Game companies lose millions of dollars on ineffective ads. I spoke with user acquisition leads, CMOs, owners from 40 companies in the gaming industry, some having marketing budgets exceeding $20M, and they all expressed this pain point.
The success of a game launch is determined by its customer acquisition, no matter if the revenue is generated through in-app purchases (IAP) or in-app adds (IAA). In mobile gaming, the primary user acquisition channel is paid traffic from social media and search. The worldwide ad expenditure on mobile gaming is projected to reach $80B in 2023 and $130B in 2025. Gamedev studios often spend more than 50% of a game's budget on user acquisition.
But what can a company do to optimize this budget? Google’s and Meta’s ad platforms offer limited transparency and control over campaigns, making the quality of ads the critical lever for success. The difference between good and bad ads can make or break a game launch.
The ads are short videos with sound, often interactive. Game design studios face the challenge of producing the best, most engaging and highest-performing ads possible. But the ads’ performance burns out quickly, what was working yesterday won’t attract anyone tomorrow. You constantly make new ads that you want to stand out.
Producing and renewing multiple versions of ads for each target audience, consistently experimenting with hundreds and thousands of creatives requires a specific skill set in design, fine-tuning digital ad campaigns, analytics and management. As a result, there is a whole market of dedicated agencies producing and testing visual ads. These agencies are an outsource version of in-house design teams. Outsourcers and in-house teams dive deep into each game, learn from their mistakes and keep track of all their experiments. Companies that do not engage high-level ad teams end up creating random creatives, hoping that they will work, instead of treating them as experiments that will help their creatives evolve.
Yet, even working with a top agency doesn’t guarantee success. The assembly line approach to ad creation is a significant challenge. Creative teams must think outside the box and create visuals that stand out and engage each specific audience. But how to scale this approach and not have your design team burn out, when they run out of ideas? How to effectively use your previous experience and not overwhelm your team with analytical work? How to keep producing engaging and performing creatives in a consistent ongoing manner?
This is why user acquisition expenditures lack transparency and predictability. It is common for companies to develop a thousand visuals to test and pay for advertising them, only to find that none of them work.
As a team with ML expertise of more than 10 years, we know that ML can analyze and provide solutions on a large scale. But I wasn’t even surprised to learn that ad agencies do not use any ML-based algorithms to assist them in this process. You need a combo of experience in video creative production, the knowledge of game design, psychology and analytics, and also to be good at creating ML models. The world needed someone to save the day.