Designed to Win: How to Monetize Users and Enhance Experience in Your…

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Hi – I’m Mike and this is Jahed

- A little about us

According to PWC and the industry reports (IFPI, etc.) for entertainment industry
The Majority of Entertainment Consumers Are Freeloaders. This is true of…
- Music: 85% of people listen to but don’t pay for music in Western Markets
- TV: 72% of people in Western Markets watch only free TV
- Games: 62% of mobile gamers never spend money in any game, but for a typical mobile game, only 7.1% of consumers spend money

- 46% of $400Bn TV industry revenue is advertising
- 49% of the $95Bn Music industry revenue is advertising
- 7.2% of 75Bn gaming industry is advertising, but it is up from 4% two years earlier

Actually advertising is useful.
Overloaded with choices and decision process could be difficult
Imagine entering a super market in the US and having to choose from the 387 brands of breakfast cereal that are sold in the US
How about choosing which app to download from the 1.8m apps in the app store

But we rarely see that value in advertising
Mostly because we see advertising as an interruption to anything fun we might be doing, watching TV or playing a game
And because it creates so much noise

According to different estimates, we are seeing between 3,000 and 5,000 ads a day
There are so many of them out there, that we became experts at ignoring them
Who remembers the last three billboards you saw on the way to Moscone center?

This ability to learn to ignore advertising is given for any new advertising medium
Some call it Banner Blindness, Andrew Chen calls it a Law of Shitty Click-throughs
Everyone hates banners, but there was a time when banners where effective
Web banner (74% to 0.05%) – 1500 times down
Mobile banner (26% to 0.38%) – not the first banner, but still 70 times down
Despite investments in machine learning and collecting all the data about us

One way the industry is trying to solve this problem is by masquerading ads as content
Native Advertising dates back over a hundred years when first advertorials, ads pretending to be editorial articles appeared in the news
The soap opera takes its name from the first TV series that were produced to market Procter and Gamble products
Product placements in movies became the next wave of native advertising

And Native Advertising is the hottest trend on the web and mobile

Another trick is to insert an ad break at the most interesting point in a show or a game
In the TV world it is called a Commercial Break Cliffhanger
Everyone who watched Who Wants to Be a Millionaire remembers the moment a player gives an answer to a tricky question
We all await in anticipation to see if he knows the answer
He is asked “is this your final answer”…
And we went to an ad break
If you want to know the answer, you have to wait through the commercials

These interruptions affect us regardless of the medium
But TV audiences can’t give stars to shows based on how annoyed they are with ads interrupting their content
They will however happily punish a game in the app store

Seth Godin, 15 years ago, proposed an alternative
Permission marketing: he proposed that instead of interrupting lives of audiences, we actually offer them value so they will voluntarily engage with ads
Permission marketing is
Anticipated: people will anticipate the service/product information from the company.
Personal: the marketing information explicitly relates to the customer.
Relevant: the marketing information is something that the consumer is interested in.

There are many examples of permission marketing:
Opt-in Newsletters
Blogs, like the one on the left from Virgin Atlantic that actually offer true informative value
Content marketing. The Dollar Shave Club is actually so ridiculously funny that 18.5m people went to voluntarily watch it on YouTube and 100k liked it
Opt-in ads or rewarded ads are another example of permission marketing

• I’ll share an example here from one of our customers Zombie Catchers. This is a wildly successful game from Finnish studio Two Men and a Dog, seeing 1.5 million downloads in the first week alone.

• The co-founders, veterans of game development, knew that IAPs wouldn’t be enough to monetize the game, so they added Vungle video ads to complement this.

• They implemented an opt-in placement that gives players faster access to zombies. Normally users only get two “catching sessions” before they have to wait. Watching a 15-second ad allows them to capture the undead again – right away.

• Turns out, getting back in the game faster also encourages players to stay in the game longer. Kallonen estimates that video ads extend player session time by more than 25 percent.

Similar uplift was seen in a study conducted by Electronic Arts, WildTangent and IHS. Prior to the ad experience gamers spent an average of 15 hours per week playing, after the ad experience gamers spent an average of 19 hours per week playing representing a 28% increase in the time spent in the game.

Advertising can actually be a feature of a game:
We reviewed three different studies conducted by EA, Wildtangent, HIS, Macrovision and Strata and they had very similar results
86% prefer free games with ads over paid games without ads
71% prefer games with opt-in ads over games without
94% increase in the number of gamers visiting the “add cash” area of the game after seeing value exchange ad.

66% want more opportunities to earn rewards through ads
83% of gamers say they are open to watching video ads, if they receive value in exchange (Macrovision study)
82% of consumers said they prefer to watch ads than pay for content (WallStreet Journal / Strate)

At Vungle, we came up with a concept we call STARS, that we use to help partners think through the integration of ads in their game.
This is a concept we use to ensure that the placement actually benefits the player, improves the user-experience and at the same time it engages players and supports monetization.
It is based on five pillars
Choosing the right scene to show an ad
Choosing a trigger to get people to engage with an ad
Ensuring the ad experience (action) is pleasurable
Providing appropriate rewards for the user that do not affect the economy of the game
Planting a seed for further action

The framework is based on research in game development, psychology, human-computer interactions and behavioral economics
And our combined experience of advising 100s of mobile games on creating ad placements in their games

It all starts with selecting the right scene for where to put a trigger for the ad
Define scene
In the example on the left, Pocket Mine, the trigger is in the main menu--a great place to ensure there is a significant reach.
Speaking of reach, there are three success factors to choosing a good scene:
Reach – how many people will see it
Flow – how does it fit with the flow of the game
Contextual relevance – are the triggers and reward relevant to the player in this scene

Reach: ensure that enough users will arrive at the event or placement to satisfy your monetization needs.
In the Slots Tycoon example, the free button is next to the Spin and has the same color of red ensuring it stands out and attracts attention of players

The second success factor for picking a perfect scene is to ensure the ad does not interrupt the flow of the game
Mike gave an example of Commercial Cliff Hanger
In the Commercial Cliff Hangers model ads interrupt the content at the peak of the crisis, when we are the most engaged with the movie or a game
This ensures the viewer stays glued to the screen to wait for the resolution of the crisis
Players hate that and that will be reflected in your app store reviews

STARS model encourages you to show ads at natural breaks, when players rest after particularly intensive challenge or are bored and waiting for resources to be replenished
Since all ads are opt-in, this is the time when players are most likely to take a break and voluntarily choose to watch an ad

Finally, the scene should be a place where we can provide the most value to the player
In Zombie Highway 2, after a player is killed, they can watch an ad to rewind a game by three seconds and try to complete the level again
This is a perfectly designed scene
The player died and a little bit of a break helps to regain focus for the next attempt
The value exchange is contextually very relevant

Next, let’s talk about triggers
Triggers are cues for players to take action
Since all ads are opt-in, we need to remind players that they can benefit from watching and ad and triggers do just that
There are two types of Triggers: external and internal

External triggers are buttons or other visual cues that remind player to take action.
They need to be visually attractive.
Good triggers also inspire curiosity, they make us wonder what’s behind them. What will happen when we click them.
George Loewenstein has described Information Gap Theory. When we see a gap in our knowledge, it gives us a feeling of deprivation, it’s like an itch we want to scratch. We want to know the answer to our question.
Tap Titans brilliantly leverages this in their placement.
In the beginning, the fairy brings only rewards. They create an expectation that when you click on a fairy, a reward will be given.
As the game progresses, the behavior changes: now the fairy randomly offers some rewards and some other rewards require player to watch a video ad
It attracts curiosity: you want to know what she will bring this time
The variable aspect of the rewards she brings also has significant impact on the engagement rate.
People love variable rewards. When we anticipate pleasure, dopamine is released in our brain and we feel happy.
This effect has been exploited in the design of slot machines in Vegas (add details)

Internal triggers are emotions, we are driven to seek pleasure and avoid pain
In games, two emotions you can target are boredom and frustration
Boredom is an excellent trigger in a game (waiting time, loading time) and ads can help keep players entertained as they way for a level to load. They can also be used when a time-based freemium mechanic introduce a delay in a game that can frustrate players. As in the Zombie Catchers example before, using video to allow players to come back to the game without waiting increases both monetization and engagement.
Opt-in rewarded video can also be used to relief frustration for players. If a player lost many times, the best way to re-engage them is to give them rewards that help them progress in the game. The value exchange is relevant and weaker players can progress forward and stay engaged.

Source: study by Kiss Metrics

If you are asking people to watch an ad, the experience must be really good. There is no place to compromise.
Look out for five things:
Performance (ads): is the speed of playback good, do you see buffering?
Quality: make sure the SDK is stable and doesn’t crash your app
Design: make sure the ads are all in high-definition and end cards and other elements of the ad unit are well designed
Fill: are you getting ads for every impression
Relevance: high Conversion Rate means the ads served are actually relevant and bring value to the players

There are three types of rewards you can give to the players:
Social rewards: make us feel accepted, attractive, important and included.
Access Rewards: provide access to unique content or areas of the game
Progression Rewards: help players progress in a game, such as currency, resources or energy and lives

Social rewards include elements that increase status of the player in the community.
They can include social gifting as well as customizations to the player avatar, etc.
This reddit poll shows that 38% of dota players have spent $80 or more (sample size ~14000). Those are insane LTVs that any studio would kill to have. Part of this is due to the huge retention they have of users, but another is that it gives you a WAY to spend money almost infinitely. If you're already at the top of the top, what do you have money to spend on? Outfits. If you have no friends to compete against, what are you going to spend money on? Self-expression and status, give them ability to customize characters

Players love to have access to unique areas of the game and love to discover and unlock new content.
This has taken the form of Easter Eggs hidden in games
This Finally Fantasy IX, Nero Brothers quest, was only discovered in 2013 after 13 years
What’s more interesting, is that players have been exploring the game and looking for hidden content even 13 years after its release
Access rewards can directly provide access to those areas and the unique content or they can provide hints for players to find Easter Eggs

Three key levers that can be used to enhance the value of rewards
Scarcity – explain why
Luck (variable reward) – explain why
Require significant effort – explain why

You want to plant a seed, for players to come back and engage with ads in the future and maybe even spend money on IAP
The key idea is for the reward to move players towards the object they want, but don’t necessarily provide complete value
We have a need for completion, if you structure rewards as a set, people are more likely to come back to complete them (explain the need for completion)
Endowed progress effect (explain how it can help to increase further engagement with ads, but also to get people to spend money on objects)

- Explain the model again

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Designed to Win: How to Monetize Users and Enhance Experience in Your Game

Designed to Win: How to Monetize Users and Enhance Experience in Your Game