In 2022, American consumers spent $56.6 billion on video game titles and hardware. Mobile gaming and in-app purchases, also wildly popular, generated an additional $19.61 billion in revenue.
Despite the massive revenue reached by mobile gaming purchases, these don’t indicate how many people play games on their devices. According to a 2021 study, almost 57.3% of the US population (equating to around 191 million people) use their mobile devices to play games, validating the trends of mobile gaming in the entertainment industry.
Unwilling to pay the price to remove ads, many players opt to play their favorite games with advertising enabled, which has led to a very lucrative advertising boom in mobile gaming.
Mobile Gaming Advertising Revenue
The explosion of advertising within mobile games has led to incredible increases in the revenue generated by the industry as a whole. In 2020, only $4.1 billion was generated by advertising. By 2022, this increased to $6.26 billion.
With more people using their mobile devices to play games for entertainment, estimates expect the industry to continue on an upward trend and reach a value of $7.87 billion by 2024.
Purpose of Mobile Gaming Advertising
Although many gamers complain about disruptions from ads while enjoying the latest mobile titles, there is a good reason for them. Their existence is the primary reason you can download many games from app stores for free.
Game developers spend endless hours working to produce the most innovative and entertaining games possible. This development comes with substantial costs—estimates place the cost of creating a 3D game between $20,000 and $250,000, depending on how the development process is undertaken. The cost increases as the studio maintains the online server (if the game uses one) to provide functionality.
When a game is downloaded for free, these studios make no money despite gamers enjoying the fruit of their labor. While some games offer in-app purchases, not all players use these, meaning revenue generated by these sales doesn’t fully cover development or maintenance costs.
Developers allow advertising into their games to retain profitability and ensure they can cover their costs. While players may see this as a nuisance, this is the primary source of income for the studio behind the game that has worked tirelessly to produce an incredible experience.
Type of Mobile Game Advertising
There are two main ways in which mobile game advertising works: general advertising and reward advertising. Although both types are open to advertisers—from a new company hoping to hit it big with a new game to a premium supplier of slots long established in the industry—the latter is more lucrative.
While you may think general advertising is the most common, it is not. This type of advertising, which displays a video or banner ad to players, is used at random intervals throughout a game and can usually be dismissed immediately or after a very short period.
General adverts also often appear when a player launches or quits a game. These generate income for the developer each time they are seen. However, the revenue collected is significantly less than reward advertising because the ads are viewed for shorter periods and are, therefore, minimally less effective.
Reward advertising is more common and generates vastly greater revenue for game studios. This advertising is paired with an in-game reward in the form of additional resources, money, or removable time limits.
Because a reward is given at the end of the advertising period, these ads are generally longer (averaging 30 seconds) and cannot be dismissed. As such, the ad is viewed by players for extended periods and is more likely to be effective and capture the gamer’s attention. Skipping the ad before it has ended will result in the reward not being granted.
How Mobile Game Advertising Works
When looking to allow advertising in their games, developers will allocate specific space on the screen or specify when ads will be allowed. From here, it is often handed over to a third party who manages all ads.
On Android devices, where games are generally downloaded from the Google Play Store, most ads are managed by Google or Google AdMob. This arm of Google regulates ads by ensuring they are appropriate and do not breach any advertising regulations.
Once an ad has been approved, it is uploaded to a central server and given specific slots to display. This server controls the push of ads to mobile games, collects data metrics about how often the ad is viewed or clicked, and then generates a report for the company advertising in the app. Payment is then made and sent to the developer.
Mobile Games on iOS devices, downloaded from the Apple App Store, operate similarly. The division of the tech giant that deals with advertising is called Apple Search Ads. Like Google AdMob, this division checks all ads before publication to ensure they conform to community standards.
Once passed, the ad is then uploaded and set to a distribution protocol. Like games on Android, the ads displayed are recorded and tracked to produce a complete ad campaign report that details various metrics, including the amount of revenue that will ultimately be paid to the game developer.
Many gamers may complain about dealing with ads while enjoying the latest mobile game release. However, having to watch these ads is a small price to pay to ensure that most games remain free to download and play.
With the lucrative industry of mobile game advertising, these ads aren’t likely to disappear any time soon. They are there to reward developers financially for their hard work and dedication to producing immersive and engaging games for players to enjoy.