On this visitor put up, 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 state of affairs is crucial to make sense of eCPM’s greater image
Let’s get began…
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eCPM is probably the most ineffective metric in advert monetization, but it attracts probably the most consideration amongst advert monetization managers and senior employees in sport growth studios.
Working within the cell, 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 crew members, and my shoppers concern eCPM.
“I heard that this sport has $20 eCPM, and we solely have $12. What are we (otherwise you) doing incorrect?”
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, probably the most ineffective metric in advert monetization if it’s noticed outdoors of the correct context.
Learn on to study in regards to the essence of eCPM, the way it works and what are the highest ten issues that it’s best to 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 subject. 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 (advertisements) proven to our gamers. It averages out our earnings over 1000’s and tens of millions of advertisements 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 have to be taken under consideration when making an attempt to check two eCPM values. Afterward, we are going to cowl extra superior components too!
Half 1: Primary components
#1 Advert format
That is in all probability the obvious one, and it’s necessary for a motive. Totally different advert codecs have completely different eCPMs by default, so it doesn’t make sense to check eCPMs if we’re not observing the identical advert format.
It’s well-known that banners have the bottom eCPM, whereas rewarded video advertisements and interactive advertisements have a lot greater 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 advertisements. The rationale that rewarded video and interstitial advertisements have an eCPM that’s a lot greater than banners is that they’re extra seen, they take up the complete display, they’re in a really interactive medium – video or these days typically a playable advert, they’ve a really seen name to motion ultimately so that they appeal to rather more participant consideration and the probabilities of the profitable conversion are a lot greater.
Relying on the combo of advert codecs used and the way they’re used, the eCPM of the sport can be very completely different. With that in thoughts, when evaluating eCPMs between completely different video games, the one method it’d make sense to check 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 can be very completely different, relying on the nation. eCPM tends to be a lot greater in nations similar to the US of America, Germany, and Japan than in nations similar 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 useful to the advertisers.
When evaluating eCPMs between completely different video games, the one method it’d make sense to check is that if we’re speaking about the identical nation.
#3 Platform
This was once a straightforward one. A couple of years in the past, it was well-known that the gamers on iOS have, on common, greater eCPM than gamers on Android. Just like the earlier level, an iPhone consumer has, on common, paid extra for his or her machine than an Android consumer, that means that they’ve greater buying energy and are for that motive extra useful to the advertiser since they’re extra prone to pay and are prone to pay extra.
Nonetheless, it’s not that easy anymore. Since Apple successfully deprecated IDFA, campaigns for iOS turned much less efficient, and subsequently, the conversion is much less prone to occur. These days, it’s normal to seek out video games the place eCPM is greater on Android. When evaluating eCPMs between completely different video games, the one method it’d make sense to check is that if we’re speaking about the identical platform.
#4 Scale
This must be straightforward to clarify, even to somebody who’s not essentially accustomed to the cell promoting trade and is, for instance, extra centered on the in-app buy aspect of issues.
We’ve all been there; the sport goes by means of its first days in the marketplace, we begin buying gamers to check the sport, and we might have the primary few thousand installs. Retention is nice, ARPU is just too, CPIs will not be that unhealthy, and it looks as if now we have successful on our palms.
Nonetheless, as we begin to scale, issues begin going sideways. CPIs are rising, and retention and ARPU will not be doing that nicely anymore. Swiftly, 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 will not be the identical when you may have tens of 1000’s, as it’s when you may have a whole bunch of tens of millions of impressions per day. The number of advertisements being proven to gamers additionally comes into play, as does the prospect of an set up occurring.
When evaluating eCPMs between completely different video games, the one method it’d make sense to check is that if we’re speaking about roughly the identical scale.
#5 Mediation setup
Listed here are two examples from the alternative sides of the spectrum.
One sport is utilizing just one advert community to point out advertisements 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 cases with completely different eCPM ground costs, bid flooring, segments and tiers.
Within the latter, there’s rather 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 consistently optimize the mediation setup, run AB assessments, and carry out different actions aimed toward discovering a superior mediation setup, nevertheless it’s necessary to concentrate on and acknowledge the opposite components, too.
Many of the conversations across the trade about eCPM are centered on this level – evaluating eCPM and mediation greatest practices to attempt to enhance the eCPM, and that’s solely pure. Nonetheless, many different components appear to be put apart or fully ignored, which can result in the incorrect conclusion – if one sport has 5x decrease eCPM than the opposite, it doesn’t essentially imply it’s doing something incorrect – it’s doable that different components are inflicting that distinction and never the mediation setup per se.
The following set of things will not be one thing that’s typically talked about, particularly when having a dialog with C-level executives who, most of the time, 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 will not be typically mentioned in informal conversations about eCPM.
Half two: Superior components
#6 Participant age (within the sport)
It is a very intriguing one. Based mostly on the information I’ve seen, gamers who spent extra time within the sport have a decrease eCPM than “contemporary” gamers. Funnily sufficient, these gamers are prone to be probably the most useful gamers on the IAP aspect 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 prone 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 not less than longer than somebody who’s on their Day 0 or Day 1). If they’re common or frequent advert viewers, they’ve already seen lots of the advertisements we’re serving, and it may be the case that they’re changing into repetitive (I feel we’ve all had this occur to us – the sport we’re enjoying is incessantly displaying the identical advert again and again).
Chances are high that, if the participant hasn’t put in the app after they’ve seen it for the primary 5 occasions, 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 advertisements they’re being served. They’re merely doing it to get in-game rewards. After we discuss rewarded video advertisements (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 information will not be one thing that advert mediation suppliers have entry to except builders ship them details about gamers’ ages within the advert request. For that motive, this information will not be available and never typically seen. Under, we will see an instance of how eCPM behaves in a single sport, relying on the participant’s age. The information is for October 2023, rewarded video advertisements 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 information exhibits % of that unique eCPM worth. By now, you have caught on that absolute numbers don’t imply a lot…
We are able to see just a few 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 lower in half for the D15 – D30 group.
- The largest drop is from the primary to second age group. After that, the decline is far much less dramatic between the 2 neighboring teams.
It’s necessary to notice that this doesn’t essentially imply that these gamers are the least useful 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 advertisements extra so than the typical participant and that they’re watching extra advertisements and have greater Impressions/DAU depend. The distinction in impressions/DAU may be massive sufficient (if the system design of advertisements permits, in fact) to make up for the eCPM distinction.
All this brings us to the conclusion that we’re not 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 price
A vital metric, obtainable on the mediation dashboards and but, in some way, fully ignored in conversations about eCPM.
Utilization price exhibits what number of advertisements are proven on common to a participant that watched not less than one advert (additionally reported as Impressions/Day by day Engaged Person or Impressions/DEU, the place engaged consumer means watched not less than one advert). Why is that this metric so necessary? 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 motive, the eCPM is, on common, greater for the primary advert proven to the participant than for the tenth one for any given day.
Right here’s some information to again up this declare. All information is for October 2023, Android and iOS (individually), rewarded video advertisements, and interstitial advertisements (individually), United States solely.
You possibly can obtain the next res model of this picture right here.
Discover just a few issues:
- For each single sport, the following impression is value lower than the earlier one (true for Android and iOS, rewarded and interstitial).
- Android appears to be considerably extra proof against eCPM decay.
- Interstitial advertisements appear to be rather more proof against eCPM decay. The distinction could be very massive. I might love to listen to from you if in case you have any hypotheses as to why.
- eCPM decay from the earlier to the following impression does not enhance or lower in comparison with the earlier pair of impressions. There isn’t a development – the numbers are comparable irrespective of if we examine 1st and 2nd or 4th and fifth impressions.
When evaluating eCPMs between completely different video games, we’d ideally discuss the same utilization price.
#8 Blocking technique
Advert Monetization Managers have completely different choices relating to controlling which advertisements are proven of their video games. Although it’s unimaginable or not less than tremendously impractical to manage 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 complete 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, that means much less competitors and probably decrease eCPM. In fact, it’s not the identical if just a few essential opponents are blocked together with probably the most delicate classes or if just a few genres which are often called the large advertisers are fully lower off from displaying their advertisements within the sport.
When evaluating eCPMs between completely different video games, we’d ideally talk about how in depth our blocking methods are.
#9 Participant supply (aka your Person Acquisition)
If you happen to’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 visitors, however on the similar 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 will not be essentially on the lookout for the expertise your sport affords. They fight 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 meanwhile (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 direction of tougher in-game occasions (buy, retention, and so on.) can be paid extra expensively on the UA aspect and also will be producing greater eCPM on the advert monetization aspect.
As a consequence, two equivalent 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 sort of UA campaigns are operating in the meanwhile.
#10 Advertiser aspect (aka different video games’ Person Acquisition)
Aside out of your consumer acquisition, which can affect eCPM by means of the standard of gamers it brings, a giant consider eCPMs would be the demand aspect of the coin. Have some advertisers elevated, decreased, or fully shut down their budgets? Have they blocked your sport for some motive? For Advert Monetization Managers, the demand aspect of the equation could be a nice unknown, a tenth nail in a coffin in understanding the nuances of the beast we name eCPM.
As you’ll have picked up by now, even if you discuss the identical advert format, nation, platform, scale, comparable mediation setup, participant age, utilization price, comparable blocking technique, and participant supply, there nonetheless may be that unknown issue that makes comparisons of eCPM between completely different video games fully inappropriate.
To display this, beneath, I’m displaying information 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 information is for rewarded video advertisements solely, United States solely, Android solely, the dimensions is analogous, the mediation supplier and all advert networks are the identical, and the optimization technique is similar, 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 price issue is excluded as a result of we’re solely trying on the very first impression for that consumer on a selected day. No advertisements are blocked from these video games, besides delicate classes, all visitors is natural and nonetheless, the bottom eCPM is 2x decrease than the best one. It is a enjoyable one to clarify, isn’t it?
As a common rule of thumb, nice warning is important when evaluating eCPMs of two completely different video games. Although all these quarterly trade stories on eCPM values could be fascinating 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 rather 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 advertisements convey to our enterprise.
