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Advertising Costs for Casual Mobile Games Are Down This Holiday Season

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The 2020 holiday season was a bonanza for the mobile ecosystem, especially mobile games. COVID-19 sent people all over the world into their homes, social distancing measures were firmly in place, and some regions were still living under lockdowns, affording people everywhere plenty of time to unwind with their favorite mobile gaming titles. 

That spike in usage led to a huge windfall for mobile game publishers. In all, global game revenue reached a soaring height of $177.8 billion in 2020. More consumers were exploring gaming, and existing gamers were going all-in on their favorite hobby. With increased usage came an increase in ad inventory, IAP spending, and virtually every other success metric that matters to mobile game publishers. 

But that was last year. Much has changed in the past 12 months, and the 2021 holiday season will require an evolved strategic approach to succeed in the new privacy-centric mobile landscape. Thankfully, while much of the mobile industry thought that the effective retirement of IDFA would spell disaster, a new Moloco report analyzing data from the mobile programmatic ecosystem suggests that the 2021 holiday season is in fact full of opportunity. 

The 2021 Holiday Season: A Higher Plateau

While the pandemic is having lingering effects on global economies and supply chains — and certain regions are still reeling from the spread of COVID — many consumers have begun to live their lives in ways that more closely resemble ‘normal,’ and that means less time spent with mobile games. In 2021, global game revenue is expected to climb to $175.8 billion — impressive, but noticeably lower than last year’s all-time high of $177.8 billion. The good news is that this year’s holiday season will continue the growth trajectory of recent years, albeit at a slower rate. 

While the incline won’t be quite as steep from last year to this year as it was from 2019 to 2020, marketers can expect meaningful growth, retention, and increased opportunity to extend their reach and expand their revenue. According to research conducted in 2021 about the effects of the pandemic on mobile engagement, gaming apps are on track to retain the users they gained during the pandemic, when the category saw a 200-400% increase in engagement. Dining apps, dating apps, and travel apps are also all on the rise, as consumers reenter society and look to technology for support fulfilling their desires to reconnect.

Nutcracker: The Dance Of The Privacy Fairy

Another development impacting mobile app engagement is the arrival of Apple’s latest privacy updates. App tracking transparency (ATT) has led to the effective loss of the identifier for advertisers (IDFA) as a means of mobile ad targeting. While some categories have seen the cost of customer acquisition fall in response, others have seen costs increase as competition to capture the attention of identifiable users grows.

For example, recent research revealed that the cost of iOS installs for casual games actually fell following the release of iOS 14.5. It’s important to understand that casual games tend to attract high-churn players who are likely to play multiple games at once instead of committing to a specific title. Casual game installs on iOS were averaging twice the price of installs on Android prior to the release of 14.5. After a month-long decrease following 14.5, iOS installs for casual games were still more expensive than Android games, but only slightly. All of this is promising news for marketers who are interested in expanding into new audiences while staying within their budgets. 

By contrast, the same time period saw average costs for core game installs rise. This is likely because marketers found themselves in neck-and-neck competitions over a shrinking segment of users who opted into tracking. Core game players are known for having a higher average lifetime value, on top of the value inherent in being able to track users’ habits and behaviors in order to serve more relevant, customized ads. In that sense, ATT further increased the desirability of acquiring identifiable iOS users.

Marketers: Put A Bow On Your 2021 Holiday Plans

While costs will likely continue to fluctuate, the post-IDFA reality is here to stay. Thankfully, there are a few simple steps mobile game marketers can take to better manage their spend and increase down-funnel performance across all categories during the 2021 holiday season and beyond. 

  1. Optimize campaigns for return on ad spend (ROAS): Marketers should keep an eye on changing CPI trends while setting aside some portion of their budget dedicated specifically to the campaigns geared toward big-picture results. Without this bird’s eye view, it will be easy for marketers to get lost in bidding wars that don’t yield sufficient results.
  2. Implement a diverse spending strategy: While following CPI trends too strictly can lead to erratic course corrections, a patient strategy that includes campaigns spread across a broad range of traffic sources will be more effective in the long run. The effects of both the pandemic and Apple’s privacy changes are still swirling — until we have a clearer view of the landscape, diversifying traffic sources will help marketers to minimize risk and identify promising strategies.
  3. Use next-generation techniques to maximize return on investment (ROI): Marketers that leverage data-based intelligence and cutting-edge technologies to optimize and balance their ad spend will sit at the edge of advertising’s future, no matter what happens next. Compared to manual human analysis, machine learning is considerably more capable of navigating and responding to rate volatility. Preparing to adjust and adapt along with the shifting sands of today’s market will make it easier for marketers to improve campaign results over the long term.

Despite these major landscape shifts, the 2021 holiday season still holds great promise. Twenty-nine percent of consumers have said they plan to spend more on holiday shopping this year than last year, and the holidays are known to inspire peak download rates and in-app purchases among mobile gamers. With those three steps as a starting point, the marketers who succeed will be those who take that reality into account while adjusting their approach to keep pace with the rapidly shifting mobile ecosystem.

Henry Wang is Director of Product Marketing at Moloco.