Facebook expands rewarded video, playable ads for mobile games

Brief:

Facebook is expanding rewarded video and playable ads to mobile game developers that belong to its Audience Network, the company's in-app ad network that tracks mobile users across the internet. The total number of game publishers using Audience Network grew more than 50% last year, Facebook said in a blog post yesterday.
Rewarded video — which gives gamers incentives to watch a video by offering points or other valuable gaming content like levels, lives or virtual gear — is the most effective ad format, per a study commissioned by Facebook. Nearly 80% of game developers that use ads and in-app purchases to monetize their content said rewarded video is the most effective format. More than half of game developers (53%) said they believe rewarded video drives in-app purchases.
Facebook also added playable ads, which let developers offer a mini version of a game embedded in an ad before downloading the full app, to Audience Network after launching the format in its News Feed last August. One-third (33%) of game publishers that use in-app ads and in-app purchases said playable ads are the most successful format, per Facebook's study.

Insight:

In-app advertising is becoming a key source of revenue for game developers looking to diversify their revenue from a reliance on in-app purchases or download fees that are subject to hefty commissions collected by app stores. U.S. spending on in-game ads will grow 16% to $3.25 billion this year from $2.8 billion in 2018, eMarketer forecasts. That figure mostly consists of mobile gaming because console game platforms — such as Sony PlayStation and Microsoft Xbox — typically aren't ad-supported, even though they provide access to online TV, the internet, shopping and social networks.

By making rewarded video available to all gaming apps on Facebook Audience Network, the company is giving game developers and publishers more opportunities to monetize their mobile games. Facebook said the format is highly effective at engaging new app users. People who installed an app after trying it in a playable ad opened the app 60% more often and were six times more likely to make an in-app purchase than people who installed through other ads for the same apps. Among rewarded video placements on Audience Network, playable ads see 60% to 85% higher CPMs than regular video, the company said.

Developers said a combination of in-app ads and in-app purchases was most effective for monetization, with about 55% using both methods. More than half (57%) of mobile developers said they believe in-app ads can improve player retention without detracting from the game. Those developments are positive for an industry that's been historically resistant to advertising that detracts from the player experience.

For Facebook, selling in-game ads through its Audience Network opens another source of revenue for the company as it competes with games for the attention of mobile users. Mobile gaming has become so ingrained in smartphone usage that 69% of U.S. consumers said they'd rather give up social media apps or TV than lose their favorite mobile games, per a study by mobile ad firm Tapjoy. Its survey found that 41% of people are likely to pay attention to ads in mobile games than those on the internet, in magazines or on billboards. While Facebook has expanded its own gaming content, including a new gaming tab for streaming content and casual gamers, the company also wants to collaborate with developers by providing them with ad inserts.