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How to win with the ironSource Growth Loop: Ad Optimization & Ad Monetization

The best mobile app monetization strategies

With more game companies merging their monetization and marketing teams in 2019, the time has come for the solutions in the market to reflect this evolution. This is where the ironSource Growth Loop comes in. The Growth Loop takes a holistic approach to app growth by merging the monetization and user acquisition sides of the business to create one virtuous and intertwined cycle of growth. 

At ironSource Gamefest 2019, Nadav Ashkenazy, VP Global Partnerships, showed participants how to scale their games by leveraging the ironSource Growth Loop. Here’s what he had to say:

Best practices for game monetization 

LTV mobile game optimization

When it comes to growing your game, one of the most important metrics to focus on is LTV. In Nadav’s presentation, he outlined 2 steps to consider when optimizing your ad strategy to optimize and maximize LTV, implementing ad units to optimize impressions per user and the waterfall. 

1. Implementing ad units to optimizer impressions per user

Nadav noted that at ironSource, we divide ad units into two categories: 

  1. System-initiated ads (interstitial ads) 
  2. User-initiated ads (rewarded video and offerwall) 

User-initiated ads tend to have a positive impact on ad ARPDAU and retention, but run the risk of cannibalizing your IAPs. System-initiated ads have an impact on ad ARPDAU, but the impact on retention may be negative, and therefore IAP cannibalization is a possibility. 

ad optimization

Ad-based games optimization

When it comes to predominantly ad-based games, Nadav suggested implementing many rewarded video placements. Since IAPs don’t bring significant revenue in comparison, the risk of cannibalization no longer exists - giving you the opportunity to enjoy the positive impact that rewarded video will have on your ad ARPDAU and retention. But be aware that since the virtual economy in these games is limited, there are only so many rewards you can offer in exchange for a user interacting with the ad. That’s why it’s important to build deep economies, as doing so will ensure your user-initiated ads generate high engagement. 

Meanwhile, system-initiated ads should be the bread and butter of an ad based game’s monetization strategy. The challenge is finding the sweet spot that balances the increase in ARPDAU and the decrease in retention when trying to maximize LTV. 

IAP-based games

For games that rely heavily on IAPs, system-initiated ads won’t increase LTV, so Nadav recommended implementing more user-initiated ads. The best practice here is to diversify the rewards offered through rewarded video and those available for purchase in your game’s economy. That way, you get the best of both worlds. 

At the same time, Nadav noted there are exceptions to the popular “no system-initiated ads for IAP games” rule. Rather, it is essential to segment users when implementing system-initiated ads. This doesn’t mean not showing paying players ads, it means being conscious of showing the appropriate ad at the appropriate time. 

For example, you can serve interstitials to non-payers or players from low-tier countries where there the risk of harming IAPs is lower, and show opt-in ads like rewarded video and offerwall to paying players. Be sure to find the sweet spot that maximizes ARPU for rewarded video and offerwall but doesn’t risk IAPs - either by tweaking pacing and capping or by making the rewards on your offerwall different to what’s available for purchase within your game’s economy. 

Learning how and when to implement ads within both ad-based and IAP-based games is crucial. You should always optimize towards maximum LTV, while being aware of ad ARPDAU, retention, and IAPs. . Nadav shared three tips: 

1- Leverage data and reporting: 

Use the user activity dashboard on the ironSource mediation platform to look at engagement rate (the percentage of users actively engaging with ads in your game) and usage rate (the number of ad impressions per engaged user) as well as impressions per DAU. Monitor how users are engaging with each ad unit, and then further break engagement down by country and by placement. Compare it to your genre benchmarks and put your focus where there is room for improvement

Additionally, use the cohorts dashboard to analyze the engagement with each ad placement throughout the user’s lifetime, finding when users usually stop engaging with user-initiated ads and adjust your strategy accordingly. 

2 - Segmentation is key: 

Segment your users based on their behavior and demographic, and then personalize their rewards based on their segment. For example, you can give your most loyal users rewards that are less valuable because they’re already hooked, but for users who play less frequently consider giving them bigger rewards to tease them into playing longer and trying out more valuable rewards. 

In tier 2 and 3 countries where IAP is low consider offering higher valued rewards in order to drive higher engagement without running the risk with a lower risk of cannibalization. 

3- A/B test everything: 

A/B testing lets you continually optimize your mobile ads and improve your users’ experience with ads - allowing you to discover which mobile ad monetization strategy will generate maximum revenue without harming, and  even improving their experience. Specifically, A/B testing will help you find the sweet spot for a maximized LTV while simultaneously considering ARPDAU, retention, and IAP cannibalization. 

You can use ironSource’s ad monetization A/B testing tool to A/B test your entire monetization strategy, from activating new ad units and frequency caps, to testing x-button behavior and changing up rewards. For more ideas, take a look at this blog post on three A/B tests you should try today

2. Optimizing your waterfall for maximum eCPM

Once you’ve implemented the ad monetization strategy that generates the right impressions per user rate of your game, the time has come to optimize your waterfall and generate maximum revenue out of these impressions. 

Nadav highlighted three best practices for optimizing eCPM:

1- In-app bidding 

In-app bidding allows you to effectively automate the waterfall process, which leads to maximum revenue, savings on operational costs, and a reduction in latency. You can even use ironSource’s A/B testing tool to test between in-app bidding and a traditional waterfall to see which option works best for your game.

2- Different geos = different waterfalls

Setting up different waterfalls per country or by group of countries will help optimize monetization efforts as users from tier-1 countries have a far higher eCPM than users from tier-3 countries. 

3- Waterfall instances

When setting up a manual waterfall, Nadav recommends 40 instances as this number has proven to be the sweet spot between maximum revenue and latency. Also, remember to include at least 1 instances per network in the auto-optimization section based on revshare to ensure that no impression is wasted. Constantly optimize your instances based on their fill rate. 

If the rill rate is low, kill the instance as it’s not contributing to your eCPM. If the fill rate is high, split the instance into two instances with a higher eCPM as the chances of you being able to generate more revenue per impression is higher. 

To successfully scale your game business, look at your game’s growth as a loop rather than a funnel

Best practices for user acquisition

Scaling user acquisition campaigns depends on eCPM, since high eCPMs place advertiser campaigns higher in the network waterfall which unlocks more scale. eCPM is calculated by multiplying IPM (installs per one thousand impressions) and CPI (cost per install). Nadav emphasized that by optimizing these two metrics, you’ll be able to successfully acquire more high-value users.

IPM optimization can mainly be done through creatives. Diversify your creatives, localize them, and always make sure that you’re refreshing them. 

Nadav outlined three main factors to consider when optimizing CPI. 

  1. Choose the right KPIs: Often, developers choose to optimize towards retention but when doing so, you end up ignoring the number and value of your impressions as well as session length. While there is value in optimizing towards retention, in almost all cases ARPU should hold the biggest weight when you’re optimizing for CPI since this metric combines both IAP and ad revenue. 
  2. Go granular: Today we see that close to one-third of all campaigns bid the same for all of their ad sources. This is not an ideal approach, as not all sources are of the same quality. Consider the country, source, device, and ad-unit when preparing your bids. If you’re constantly bidding the same for different groups of users, in some places you’ll end up paying too much and other places you’re paying too little and not maximizing the potential of some good sources. Once you begin to bid granularly, you’ll notice an increase in LTV because you’re buying more of the right users and less of the wrong users. 
  3. Update constantly: New games are entering the market on a daily basis and bring a huge and high quality of supply, but these games tend to have short life cycles. Therefore, if you don’t react to supply changes in real-time, you’ll miss out on a potentially great ad source. Also remember that the quality of games on the market is constantly changing and you reevaluate the performance of all your sources constantly. 

Closing the loop

After discussing monetization and user acquisition, Nadav delved into how to best connect these two sides of the same coin and create one virtuous cycle of growth. 

Optimizing for ROAS

Nadav suggested utilizing the ROAS optimizer to optimize CPI. This tool updates your CPI on a daily basis, across all sources based on historical data as well as current monetization trends within your game. The more granular your bids, the more high-value users you’ll acquire, which in turn will improve the monetization of these users inside of your game. Do you see how the loop works? 

The power of bid optimization:

Kosei from ITI.inc, a Japanese hyper-casual publisher, joined Nadav on stage to show how the ROAS optimizer generated 20M installs for their game and got it to number 1 in many countries. At first, ITI.inc was bidding $0.50 - a number based on retention that ignored the value of each impression - across all sources, leading to a significant drop in IPM. 

Once the optimizer was turned on, everything changed. The scale of ITI.inc’s UA efforts  increased by 16% and ROAS increased by 25%. 

The power of cross-promotion:

ironSource’s cross-promotion solution combines UA and monetization and allows for you to treat your portfolio of games as an entire ecosystem. It allows you to acquire users you already have on one game and then monetize them on other titles within your portfolio. The perfect growth loop scenario. 

Nadav was joined on stage by Rahul from Amanotes who described their success in using the cross-promo tool. Magic Tile 3 is one of Amanotes’ longest running titles and they realized that the users they were acquiring across their portfolio of games were actually the same users coming back again and again. Using the ironSource tool, they saw their cross-promotion campaigns grow from 20% to 50% of total installs. 

Wrapping up

Today, marketing efforts inform monetization efforts, and vice versa - leveraging a more holistic view of growth. Keep Nadav’s words in mind: to successfully scale your game business, look at your game’s growth as a loop rather than a funnel.

Let's put these tips to good use

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