risen and DAU has declined, highlighting the need for a shift to profitability gains
Over the past year Wordscapes has experimented with banners’ inclusion in the “No Ads” IAP bundle as well as the subscription duration (note this is not an automatic renewal subscription, but must be purchased each time after expiring). No Ads subscriptions are a popular choice for ad revenue dominant games that are maturing and optimising unit economics as user growth slows. Granting no ads “for life” in a growing game’s early lifecycle is easier at early stages because it promotes higher retention, payer conversion while the adLTV traded off is still low initially. A great example for this is Habby’s new game launch, Archero 2 which features a lifetime no ads IAP while growing steadily in DAU MoM. What works for a growing game, however, doesn’t often maintain the status quo over time as priorities shift to EBITDA mining for a mature game like Wordscapes today.
As DAU growth slows over the years however, the opportunity cost on that adLTV forgone by a single “No Ads” IAP rises while the benefits of payer conversion become less prominent.
To improve overall LTV for the existing player base, many games choose to make No Ads IAP a subscription product that must be paid every 7-30 days, like Wordscapes did in the past year to get the prominent ARPDAU jump in Q4’23 we see in the Sensor Tower graph above. As for banner ads- they continue to be a monetization feature that players tolerate. No one is banging on the PeopleFun doors for more banners, but by and large players don’t quit over banners either. In this paradigm of maximising unit economics, IAP bundles like “No Ads” can remain profitable by removing neutral ads from their restrictions, and only applying to truly intrusive ads. This means ad tech providers who innovate on banner ad technology, like intrinsic in-game ads, will continue to capture the market even as ad based games shift towards hybrid monetization.
Although Wordscapes DAU has been in a gradual decline since 2023, their revenue has remained nearly steady due to ARPDAU gains of close to 20% YoY. Their application of the Substitution Effect in merchandising lead to their current No Ads IAP to remove only the fullscreen popup interstitial ads that contributed to player friction while preserving banner ad revenue that is standardly accepted in word game substitutes.
In one year, Wordscapes 10xed their LTV unit economics from a single $10 purchase to remove ads forever to monthly purchases. They continue to experiment with even shorter durations that accommodate more sporadic play binges to boost conversion while also protecting ad revenue from their unintrusive banners. This move to shorten subscription length and banner exclusion from the IAP could have increased hybrid revenue from these areas by 30-40% alone. Retention was not affected by more than the margin of error according to Sensor Tower’s D1-60 retention rates in the quarters before and after banners were removed from the No Ads IAP. If Wordscapes experiments show the prominence banner ads have in their monetization strategy and its neutral effect on KPIs- why stop there?
Double stacking banner ad units with Direct Deals for Wordscapes
Wordscapes displaying both clickable banner ad and intrinsic in-game ad placement designed as a signpost
This may look exactly like my typical Wordscapes homescreen, but it’s actually using clickable intrinsic in-game ads via direct deal. Games using mediated banner ads can actually double stack their ad units with intrinsic in-game ads through a native integration, so a loss in fill rate for their mediated banner could be covered by a direct demand ad unit and at 5x the average US banner CPM to boot. If your game skews more hybridcasual, then making sure your banner fill is always covered by an impression is crucial since the contextual fill rate that AdÍnMo caters towards is often much sparser from targeted bidders. Most banner ad supply serves targeted demand, meaning users who hide their identifier (a la ATT or GAID) can suffer fill rate gaps. If you double stack your ad units with all contextual demand like intrinsic in-game ads, then you can assure players with consistent fill no matter their privacy choices.
Meditation toolsets today heavily discourage direct deals through their platform, while some no longer allow it at all, as bidders proliferate and waterfall management dries out. Diversifying your meditation infrastructure to include native or managed demand from point solution ad tech providers can ensure your direct deals actually fill at the CPM you expect. If your game shows ads from multiple demand sources that don’t talk to each other, then bidders can’t optimize your CPMs to their opaque floors as easily! This example defaults to showing an untargeted intrinsic in-game ad on a managed demand service from AdInMo, but only in the case of no fill from Wordscapes’ typical mediated banners.
Curious how in-game banners can work beyond ad monetization and drive cross promotion or IAP sales? Catch part 4 of Tiffany’s blog series featuring further in-game advertising use cases with Hexa Sort by Applovin and Spades Fever by Wildcard Games.
More…
Introducing Immersive In-Game Audio Ads
In the fast-evolving landscape of digital advertising, innovative and non-intrusive formats are becoming increasingly sought after by both brands and developers. InGamePlay audio ads are available as an exciting new feature of our latest SDK release. In this video...
Major new release from AdInMo combines player data and multi format support to become the most integrated InGamePlay platform
We've just added audio and rewarded formats to our tech stack so that publishers and advertisers can now reach and monetize players with even more formats from a single ad placement. The comprehensive InGamePlay SDK gives publishers greater choice and control on how...
A better way to game
The call to arms of NSPCC’s inaugural Game Safe Festival was ‘to help build a safer online world for young people’. Our COO Joanne Lacey participated in a roundtable of publishers & developers, platforms, industry bodies, eSports teams and influencers to play and...