Escaping the Mobile Game Ad Treadmill With Rewarded Brand Advertising

On July 27, 2022, Google updated its developer policies for in-game ads for mobile games on their Play Store. Announced in a post titled “Better Ads Experiences, the company called out the terrible state of abusive ad experiences across the mobile game landscape, accompanied by visual examples of non-skippable, interruptive, deceptive and inappropriate ads. Notably – and not surprisingly for anyone who plays games on a mobile phone – the one and only type of advertisement that Google specifically exempted from obliteration was… the rewarded ad. Here’s the exact language (emphasis added): “This policy does not apply to rewarded ads which are explicitly opted-in by users (for example, an ad that developers explicitly offer a user to watch in exchange for unlocking a specific game feature or a piece of content).”

For me, this is a bit of a schadenfreude moment. While I don’t really take pleasure in others’ misfortunes, I can’t help but get a kick out of this announcement. A decade ago when I was head of global brand partnerships at Electronic Arts, I led a team that proposed, evangelized and helped convince Google to enter into the in-game ad business with a rewarded ad platform. It was in our interests to have Google on board to help improve the quality of brands involved and the safety of the experience for gamers. Initially, the idea of “incentivized” ads was considered heresy to the Google founders, who reportedly shot the idea down several times. It took a couple more years and lots of meetings to finally get across the notion that interruptive and pre-roll type ads would never fly for free-to-play gamers and that value exchange was the key to any in-game ad platform’s success. Eventually, Google conceded and jumped into the in-game SDK space full bore.

While finally eliminating the outrageously egregious ad experiences in mobile games is a good start, it really doesn’t address perhaps the most perplexing aspect of in-game ads in mobile -- and the primary reason that leading brands have conceded the landscape to direct-response and app-install advertisers. When I was one of the creators of the innovative “rewarded ad” platform BrandBoost™ at WildTangent, circa 2002, I never could have imagined that games would end up with ads for other, often competitive, games as the key driver of revenue outside of in-app purchases. But that is exactly the state of mobile in-game advertising today. By far, the leading ad monetization comes from other games, with the entire $100B mobile games marketplace arbitraging players among themselves and hoping to shill the non-spenders out to other developers for a fee, all while retaining and capturing the whales, dolphins and minnows who spend a lot, some or a bit of money in the largely F2P mobile ecosystem. (For more on this “monetization trap,” read Eric Seufert at Mobile Dev Memo.)

From the perspective of players, seeing ads for other games is not necessarily a bad thing. In fact, to them those may be the most relevant ads. But there is a reason why King Games and Activision specifically don’t allow competitive game ads to run in Candy Crush, or why the NFL doesn’t air ads for the NBA during its broadcasts -- it just doesn’t make sense. Why risk the audience decay? And yet this has become the backbone of the business model for several newly minted IPO game ad-tech companies as well as a big revenue driver for Facebook, Google and others. What we now have is a giant treadmill operation in which a game sells ad space to other games and then uses that ad revenue to fund acquisition campaigns to buy ads on other games that reach similar players. But as anyone who has tried to keep ratcheting up the speed and angle of a treadmill during a workout knows, eventually it will come to an exhausting end.

That capitulation is near: Apple with its ATT (App Tracking Transparency) toggle for consumers and Google with its pending privacy changes are cutting off (at least for second and third parties) the deep level of unique SDK-level player data that the games have been trading on for years, fueling efficient ROAS (Return On Advertising Spend) and player growth for developers. Already the earnings of ad-tech leaders like AppLovin, Unity and IronSource have been hit hard, along with platforms like Snap and Meta (Facebook). And now, Google is throwing down the ad-standards gauntlet as part of the Coalition for Better Ads, which will surely send user acquisition, ad efficiency and in-game ad revenues down another peg, at least near-term.

Is there a silver lining to all this upheaval? I’d like to think the rapid deterioration of app-install efficiency creates a window of opportunity for the industry to rethink the use of rewarded-ad space in mobile games. Maybe game developers cleaning up their experiences will lead to a new, more pristine environment for players and the brands that by all rights would want to engage with them – perhaps by helping them unlock in-game content in return for a few seconds of engagement, resulting in turn for more than a few moments of joy and appreciation for the consumer products and services that made such rewards possible.

That’s certainly the philosophy behind the approach my team and I have taken in another large and extremely valuable F2P game market: console and PC games. Over the past year and a half, we’ve built up PlayerWON® from scratch into the only player-first, rewarded experience custom-made for big-screen console and PC titles. Our focus is entirely on providing gamers with a beneficial value exchange, developers with a non-deletive ad model, and brands with a uniquely viable way to finally reach young, highly engaged players in a benevolent and highly appreciated manner.

No treadmill here.

I’d love to hear your thoughts. Leave me a comment at davemadden.substack.com.

Want to learn more? Find out how PlayerWON® enhances the experience for F2P console and PC gamers while driving lifetime value and in-game spending for publishers.