AD APOCALYPSE 2024 (???) with Felix Braberg

hey and welcome to the deconstructor of fun podcast I'm your host Mish katoff and my guest today is Felix braber a true monetization expert who is really so transparent with his advice that he has received seasoned assists from some ad monetization company but let's not talk about that let's talk about what me and philx are discussing in this podcast we talk about brand ads and games Amazon and apple entering the ads business the efficacy of different ad formats how a game can double their ad Revenue the effect of privacy changes on in ad monetization and what the ad monetization will look like in the near future when all the dust settles so inab ads are either important or absolutely crucial depending on the type of a genre that your game is and I think this is fascinating I think even if your business is not relying on inep ads this is truly uh a topic that you need to understand so so without further Ado

ladies and gentlemen Felix [Music] Robin welcome welcome welcome everybody to the deconstructor of fun podcast this is my podcasting voice Felix how do you like it it's gorgeous uh yeah so my guest today is Felix Brer uh Felix is a mobile ad Revenue expert and a fellow podcaster for two and a half Gamers if you haven't listened to their podcast it's fantastic uh so Felix you've spent years working with biggest game and app developers to help them increase their ad Revenue by designing ad placement negotiating with at networks and improving mediation ad Stacks you worked on mobile dsps and at networks so you know exactly how the demand side works and you probably gone through hundreds of mistakes failures and complicated situations as have I and um that has made you into the beautiful man that you are today which is not like me so Felix welcome to to the podcast thank you man

you know compliments get you anywhere so thank you for that warm introduction so I wanted to I wanted to get you on on the podcast because I want to um understand in apppp ads and where we are today and I think I had couple of U couple of stats in my presentation that I was uh I've been presenting to to a few people and I think these are from I believe these stats are from Unity so uh there's two charts one is why enap ads matters and it shows all the genres in the game in mobile games from action adventure to trivia word puzzle racing role playing simulation you name it and it shows the distribution of inapp AD Revenue percentage and Ina a purchase Revenue percentage and the lowest percentage is in RPGs and even RPG games make 20% of all their revenue through ads and then you go of course to the uh the 95% from hyper cas ual the 80% for

word um 70% for board games etc etc so this kind of shows that no matter what kind of a jar no matter how core it is it still makes fifth of its Revenue through inapp ads and the second chart that I've had in my presentation was the sort of a anti notion to the the the thinking that ads May create a worse experience or inferior user experience for Gamers uh in this chart it shows the reward video ad completion rate by genre again and there you can see that that the typical genres that we consider the Casual ones the uh the you know the the hyper casuals and so forth have a very high completion rate of 80 it's per and up but then we go to the traditional core genres like RPGs like strategy Etc and there the ad completion rate is actually over 90% so the clearly users

are uh enjoying the ads or at least enjoying what the ads give them and then the final chart that I had was um when you ask core Gamers console Gamers PC Gamers mobile Gamers do they want to get rid of product of AD product placements and majority of them far larger side than those who say that they want to keep the ads there and it's a far bigger percentage than those who say that they want to get rid of ads so this is kind of a my background of why I think inapp ad revenue is valid so did I did I get this right Felix yeah I mean you still got to take it with a bit of salt right because I always say that uh inapp ads are still kind of the last bastillion of the Wild West how I've described it earlier is uh if you've ever played Red Dead de Redemption 2 you know it's set right before the end of uh the cowboy age that's kind of the age we're in right now uh with inapp advertising so these stats that it out they're they're

fine and dandy but they're still made by unity which has an interest in getting people to use more ads so if we just look at the charts uh first of all completion rate it's a bit deceptive for them to publish this I think like that because to get out of rewarded ads you actually have to close the app because there's no x button until the end of it so you know that requires a lot like you really have to be quite angry so it's quite hard but still yeah it's still good indications of like the overall um yeah the overall like sentiment H generally people like rewarded ads and it's kind of touted as this Silver Bullet for the fact that if you have the best game in the world you can might get three to 5% of people that make an IP the rest of the people that you have or The Gamers that you have is just costs right server costs yeah so making them see rewarded ads is kind of on paper the Silver Bullet so in practice usually the the biggest issues I find with rewarded

ads is kind of the content uh of rewarded ads because it's kind of a race to the bottom right now to get low cpis with shocking content everyone's seen like yeah the atrocious CPU like the the content that you sometimes get and then also the end cards have been getting worse right so what a lot of people don't know is you need to kind of manage everything right and you can but it just takes a lot of effort and if you do all these things and we can get into other parts best practices later as well you're able to get quite a good ad experience and reduce complaints and then everyone's happy and I've actually worked with some clients where you remove rewarded ads and people get pissed off and that's a good sign that's a good l t right but also going back to what you said on RPG so I worked on legendary uh when I was at Network and I helped increase the ad Revenue overall from 12% to 18% and that was one of the things where like every all the developers were really not happy about it but like in the end we managed to do

it incrementally without reducing any of the iaps so I know it can be done for role playing games and if it can be done for role playing games it can certainly be done I think for pretty much every genre it's just about taking the time and kind of understanding it and kind of understanding the regular pitfalls yeah yeah that's uh that's valid valid points uh yeah and thanks for for not debunking but adding a little bit of a color to these you know ad platform based uh surveys uh but I'm curious to to understand what happened in 23 like during this year um what has been and and more particularly like what has been the Privacy change on inapp ads so the Privacy change on Ina ads it's uh I guess you're referring to the Google CMP and the loss of the idfa which was a bit earlier is it that kind of what you're getting at yes idfa especially especially iOS yeah so the Ida everyone's been touting as the ad

apocalypse uh which it kind of is right because if you lose the ability to Target users uh all ads essentially become branding ads and in theory the ecpm should then fall quite significantly because you can't do highly targeted ads um that hasn't happened yet because uh iOS is still allowing or kind of like turning a blind eye to something called fingerprinting what is fingerprinting fingerprinting is essenti when you use statistic methods to kind of deduce and do targeting anyway but it's not individual targeting uh funny story is that uh we know exactly that all networks are doing fingerprinting even apple is saying it's not allowed but everyone is doing it and there's proof on this because essentially when Apple first announced uh that they were going to get rid of the idfa and basically no fingerprinting was allowed ecpm on iOS dropped uh pretty much overnight by about 50% you could see it across the

board and all the networks dropped and it was pandemonium it was like everyone's like yeah here we go here's what everything what cres has been talking about this is uh we're all going to die um and then interesting things started happening like networks uh started like the ecpm started improving and the Delta between idfa users that have consented and that didn't basically went down from about 60% down to 18% uh about 3 weeks after so what happened then all networks essentially turned on um yeah fingerprinting and that hasn't changed yet so right now we're in this kind of really big transitionary phase where a lot of things are happening with an app advertising so it's a very big moment of change a lot of things are happening so idfa is one so no one really knows when Apple is going to get rid and start of actually like enforcing fingerprinting uh like to get rid of fingerprinting and that will have a a huge effect on the cpms on Apple uh on

iOS so no one knows when this is coming but the second they start enforcing it it's not going to be great for ecpm on iOS mhm personally my theory when this will happen and this is pure speculation right because you know it's down to five people who decide this probably inside of apple and you know I don't even know who they are right but you know I would love to take him out for dinner you know Rob him with good food and good Brandy and then you could find out right uh so if you look at it I think from like a game theory standpoint uh so the app store right now for apple is responsible for 10% of their overall revenues and all of that Revenue comes from iaps right and apple have their own way of doing UA right in a targeted way which is Apple search ads right problem with apple search ads is three placements so you can't really scale as a gaming company I've never heard of a gaming company being being able to spend more than 4 or 5K a day and you know for

like yeah a take two or anything like that that you know if you can't spend at least 100K a day on a platform it's pretty much irrelevant and it's not worth your time so that's an issue right so I don't think personally that Apple will remove this fingerprinting until they have sorted that issue out for Apple search ads it's a bit of a going against the controversy but I don't think they will shoot themselves in the foot because essentially then no one can do UA on Apple to find these high value users who make all these I APS so I don't think that's going to get killed until Apple search ads either makes an audience Network which makes sense because they've been advocating for or hiring for roles for a DSP which is kind of the key component what you need when you're starting in an audience Network so that's what I'm thinking to watch out for so I don't think fingerprinting and the whole idfa thing is going to get killed until Apple have launched their

Audience Network got it and then Apple would would uh would be in a pretty Dandy place because they have apple arcade where you can get all your games and then they have their own Audience Network uh their own advertising Tech which is the search ads if you want to play the free-to-play game give us the money and continue playing well they're looking at you know unity's revenues app's revenues liftoffs Revenue saying like hey Gee that's a lot of spend yeah would a shame would be a shame if something bad happened to it right yeah a lot of spend that we don't get a lick of that's the problem exactly that's the I mean you know buy some Apple shares right there I think they're going to pull it off it's a close ecosystem so I I always buy Apple shares they're the real gangsters in the of course STS only go up yes um by the way I wanted to get some basic terms right what is a DSP demand side platform so um what we can talk about so I've worked in two dsps and an ad Network so I know how the sausage sausage is made so dsps is a

demand side platform that buys everything programmatically uh I worked for two called REM merch and adic they're retargeting dsps uh so yeah they yeah bought mostly Banner inventory but then there's also something called networks uh and they have their own demand so when you go to APPL you buy APPL like campaigns through app loving that's through their direct inventory dsps they buy all their inventory from an SSP or supply side platform and that's where they buy all their inventory so it's a dsps and networks are the two main demand sources that you get when you hook up ads into your mobile game or mobile app understood kind of so when I get when I unlock like when I open up my Unity ads to run uh through my game let's say I'll take Unity ads and I'll take the uh um app Lovin ads um it it it's more complicated like I said right so it's Ina

advertising it's it's a bit like reading in the Middle Ages you either know it or you don't and no one really teaches you it because there's not that many people that do it but it it's way more complicated so for example if you work with iron Source let's say for example AKA Unity Unity yeah Unity but iron source is the network so let's say Mishka you have created another game and you want to buy some users for that game and you have decided let's go to iron Source let's buy some let's buy some users course Source all the way iOS they're quite good so yeah and then no I'm not some let's get Luna labs for for our creatives and right we're good so you got your Luna labs creatives and then you move to iron source and you your credit card details and you're buying users right so I then have the app I do the ad monetization I see The Impressions come in in my app or game and then I'm getting used it looks like iron Source right but to ensure that they get a lot fill like what you also see is so typically if you're seeing $100 let's

say a day from Iron Source maybe 40 to 30% of that comes from Iron Source directly because they can also resell inventory because they have a direct link with a publisher or Publishers where you call an app or game that shows ads so what they can also do is use their piping to sell that to third parties and that's what you see in the adaps txt file uh which you need to list when you start having ad Revenue so it's not only iron Source demand directly that you're getting when you plug in Iron Source it's also their third party demand which is a list of exchanges dsps like a whole myad of different places so everything is very complicated it gets really yeah complicated quite quickly but yeah the fundamentals are simple but the practice is a bit difficult so for a Layman listening to this don't worry about DSP uh what what you need to worry about is you said ECP M and the way okay CPM is cost per thousand impression cost

per Mill and CPM is important because when you divide CPM by IPM IPM being installs per thousand impression you essentially get your CPI which is the cost per install and that is one of the most important metrics in your game and CPM the way I understood is is basically how expensive or cheap it is to advertise towards the audience towards the audience that you're looking for on a specific platform and then IPM installs per th000 impression means how cool your creative is how well it hits with the target audience and so when you divide that sum of how expensive is to advertise to what is your knockout percentage of how many of of you know thousand impression actually installs it you get a lower CPI the higher the IPM is I understand that what is an ecpm so effective CPM right so effective cost per melee effective cost let's just

let's just run through like the basic terms of ad monetization because ecpm uh gets by far the most attention and it's not the most important metric by a long shot so usually you can tell if someone understands and knows what ad monetization is depending on how much or little they talk about ecpm so if you're talking to a network and you keep complaining about ecpm usually the person working at the network will think you don't know anything thing right and the reason for that is uh you care about ad Revenue ad revenue is the most important metric and AD revenue is a component of two things that's Phill and ecpm and those things together bring you your ad Revenue so I would gladly take a lower ecpm if I meant I got a higher fill and a higher ad Revenue so the metric that we use our Northstar metric our load star our pole star whatever you want to call it is poar RP add Revenue per daily active user

because that's the only metric that you can look at in ad in ad monetization that takes into account the fluctuations of UA so ecpm is just a mere component of that and ecpm like you said is pretty much what the network is willing to pay for your inventory so how does a network decide how much they're willing to pay for your inventory so ecpm is calculated by all networks in different ways they have different algorithms to do this but if we're doing it pretty simple Roundup of how it works they take the average of the last seven days on a bunch of metrics Google uses about 84 metrics taking into account like time of day like even the weather like where they're doing it but in principle like the main metrics that they look at is the amount of unique users uh the amount of like times the user has seen an ad before in

that day uh the install rate on the average like user in that app for the last seven days uh also they look at like the clickthrough rate and a bunch of stuff like that but that's the main metrics that you look at and you take the average of that over seven days another big metric that they look at is did the ad Network bring that user to uh the game or app where they're now seeing it in the bidding if they did they usually have that tagged on their server side so they pay more for it so let's say you brought a user via app loving to your game app loving then sees it on the admon side they will bit higher for that because they know more about that user so that average is calculated uh on the last seven days taking into account all those components like I said Google uses 84 I'm sure they every Network uses as many but those metrics that I listed are the main ones that matter the most got it that's how ecpm is calculated and basically you can't really do anything about acpm as a publisher you can so

that's a good question so what the only thing you as a publisher can do is maximize the amount of competition that you have in your waterfalls in your mediation stack so you need to increase the amount of competition because as we know uh you know uh what can we say like living in a healthy capitalistic Society you know like competition moves up the equal lium right so if you think about it as a supply demand curve if there's more demand uh yeah the yeah equilibrium price moves up right so that's all you can do yes and for listeners maximizing competition in a waterfall means that waterfall is all these ad providers and how many you have them and how have you set them up so uh what comes in first is it iron source is it app Loven is it Google ads is it you know meta ads what is coming first who is coming second Etc ET how you move those things around um

and basically it's like the way I understood it is the order will be based on who pays the highest per ad and then you move to the next one the next one and the next one and it's always lower and lower and lower cost yeah so we're doing this conversation right now in this transitionary phase right where the waterfall which was good and stuck around for way too long is now being phased out and we're all moving to programmatic header bit which means that there's no more waterfall but we're still like I said Red Dead Redemption 2 we're not quite there yet it's not you know out of the cowboy area so right now we're in this weird space where there's both biders and placements and essentially everything is going to move to bidding probably within the next 12 months so you don't have to move stuff around in the waterfall but yeah yeah so it goes from this manual who comes in first to programmatic header bidding meaning that the ad that pays the most most goes first and then

second and so forth right y exactly so it just automates it the the uh you know I've I've been to many iron Source events they've been talking about programmatic header bidding for the last 3 to four years as I remember so I thought it's already in place kind of and kind of not really I mean takes time to build these and make them good cuz placements say they're a pain in the neck to manage right but they do their job quite well and to get biders to do a better job takes time and resources and that's just what's taking time right now and so in terms of AD Revenue ad ARP Dow has it been increasing or decreasing in 2023 uh is a bit hard to say right so I see maybe like maybe 1% with all my clients like of there like of the total markets add Revenue it's hard to say uh I think

that by this time next year there probably will decrease because there's a lot of changes happening right because as you move from placements to biders uh essentially what happens is that your app or game um moves from being a price Setter to a price taker uh because you don't have the same controls as you do on placements as you do on biders to kind of keep the price High also as in every industry there's a lot of hacks that exist and most of these a hacks right now have been around utilizing or gaming kind of a Google systems and most of these hacks are now being closed and they're all going to be closed probably by end of January next year and these hacks have been so profitable that there's probably a lot of companies that have propped up a lot of their margins on this so I don't think that this time next year's ad ARS or ecms will be anywhere as high o that's uh that's a another warning sign I mean it's also it's also tied to

macroeconomics right you know if there's more money more people playing games more people spending right there's more money in advertising so more games being launched more games being scaled I think that's even more important than than the uh the spending part because when there's less game being launched especially with Hyper casual going gone let's just put it that way gone then that means you're not like there's not a plethora of different ad monetized games being scaled every week essentially so that has probably been a pretty big of a hit on well they kind of advertise each other I would imagine that these mediation platforms the two biggest ones right now is uh Unity level play and uh apple and Max right I should imagine uh that probably their one of their biggest issues probably will be Supply in the future and that's probably one of their biggest issues not demand so Supply meaning not enough placements to put the ads in there's not enough ads being

shown every day to fill all the demand that's what I think probably will is their main issue I I don't know but from the outside that's what I would assume we have exactly same issue here on this podcast so it's uh it's it could be a good issue or could be a bad issue but I I feel their pain on a significantly smaller scale yeah damn um okay and got it there's a lot of a lot of things you've said it's very interesting and um what can so beautiful I keep saying it like not enough people realize well it's um I wouldn't call them beautiful but it is an important part of the business that is easily overlooked yeah agree because because they have a lot of acronyms and it's not games and it's not as big as in I purchases so I'm just going to overlook it even though there are games like I've I've worked next to games that have been making half a million from ad Revenue a

day so so and there's no cuts from that it's half a million to your account a day so 30 baby there we go exactly there's no web shops over there you don't need none just just straight into the beans that's how it goes um exactly so so um so talking about that is like what can a what can a publisher do or developer do to maximize their ad Revenue yeah so two components to that right so let's start with the mediation and then we can move on to ad placements right because there's some general ground rules that you can set so best practices for mediation is to always use a mediator uh the reason for that is the mediation platform is like the marketplace where you hook up all the things and that's where you can get multiple networks bidding for your inventory for example usually in soft launch uh what makes the most sense is just using if you built your gaming

Unity just use Unity ads as the network without a mediation when it's a soft launch and then you want to focus on metrics like ad viewer rates or Impressions per da to get that looking strong and good metrics we'll go into that on the placement side MH and then once you start scaling the game that's when it makes sense to put in the mediation so when you put in a mediation with four to six networks you will double add Revenue that's how big this factor is right like I've seen a double and it always doubles so yeah double add Revenue by adding a mediator uh make sure you have a competitive mediation stack uh every Network it has sales people right and they want to sell you and be in their stack and they're very like they're always telling you the good stuff uh but proof is in the pudding so whatever game you're making go to let's say the apps flyer uh index and see the biggest Network in your genre pick the top four and integrate them uh that's a good start uh basic rules of mediation is

that you want to have a network that is competitive and what that means in actual terms is you want the network to contribute at least 5 to 10% of overall share or Revenue otherwise that network is a complete waste of space in your app and makes your app topheavy because you have to have the SDK in there and they're not bringing that much bottom line and if they're making less than 5% of AD Revenue they're not contrib to the competitiveness so just get them out and that also goes two ways so you don't want to have a network that earns more than 40% because then they kind of have price setting power in your app and that's not good either uh so you want to keep everyone in between that and then juggle the amount of B networks that you need based on that metric so do that some networks are still on bidding some are on placements uh yeah probably in a year um there'll be less Adon ation people cuz every lot is more automated

so that's like really good advice for um just mediation like that's the basics right if you get that right it's really hard to screw up so there we go enjoy dear listeners so if we move on to placements which is a bit more hard right that requires a bit more finesse so there's three main types of AD units and let's go through all of them and list the pros and cons and kind of some best practices so the first one which we've talked the most about is uh the Golden Boy the one that everyone loves the rewarded ad right so rewarded ads get paid the highest ecpm uh in the industry because it's opt in so a user chooses to watch one so networks assume that then there's better attention being paid there so that inventory typically like fetches globally anywhere between depending on the geomix $5 to $30 ecms right so rewarded ads are extremely good because you can get users to watch them and be

happy to do so without complaining and they shouldn't impact retention right the only issue with rewarded ads is you need to get them to watch a lot of them so basic metrics that you say to be decent is 45% on ad viewer rates that is to say 45% of users watch ads that see the rewarded ad placements anything below that means that the rewards are not high enough or the placements are not prevalent enough and that means they're quite bad so that's anything below 45% I would usually say to clients is unacceptable go back and do again and the other metric that you look at for rewarded video is Impressions per da and you're not really going to make a lot of money from rewarded ads unless you get at least four or five Impressions per Dau and that's the hard part to get to four or five Impressions per da uh idle games I've sometimes seen people go as high as 19 and that's insane like it's crazy right so the

trick is just to get people watching a lot of them and if you can sort that out you'll earn a lot of money so moving on to the interstitial uh ad placement so this is the one that probably I'd say users hate the most and that has the biggest negative impact on retention but it's also like if you don't have a very deep economy game they're probably the best ones to use for you because you force users to watch a 15-second intertial ad uh typically these interstitial ads anywhere between 10 to 12 globally if you're lucky depending on the geomix uh thing to watch out for here is like if you do this too much you really see a drop on retention so using this ad format requires a lot of AB testing and probably better to do this with segmentation in mind so segmentation is basically not every user is the same so show them different amount of ads this most simple form of segmentation is show T2 T3 countries more intial

placements than T1 this these come in to play when you're playing your puzzle game and you've been playing it pretty heavy and you still haven't paid and it's like day 20 good luck they're kick your ass with these interatial exactly right well they got to make their money somehow right yeah and you're like you're like gritting your teeth when you get them they're so bad that they don't even have the x button anywhere the they just get hung up and you have to go to the app store afterwards that's what we're talking about when you're a cheap [ __ ] who just plays for doesn't exactly and then the last but not least I guess the the Survivor the Cockroach of ads I guess the banner placement which is you know that little little thing at the bottom or top of you know apps games where you see you know small little ads changing and changing a lot uh these Banner placements are get the lowest dcpm because it's just a little text box or picture or whatever um trick here is yeah ecpm can be

anywhere from 10 cents up to a dollar a150 if you're lucky depending on the goo but the trick here is to make money on banners you just need to have the same Banner placement visible at all times so basically when you switch through screens you just have the same Banner thing so you can increase the Impressions per minute as much as possible big battle being fought here and kind of one of the reasons I believe at least uh Max and level play have gained so much market share in the last couple of years so admob doesn't let you change the refresh rate that is to say how often uh new Banners are set so it's set by default to once every 30 seconds and Max and level play you can go down to 10 seconds so yeah makes a big difference I think banners ban working at apps like that's the uh that's probably the reason why they still exist they might not be great for for games but it's uh it's for apps yeah yeah I

mean you I think they have it on the road map that you can change it down uh I've heard it being like tossed around yeah but these three um yeah ad units are the main ones and they're the ones that pretty much Drive our entire app ecosystem right because if you think about it like the discoverability on the Google Play and like app store is terrible and you can't solve it CU there's too many apps in games so the only way you can solve it is by actually showing advertising and apps where or games where other people are so it's kind of the only way you can solve that issue I think so I don't think it can be solved in that app in the app stores uh talk to me about playable ads what's going on there like at one point there were the uh the hot stuff they still seem to be like you know the eony ads and and the play playrix uses a lot of them where you you know drag the pens and you name it like all those kind of uh misleading ads in many way like what's going on with playables playable ads get served in either the interstitial format or the rewarded ad format so from an ad monetization

perspective um there is no playable ads per se there is just rewarded ads intitial ads and they show up in those placements more like right now usually what happens is that it's a video for 30 seconds on rewarded ads and then there's a playable end card or something like that for intertial so there's no real distinction from ad monetizations perspective got it and how about offer walls offer walls is uh I wouldn't call it one of the main formats but it certainly exists as well if I had to make the list four there's definitely that is definitely the fourth widest used format uh it's also what can I say like it it's a good ad format if you have a robust in-game economy and that you can like plan it out and you know balance the economy for it which usually these companies help you do um also secret tip for for any listeners uh like ecpm for offer walls

are sometimes as high as like $300 right wow so it's the highest margin product for most of these networks meaning that you can usually get a big bonus if you're integrated in your game but still like the best use of offer walls I've ever seen you get maybe 10 to 12% optin like of users actually going and using it right plus the offer walls look usually quite bad yeah they're not to look at WS is like you do something in another game and you get an offer for the in the other one yeah exactly that's that's basically it final one audio ads that has been on the rise yeah audio ads is a brand new thing right so it's it's very interesting it's growing quite a lot it's still very nent and it's still very underutilized and for that reason it's not getting that much credit for example I've seen it using a lot of apps I've spoken to a lot of contemporaries like uh in hyper casual games that use them quite a lot lot and I've never heard anyone say that they make up more

than 10% of an app's overall revenue or ad Revenue so it's still a very new format and the fact is that there's no mediation yet for audio ads so yeah until I think there's a mediation I don't think that format is completely going to scale but you never know what happens right so yeah another main type of AD format yeah it just uh with audio ads like the uh the hypothesis is is that you don't have to interrupt player session they can just listen while they're playing and so again uh another additional format into what already exists in in your ad Tech yeah I mean you made games right like what's the percentage of users that play with a mute button on right depends on the game yeah it's usually quite high right like it's usually over 50% it it really does depend on the game like yeah like let's say you're making a shooter you have to be a a serial killer if you

play it without sounds much it's let's write Jeffrey dmer and see what his opinion is right yeah it's like no I just want to watch killing like I don't care what so yes they are for sure those type of people but most would enjoy actually playing with sounds on then again I'm not going to say that you're going to enjoy an ad in the midst of Call of Duty mobile that's a you know that's again a distraction and you don't want that so of course it's not for for all the U for all the settings but then another thing that you're seeing now more often is is that users are listening to something else a podcast music while they're playing uh and sort of multitasking that way and then you can listen to an ad if it gives you because it just interrupts the podcast that you're listening yeah let's see I mean I think the starting gun really for that industry will be if there's a mediation

between them because there's a couple of competitors yeah uh like out the market yeah audio mob audio those those two are pretty great ones and who knows maybe Spotify moves in there as well like that would be a really big thing because they have a lot of Demand right so let's see what happens it could be a very interesting space to watch out for yeah okay well nice so we covered it all upand comers sort of a hasb beens and the main ones um one thing that working with ads when working on games has been the transparency uh is that still an issue because what I mean by transparency it felt like this is a black box this ad SDK is a black box and it starts making money and there's salespeople that will tell you that it needs to be in the front of the waterfall and if you like those sales people you might even move it up by a couple of positions because essentially all these black boxes are the same thing is is is that still the the case so how do you mean transparency

like what ads are being shown in your game or app or like how the auctions is being done or yes the auction part like like how come like what what is the amount of money we are making and who's making what and like like what is really happening inside of this um this thing yeah I mean no one knows right like what I told you how is ecpm calculated I know Google has 84 metrics I know maybe five of them I don't know how does the auction really work inside of mediation platforms I I can speculate how it's described in like the tech documentation but I can't check it right it's not open source so I don't know uh I'll have to trust people on it and I don't want to comment on it because I did it once and I got some to cease and toist so even opening that like n and how about how about like you're making uh playable ads how do you or or not even yeah let's say playable ads playable ads makes sense so these are like 15 to Max 30 second experiences is there a way to optimize those like is

there data coming from those is like what should be like do we AB test different things like how how does it work yeah I mean like there's a lot of people like that's making UA creatives right so that's a bit more right so usually I guess what MAA say who's the UA experts and I'm you know the third best UA manager on the two and a half Gamers podcast so like maybe don't take my word for it yeah but a good hook right like good three second something like interesting those first times and that gets a click right uh you know I sell the inventory I don't like I don't deal with the demand in that way so yeah that was a bad asking the wrong person that was a really bad question I'll take that one that was an L uh I got it yes I got too excited I was already looking on the other side of the of the table so so yes that that that makes all sense but uh but in terms of just like optimizing your ad Revenue it's like yes sure you can look at the placements and you're increasing those from from your game side making sure that users watch and making sure that there's value added

when they watch those ads making sure you're using the uh the right uh types of um ad um formats you can talk about ad quality I think that's probably where you're want to go next right cuz that's uh probably yeah that's also one of the Hot Topics right ad quality because let's think about it so the industry went through really big changes uh on the end card side so I have this theory that I say that the thing that drives the most amount of installs and clicks is not the actual creative itself it's actually statistically the end card format that these ad networks add on for all the in creatives that are run on their Network so I think it was 2 and a half years ago uh iron Source started making an end card that you had to click three times or four times to get out of

before you actually got out of the rewarded ad so it it's a 30C rewarded ad then it was an end card and you had to click three times and then basically I don't know what happened but 3 weeks later App 11 had the same kind of style so it must have really incre like ctrs like by a lot and now when you're running UA on some of these networks you know ctrs are sometimes like 85% and you're like what going on so now also what's happening is that networks are pushing more and more on on rewarded ad units in particular because that's the highest margin so now what you're actually seeing is sometimes videos being 60 seconds long with an end card that's you know clickable five times to get out God damn it I know but what a lot of people don't know is like if you have scale in ad ad monetization like that is to say like you're big enough to negotiate you can negotiate the end cards so you can say I don't want to have an end card so I like the rules in my game are 30 seconds plus 5sec end card two clicks to leave it that's my rule uh networks will push back saying yeah well you will lose ecpm but ecpm

over retention not a good deal right so yeah it's like discussion to be had yeah and two like two clicks to leave it meaning like there's a there's going to be an x button you press on that x button it says like huh nice press try again exactly yeah wow these are really evil like I mean no like it's like you know they're publicly listed companies it's their fiduciary duty to increase their margins right but we work for gaming companies and it's an our fiduciary duty as well for our shareholders to increase our margins as much as possible so it's just we're locked in this battle between publicly listed companies who are craving profits and it's kind of just the end never ending battle right forcing forcing players onto the App Store Pages not sounds so vicious all gravy right but the thing is like like I said before it's like reading in the Middle Ages as long as you know these things then you know how to deal with it yeah messaging

your ad Network being like hey please get rid of all 60c rewarded ad videos and get rid of end cards that are longer than 15 seconds yes thank you and then if they say no you go like nice working with you we're removing you from the OD stack and I guarantee the network will change it exactly then they will change it okay yeah with with the transparency I was more thinking about like once you start putting games into your ad and starts making money somehow like like you know how is it tied to the users you have how engaged they are and as you said actually there's not a lot of transparency because even you can't say where how the ecpm is calculated so that that kind of speaks volumes of you have the sum right so lower ecpm means that your user base is worth less and uh you know like for RPG games like I've sometimes seen in the US like you know $90 cpms for a rewarded video and then for games that are high on Organics uh you know ecpn might be 7 yeah for rewarded right because users who are organic are deemed in network

eyes you have less data on them right so they're usually worth less so in the world of AD monetization Organics are worth less interesting and just like in the world of games Organics are worthless yeah they are people we don't know anything about exactly very interesting okay let's talk about Brands and ads well you said that all the ads are pretty much getting into branded ads and brand becoming more if they take rid of fingerprinting right so that's probably not going to happen on Android but it will happen on Apple at some point probably so let's see what happens but maybe then we'll have you know Apple search ads to save us yes and apple arcade Netflix games um so so uh as long as I've been so I I first started working on ads back back back in 2013 from the game side uh I was doing some of the ad mization stuff for Heyday um um and back then when we were discussing with the ad colonies of the

world so and the chart boost of the world see I'm an OG in this one that the um the talk was the brands are coming and ever since Ever every time I I've kind of peaked into the ad monetization world the same topic has been there the ads are coming the Range Rover ads are coming the uh the the uh the you know the movie ads are coming are they still coming or have they come I mean they come they come twice a year they come twice a year Black Friday and Christmas and then they leave again it's just that simple and let's just be completely honest here like brand ads do exist when the economy is good or when the econom is bad they just leave but if you think about it uh I don't think branding advertising will be ever really massive in the current state on mobile for one big reason and that is because the main advertising like ads that you see on like mobile is other mobile games and that's a simple fact because mobile

games have higher LTV and trackable users and metrics than branding ads so if you look at the main Spenders on branding ads is the fast moving consumer good companies agencies and like yeah Big Brand companies like car companies right so you know like you getting a user for uh let's say a game I don't know like what's a good example raid can't yeah raid raid Shadow Legends right let's just say for argument sake their LTV is like I don't know $20 right so they can track that easily for a car let's say someone's like uh advertising F1 like you know pickup truck like there's no tracking that that someone's going to go to dealership and buy that so they can't track it it's just money spent and it's just like let's hope it worked right so they're always going to be willing to pay a higher CPI which leads to a higher ecpm so they'll win the auction right uh the only time this changes is on Black Friday and during Christmas when shopping Goes

Bananas uh but pretty much like when the economy went completely upside down what was it now two years ago like branding went completely out you can see this on The Branding Focus networks like they used to be semide decent and now demand is a big issue for these uh networks I focus on that and also a lot of this branding demand is locked away inside of agencies and to sell to agencies you need you know what is the saying stakes and strippers right like that's how you sell to agency you know like an army of sales people and relationships so I when I worked at adic they had a branding sales department right and how they did sales was very different from performance right performance is all about Roi roas trackable metrics and then agency sales is pretty much just who you know how close friends like what you can offer and then like I heard stories where you know like Mercedes comes and like hey we want to spend 50,000 on like branding can you get us on these websites uh okay

like what's your metric visibility you're like yeah okay like all right Impressions yeah like where do I sign you know in performance that would never happen right so as long as gaming is so big on mobile which it is like I don't think brands have too much of a space to compete just on a pure economic basis MH that's uh that's very well put and important for understanding oh did you but do you remember the uh the time when King hired their own like um ad sales team for Candy Crush and that was for Brands right they're like we're not going to show other other ads of other have ads now right and and like I think they're doing quite well on ads like I don't know how much their ad revenue is but I'm sure they've realized how dumb that initial decision was it was so dumb it was like it was it was it was like so so it was it was one of those decisions that you're you're like

a highflying executive and you feel that the the rules of the game do not apply to you like you're flying on a different level and then that's when you make these calls yeah you know but you know give me a couple billion dollars maybe I start making really bad calls as well right like no mode yeah it's more like like you know I'm not normal thing I'm a next I'm a being anyways I'm a king that's how they work so no shout out to King they're they're smart player they're definitely uh they're the kings of match right like Undisputed Kings but you know ad Revenue there was one silly move there was one silly move and we're allowed to make fun of it because it was silly then and it's even funnier now but anyways anyway so so talk talking about silly let's talk about Netflix Amazon let's get those guys angry as well so uh these content strongholds they're getting into

advertising business I think Microsoft was talking about getting into advertising business what's your take on that so Amazon is the rising star in our in the mobile space right and they are rising quickly like I wrote a blog post about it three or six months ago and how they're entering the industry is super interesting so right now in the US they are competing I would say with Google on banners in a lot of my ad stocks that I manage they're either the biggest partner in terms of share revenue or the second biggest in the States and how they do this is typical you know Amazon they're kind of saying is you know your margin is my opportunity and they do the same thing with ads so what they're doing is they have their e-commerce demand so what I said before about the iron Source how it works is like you have some iron Source direct demand but then they also have other demand so how they did this was super clever so they moved into into the market and they're like we have our first party e-commerce demand uh we're only going to accept

people on our platform that has a high match rate with where we can find the Amazon ID so they kept it or still is a closed garden and they slowly onboard advertisers that they know is going to have a high fill rate so not everyone can join which is super annoying uh but then also what they did Super clever uh which is also why they're scaling so much right now they enabled a program called Tam what is Tam I can't remember what it stands for but Tam sounds good so I'll just say Tam so what is Tam so like I said before own demand and then they have a bunch of dsps that pay a tax I think is 18% to show their inventory through their Plumbing so they can show banners and justicial if they pay the price right uh what they allow you to do on Amazon which is the only company that allows this currently is that you can go and look at the full list of dsps which you can do on any network that are buying into your inventory and then you

can see if any dsps are spending a lot and what Amazon then allows you to do is reach out to that DSP say hey let's do a tam agreement uh if you do a tam de agreement that's a direct IO agreement with a DSP so they pay you then Amazon drops that 177% down to a fraction of a cent per impression shown so uh you can actually like if you go on my website you find the article you can see the example uh so basically a a picture on that article where I implemented Tam and how like pretty much after that the Amazon Revenue like quadruples in like in like half a month and they're doing this on banners and now they're moving into rewarded ads and intials they're not quite there yet because they don't have the ability yet to do the end card that you know they knowing click clickable end card which you have to do now to compete but they're going to figure it out like they're the quickest growing ad network uh right now in the states and yeah they're going to take it over not take it over but they're going to be forced to be reckoned with and it's looking

super strong for them that sounds good and scary at the same time scary for some uh how about Netflix and Microsoft don't know they're not in the mobile space yet right like they're making mobile games but they're making premium right you probably know more about that than I do uh sub I don't I don't even look at that right because they don't have G ads in their game so yeah oh well they don't have any monetization than games they don't have good games either but that's a different story um okay got it so um okay so let's let's move on to the uh the last part what we be seeing in the inap ads during the next two years so we understand the 24 you mentioned that is going to be a tough year for inap ads and what's going to happen like what do you see happen happening in the next two years so there's a lot of change happening so I think like when always

there's a big change there's always opportunity for new entrance new movements if you look at like when you said you remember chart boost and not call any what you mentioned right like their shares of the market were enormous back when you're mentioning that and right now fractions of that right so this is a fast moving industry that has the chicken the EG problem right all the time supply and demand you got to match supply and demand if you don't have enough Supply you get less demand vice versa vice versa right so things can change extremely quickly uh right now applovin looks like to be in a very very strong position but you know not guaranteed they will keep it but they're pretty good operator so wouldn't be surprising right the biggest things what's happening right now is that Google has a very stronghold on the market as well for inapp advertising and they've kind of become a king Maker Now to think think about it as well for mediation platforms so currently now Google are moving to bidding only um no

more placements uh next quarter or q1 next year pretty much but they have only accepted that their bidder will be in four mediation platforms and Google typically makes up 40 to 60% of Advertiser revenues no matter what game you have right so what they have essentially become is King makers in the mediation business because you can't have a mediation without Google bsiness so it's four mediation platforms that have Google bidding currently so if they don't open up Google bidding to more those are the only four mediation platforms that will ever exist on mobile so that's Unity app Loven um chart boost uh digital turbine and of course their own mediation uh admal mediation interesting chart boo still hanging on yeah I mean uh they have all their demand from being bought by zingga right so you know part of I don't know if they still call it helium or not but you know I think I'm not sure but I'm pretty sure a lot of their portfolio companies use helium right MH

or chart boost interesting and are they going to be like how about AR ads I don't know no idea I don't know just on mobile never thought of it never thought of it but what I expect to happen is more consolidation and more consolidation to keep happening I'm sure Unity will be bought at some point by Microsoft Microsoft or app maybe I don't know like I have no idea but like the more consolidation is bad for the ecosystem because then it's harder to get better deals by pitting networks against each other for negotiation it's harder like you said remember what I said the most important thing you can do is have competition and you know if it's all one or two networks then it's not that much competition anymore right so yeah more consolidation uh which it could make things harder in the anop space But the thing is I've been doing this for like what is it eight years nearly now and there's always hacks that come up and

they always appear so there's always a way to get an edge if you know what you're doing so now what I said this Google sacks are closing there's probably another one that's going to be opening at some point right so just have to wait and see and figure it out so very interesting times but it's going to get harder I think and yeah would you say that increase in inap ads inap ad monetization becomes more challenging going forward increasing your you'll still get paid a lot of money for inventory right so if you don't have ads in your game or if your metrics are below the metrics I listed before you know there's definitely room for you to grow if you just you know pull your sleeves up and do the work right there's always more way to get it but like the ones that live and die by ad margins that's going to get more harder right so hyper casual style of games like that's why they're moving into hybrid right like it's going to get harder to have a pure margin business based on ads alone still a killer business to supplement iips and der risk your business right but

probably only ad Revenue driven games is going to be a lot tougher going into the future than yeah it was in the past yeah especially the the like with uh with Hyper casual because acquisition is is more expensive and when acquisition is more expensive and only thing you have to push is inap ads and you don't have the inup purchase half of your business then you're going to be dead yeah I mean there's a lot of interesting things happening like it like I said there's a lot of changes we haven't even touched on skip it and like things like that game skip it it's like uh allowing uh your users to buy tickets that skip rewarded ads uh or you can supplement I APS so this is a clever way of actually uh removing the friction so like there's always in business discussion do you s show rewarded ad to paid users or not like dumb discussion to even have of course you rewarded ads but in every IAP you should put skip it so when someone buys something you can actually skip the

rewarded ads so then making your inup currency even more appealing to buy so dumb discussion to have skip it also kind of what you're seeing now in the latest kind of things is um using actual premium currency in the game to skip ads and basically using the premium currency to skip ads so a lot of things are happening I encourage any listener to hear this is play my perfect hotel by seame to see thish uh or mob control by Voodoo and then you can see kind of these things at play but yeah last one digital well last last part of my last question is a digital Market act so this is the uh the eu's uh new ruling that will have a pretty significant effect on at least the uh the app and games business in EU and as we know from gdpr and some other rulings that have happened in EU it tends to go Global in a relatively short amount of time and when we talk about digital Market acts we we tend to talk about the effect on

the web shops and the fact that you can actually now push towards web shops from from your own apps it's the fact that you can open up your own storefronts or third party stores and open them up but the stuff that is not that much discussed is the uh developers being handed more access to complete data from the platforms uh or whoever is being deemed as a gatekeeper does this have an effect on inap ad monetization oh my God yes and it's been a topic for the last half year and it's so boring government regulation like it's just like it's just so unsexy so boring but you have to do it right yeah it's just a sign of where our Market has gone right so it's Consolidated it's gone so big that now government has stepped in to regulated it which what happens typically when regulation it gets harder for new entrance to come in because it requires higher cost to appeal with the regulations so you know it's harder to become a new entrance

into the market as a result that's my opinion all right but the r rules are in place what are the rules and what will the impacts be so Google was the first one uh to announced couple of months ago that any app developer wanting to have Google demand that is targeted in the EU or the UK will have to send uh ad requests with a CMP approved string in their bid request which means that app developers needs to install a consent management platform that is approved by the IAB in order to still get targeted ads from Google in that Geo so you don't have to do it but then you won't get targeted ads from that like from EU and the UK from Google which pretty much means that you're losing 40 to 60% of your ad Revenue in that in those GEOS if you don't have any users there fine great don't do the CMP pain in the ass anyway right but most people that have a

lot of bad Revenue have to comply and they have to install the CMP um you can either use the Google one uh which usually has an opt-in rate what I see in clients of like 84% or you can go and go with a bunch of vendors and usually then I can see that like what can you say like consent rates are like 94% M just a lot of development work that need to do it doesn't look great it's annoying to do uh only good news is that you also get Amazon demand because they actually just don't Target European users at all right now so that's a nice carrot for you if you do it but yeah it's something you have to do and it's not sexy and the due date for Google is the 16th of January and then it's slowly going to get phased out until the end of the quarter pretty much interesting like I said there's a lot of things are happening in the in up uh add space yeah and whatever happens whatever whenever it feels like the game has

ended there's always a hack yeah exactly that's how it works well Felix this was immensely beneficial to my understanding I will need to listen to this a couple of times uh but you have a wealth of knowledge and thank you it was a pleasure to be on here very impressive person so thank you for talk yeah my pleasure so uh for for folks to connect with Felix it's Felix br.com we'll put in a link in the podcast description below and if you need help with your Ina ad monetization um he will fill your demand a good one very good one you can use that tagline I will uh on that note um thank you ladies and gentlemen for listening thank you Felix once again for educating um me chia