In-App Bidding vs. Waterfall: What’s Best for Your Mobile Game?

Query "how to monetize your mobile game app with ads," and you'll uncover dozens of similar articles espousing approaches and considerations. The sheer volume of content underscores the importance and uncertainty game publishers face when assessing the two predominant ad mediation approaches: waterfall and in-app bidding. 

With in-app advertising expected to grow annually by 9% through 2030, the model you choose significantly impacts your bottom line. Simply put, which approach you prioritize determines how advertisers’ demand is prioritized, pricing per impression, and your overall fill rate efficiency; collectively, these variables will determine your effective cost per mille (eCPM) and the average revenue per daily active user (ARPDAU).  

Based on discussions with our publishers, in-app bidding now constitutes around 80% of the typical setup and we expect that number to grow. The shift is driven by advertisers prioritizing performance-based down-funnel KPIs like cost per action (CPA) and return on ad spend (ROAS), using ad networks like Moloco that leverage machine learning (ML) to automate bidding and targeting. As more demand budgets flow into this model, ML-driven optimizations create a virtuous cycle: millions of bids and purchases refine the model, boosting performance and improving ROAS for advertisers. 

This, in turn, leads to higher effective eCPMs for publishers, as increased competition for valuable impressions raises bid prices. With improved monetization efficiency and higher share of wallet (SoW) from advertisers shifting more budgets into this model, publishers benefit from greater revenue stability and long-term growth.

If you’re interested in a deeper exploration of how ML enhances in-app bidding or the differences between the two mediation platforms, I encourage you to follow the link for a primer. In this post, we’ll focus on which approaches are best suited to monetize different types of mobile games.

Hyper-Casual Games

Hyper-casual games — which typically revolve around a simple mechanic like dexterity, timing, or merging — are known for their broad appeal, intuitive gameplay, and high player churn rates. To maximize revenue within these short retention windows, publishers prioritize in-app ads (IAA), focusing on high ad fill rates and optimized eCPM. Since engagement is fleeting, capturing ad revenue efficiently is critical to their monetization strategy. To optimize for efficiency, hyper-casual game publishers rely on in-app bidding because it provides greater demand and automates bidding, ensuring they can make the most of each user session before churn occurs.

Not all ad networks offering in-app bidding are the same. Publishers can unlock greater value by choosing networks like Moloco’s SDK, which delivers 100% direct demand—ensuring every ad comes straight from advertisers, with no third-party reselling. This elevates ad quality, enhances transparency, and optimizes performance. With automated bidding and full control over their inventory, publishers can maximize revenue with high-quality demand.

In summary:

• Hyper-casual games attract broad audiences but have short player retention.
• Publishers prioritize IAA to optimize earnings within limited engagement windows.
• High ad fill rates and strong eCPMs are crucial for sustaining profitability.
• Moloco’s SDK ensures ad quality with 100% direct demand, eliminating third-party reselling
• Leveraging automated bidding helps maximize revenue before players churn.

Casual Games

Casual games, such as Puzzle, Word or Match 3 genres, retain users longer than hyper-casual games, allowing publishers to adopt a hybrid monetization strategy that combines IAP and IAA to maximize ARPDAU. Given the high volume of ad inventory, in-app bidding has become the preferred method for efficiently filling impressions, providing real-time competition and flexibility in ad placements. While some publishers use waterfall auctions to maintain greater control over premium inventory, Moloco’s approach ensures that in-app bidding remains effective even for these placements. By eliminating intermediary fees and passing those savings back to advertisers, Moloco enhances publishers’ buying power—driving higher eCPMs and greater revenue.

In summary:

• Casual games tend to have longer user retention compared to hyper-casual games.
• Publishers often use a hybrid monetization strategy, combining IAP and IAA to maximize ARPDAU.
• In-app bidding is the preferred method for filling a large volume of ad inventory in casual games.
• Some publishers may use waterfall auctions for greater control over premium ad placements.
• By eliminating intermediary fees, Moloco’s SDK enhances buying power, driving higher eCPMs and greater revenue without needing waterfall auctions for premium inventory.

Mid-core & Hardcore Games

Mid-core and hardcore games like role-playing, first-person shooters, and various multi-player games —  are known for their complex gameplay and strategic challenges that require greater time investments from players and therefore, have smaller target audiences compared to other game types. To maximize revenue, publishers often use a hybrid monetization strategy that combines IAP, subscriptions, premium content, and IAA, while ensuring these methods don’t interfere with gameplay or player retention. The highly engaged players in these games attract premium ad prices. While waterfall auctions offer pricing control, in-app bidding tends to deliver higher eCPM due to increased competition for impressions and avoids the latency issues associated with waterfalls.

In summary:

• Mid-core and hardcore games require more time from players, resulting in smaller target audiences compared to other game types.
• Publishers often use a hybrid monetization strategy, combining IAP, subscriptions, premium content, and IAA, without affecting gameplay or retention.
• Highly engaged players in these games command premium ad prices.
• While waterfall auctions offer control, in-app bidding typically results in higher eCPM due to increased competition and avoids latency issues.

Publishers should bank on in-app bidding for ad revenue

While the waterfall approach served the industry well for years, in-app bidding represents the future of mobile game monetization across all game types. The transition follows a similar trajectory to the programmatic revolution in desktop advertising. According to eMarketer, programmatic ad spending now represents 90% of all US digital ad spending — predominantly led by mobile. 

For publishers still using waterfall models, the time to start transitioning is now. Begin with A/B testing to measure the impact on your specific game, gradually shift more traffic to in-app bidding as you validate results, and choose partners with access to large demand pools optimized for programmatic ad spending.

If you’re interested in learning more about Moloco’s in-app bidding, reach out to us today.