Google has recently unveiled some noteworthy updates concerning its ad monetization policies that have significant implications for mobile game and app publishers. Only this time, it's (mostly) good news!
In one of our previous articles, we discussed Google’s announcement that starting October 31, all its ad platforms will discontinue support for multiple calls in mediation, creating a seismic shift in how ad auctions are conducted and how advertisers and publishers interact with the platform.
In a surprising turn of events, Google’s Director of Product Management, Carlos Façanha, announced that the company is extending the deadline for publishers to switch from waterfall instances to bidding.
In this article, we dissect the announcement, explain its implications, and provide insights into how publishers should prepare.
Google's recent announcement highlighted a delay in the deadline for publishers to transition from waterfall instances to bidding. This means that until the original deadline of 31st October 2023, Google will gradually cease responding to waterfall calls lacking a bidding ad unit. By the end of October, Google Ads will no longer entertain multicall requests in waterfalls without a bidding ad unit.
However, following the deadline, Google will still respond to non-bidding waterfall calls, but only as long as there is a single call within the waterfall to Google Ads demand. Beyond October 31, 2023, Google will continue to acknowledge non-bidding waterfall calls, including the waterfalls with multiple non-bidding calls, as long as they contain the bidding ad unit from Google (hybrid waterfalls).
This aspect of the update stands out as the most anticipated by publishers. However, a dampener on this positive note is Google's intent to cease all responses to non-bidding calls by the start of 2024. Google Ads aims to phase out responses to hybrid waterfall requests and foresees the completion of this shift by early 2024.
The consequences of the original announcement were immediate, and its implications were significant. AdMob is usually the biggest or one of the biggest contributors to ad revenue in most apps and games, so any changes related to it would affect the publisher's overall revenue.
However, Google's abrupt policy change also presented a myriad of challenges for publishers:
The biggest consequence was the impact on eCPM and overall ad monetization performance. We conducted dozens of AB tests for our clients and found that switching from a multi-call setup to a hybrid setup had positive results in many cases. We did, however, see a couple of cases where adding a bidding ad unit from Google reduced overall performance - even by 10% - in many cases. Even though Google was trying to implement a one-size-fits-all solution, our results varied depending on the game, platform, ad format, and country.
Even more worrying was the fact that the tests ordered by Google didn't really give us an idea of what would happen after 31st October. Despite testing both a hybrid setup versus a multi-call setup, the bidding setup would be the only option starting on 31st October. Initially, our big concern was (and still remains) how would removing calls with fixed price points from the waterfalls affect the performance.
As expected, we ran several tests where we deactivated AdMob instances and concentrated only on bidding (simulating what would happen anyway after the deadline), and the results were expectedly negative. In case you wonder how negative they were - it depended on the game, platform, format, and country. In general, they were more negative in waterfalls where AdMob was taking a larger share of revenue. This was without even taking into account the fact that we wouldn't be able to access Google demand via GAM partners.
For some time, mobile publishers have incorporated GAM partner line items into their waterfalls to enhance their competitive edge. The demand from GAM partners consisted of their unique offerings, either direct or through resale, but notably, a significant portion originated from Google. This approach allowed publishers to tap into a greater share of Google's demand, boosting their eCPM and overall ad ARPDAU.
However, with Google's transition to exclusive bidding, this strategy will become obsolete, leading to potential eCPM reductions for publishers. This change also left GAM partners in a bind: they had to either diversify their demand sources, reduce their dependence on Google, or consider a complete business overhaul.
Remember the context in which this deadline postponement news emerges. We're on the cusp of Q4, a pivotal period for the advertising sector. Those who profit from game ads recognize it as the year's peak earning season.
With holidays like Thanksgiving, Black Friday, and Christmas around the corner, advertisers are allocating more funds. Google stands out as the primary platform where brands invest heavily in mobile games and apps.
Google's decision not only offers developers an extended window to adjust, as highlighted in their blog, but it also sidesteps potential challenges or market share losses during this crucial phase.
While Google's recent announcement offers a breather to mobile game and app publishers for now, it's paramount to acknowledge that by the dawn of 2024, the company expects to only respond to bid requests. Additionally, come 16th January 2024, Google will also stop responding to any ad requests from the EEA and the UK that are not TCF 2.2 compliant.
Combined with seasonality and bidding effects (eCPM decreased from Q4 to Q1), January may be a rough month for publishers monetizing apps with ads. They may see a significant drop in eCPM, which in turn impacts ad ARPDAU. Therefore, a vigilant approach is imperative for publishers to navigate the impending ad monetization landscape.
As the landscape of ad monetization continues to evolve, staying informed is more crucial than ever. For the latest insights on Google bidding and actionable strategies to maximize your ad revenue amidst these industry shifts, keep following our updates. Navigating these changes can be challenging, but you don't have to do it alone. If you're seeking guidance on optimizing your ad monetization strategies, reach out to GameBiz Consulting. We're here to help you thrive in this dynamic environment.
