Advertising is a tax on the poor, and that’s OK

[Music] um yeah uh as mentioned my name is chrisa Feb and uh that's not actually how you say my name it's Chris Le fa and my talk is called advertising is a tax on the poor and that's okay um I work with a company called PR interactive at a Victoria BC it's a mobile monetization company and I'm extremely grateful to work for an advertising company that let me pay to stand here and tell you all that advertising is a tax on the poor and I'm equally grateful for Pocket Gamer for hosting us um just a preface to talk so this is sort of intended to be a fun thought experiment that looks at how advertising interacts with game economies uh and how that can pass value back onto the user and there's some political content in there for fun so if you have any hard views um I don't I just did this for fun so enjoy yourselves um before I get into the uh thought experiment I thought I should just tell you a little bit about myself um as I do enjoy talking about myself quite a bit uh so the first thing I did

in gaming uh was working with Cosmic Coria PC game uh helping on its Kickstarter campaign uh we were lucky enough to hit 250% of our Kickstarter goal um which uh is more impressive than the dollar amount but uh so that's why the percentage is up there and probably one of the funner things that came out of it was the PewDiePie coverage uh that we got and uh the audio isn't on but uh that's fine he's screaming as he does and uh the whole Donald Trump thing is is a bit weird but it will actually tie into some of the content later um from there I began doing user acquisition and free-to-play games online uh really just driving um really focusing in on on driving quality installs wherever possible uh and the main reason that's there is um obviously because they said something nice about me on my LinkedIn profile and that's my second favorite thing after talking about myself so thought I'd put that up there worked with a lot of different companies wargaming um uh gyen Marvel heroes um a whole slew a lot a lot of fun since Jo I'm having a hard time walking around of

this table here but just maybe just stand get myself this pacing space uh since joining Pao um you know continuously trying to involve myself in games and add value wherever I can so currently I act as a judge for Indie prize um testing 300 games four times a year definitely seeing a lot in terms of Trends and mechanics and shaer combinations monetization techniques the rest um and uh also like geographically Central centralized Trends as well so seeing what's happening in Europe seeing what's happening in Asia and North America on a more local front working with the igda and Victoria to help them market and promote uh the annual game jams uh we actually have one coming up uh at the end of October so if anybody's interested in talking about that afterwards it'd be great to have you guys out or uh even come down for a meet up and maybe do a guest talk there um so that's enough about me why are you listening to me well hopefully it's because you're one of two groups of people you're either a bright-eyed bushy tailed game developer who wants to make money doing what they love or you were a bright-eyed bushy bright-eyed bushy tailed game developer you're slightly more Jaden now and you're trying to continuously make money doing something

that you probably don't love as much as you used to but are still fond of so given that this is the um uh monetize acquire retain track I thought I wanted to sort of just set up this thought experiment within within those sort of Three core components so looking at sort of what what you're up against or what you're dealing with in the mobile marketing landscape to start with the acquisition uh we know user Acquisitions paid user Acquisitions is extremely expensive uh we did see a year-over-year uh decrease in costs for the uh loyal user um but we also know that winter is coming and with it uh higher acquisition cost as we try to clamor it to get onto the new devices um that that come with the holiday season so definitely fairly daunting in 250 might not sound like a lot of money but uh when you consider the retention um figures of the industry it's it's kind of uh demoralizing or uh terrifying to consider the fact that on a single day about 40% of your money is uh almost literally thrown in the garbage or uh after 30 days almost all of it

um so you know but if You' managed to like scrap together a pretty decent user acquisition budget you managed to actually keep some people in your game now you can focus on making money through purchases right well not always um according to Swerve you know under 2% of users are ever going to make a purchase uh which isn't very attractive additionally they'll do so once a month on average and and for a fairly small amount of money we're actually seeing less whales whales I think are becoming an endangered species in Mobile um possibly because of the you know vast uh amount of games that are available to play so uh we're seeing a decrease in the amount of users who will make multiple purchases per month um and then something that last point there that I thought was kind of interesting just the idea that most paying users will do so on day one but we already know that day one retention uh is as terrifying as it is so just kind of like interesting to kind of keep these sort of higher level pieces of information in mind um so if you're still listening to me uh and not just you know crushing some emails it's probably because you're trying to avoid starvation or scurvy like these game developers who couldn't even afford uh brand macaroni and cheese

it's that's off brand so so here Begins the thought experiment um if we can all agree that advertising is a tax on the poor which we can we can say that it is most most games allow uh the user to make a one-time purchase which will remove most forms of advertisement and they don't make that purchase they're then taxed via consuming ads um then we can by combining ad content and AD formats we can kind of create something that resembles a political a political Spectrum um and I definitely recommend you check out the talk by Scott Galloway really really cool stuff so it's basically up to you as game developers uh to Levy this tax against your users and it's up to you to decide how aggressive this form of Taxation is going to take are you going to uh use ads similar to banners or interstitials uh be they static or video where you essentially provide the user no additional uh value for and I say additional because obviously the game in itself has inherent value but um yeah are you essentially going to use ads that provide the zero additional value for interacting with them they are essentially the Donald Trump's of ads

they are loud obnoxious intrusive and there is a terrifying uh probability that they'll never ever go away um moving a little bit further down that Spectrum into where we begin to see uh inapp value exchange take place um largely in the form of rewarded video so this is uh you know a very very popular form of ads and this is definitely where uh value exchange begins to occur where the tax becomes less moderate but I think if you look at rewarded video very much uh much as is the case for Hillary Clinton's political career if you begin to pull back the layers a little bit you begin to question the long-term sustainability of the model um for one I don't know anybody that actually watches rewarded video I know IID don't and I played like probably 50 games this week and opted in to watch uh you know pot potentially a 100 different ads and I can think of maybe two games that I remember see in the commercial for so people aren't actually watching rewarded video it's a great way to make money and I definitely don't uh recommend not using it but um uh in terms of long-term sustainability it it definitely begs the question of how long it'll last and then there also important to keep in mind

that a lot of times developers aren't necessarily getting paid on a video view but they're getting paid on the install and we already know that user acquisition is as expensive as it is um and it it seems mind-boggling to me that we're advertising competitors products within our own when it's so hard to keep that user so just something to keep in mind there as well um at the end of the day it's all about LTV and if you come out positive that's great but what I really wanted to focus in on was okay so there there is value exchange taking place that users being given value for interacting with the ad but what does that look like and what's a fun way to frame it so I want to take this opportunity to showcase a local Studio hotthead who who do amazing work and uh their game boom boom soccer so this is basically just looking at their inapp economy so we see that uh a per average um unit of gold is just under two pennies and that through their rewarded video uh I believe tap Joy is their provider so there's many opportunities uh to perform incentivized actions to in game currency but for the purposes of brevity in this talk I uh uh just wanted to keep it strictly to the rewarded video so just a fun little way of framing this um you know they get three gold for watching a 30 second video we

know how much uh that gold is worth and how long it takes to acquire so essentially hothead games is paying its user $7 an hour to interact with ads which is a really good deal you're not going to get that from TV you're not going to get that from Radio print or anything else um so definitely you know it's really nice to see but something that's important to stress about this value exchange is that it occurs entirely in app there's nothing outside of the app that that user can call their own that they can then associate with the game and potentially help increase retention um so just something to keep in mind there moving to the most benevolent extreme of the ads and what what I consider to be the sexiest of AD formats um we start to see the uh display of brand content in the form of real world rewards um some of you are probably wondering why I have a naked picture of Justin Trudeau Canada's prime minister on the slide um and I hope the Canadians understand this but it's because it's 2016 so looking at um a prio ad so this is uh uh served in the format of a static intertial uh

where a user provided a 15% coupon uh for this content we can basically run that same calculation so we know you know what that discount is worth how much value that passes to the user and how long that how long that value takes to acquire we can actually see that prio interactive ads uh on average well in this particular instance are paying users an hourly wage of $633 which is I had double checked I mean it's just simple like Division and multiplication but I had like an actual developer look at this because it is very suspect um but it is in fact the case and uh what's really nice about this is that that value that value that value can be retained outside of app and so why is that important well going back to acquisition retention we know that the number one challenge facing facing developers is Discovery and that the number one source of downloads are social and emotional connection so being verbally told to play a game or seeing somebody play a game and then uh you know asking that person what it is and playing it yourself these are the most important and this is actually 2015's info I'm pretty sure featured outranks advertisements at this point so

it it's extremely extremely important to provide people an emotional Catalyst to talk about your game and I don't know about you but when I get something for free that I want I tell everybody else how to get that free thing if there is free pizza down the road I be like guys there's free pizza everyone hit it and we you know everybody be eating that pizza the pizza would be gone so something to keep in mind you want to give people an emotional uh Catalyst an emotional reason to talk about your game and so just looking at how we further you know basically create that emotional C so not only are we giving somebody something for free that they want but you know the very nature of the value exchange that prio ads uh provides is extremely different so you're not you're not saying to yourself oh you're not saying to your user okay you know watch this ad we'll give you a few coins you know thank you so much the value that the user providing you is actually engagement so our ads are placed uh during positive moments in game so you get a high score you level up whatever the case may be we create a nice optin flow that then serves that ad so the value that the user is giving you is engagement and what you're giving them as a prize for doing it something that

they can hold on to outside of the game and ideally have enough uh emotional C have enough of an emotional reason to tell their friends and family about this game so I rambled on pretty quickly there but uh that's pretty much all I have for you so happy to take any questions on uh on anything so you familiar with yes because they tried this like 3 years ago and they eventually found it didn't work and they went back to giving you know currency yeah yeah there's definitely and it's even is quite a challenge to even use the word rewards in front of a developer cuz every time I do they're like oh good yeah real word incentivized videos I get it totally and so there's always this backtrack um we work quite closely with keep um filling a lot of their ad requests on the non-incentivized side so yeah I think I think more and more Brands particularly retail are entering the mobile space and I think that it will become uh I think there'll be like less education around it so eventually I think uh it'll definitely be adopted a little bit more but certainly I think

the dominance of rewarded video is what makes it hard to understand because rewarded video is just like so easy and everyone gets it and yes you know but I mean I was talking with some people yesterday and on more on the UA side because I'm curious like you know if you're if you're out for user acquisition which is where all the money is coming from for rewarded video how well is that working out for you and I mean it's like the quality of an incentivized install it's exactly what you think it is it's not very good by and large um so I think it's uh I think that kind of comes back I mean it'll be interesting to see where where this model goes but it'll also be interesting to see where rewarded video goes because I'm not sure how long people are going to be footing the bill on that when uh you when the quality of the install isn't very good [Music] so