On this visitor submit, head of advert monetisation at GameBiz Consulting, Božo Janković shares his perception on higher understanding one among advert monetisation’s ‘favorite’ metrics.
Moderately than being a easy case of simply ‘following the numbers’, understanding the subtleties of every distinctive scenario is crucial to make sense of eCPM’s larger image
Let’s get began…___________________________________________________________
eCPM is essentially the most ineffective metric in advert monetization, but it attracts essentially the most consideration amongst advert monetization managers and senior employees in sport growth studios.
Working within the cellular, free-to-play video video games trade for over seven years now, a number of the most typical questions I’ve heard from colleagues engaged on advert monetization, management staff members, and my purchasers concern eCPM.
“I heard that this sport has $20 eCPM, and we solely have $12. What are we (otherwise you) doing fallacious?”
Or…
“Our sport X has $10 eCPM, and our sport Y has $6. Why are we not working extra on attaining the identical eCPM?”
On this piece, I’ll attempt to argue why eCPM is the trickiest and, therefore, essentially the most ineffective metric in advert monetization if it’s noticed exterior of the right context.
Learn on to be taught in regards to the essence of eCPM, the way it works and what are the highest ten issues that you must know earlier than having discussions about eCPM along with your colleagues (or a boss!).
Let’s begin with the fundamentals and dig deeper into this matter. First issues first.
What’s an eCPM?
eCPM stands for Efficient Price per Mile. It’s a metric that tells us how a lot cash we’re incomes per one thousand impressions (adverts) proven to our gamers. It averages out our earnings over 1000’s and thousands and thousands of adverts that we present, for the reason that worth of these commercials largely comes from the installs and different actions our gamers do, not as a result of a participant merely watched an advert.
Within the subsequent a number of factors, we’ll go over completely different primary components that impression the eCPM and should be taken into consideration when attempting to match two eCPM values. Afterward, we’ll cowl extra superior components too!
Half 1: Fundamental components
#1 Advert format
That is in all probability the obvious one, and it’s essential for a purpose. Completely different advert codecs have completely different eCPMs by default, so it doesn’t make sense to match eCPMs if we aren’t observing the identical advert format.
It’s well-known that banners have the bottom eCPM, whereas rewarded video adverts and interactive adverts have a lot increased eCPM. The place is that this distinction in eCPM throughout completely different advert codecs coming from one? It’s easy. It originates from the completely different nature of those adverts. The rationale that rewarded video and interstitial adverts have an eCPM that’s a lot increased than banners is that they’re extra seen, they take up the whole display, they’re in a really interactive medium – video or these days usually a playable advert, they’ve a really seen name to motion in the long run in order that they entice way more participant consideration and the probabilities of the profitable conversion are a lot increased.
Relying on the combo of advert codecs used and the way they’re used, the eCPM of the sport shall be very completely different. With that in thoughts, when evaluating eCPMs between completely different video games, the one manner it’d make sense to match is that if we’re speaking about the identical advert format.
#2 Nation
That is a straightforward one. Irrespective of which format we’re speaking about, eCPM shall be very completely different, relying on the nation. eCPM tends to be a lot increased in international locations akin to america of America, Germany, and Japan than in international locations akin to India, Egypt, Brazil and Serbia. That is purely for financial causes for the reason that gamers coming from the primary group have the next shopping for energy (all of this, on common, in fact), and so, these gamers are extra beneficial to the advertisers.
When evaluating eCPMs between completely different video games, the one manner it’d make sense to match is that if we’re speaking about the identical nation.
#3 Platform
This was a straightforward one. A number of years in the past, it was well-known that the gamers on iOS have, on common, increased eCPM than gamers on Android. Just like the earlier level, an iPhone consumer has, on common, paid extra for his or her system than an Android consumer, which means that they’ve increased buying energy and are for that purpose extra beneficial to the advertiser since they’re extra more likely to pay and are more likely to pay extra.
Nevertheless, it’s not that easy anymore. Since Apple successfully deprecated IDFA, campaigns for iOS turned much less efficient, and due to this fact, the conversion is much less more likely to occur. These days, it’s normal to search out video games the place eCPM is increased on Android. When evaluating eCPMs between completely different video games, the one manner it’d make sense to match is that if we’re speaking about the identical platform.
#4 Scale
This ought to be simple to clarify, even to somebody who’s not essentially aware of the cellular promoting trade and is, for instance, extra targeted on the in-app buy facet of issues.
We’ve all been there; the sport goes via its first days available on the market, we begin buying gamers to check the sport, and we might have the primary few thousand installs. Retention is nice, ARPU is simply too, CPIs should not that unhealthy, and it looks as if we’ve a success on our palms.
Nevertheless, as we begin to scale, issues begin going sideways. CPIs are rising, and retention and ARPU should not doing that nicely anymore. Unexpectedly, we’re questioning profitability and whether or not we will make this sport successful or not. Sounds acquainted? The factor is – you possibly can obtain nearly any benchmark for nearly any sport KPI on a low scale, however when it will get massive, that is when the issues begin.
The identical factor occurs with advert monetization. Optimizing eCPM just isn’t the identical when you could have tens of 1000’s, as it’s when you could have a whole bunch of thousands and thousands of impressions per day. The number of adverts being proven to gamers additionally comes into play, as does the possibility of an set up occurring.
When evaluating eCPMs between completely different video games, the one manner it’d make sense to match is that if we’re speaking about roughly the identical scale.
#5 Mediation setup
Listed below are two examples from the alternative sides of the spectrum.
One sport is utilizing just one advert community to indicate adverts to its gamers. The opposite sport has a fancy mediation setup that features a number of advert networks, each bidding and non-bidding, waterfalls with 20 to 60 situations with completely different eCPM flooring costs, bid flooring, segments and tiers.
Within the latter, there may be way more demand and competitors amongst advert networks. Elevated demand and competitors between networks are what drive eCPM up. Mediation setup and its fixed optimization is essential in maximizing advert ARPDAU by growing eCPM and is one thing that many builders are doing. It completely is sensible to always optimize the mediation setup, run AB assessments, and carry out different actions aimed toward discovering a superior mediation setup, but it surely’s essential to pay attention to and acknowledge the opposite components, too.
A lot of the conversations across the trade about eCPM are targeted on this level – evaluating eCPM and mediation finest practices to attempt to enhance the eCPM, and that’s solely pure. Nevertheless, many different components appear to be put apart or fully ignored, which can result in the fallacious conclusion – if one sport has 5x decrease eCPM than the opposite, it doesn’t essentially imply it’s doing something fallacious – it’s doable that different components are inflicting that distinction and never the mediation setup per se.
The following set of things just isn’t one thing that’s usually talked about, particularly when having a dialog with C-level executives who, as a rule, don’t have time for a broader context and simply need fast, easy, and exact solutions. Fact be instructed, even amongst professionals on the topic, these components should not usually mentioned in informal conversations about eCPM.
Half two: Superior components
#6 Participant age (within the sport)
It is a very intriguing one. Primarily based on the info I’ve seen, gamers who spent extra time within the sport have a decrease eCPM than “recent” gamers. Funnily sufficient, these gamers are more likely to be essentially the most beneficial gamers on the IAP facet of issues as a result of they’ve one of the best retention. It’s not unlikely that they’ve longer and extra frequent classes and are in all probability extra more likely to pay. Why is their eCPM decrease then? I’ve a few hypotheses on this.
These gamers have been within the sport for a very long time (or a minimum of longer than somebody who’s on their Day 0 or Day 1). If they’re common or frequent advert viewers, they’ve already seen most of the adverts we’re serving, and it is likely to be the case that they’re changing into repetitive (I believe we’ve all had this occur to us – the sport we’re taking part in is steadily displaying the identical advert time and again).
Chances are high that, if the participant hasn’t put in the app after they’ve seen it for the primary 5 instances, they will not do it after twenty impressions both.
One other rationalization is that these gamers are very dedicated, very dedicated to our sport they usually merely don’t take a lot curiosity within the content material of the adverts they’re being served. They’re merely doing it to get in-game rewards. Once we discuss rewarded video adverts (or within the case of interstitials, as a result of they don’t have a selection) and irrespective of which advert we present, we’re unlikely to know sufficient of their consideration to make that set up occur.
This knowledge just isn’t one thing that advert mediation suppliers have entry to except builders ship them details about gamers’ ages within the advert request. For that purpose, this knowledge just isn’t available and never usually seen. Beneath, we will see an instance of how eCPM behaves in a single sport, relying on the participant’s age. The info is for October 2023, rewarded video adverts solely, Android solely, and United States solely.
To maintain absolutely the numbers confidential, I’ve taken Day 0 – Day 1 right here as 100%, after which all different knowledge reveals % of that authentic eCPM worth. By now, you’ve got caught on that absolute numbers don’t imply a lot…
We will see a number of patterns:
Gamers who’ve been within the sport for round half a 12 months generate solely 38% of the eCPM in comparison with gamers who simply put in the sport. So, their eCPM is greater than 2.5x decrease.
The eCPM worth has already been minimize in half for the D15 – D30 group.
The most important drop is from the primary to second age group. After that, the decline is way much less dramatic between the 2 neighboring teams.
It’s essential to notice that this doesn’t essentially imply that these gamers are the least beneficial from the advert monetization perspective. Since these gamers are doubtless very engaged with the sport, since they’re sticking round, it’s not unlikely that also they are engaged with adverts extra so than the common participant and that they’re watching extra adverts and have increased Impressions/DAU depend. The distinction in impressions/DAU is likely to be massive sufficient (if the system design of adverts permits, in fact) to make up for the eCPM distinction.
All this brings us to the conclusion that we aren’t evaluating apples with apples once we discuss two completely different video games, the place one among them has 50% of its gamers on their D0 – D3, and nearly none of them D30+ whereas the opposite has 10% of D0 – D30 and 40% of them D60+. When evaluating eCPMs between completely different video games, we’d ideally discuss the identical participant age.
#7 Utilization fee
A vital metric, obtainable on the mediation dashboards and but, by some means, fully missed in conversations about eCPM.
Utilization fee reveals what number of adverts are proven on common to a participant that watched a minimum of one advert (additionally reported as Impressions/Each day Engaged Consumer or Impressions/DEU, the place engaged consumer means watched a minimum of one advert). Why is that this metric so essential? The reason being easy – eCPM decay. With each single advert that we present to a participant, the probability of them making an set up, on common, decreases considerably. For that purpose, the eCPM is, on common, increased for the primary advert proven to the participant than for the tenth one for any given day.
Right here’s some knowledge to again up this declare. All knowledge is for October 2023, Android and iOS (individually), rewarded video adverts, and interstitial adverts (individually), United States solely.
You possibly can obtain the next res model of this picture right here.
Discover a number of issues:
For each single sport, the subsequent impression is price lower than the earlier one (true for Android and iOS, rewarded and interstitial).
Android appears to be considerably extra proof against eCPM decay.
Interstitial adverts appear to be way more proof against eCPM decay. The distinction may be very massive. I’d love to listen to from you if in case you have any hypotheses as to why.
eCPM decay from the earlier to the subsequent impression would not enhance or lower in comparison with the earlier pair of impressions. There is no such thing as a pattern – the numbers are comparable irrespective of if we evaluate 1st and 2nd or 4th and fifth impressions.
When evaluating eCPMs between completely different video games, we’d ideally discuss the same utilization fee.
#8 Blocking technique
Advert Monetization Managers have completely different choices relating to controlling which adverts are proven of their video games. Despite the fact that it’s inconceivable or a minimum of tremendously impractical to regulate each single advert proven to the gamers, there are some instruments that permit a sure stage of management. It’s doable to dam broadly, from entire classes (politics, faith) to particular genres (puzzle, on line casino) or in finer element the place you goal a single problematic app and even only one particular marketing campaign.
Usually talking, the extra restrictive the developer is with their blocking settings, the less advertisers there are to compete for the advert impression, which means much less competitors and probably decrease eCPM. After all, it’s not the identical if a number of major opponents are blocked together with essentially the most delicate classes or if a number of genres which can be generally known as the large advertisers are fully minimize off from displaying their adverts within the sport.
When evaluating eCPMs between completely different video games, we’d ideally talk about how intensive our blocking methods are.
#9 Participant supply (aka your Consumer Acquisition)
For those who’ve been fortunate sufficient to have your sport featured on the Apple App Retailer and/or Google Play Retailer in one of many extra outstanding spots on the shop (for instance, hero banner that includes), you’ll simply relate to this.
The that includes may convey a giant enhance in natural site visitors, however on the identical time, you’ll discover a lower in retention, monetization metrics, and just about each different KPI. Why? The sport is extra seen within the retailer and is attracting extra “random” gamers who should not essentially in search of the expertise your sport provides. They struggle it out for a bit, after which they’re gone.
This is only one instance of how gamers may differ in high quality. The identical goes for advert monetization metrics. Relying on what sort of gamers your sport is getting in the mean time (extra natural, extra paid, and inside paid, what sort of marketing campaign we’re speaking about), you’ll see completely different eCPMs, even for gamers on the identical platform and nation. Low-cost installs coming from low-CPI campaigns will generate low eCPM and vice versa – gamers coming from campaigns optimized in the direction of more difficult in-game occasions (buy, retention, and many others.) shall be paid extra expensively on the UA facet and also will be producing increased eCPM on the advert monetization facet.
As a consequence, two similar video games on the identical platform, in the identical nation, and with the identical advert format and mediation setup might have drastically completely different eCPM relying on the participant supply and high quality.
When evaluating eCPMs between completely different video games, we’d ideally talk about the place the gamers are coming from and what kind of UA campaigns are working in the mean time.
#10 Advertiser facet (aka different video games’ Consumer Acquisition)
Aside out of your consumer acquisition, which is able to affect eCPM via the standard of gamers it brings, a giant think about eCPMs would be the demand facet of the coin. Have some advertisers elevated, decreased, or fully shut down their budgets? Have they blocked your sport for some purpose? For Advert Monetization Managers, the demand facet of the equation is usually a nice unknown, a tenth nail in a coffin in understanding the nuances of the beast we name eCPM.
As you might have picked up by now, even while you discuss the identical advert format, nation, platform, scale, comparable mediation setup, participant age, utilization fee, comparable blocking technique, and participant supply, there nonetheless is likely to be that unknown issue that makes comparisons of eCPM between completely different video games fully inappropriate.
To display this, beneath, I’m displaying knowledge for 5 video games from the primary half of November 2023. Right here’s the trick: All of the video games are from the identical sport style, the info is for rewarded video adverts solely, United States solely, Android solely, the size is comparable, the mediation supplier and all advert networks are the identical, and the optimization technique is identical, participant age hasn’t been filtered out however as a result of nature of the video games, there shouldn’t be huge variations there both.
Utilization fee issue is excluded as a result of we’re solely wanting on the very first impression for that consumer on a particular day. No adverts are blocked from these video games, besides delicate classes, all site visitors is natural and nonetheless, the bottom eCPM is 2x decrease than the very best one. It is a enjoyable one to clarify, isn’t it?
As a basic rule of thumb, nice warning is important when evaluating eCPMs of two completely different video games. Despite the fact that all these quarterly trade studies on eCPM values may be attention-grabbing to take a look at, they need to be taken with an enormous grain of salt (higher make {that a} bag of salt!).
The truth that one sport has the next eCPM than one other doesn’t imply it’s doing a greater job at mediation optimization.
As an alternative of evaluating absolute numbers, it makes way more sense to debate the methods we’re utilizing to optimize mediation and different advert monetization setup components in our efforts to maximise the worth adverts convey to our enterprise.
