Blog Article
August 1, 2024
Recent gaming industry news (such as reported from Pocket Gamer, Tech Crunch, and Polygon) suggests a bleak picture amidst decreasing app downloads. Convinced this narrative wasn’t telling the whole story, the Moloco data science team conducted an in-depth analysis using our internal data and found the reality considerably more nuanced and optimistic than the headlines suggest.
Given the proportion of headlines concerned about the performance of games monetized by in-app purchase (IAP), our data science team focused on the performance and advertising practices of a subset of IAP gaming advertisers. Our data set covered metrics like installs, revenue, retention, total payers, purchase values, time to purchase, repeat purchase rates, revenue growth curves, and more.
After analyzing two years’ worth of robust internal data, we learned that by the end of 2022 and beginning of 2023, the gaming industry experienced a growth phase, followed by a period of stabilization. By Q1 2024, growth started to decrease across iOS and Android platforms, which is what media reports have focused on.
In our analysis, we uncovered key trends that are driving performance across the industry and identified top performing games that are managing to become outliers and drive quarter over quarter revenue growth. Some of the key uncovered insights:
What follows is a deeper dive into these industry trends and insights around revenue, monetization, and retention.
Overall revenue generated from IAP in-game is falling — but examining the underlying metrics that drive revenue reveals a more complex story.
To help marketers find success amidst these headwinds, we segmented the top 5 games based quarter over quarter revenue growth for iOS and Android to identify the distinct approaches they were using to drive significant growth.
When isolating the top 5 games, we found that gaming developers achieving high double-digit revenue growth excelled across three key metrics: repeat purchases, transaction volume, and retention.
While the installs trend is mostly driven by marketing efforts, the revenue trend is primarily driven by retention and monetization. Retaining users for a longer period of time provides top games with more conversion opportunities, generally leading to better monetization. The increased revenue can then be reinvested for acquisition, creating a growth flywheel for these top performers.
In addition to understanding what success metrics look like for top performers, our analysis revealed several distinct acquisition strategies these companies used to sustain growth.
The learnings from our analysis shows that compared to the rest of the gaming industry, the top performers invest more heavily in Europe, Middle East, and Africa (EMEA) markets, Android, and playables and mid-length videos to acquire and retain customers.
It’s important to note that our key learnings reflect how the top 5 games invest and market specifically with Moloco, but our data reveals clear differences in their marketing spend compared to the rest of the industry. Here are three strategies of these top performers to consider adopting, based on our learnings.
Playables are more expensive to create, which can pose financial hurdles for some developers. Exchanges also have a variety of inventory rules and creative capabilities, making it more challenging to optimize how playables are served to users. But for these top games, it appears the investment is worth it. On the other hand, these top 5 games seem to be keeping things simple with video. Since they’ve found success with 16-30 second ads, we hypothesize they are saving the cost and energy of investing heavily in other video format lengths.
Major industry forces and trends can feel beyond any marketer’s control. But looking closely at the top 5 performing games can reveal a few ways companies can take action and respond to stay competitive despite the overall trends. To summarize:
Taking the learnings from the top 5 games, marketers can stay ahead of the curve by using advertising platforms that enhance ad targeting and bidding with machine learning (ML). ML can enable marketers to make better real-time bidding decisions around supply and ad costs and identify unique markets to target, helping them optimize their returns on spend.
If you’re interested in learning more about Moloco Ads, please reach out to us.
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