The year 2022 was a tumultuous one for the world economy, with a number of factors contributing to a volatile market. From geopolitical conflicts and inflation to the lingering effects of the COVID-19 pandemic, businesses in a variety of industries were forced to adapt and make adjustments in order to remain competitive. The mobile gaming industry was no exception and experienced a significant drop in eCPM (effective cost per thousand impressions) due to these challenges.
In this blog post, we will analyze how the eCPM compares in 2022 and 2021 and explore the impact that these events have had on the ad monetization industry. By gaining a deeper understanding of the challenges we’re facing, we can better appreciate the steps that must be taken to ensure its continued growth and success in the years to come.
Mobile Game Monetization in 2022: Navigating the eCPM Decline
In the last six months, we've shared two posts on the eCPM trend due to the interest our clients and other developers have shown in the topic. Their interest comes as no surprise, as eCPM is one factor developers looking to monetize their users with ads and purchases cannot control.
In our last article on eCPM trends, we covered some basics, including:
• What is eCPM?
• Consistent factors influencing eCPM.
• How developers can include their eCPMs.
• Factors that affect eCPM outside the developer’s control.
Therefore, we will skip these now and refer you to our previous article. Instead, we will address the concerns we hear from clients and colleagues.
How We Structured Our Study
The data in this report is separated per ad format, platform, and country. The following are some guidelines we tried to follow as much as possible when analyzing the data in order to keep the insights useful and meaningful for you:
• We did not analyze games whose scale was too small or drastically changed during the period. As a measure of scale, we look at daily ad impressions (driven by DAU changes).
• We also omitted games if the UA changed drastically (due to sources or budgets).
• We also excluded games from the analysis if other special circ*mstances were present (longer outages of specific ad networks, etc.).
With all these factors in mind, we are able to share insights about eCPM for:
• Games downloaded via Apple App Store or Google Play Store.
• Rewarded video ads and interstitial ads.
• United States, United Kingdom, Germany, Brazil, and Mexico.
The games we used for analysis are running on different mediation platforms (LevelPlay by ironSource, MAX by Applovin, and FairBid by Fyber) and using various networks, but common ones being AdMob by Google, Audience Network by Meta, UnityAds, ironSource, and Applovin. Many of the games are using additional ad networks, such as Liftoff (Vungle), DT Exchange (Fyber), etc.
How Does eCPM in 2022 Compare to 2021?
The main question on your mind has to be: “Did eCPM really decline in 2022?”
Sadly, the answer is yes.
As we highlighted in the title, eCPMs declined in 2022 compared to 2021 based on everything we checked.
What did we learn in 2022? eCPMs have decreased across:
• Both iOS and Android. However, iOS saw a bigger decrease than Android.
• Rewarded ads and interstitials. We did not have enough data to analyze banner ads. However, rewarded video ads were more affected than interstitial ads.
• Different countries. Internationally, eCPMs have decreased more than in the U.S.
Were Some Games Affected More Than Others?
While we were trying to find patterns based on the game genre and how their revenue was split between ads and IAPs, we could not find any. Interestingly, one thing did come up: games with higher eCPMs to begin with experienced a greater decrease than games with lower eCPMs.
The table below shows the average eCPM of six different games (various genres), rewarded video ads, Android, United States. We are sharing the average absolute eCPM and the % decrease in eCPM for 2021 and 2022. It almost perfectly demonstrates our point (apart from Game 4, which should have decreased more).
We observed similar behavior in other countries as well (and on iOS as well). Since we observed such a long time frame for insights, we did not have enough data to verify our findings for interstitials and banner ads.
As shown in the table above, asking "What is a good eCPM?" makes no sense regardless of platform, ad format, or country (as we specified above).
Even though all the games above have well-optimized waterfalls and have competitive setups, eCPM varies from $16.2 to $68.1 due to a complex set of factors.
How Does the eCPM Compare Between December and January?
The high eCPMs we enjoy in December are typically short-lived, followed by a decrease in eCPMs in January. Ad monetization managers know this. However, this year it feels as if the drop was more significant. Do we have the data to support this?
In short, we do not.
Based on the data we have, it appears that the above statement is not true. We found games that experienced a sharper decrease in eCPM from December 2022 to January 2023 than from December 2021 and January 2022. Nevertheless, there were many instances (not just a few exceptions) where eCPMs decreased less for both rewarded videos and interstitial ads.
While we heard several complaints that banner eCPMs dropped dramatically in January 2023, our data indicates that this is no different than what occurred a year earlier. We can see the following by looking at a specific game's banner eCPM on iOS and Android in the United States for the selected month.
According to our data, banner eCPMs have fallen the most (versus rewarded video or interstitial ads), which makes sense since banners are more dependent on brand advertising than the other two formats.
Month-On-Month eCPM Analysis
Similarly to our previous post about eCPM trends, we are sharing month-over-month changes for ten different games.
The biggest drop in a single month for each game is different. You can see the exact values in the table below. The worst drop in a month for each game is marked in red.
Some games even experienced the biggest month-on-month drop in November or December, typically the strongest months of the year, especially when brand advertising budgets increase. According to Appodeal's latest report, many tier 1 countries saw a decrease in eCPM between November and December.
While we could not identify any periods of greater drops last time, we can now clearly see that most games had their biggest declines in the first half of the year.
Taking one more look at the table above (and also the absolute $ values behind it), we see that the eCPM is lower in:
• December 2022 than in January 2022.
• Q4 2022 than in Q1 2022.
• Q4 2022 than in Q3 2022.
Although the above comparisons may not be your first choice, it just proves that the decline in eCPMs in 2022 was so strong and widespread that even unorthodox, unfair comparisons like this couldn't deny it.
We were able to verify this on Android, Rewarded video, and the United States too.
There are a lot of changes in the market, so all of the predictions for 2022 were probably overestimated by at least 20%. Needless to say, 2022 was not easy on ad monetization managers and their respective companies.
What Should We Learn From The 2022 eCPM Drop?
The 2022 eCPM drop is indicative of the ever-evolving nature of ad monetization, and understanding this can help developers stay ahead of the curve. It's important to be aware of current trends so developers and ad monetization managers can be prepared to adjust their strategies accordingly.
Here are the main lessons we learned from this drop:
• Wider context matters. In 2022, a great deal happened that affected economies around the world. The gaming industry is no exception. The ad monetization industry is no exception. It would be unrealistic to expect either to be immune to macroeconomic factors or trends.
• It doesn't mean we should give up. Optimizing the performance (both in-game and on the mediation side) will likely help to stabilize or reduce the decline in revenue, if not grow it.
• Diversify your ad revenue stream. Rewarded video ads, for example, have been impacted more than interstitial ads. If you haven't diversified your ad revenue streams, you may want to reconsider.
• Soften the blow by adding more ad networks to your mediation. While we couldn't provide hard data to support this claim, having more networks in the mediation increases its resistance to downfall. You might want to test some ad networks you haven't used before if you don't have extreme crash and ANR rates, and developer time is not limited. By tapping into additional demand pockets, you might gain an advantage over the trend.
How Can You Navigate the eCPM Decline?
The eCPM drop in 2022 was a challenge for the mobile gaming industry, but it also presented an opportunity for developers to reevaluate and refine their ad monetization strategies. Even though gaming accounted for 69,02% of advertising traffic on App Store and 55,58% on Google Play, according to this report by Apptica, the larger factors at play influenced the noticeable eCPM decline. By understanding these factors, developers can take proactive steps to minimize losses and ensure the long-term success of their games.
One solution to this challenge is to seek out expert support from ad monetization services such as GameBiz Consulting. With our expertise in the field, we can help developers make informed decisions about ad placement, targeting, and optimization. By working with GameBiz Consulting, developers can tap into the extensive industry knowledge and resources needed to design and implement effective ad monetization strategies
