How we earn $10 eCPM & 100% fill rates with virtual currency and video ads

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This is a guest post by Chris Chidgey.

If you would have told me that my best performing series of apps could increase revenue, increase retention, and provide a better user experience 6 months after its launch while downloads continued the downward trend – I would not have believed you.

After all – we had implemented best practices for both ad placements and ad types. We implemented the most popular, top-performing ad networks. We had experimented with mobile polling, ad mediation and creating our own ads with affiliate offers.

This series of apps had not been our first. We were a little more experienced and ready to take some chances by implanting a virtual currency system and offering hints and skips that were purchased using – what is called – a “hard” virtual currency.

Adding virtual currency to the app series was key to the growth in monetization rate (what we loosely defined as revenue earned per download). And while having a virtual currency allowed us to add little bells and whistles such as a popup at the app open for returning users saying “Welcome back – here is 10 coins!” and other such messages to encourage both returning to our game. Giving away coins also seemed to create a “looser” wallet – where a user might be more inclined to spend the currency they earned or purchased.

While I love virtual currency and try to find an excuse to add a virtual currency in just about every app I build or consult on – adding incentivized video ads was the magic that brought my revenues back to where they were the first 2 weeks of the series.

To implement – we simply removed the full screen interstitial ads we had been serving through our ad mediation partner (MoPub). We then used this ad space for a pop-up ad that we designed in-house offering a user 10 coins for watching 1 video, or 100 coins to watch 5.

It took a bit to get Ad Colony set up correctly as their V4VC does not work like we wanted in its default configuration. So you can see from the below – we wrestled with low fill rates.

Screen Shot 2014-05-03 at 10.20.23 AM

Since we recognized Ad Colony was the partner we needed to figure out how to work with, we tripled down on testing various configurations and set-ups. Eventually we got it set up so that instead of having an ad space with a single ad unit in Ad Colony with V4VC set to reward 100 for 5 views, we set it up so that each view was worth 20 coins and the code would play 5 ad spaces (ad units 1-5 all each worth 20 coins).

Bam – like magic – revenues doubled as fill rates reached 100% and eCPM stayed above $10.

Screen Shot 2014-05-03 at 10.21.06 AM

(Image: 100% fill rates on over 1m impressions @ $9.61 eCPM)

To date this move to Ad Colony from MoPub mediation and marketplace interstitial ads has netted more than $12k in the 4.5 months we have had this set up in the series. That time frame represents almost 425k downloads.

One question we asked ourselves before and during the move to “giving away coins” for videos was how would this affect our in-app purchases where we sell coins?

Here come the numbers – and in-app revenue is down……

Pre-Dec 15, 2013 – the app series had 538k downloads and made 31k in “In-app” revenue. That’s $.057 per download in “virtual currency” sales.

Compare this to the period since Dec 15th, 2013 – which generated in-app revenues of $9.9k on 210k downloads. That’s $.047. So we are down a penny on average – which doesn’t sound like a lot – but regardless if pennies or thousands of $$$ – we are down almost 20%.

The Ad Colony incentivized ads almost certainly are what explains this drop. But – that’s ok if more users watched vids than would have otherwise walked away from the app without paying $.99 to unlock the 1st tier of Virtual Currency.

And that is exactly what happened. As the series made roughly $49k on 538k downloads before Ad Colony – for a rate of 9.1% ($.091 cents per download), and made $27k on 210k downloads for 12.8% (or $.128 cents per download).

Though store revenues were impacted to the tune of a 20% drop, overall revenues increased by a whopping 40%, a full 6 months after the initial release!

While downloads dropped despite more reviews, juggling of keywords and all of the basic ASO best practices we use across all of our apps – revenues stayed mostly flat because of the drastic improvement in monetization through ads.

Screen Shot 2014-05-03 at 10.35.09 AM

Guess what? I now use Virtual Currency and incentivized ads with Ad Colony across every app where that makes sense, and we continue to see $10+ eCPMs and 100% fill rates.

We have Flurry analytics in all of our apps – but with a portfolio that is usually between 50 and 100 apps across iOS and Android – it is incredibly difficult to keep track of how specific changes in apps affect retention and other super important metrics. Being able to track the difference in monetization by download has had a large impact on my strategy across my entire app portfolio.

I hate to think of what I am missing by not keeping an eagle eye on changes that affect retention. This is where my new startup App Jetpack Mobile Diagnostics comes in. I have a decent handle on ASO and Monetization – partly because I have become an SOP master. But I know retention is the most critical of all of the most important KPIs. Creating a user experience that keeps users coming back has a greater effect that any incremental ASO gains, and far better than a “mere” 40% increase in revenues.

Screen Shot 2014-05-03 at 11.30.54 AM

(Image: users started to stay in the app longer – once we implemented incentivized video)

I hope everyone reading this takes a look at virtual currencies and how to use them to incentivize facebook likes (we have 9k fans from this), twitter follows, friend invites, high score shares, visiting your app each day – and surely – coins for videos!

Once you see each download of your app is worth $.12, and you have your ASO down cold, nothing, and I mean nothing will affect the success of your app business like having users come back to your app 12 times instead if 3. I am not great at math – but that would mean roughly $.50 a download…

I have never figured out how to maximize retention in the series above, but we recently sold the series for 14 months revenue – which was propped up a great deal because of the implementation of incentivized video. Now that I have my favorite monetization method firmly in place – my focus shifts to solving retention and using App Jetpack to track retention and related metrics across my portfolio, providing suggestions on steps to improve.

The recent changes or testing by Apple as to how they would interpret their guidelines related to incentivized ads appears to be over – but you can stay tuned to the App Business Podcast for updates or follow this blog and others for the latest on what Apple is allowing. As long as your focus is on improving the user experience – chances are that’s what Apple is trying to do as well. There are many developers, publishers and Ad networks who believe in incentivized ads very strongly – so as we learn more about Apple’s positions – know that the above model for monetization is highly regarded and will likely grow in adoption.

This guest post was written by Chris Chidgey.To hear more about me, App Business Podcast or App Jetpack – you can connect with me on twitter @chidgeychris.

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Elaine Heney is the CEO of Chocolate Lab Apps, #1 Bestselling Author of "The App Escape Plan". Elaine has over 300 apps published with over 10 million downloads, 5 online App Development Courses, and mentors international mobile startups.

{ 4 comments… add one }

  1. 1 Jamie June 17, 2014, 9:51 am

    How are you handling Jailbroken Devices using Cydia to bypass coin purchases with real money? If you haven’t dealt with that yet you would be surprised how many users are making fake purchases for coins.

    What solution if any have you deployed ?

  2. 2 Chris Chidgey June 17, 2014, 3:34 pm

    Hi Jamie – I have not deployed any solution to combat that. I haven’t really seen any stats around bypassing VC – but would love to read some. Do you have some references you could share here?

  3. 3 Jamie Toelle June 17, 2014, 8:57 pm

    We have several tools we built to track our users to get better insight into what they’re doing, what they’re buying and how they’re using their coins.

    First of all I should clarify that I’m only speaking about iOS apps, that’s the only platform we develop on.

    Our application is a Utility that offers a Pro upgrade and Coin purchases they can spend on various services.

    Every day we’re seeing 15-25% of our daily users giving themselves Fake upgrades to Pro and Coin purchases.

    A typical user will earn 20-50 coins a day, but we have Jailbroken users giving themselves 60,000 – 800,000 coins a day.

    Apple offers a Receipt Validation but they’re able to fake the DNS and bypass the feature. Now we’re looking into alternatives to stopping fake purchases.

    We’re working on a solution where if we detect Cydia or any of it’s characteristics, we won’t show the ability to buy coins. The only way to get coins will be incentivized ads (i.e. Adcolony etc…)

    I can’t post screenshots here nor do I use twitter, but my contact is my full name at gmail if you have any questions.

    You should setup a simple tool to compare your Coin counts to your daily purchases, I’m positive you’ll see some discrepancies, could increase your revenues.

  4. 4 Steve Young September 17, 2014, 10:28 pm

    Great post Chris! Love the use of incentivized video ads – more revenue and great retention. Brilliant!

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