While marketers turn their heads towards high-profile partnerships in esports, Fortnite, and Twitch, it becomes easy to forget a major portion of the gaming audience: the mobile gamer. The global mobile gaming market is estimated to reach over $77 billion in revenue by the end of 2020. There are many reasons for the persistent growth and player retention in the space, and to learn more, we spoke to Sarah Chafer, EVP of global ad sales at Tapjoy.

Tapjoy connects game publishers and advertisers, enabling brands to advertise and monetize on a wide breadth of mobile platforms. “A lot of what we do is around user choice,” Sarah told us. “We offer them a wide variety of things that they can do in order to transact for currency. If you think about being a user or consumer yourself, how often is it that you get to decide which advertiser you’re going to transact with versus having some unwanted messaging that maybe doesn’t apply to you personally?”

We spoke with Sarah about monetization practices in mobile games, and learned about the special, mutually beneficial dynamic between players, games, and advertised brands.

You can listen to the episode using the player embedded above, or you can read a full transcript below.

Episode Transcript

Sarah:

So, funny enough, I was working for a company that had an affiliate program about 11 years ago, and we were issuing payments out to these affiliates and one of them was Tapjoy. And I had to ask the question, “Hey, this check’s kind of big, what exactly are we doing with this company, and how are they making so much money?” And I did a little bit of digging and started trying to understand what the business model was. And for me, one of the answers to that question was, “Well, people are interacting with advertisers in order to get something that’s a virtual good.” And then I had to ask the question, “Well, what’s a virtual good?” And at the time it was a free cow for Farmville on Facebook. And that was pretty exciting for me because I just didn’t really understand at the time that users held a lot of value in what they were exchanging with for an advertiser in terms of the time they’re willing to spend, the interactions, and what they’re willing to put in to get something that’s not really worth actual money.

So that was insightful for me and it did make me think. So when the recruiter called for the same company, I very quickly answered the phone and said, “Yes, I’d love to work in that field.”

Jamin:

Are there any historical antecedents for like buying virtual goods or is there a longer advertising history that companies like Tapjoy fit into for someone who might not be as familiar with the space but might be familiar with another form of advertising, either digital or physical or whatever that might be?

Sarah:

Yeah, I think it’s really the rewarded model and it’s something that’s really been around for a long time. And you could think of it as anything from a content unlocking model meaning you watch an NFL game and you are waiting for that commercial to play and probably engaging in–maybe laughing at it–and finally, get to that point where you get to watch the rest of the game. So it’s funded by advertising in some way, shape, or form. So it’s similar, it’s like content unlocking. You can get to the next level of gameplay, in order to get there, what you need to do is sometimes transact with an advertiser. So it could be that you’re watching a video in order to get to your next level or that you’re interacting with an advertiser in some way, shape, or form.

Jamin:

Got it. So tell me a little bit about the process of connecting brands that want to advertise and monetize as well. So, if I’m a non-gaming brand and I’m looking at working with a company like Tapjoy, what’s the process for actually making that happen?

Sarah:

Yeah, great call-out. I think our system is sort of interesting and whenever an advertiser approaches us for the first time, usually the first question we get is how many points do I give away for interacting with our offer? And it really works a little bit like a three-pronged approach. So we have our three groups that we focus on: our publishers, our users, and our advertisers. So the publishers see the benefit in Tapjoy to monetize their content, which is usually found in a gaming environment nine out of ten times. Users are looking to transact with the advertisers in order to create this value exchange and earn their credits. And then advertisers fit in this because we’re really offering this unique setting for these users and we want to give them as many choices as possible.

A lot of what we do is around user choice and making sure that everything we’re presenting to our users is exciting and appealing. We offer them a wide variety of things that they can do in order to transact for currency. And I think the user choice piece is really important; it’s just allowing them to interact with the advertisers they want to interact with. If you think about being a user or consumer yourself, how often is it that you get to decide which advertiser you’re going to transact with versus having some unwanted messaging that maybe doesn’t apply to you personally?

Jamin:

Now, what are some of the things that you find adds value? So what are the types of carrots, so to speak, that you find advertisers use to attract a player to advance or engage with that particular ad?

Sarah:

Yeah, I think it’s almost more on the publishing side on how often they want to even present us as an option. And so when I think about being in gameplay, you don’t want to be too disruptive, you don’t want to make it so that the user never wants to come back. The number one focus for publishers should be returned usage and also making sure that you’re presenting the right kind of offers, demand matching, making sure that these things are appealing to users and that they’re not a waste of their time and that they actually do enjoy the time spent.

We have one interactive unit we call our interactive end card which is the end card that sits at the end of a video, and we are astonished at the amount of time our users spend playing in that ad unit because it’s interactive. So, you can move things around, you can take a basketball shot and things like that. And the users do spend a lot of time playing in the ad, which is pretty exciting for the user and for the brand. So that’s been something different than I think we’ve seen before.

Jamin:

Yeah, it’s interesting, I think about like in fashion magazines, for example, there’s sort of this understanding that the advertising is part of the content itself: it adds to the experience for the November issue for Vogue or something like that. So it sounds like you have a similar type of interaction where players are coming to an experience, they’re already in the mindset that they want to play games and when done well, these ads can serve as an additive experience of something that they’re already participating in.

For direct-to-consumer brands, what are some of the considerations at a macro level that they need to be thinking about before working in your space, and what are some of the differences between those brands and some older, more established brands when they’re approaching the space?

Sarah:

Yeah, it’s a good question. I think that direct-to-consumer has been a pretty popular category for us the last couple of years. And if you think about sort of where the direct-to-consumer market was born, it was more of an online versus a traditional brand, and we’ve definitely seen that group perform really well on our platform and our users really liked to engage with those types of brands. And a lot of those products at the end of the day are ending up being shipped at home, which given everything that’s going on right now with COVID-19 and how many more users are home, those brands and those programs have just picked up a lot of popularity. How it’s different than what they would do on a traditional basis is it’s a little bit more measurable in real time. So we’re doing a lot of really quick measurement meetings, they’re telling us right away when we have a conversion, we’re rewarding the user in real time and they’re able to see very quickly how our users behave and sort of who’s subscribing, who’s staying on that long tail.

So I think they get a lot of really good real-time data. And I think it’s also a really good mix from a mobile perspective that is outside sort of the big two, Google and Facebook, which are kind of an “always” buy. But to diversify a little bit with someone like Tapjoy, it does help you get a little bit of a different audience that’s a bit exclusive as well.

Jamin:

Yeah, it does speak also to how people are actually using mobile devices. Obviously, social networking is a big category, web usage is a big category, but gaming is such an enormous piece of what people do on mobile. In many instances, it’s more popular than many other social networking apps.

Sarah:

Right. And even that cross-section that you mentioned with social is going to be huge. And when we think about games, we definitely think about them in a mainstream fashion, particularly with mobile. And if we think about half the audience of gamers in general, they’re coming through a mobile device which becomes really exciting: it’s a new genre in place for brands to play.

We’ve done a lot of research too about gaming in general and who gamers are, and we found some interesting things. So we found out that our audience really would give up social media in order to not have to give up games. If you had to choose between the two, what would you choose? And 70% said that they would rather have their games than their social media, which we thought kind of goes back to our audience is very loyal and they really love to engage in this way. And when we surveyed the moms on our network, we found that a lot of them were spending their free time playing mobile. Well, what free time they have, and I’m a mom, so I totally get it.

But certainly, those are some of the insights that we were able to pull out of that study that really have helped us appeal to a larger market when it comes to advertisers.

Jamin:

Yeah. And I do feel like mobile, I think in the minds of many brands when they’re thinking about doing something in the gaming space, mobile is not as top of mind as I really think that it should be given how much people use their phones. So I think the idea that you really can reach a whole different audience on mobile, seems like it’s a really big part of the appeal. Particularly for brands that maybe they’re like looking at the gamer stereotype. But how do you get over maybe for brands that maybe have an emotional thing? “I’m not quite sure, I don’t know, this gaming thing maybe doesn’t seem quite right for us.” What’s the answer that you give to someone along those lines?

Sarah:

Yeah, it’s a question we come across a lot just in our sales processes, “Is this the right audience in spot for me?” And really it is about kind of going back to our research and diving into who that gamer is because it’s really your everyday audience. And the breakdown between male and females is actually quite balanced. In fact, sometimes it skews more female than male–which common misperception there–but also it’s about their individual product and brand. So a lot of times we’re looking at what are you looking to accomplish as a brand? Are you looking to get more subscribers? Are you looking to educate the market on what you do and who you are? Are you looking to really create a brand affinity experience with the user? Because that’s a big part of what we do as well. If we’re sponsoring your in-game experience, a lot of times there are brands that want a part of that. “Hey, I’m running a movie trailer, and not only am I excited for you to hear about my movie, but I want you to remember me when you see this in the theaters.”

And you know, sometimes granting a little bit of virtual currency will create that memory because it’s a fun one and the users are highly engaged in it.

Jamin:

There are many places to place digital dollars on mobile, what are some of the unique things about Tapjoy’s platform? How do you differentiate yourself when you’re making that case for spending money with Tapjoy versus another place in the mobile ecosystem?

Sarah:

Yeah, that’s also a challenge we come across. There are so many places to advertise on mobile these days, and what is it about our space that’s unique and valuable? And for us, one, it’s a fun environment. So, if you think about what you want your user mentality to be like when they come across your ad, you definitely want them to be enjoying themselves and you want them to have fun, you want them to have some buy into your ad and your brand in general. I think for us, the rewarded model is something that we’ve learned from the very beginning, go back to the virtual cow and think about what’s truly important to a user. And depending on what game you play and I play quite a few, there are some things that are really important to me as a user. And I think too, the other part is the desire from the users.

So, we talked about this a little bit earlier, but sort of that notion that the users actually want advertisements in this way, shape, and form. And in our research, we found that they’re more likely to watch a video if there’s a reward attached to it, or more likely to opt into an ad if there’s a reward attached to it. So we do think it’s an interesting, unique place for advertisers to play.

Jamin:

Yeah. I think also, as you mentioned, that counterbalance with publishers as well. I think in many instances, it’s not always the case that the distribution platform for an advertisement is always thinking about ultimately what a user’s best interest is, right?

Sarah:

Yeah. We definitely take great care of what our publisher feedback is on specific advertisers we run as well as user feedback on how easy it was to convert on something or difficult, and it’s definitely a three-prong party when it comes to how we try to keep each group happy. And the publishing pieces, as you mentioned, is definitely hugely important, they have app ratings that they have to think about. So making sure each user is getting rewarded exactly as they say they should is a big push for us in the last year.

Jamin:

Are there any misconceptions that you find that potential partners might have about in-app advertising?

Sarah:

Yeah, I think it’s probably this notion of premium content and also that potentially it’s not a brand-safe place for brands to play. But in-app advertising is actually pretty safe just by nature. You have the Google Play store and also iTunes, there’s a vetting process, they have to submit an app, they have to get approved, they have to have the right content and category in order for them to even come through as a certified app in both of those ecosystems. So once you kind of pass that test, it makes it a little bit more safe thinking this content is actually already been signed off by two major mobile marketing companies, so there’s an environmental piece to it. I think the other thing is there’s no user-generated content so that the risk that you’re going to run up against something that might be worrisome or scary for a brand is a lot lower as well.

And I think we’re lucky in a way that Google Play and iTunes, both set ratings on an app level which helps us. It helps guide us in terms of what we are allowed to show and what we’re willing to show because as you mentioned, there’s grand theft auto and there’s a big blue bubble, which is, maybe, targeted to two completely different audiences, but they are all in the gaming space. And if you look at the number of genres in gaming, it can go from something that’s very interactive, and maybe you have a shooter game versus something that’s a match 3 or a spelling game. So it really does run the gamut of all different things that a game could be in. And we do take that into consideration when we’re talking to brands and when we’re talking to publishers too.

Jamin:

Are there any onboarding challenges that you face? So for someone who comes to you, anything that they should be thinking about or preparing before getting started? And while they might be doing a lot of different things in mobile advertising, is there anything that they need to do specifically for doing this type of in-game advertising that might differ from other forms of digital or other forms of mobile advertising?

Sarah:

Certainly, depending on whether your promotion of your product is coming through an app or coming through mobile web, there’s definitely some different tracking mechanisms there that we’d want an advertiser to sort of have in their back pocket. One would be, if you’re coming in with an app that you’re trying to promote or an engagement that’s within an app, we definitely want the advertiser to think about having an MMP, which is a Mobile Measurement Partner. Some examples of those apps; Flyer, Adjust, Singular, Branch, Kochava. Those are all really popular and we work with all of them and are pretty well integrated. The other would be on the mobile web tracking side. So having the ability to place some sort of a real-time tracking post-back meaning once the sale’s complete that you’re posting it back to us so that the user gets rewarded right away.

And I think those are the major things that are maybe different about our model, is that in order to reward a user, we definitely have to have that tracking in place. And in mobile, in general, and in-app, certainly that mobile measurement partner, if you’re going to get into in-app mobile advertising for the first time, you are going to want to have a partner that you invest in and takes care of all of your measurement for all partners.

Jamin:

Well, I wanted to talk about metrics, how do you gauge success for a campaign? What are the things that you’re looking for? What’s the way in which you would advise brands to be thinking about success with Tapjoy?

Sarah:

Yeah, I think that we’re always looking at that funnel. And actually, I feel like at Tapjoy we’re very focused on the entire funnel from very early on, what is your impression look like? What does your click look like? And the most important piece is the piece that’s important to the advertiser which is going to be either that point of adoption, that KPI, that retention metric, and we have to stay focused on that really through the whole journey. And sometimes that’s a very short fraction, “Help me get to level three, help me get more people to register for my website or subscribe.” But we do pay really close attention to every piece of that funnel just to make sure that everything looks healthy, everything’s converting well. The most successful ads on our network are going to have a strong conversion rate and a strong fit. So paying attention to that funnel all along the way is pretty important.

I think from a metrics perspective too, if you look at what our CVRs are and what our total conversions for a campaign are, that really gives you an indication of campaign health, and we do a lot of tweaking along the way. So we spend a lot of time with the advertisers advising on how you should approach iOS differently than Android and what’s best for your overarching campaign goal.

Jamin:

How has mobile advertising changed over the last few years? And the answer is obviously a lot, but what are some of the changes that you’re seeing and how do you think that it’s going to impact your business going forward?

Sarah:

Yeah, I think it definitely has seen a lot of change. If you had asked me back in 2009, 2010, there was always this notion of it’s going to be the year of mobile. We heard that for a long time and now I think we’re kind of past that and everybody understands everyone needs an app and a mobile strategy and some way to approach the mobile in-app ecosystem. I think as that developed, some challenges have definitely come up including just new ad compliance standards, which I’m sure you’re hearing about, privacy control challenges, things like the new OS, so iOS 14 is coming, actually already came out but part of that will be a new privacy screen that will ask you for permission to use advertising tracking things like that, Google family certification, new industry-wide privacy policies like GDPR and CCPA and just more verification tools. And that’s really all around brand safety and privacy. And from that perspective, Tapjoy’s completely supportive.

Sarah:

But as these things roll out, sometimes they’re quick and sometimes the industry has to be nimble and move quickly around it, meaning developing new ways of tracking and new ways of thinking about users, and we’re going deeper into the funnel with our advertisers. And I think that is a change from early on when mobile advertising was a little bit more… It wasn’t the year of mobile yet, I’ll say, and we were still dealing with like, I think at the very beginning we were still trying to figure out what the funnel looked like. And now we have so many great tools that will allow us to measure pretty much down to the purchase of a product. And that can tell us a lot about what’s working well and what’s not, and helps us to optimize along the way.

Jamin:

Yeah. That’s one of the things that we have that conversation with clients often to think about whatever your customer journey looks like, there’s a different gaming solution that’s out there. You just have to make sure that you know what it is that you’re ultimately looking for and creating the right set of expectations for what that platform could do. So some are better for awareness, some are better. Yeah, it’s something that we see all the time. Like if folks want to do stuff like in-games, for example, outside of mobile and not thinking through like, you’re not going to have the same kind of control or visibility-

Sarah:

Metric.

Jamin:

… into what’s happening if you do something on animal crossing or… You’re not going to be able to see it. It might be great if you use other social channel help promote it or something you own, then perhaps that could be good from a content perspective, but setting the right expectations for folks is really, really important because I think doing marketing in gaming and marketing to gamers ends up becoming this zero-sum thing where it’s like, “Oh, I’ve covered all my bases, as opposed to thinking about a more integrated strategy that focuses on where your audience actually is and what behavior they’re going to participate in at that particular moment.”

Sarah:

Yeah, definitely. It’s funny too, I’ve seen a lot of that in-game stuff and actually some of those integrations are amazing. I always think about, oh, that’s cool if the car drives by the big billboard and definitely a cool way to get your ad in front of users but certainly a little different than what we’re doing on a cost per transaction basis.

Jamin:

Yeah, absolutely. Sarah, thank you so much for your time. I really appreciate it.

Sarah:

No problem. Thank you.