Brief:

• The portion of free-to-play mobile games that carry in-game advertising grew to 94% this year from 87% in 2018 as more developers moved to sell ad space to monetize their content, according to a study by game marketing firm deltaDNA shared with Mobile Marketer. 
• The percentage of developers making between 40% and 100% of their revenue from ads jumped 21% from a year earlier, deltaDNA found. Rewarded video ads, which unlock content in exchange for watching an ad, continued to grow as deployment rates rose to 82% of games this year from 65% in 2018, ahead of interstitial video ads (57%) and banners (34%). Playable ads were less popular, sliding to 19% of games this year from 21% in 2018. 
• The percentage of game developers showing five or more ads per gaming session grew to 30% this year from 20% in 2018, while the number of developers that don't show any ads fell by almost a third to 10%. The portion of game developers that said ads were an "important monetization opportunity" rose to 64% this year from 59% in 2019, while 15% of respondents said ads scared off potential payers.

Insight:

In-game ads increasingly provide a way for mobile marketers to reach audiences who are engaged with a gaming experience and aren't just passive consumers of content, deltaDNA's findings suggest. Growing in-game ad inventory gives marketers another digital channel to diversify their media budgets and lessen any over-dependence on paid search or social media. Mobile platforms are responsible for 47% of time spent with digital games, making them more popular than gaming devices (27%) and personal computers (22%), according to a Deloitte study cited by eMarketer.

Game developers used to be wary of in-game advertising amid fears of alienating gamers and interfering with the user experience. Those concerns continue to ebb amid growing acceptance of in-game advertising among hardcore gamers, not just casual gamers who were willing to see ads in exchange for free downloads and other rewards. The number of game makers that said they feel "confident" about their approach to ads rose 60% in the past 12 months, a significant indication that their attitudes have changed.

Developers are also becoming increasingly competent about balancing ads and in-app purchases (IAP) to preserve the player experience, deltaDNA said. Its survey found that game makers are diversifying their ad formats. More than two-thirds (68%) of game developers used more than one ad format within their games this year, up from 56% in 2018. The percentage of game makers using three or more different kinds of ads rose to 33% this year from 20% during the same period.

The most common concerns about in-game ad frequency are increased player churn (30%), lower levels of player enjoyment (27%) and effect on IAP revenue (16%), per deltaDNA. More than one-fourth of developers (28%) don't evaluate the return they get from user acquisition (UA) spend, while the most common form of evaluation (31%) is to compare the CPI from UA campaigns.