As of 2024, the mobile app market has continued its rapid expansion. During Q3 2023, the Google Play Store had 2.43 million apps available. In comparison, the App Store offered more than one million gaming apps and 3.83 million non-gaming in July 2023. 1,2 This rapid growth intensifies competition, compelling developers to explore various strategies to stand out and monetize effectively.
One of the critical decisions game developers face is whether to allow or block competitors' ads within their apps or games. This debate concerns potential trade-offs between maximizing revenue, maintaining a positive user experience, and allowing competitors to take advantage of your user base.
Conversely, blocking competitor ads could help retain players within the ecosystem but at the cost of missed ad revenue. Understanding the nuances of this decision is vital, as it impacts both the financial health of the app and the overall player experience.
In this article, we’ll provide a thorough examination of the pros and cons of showing your competitors’ ads in your game or app, aiding developers in making well-informed choices.
Choosing to block competitors' ads is a strategic decision that is influenced by several factors, including user retention and in-app monetization. One of the primary concerns is the potential negative impact on user retention and experience. For instance, the influx of competitive ads could lure players away, reducing the time they spend in the game and, consequently, their likelihood of making in-app purchases. Given that the main install driver for casual games are ads shown in other casual games (91% to be specific 3), developers are particularly wary of losing their player base to competitors offering similar casual or hybrid-casual experiences.
Moreover, the fear of losing players is not unfounded. For example, data shows that hyper-casual games, while dominant, are seeing a shift toward more engaging hybrid-casual models. This shift means that even a slight distraction from a competitor's ad can result in a player migrating to another game or appwith similar but perhaps more enticing features.
This migration can be particularly damaging for games or apps that rely heavily on retaining a dedicated user base to drive in-app purchases and other forms of monetization. For example, games that integrate features like competitive events and regular content updates need a stable and engaged user base to maintain their revenue streams.
Another critical factor is the potential negative impact on in-app purchases and player loyalty. Allowing ads from competitors can dilute brand loyalty, especially if players are reminded of alternatives that may offer better rewards, gameplay, or incentives. This situation becomes even more concerning when considering that upgrading an app's rating by even one star can increase conversions by up to 89%, as players are more likely to trust and invest in apps with higher ratings.4
While all these concerns are valid, players naturally explore various games and apps, often keeping multiple titles on their devices, reflecting a fundamental aspect of gamer behavior: they seek diverse experiences. Instead of resisting this tendency, developers can embrace it by monetizing through competitor ads. By doing so, they earn revenue from the inevitable exploration that players undertake, rather than losing out when players find new games elsewhere.
By offering thoughtful recommendations within your app, you maintain control over their journey and potentially increase engagement. Additionally, selling ad space to competitors can be a smart financial move. It turns otherwise dormant advertising potential into profit, effectively making your competitors contribute to your revenue. This dual benefit—providing a better user experience and gaining financial advantage—makes the case for making competitor ads compelling.
Allowing competitors' ads within a mobile game or app presents a valuable monetization opportunity that can significantly bolster a developer's revenue stream. In 2024, the average cost per install (CPI) for mobile games continues to rise, particularly in competitive genres. For example, the CPI for puzzle games is approximately $2.23, while simulation games hover around $1.77. 3 By hosting ads, developers can capitalize on these high CPI rates, earning substantial ad revenue from each click or impression.
Moreover, the hybrid monetization model, which combines in-app purchases (IAP) with in-app advertising (IAA), has proven to be an effective strategy. This approach allows developers to monetize non-spending players, who constitute a significant portion of the user base. It offers a diversified income source, mitigating risks associated with relying solely on IAPs. For example, players who may not purchase in-app items can still generate revenue through ad views and interactions.
Understanding user behavior is critical to making informed decisions about ad strategies. Research indicates that mobile gamers often engage with multiple games simultaneously, driven by curiosity and a desire for diverse gameplay experiences. In 2024, it is estimated that the average mobile gamer regularly plays at least three different games, with genre preferences ranging widely from casual to mid-core games. 3 This behavior suggests that the presence of competitor ads may not necessarily lead to user attrition. Instead, these ads can act as a bridge, enhancing the player's gaming ecosystem by introducing them to new experiences without leaving the primary game.
Moreover, leveraging this behavior can lead to increased user satisfaction. When players are provided with relevant ads, they perceive them as valuable recommendations rather than interruptions. This perception can enhance their overall experience, making them more likely to engage with the ads and, consequently, generate more revenue for developers.
When examining your ad performance metrics, it's evident that no ad achieves a perfect click-through rate. However, this doesn't mean you aren't benefiting; with a CPM (cost per thousand impressions) model, revenue is generated every time an ad is displayed, regardless of clicks. If competitors are willing to pay for the opportunity to advertise to your users, it's worth considering their offers.
Some developers hesitate due to concerns about potentially decreasing retention rates or negatively impacting Average Revenue Per Daily Active User (ARPDAU). However, these fears are often overstated.
Integrating competitor ads into your mobile game or app can present several risks, particularly related to user retention and overall revenue. While these ads can provide an additional revenue stream, they may also lead to players migrating to other games or apps, potentially decreasing ARPDAU. To navigate these challenges, it is essential to employ data-driven decision-making and implement strategies to minimize negative impacts.
When allowing competitor ads, monitoring the effect on ARPDAU and retention rates becomes crucial. Analytics tools can provide valuable insights into how these ads are influencing player behavior. For instance, if there's a noticeable drop in ARPDAU following the introduction of competitor ads, it might indicate that players are switching to the advertised apps. Similarly, a decline in retention rates could suggest that players are leaving the app altogether due to these ads.
While there are inherent risks in allowing competitor ads, these can be effectively managed through careful considerations and data monitoring, primarily analyzing retention rates, IAP and IAA ARPDAU. By adopting a thoughtful and data-driven approach, developers can leverage competitor ads as a viable monetization strategy without compromising the player experience or core revenue streams.
If you're intrigued by the potential of monetizing competitor ads but are concerned about the complexities and risks involved, GameBiz Consulting can help. Our expert team is well-versed in developing tailored strategies that maximize ad revenue while maintaining a positive player experience. You can get in touch regarding your specific issues at this link.
We understand that implementing these changes can be daunting, especially when trying to avoid negative impacts on your game's core metrics. Our proven methods and continuous optimization ensure that your ad integrations are effective and seamless.
