How we Raised LTV
by disabling one
Optimizing an In-App Ad monetization Model
In-app advertising is the monetization model most profitable for NewPubCo games. In this situation, we faced the following dilemma:
- To create a strategy focused solely on increasing revenue, at the risk of losing users?
- Or to reduce user churn & increase the LTV by protecting users from an aggressive ad network -which could potentially cause a loss in daily revenue (ARPDAU)?
We chose both. Appodeal built a monetization strategy that balances the ad delivery to users, while maintaining the retention rates. This could ensure the developer a high daily ad income.
But to find the perfect balance is not always as easy as it seems.
The difficulty of assessing the Cost of Opportunity
And it's also quite difficult to give up a high ARPDAU. Even more when, day after day, we check our monetization dashboards and see that each user brings a higher income than yesterday. When this indicator starts to fall, means that your mobile business is in a serious threat.
The tricky situation is to increase the CTR (click-through rate) on our in-app ads. Tactics to increase the CTR usually go against the game loop. Users don’t want to find too many ads during their gameplay.
Also, if videos are difficult to close, you can misclick on the ad. As a user, you get so annoyed that you may end up closing the app right away or even uninstalling it.
Some developers think that to keep and increase the ARPDAU (Average Revenue per Daily Active User), the game must push as many ads to the user as soon as possible and then spend the revenues on UA campaigns.
However, these strategies don't always bring the highest LTV. The churn rate caused by aggressive advertising is too high.
Therefore, we decided to be more gentle with our in-app ads while taking care of our users & gameplay.
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Disabling an aggressive Ad Network
We A/B tested what would happen to our retention rates if we turned off one of the aggressive ad networks in the monetization strategy. Would LTV's growth compensate for the loss in ARPDAU? A difficult question to answer. If we noticed a loss of our daily ad income, we would be ready to act.
During the A/B test, we soon discovered the additional benefits of the new Appodeal dashboards. In experiments like this, the simpler and more detailed the Business Intelligence data, the better it is to draw results and conclusions.
A/B Test Results: high increase of CTR & ARPU
- the “total number of impressions”
- the “average impressions per user”
Improvements in our Retention Rates
We also tracked other performance metrics, such as DAU (Daily Active Users), CTR (click-through rate), or Total Clicks.
That helped us ensure that the ads' quality didn’t plummet and that we still offered a seamless experience to the users. The charts were stable.
Boosting the eROAS of our UA Campaigns
Besides the excellent monetization results, our User Acquisition campaigns also benefited from removing the aggressive ad network.
A higher number of users were staying in the app, which led to an increase in the effectiveness of our advertising costs. The eROAS (effective Return of Ad Spend) on Day-365 boosted from 69% to 94%! The UA Campaigns got even more profitable!
And the most important discovery, as you can see in the following picture, was that the potential income growth for 365 days -AKA, Forecasted Income in D365- increased by 78%!
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Conclusions & Learnings
We learned that taking care of our users pays off over the short term and in a long run.
Disconnecting aggressive ad networks may have led us to a small decrease in in-app ad revenues. But in the long run, we are able to reduce the user churn, increase our LTV, and keep growing our game into the top charts.