Jarkko noted that developers might limit ads because they’re afraid of hurting retention and cannibalizing in-app purchase revenue. However, these myths, as Jarkko pointed out, are solely based on intuition. That’s why Rovio decided to run a data-driven research study and find out once and for all how in-game ads impact user behavior.
Researching the impact of in-game ads
Rovio ran a test studying iOS and Android users playing Angry Birds Blast, a casual puzzle game in the match-3 genre, over the course of two weeks. Rovio asked their ad network partners for all the relevant install events, and compared their test sample against a random sample of Rovio users.
Here's what they learned:
1. Rewarded ads actually increase retention and session length
In their study, Rovio found that in-game ads didn’t negatively impact retention and session length. In fact, players who watched ads and installed other games had higher retention rates in comparison to the random sample.
The same was true for session length - while time spent did drop after installing other games, these players still ended up playing longer than the random sample.
Even more interesting, players who installed competing games had the highest retention rates of all.
Rovio was intrigued, and ran another test. What if they didn’t show ads at all? Would retention be higher? They ran an A/B test, completely blocking ads for new users and comparing their behavior to users being served ads. The end result? No difference, and actually the group watching ads had marginally higher retention and monetization rates.
In addition, when looking specifically at whales, Rovio found that every single whale who also watched ads and installed other games was still playing Rovio games 6 months later.
In short, there is no correlation between players who watch ads & install other games and churn rate. If players are churning, it’s for other reasons.
2. Ads don’t cannibalize in-app purchase revenue
Rovio also discovered that users who watched ads and installed other games spent more money on in-app purchases in comparison to the random sample. And that’s not even accounting for the additional ad revenue they brought in.
The most interesting part of the study, according to Jarkko, was analyzing the monetization behavior of players before they even went on to install other games. Rovio learned that players who go on to install competing games, already had lower retention rates 2-3 weeks before they ever installed the competing game - meaning these users were different to begin with. The reason why their monetization is lower was not because they’re installing competing games, it was just in their nature.
3. The genre of installed game affects monetization behavior in the current game
Players who installed games of different genres had lower retention rates than the average Rovio player. That’s likely because these players were not casual gamers to begin with, and prefered midcore or hardcore games.
Jarkko emphasized that players are always two seconds away from the app stores. So if they don’t like your game, they’ll find something else - regardless whether they saw an ad for another game or not. In other words, there’s no way to completely isolate your users and prevent them from playing other games. If that’s the case, why lose out on potential ad revenue?
That’s why Rovio shows ads of all kinds of games to their users.
Of course, other developers may find their players behave differently. If that’s the case, Jarkko encourages you to do your own research study and learn how in-game ads affect your users’ behavior.