How did the coronavirus affect the cost of gaming traffic?
We asked five marketing companies — Appodeal, AdQuantum, Digital Turbine, Borscht and AdSide Media — about the impact of the pandemic on the gaming advertising market.
The question did not arise from scratch. Several of our sources noted last week that they were observing changes. In particular, a decrease in purchases. In this regard, we decided to talk to marketing platforms about the situation.
How did the coronavirus situation affect the cost of gaming traffic?
Mikhail Tkal — VP, User Acquisition in Stack — Appodeal
Speaking about the world as a whole (except China), at the moment we do not observe significant changes. It is too early to talk about this, since the peak of the virus in Europe has come recently or is only expected, as in the case of North and South America. In the CIS, we see a decrease in the cost of purchases due to the fall in oil prices and the exchange rate of national currencies.
Konstantin Ivanov — Brand Manager – AdQuantum
It cannot be said that the coronavirus has somehow affected the cost of traffic for the games we work with. E-commerce projects began to make fewer purchases, and then you can only fantasize about short-term and long-term trends.
Alexander Dyudyuk — Sales Director — Digital Turbine
The coronavirus factor certainly affects both the gaming and advertising industries.
Quite an interesting situation: business activity is slowing down, and this entails difficulties with the release of new games. On the other hand, people isolate themselves at home in quarantine and play their favorite games more.
Our partners are already sharing information that the quality of traffic is going up – players have begun to spend more time in games and, accordingly, bring more revenue to gaming companies.
This may entail a certain increase in the cost of traffic, as companies increase UA budgets and raise rates in pursuit of large volumes.
Nikita Grigorovich — Chief Operating Officer — Borscht
The price of traffic has started to fall due to the fact that auctions previously occupied with advertising travel, events, real estate, restaurants and other things in the real sector, which is suffering due to declining demand, are being released.
I believe that now there is a great opportunity for advertising agencies and gaming companies specializing in gaming advertising to buy out the auction on platforms, and closer to the summer, when the cuts begin, to “vacuum” the personnel market.
If we talk about Russia and the CIS, then traffic is getting cheaper, but you should not expect an increase in ROI in the current situation, since the dollar has grown, and ARPU in dollar terms has decreased.
In general, the situation reminds me of 2015, when there was a mass exodus of Chinese advertisers from the Russian Federation due to currency exchange rates. Some of the Chinese applications and games simply “parted” the economy, since the population no longer had money, and the cost of traffic remained at the same level. The difference is that now the coronavirus balances it, because people are staying at home.
Evgeny Marchenkov — CEO — AdSide Media
We didn’t notice the difference.
Has the behavior of gaming companies changed in terms of spending on advertising, how exactly?
Mikhail Tkal — VP, User Acquisition in Stack — Appodeal
The gaming companies that we are growing now in Appodeal spend the maximum possible amount of money at any time with a positive payback. The current situation is no exception, and we have User Acquisition running at full capacity.
Konstantin Ivanov — Brand Manager – AdQuantum
In our case, it has not changed.
Alexander Dyudyuk — Sales Director — Digital Turbine
Yes, most UA managers are well aware of the seriousness of the quarantine situation and try not to miss the moment. More and more game advertisers, seeing the positive dynamics in traffic, increase or completely abandon Daily Caps (daily limits), and also raise rates. Although high rates do not always lead to better traffic. If an auction overheats in a certain country within a particular operator, then it may make sense to start buying traffic on another operator where the rates are still low.
Nikita Grigorovich — Chief Operating Officer — Borscht
Because of the coronavirus, advertisers (especially in the categories of “travel”, “clothing”, “events”, “restaurants” and “real estate”) began to remove advertising placements and cancel marketing activities, gradually unloading the advertising auction. This means that games, online education services and online cinemas can start to “rake it out”. This is especially true now for European countries. I would generally now “vacuum” Spain into games, TV series and EdTech.
Evgeny Marchenkov — CEO — AdSide Media
Nothing has changed.
How has the consumption of advertising by users changed?
Mikhail Tkal — VP, User Acquisition in Stack — Appodeal
Users began to spend more time in games, thereby spurring the growth of advertising consumption. So far, the growth is not so obvious, but the situation will change every day.
Konstantin Ivanov — Brand Manager – AdQuantum
While at home, while on the road or at work, we always keep smartphones at hand. Consumption depends mainly on the user’s desire and interest to click on a specific creative, so we do not associate fluctuations in metrics with the coronavirus.
Alexander Dyudyuk — Sales Director — Digital Turbine
Our partners are seeing an increase in the number of gaming sessions, as well as advertising views. Those advertisers who focus on ad revenue are especially happy about this.
Nikita Grigorovich — Chief Operating Officer — Borscht
The example of China is indicative for us. One of our projects in China received a feature. The project was not even translated into Chinese. We got a very high conversion rate to paying users. The average income from everyone who installed the game was $2.18 (this is if you divide the revenue from the campaign by the audience of the feature). Perhaps because of the coronavirus, the Chinese audience is more “hungry” for games.
Evgeny Marchenkov — CEO — AdSide Media
No changes were noticed.
Is it worth waiting for changes in the speed of advertising campaigns/creating creatives/apruva them from social platforms?
Mikhail Tkal — VP, User Acquisition in Stack — Appodeal
The creation and testing of creatives will accelerate — the flow of production and tests has already increased several times. The one who learns to do it more efficiently will receive additional profit.
Konstantin Ivanov — Brand Manager – AdQuantum
In AdQuantum, most of the designers work remotely, so there should be no loss in production speed. As for the apruv, there may be delays on the part of the platforms in case of a request for manual moderation from managers, since the moderators of the platforms are gradually transferred to remote work. For example, the review speed of an application on Google Play can now reach 7 days or more.
Alexander Dyudyuk — Sales Director — Digital Turbine
It is difficult for me to judge this, one can only speculate.
Some non-gaming advertisers stop their campaigns because their business was either completely offline or partially offline. Applications of gyms, restaurants, shops, travel agencies have a difficult time during quarantine. This may lead to the release of necessary resources for game advertisers.
On the other hand, many companies, including social networks, might not be ready for total Working From Home. This means that the speed of decision-making will slow down. At least in the first weeks.
For the most part, campaigns on our platform do not require creatives, and the situation with the virus has not affected the speed of decision–making – we have been practicing working from home at will for a long time.
Evgeny Marchenkov — CEO — AdSide Media
We expect moderation to take longer as moderators will work from home.
What factors, besides the pandemic, are actively influencing the gaming UA market now (and what will be during the year)?
Mikhail Tkal — VP, User Acquisition in Stack — Appodeal
Of course, difficult times are coming in the global economy. This is a classic “black swan” type event*.
* Nassim Taleb, an American scientist of Lebanese origin, published a paper in 2007 in which he introduced the term “black swan”. It means an unpredictable event that has the strongest historical significance for all mankind and can only be explained in retrospect.
In addition to the pandemic, the market is affected by a serious drop in oil prices. Together, the pandemic and oil are causing a big blow to the economy of most countries and businesses.
If we talk about the impact on the gaming UA market, perhaps the December jump in the purchase price this year will not be so obvious, because many companies will cut off part of advertising budgets. However, even with less heated budgets, we see a great prospect in the market — including by increasing the speed of production of creatives and automation of UA. Just now, a product has been released into beta that makes the optimization of purchases with maximum ROAS completely autonomous for gaming companies.
Konstantin Ivanov — Brand Manager – AdQuantum
You can fantasize about trends, because the pandemic in our case practically did not affect the customers associated with games. However, it is worth noting the level of hype, which helps some products to reach the top due to the situation. The game Plague Inc. is a vivid example of this. As a result, the game was even removed from the App Store in China.
Users have always loved “related products”. Plague Inc. this, however, can not be called (the project has been on the market for a long time). This does not prevent users from considering it as such, downloading it as part of the “thematic”.
By the way, according to 9to5Google, the Advanced Protection function for the upcoming Android will be able to completely block the ability to run “left”/”gray” .apk on smartphones. This will dramatically affect the behavior of users, will push a considerable part of them to pay for licensed content. There is a possibility that under such conditions the audience will become more loyal to advertising, taking it for granted and an integral part of the market.
But in order for such “acceptance” to proceed more easily, the quality of the advertising itself should also change.
Alexander Dyudyuk — Sales Director — Digital Turbine
This is a rather complex issue that requires a more thorough analysis. In addition to the coronavirus, anything can affect, both directly and indirectly.
For example, a steadily growing global economy, ideally, should have been a guarantor of improving the quality of life of the world’s population, and this ultimately contributes to the growth of UA budgets. Now, in the context of the recession, it is likely that many sectors of the economy are going through hard times.
Can this affect the gaming UA right now? I think that at the moment it should not affect much. What will the situation look like in the medium and long term?
Perhaps many more people will work from home, which will contribute to an increase in the time spent in games. Accordingly, both the volume and the cost of traffic will change. It is difficult to predict with certainty.
One thing is clear: the world will no longer be the same. Gaming UA is likely to be affected.
Evgeny Marchenkov — CEO — AdSide Media
The introduction of new ways to purchase traffic on Facebook (like Google UAC) may affect the market, but we have not tested this new functionality ourselves yet, since it is only available in beta for several large game studios.
