The common message across the industry of User Acquisition today is that Video is on the rise. Consistently across all game developers it is becoming apparent that the dominance of Facebook as the largest sink for UA budgets is no longer holding true, with a switch to providers such as Adcolony, Unity & Vungle a common theme.
First of all let’s look at Facebook, and the market place dynamics that are currently dictating the switch of UA budget away from this platform. Facebook has been the primary sink for UA spend for one simple reason, targeting. It is the only place that has both scale and accurate information not only on demographics but also on interests, geo, spend behaviour (if you are whitelisted) and engagement. For this reason it has consistently been the highest LTV generating channel and as such has cornered most of the UA budget. Unfortunately this has now become common knowledge, the good old days of 50cent CPI and 10K installs a day have gone and now with everyone and their mothers are running UA on Facebook. This has led to an inverse correlation between LTV and CPI. The CPI has increased maybe 10x but there has been no (positive) improvements in targeting or media format to offset this. Some might argue video and carousel have increased these but I would say they have actually decreased cost through higher conversion rates rather than increase LTV.
The result has been the quest for new high quality sources of installs, which has resulted in the current quest for 'social' and the ongoing search for new paid channels. The top of the food chain, as discussed earlier, is video.
If we think about this holistically this transition actually makes sense, but in my opinion not for the reasons that are traditionally banded about. While video does often do a better job at representing products, and is a more engaging piece of media, I do not believe these are the only key reasons behind the higher quality and the resulting adoption.
In my opinion the reason video works is 2 fold: Conversion rates and the context that Watch to earn is shown in publisher apps. Conversion rates we have discussed, if your product is compelling it is always going to be easier to convey this in a video format. The consumer can make an educated decision which increases all of the pre-install funnel metrics. This keeps cost lower for most products and as such the risk is lower in terms of ROI.
The other and much more important reason video works is actually a by-product of the way it is implemented in apps. It is common practice to implement interstitial advertising with rule sets that rules out paying users. The school of thought here is that interstitials are disruptive and as such should only be shown to users that have not converted into payers. Watch to Earn (videos) does not, in most cases, follow this school of thought. This is due to the fact that W2E is more of an 'opt-in' advertising product, and also provides value to the user in the form of a reward in the title. For that reason, videos are also shown to payers & potential payers.
The real reason video is on the rise is simply because of the choices publishers are making in terms of implementation in their products. Advertisers are not taking the risk that comes with interstitials, which dictates that their product needs to be more efficient at converting non-payers than the product they came from. Instead they are getting their product shown to payers and non-payers alike, increasing the quality while simultaneously decreasing the cost through a better media format.
The result is a lower CPI and a higher LTV, which everyone knows is good.