The advertising landscape on mobile has been undergoing a seismic shift, particularly with the increasing prominence of bidding technology. Giants in the industry like Google have been steering towards bidding-only models, a trend that became particularly noticeable in 2022 and 2023, with a full transition already completed in January 2024.
Despite this trend toward bidding, optimizing mediation and waterfall setups remains a crucial strategy for maximizing ad revenues in mobile apps. Ad optimization entails strategically placing ad networks at various points in the 'waterfall', allowing for control over floor prices and ad placements. This approach, while complex, has been the cornerstone for many ad monetization managers in their pursuit of optimal eCPM (Effective Cost Per Mille).
In this article, we will explore the evolving dynamics of mobile advertising, weighing the merits and challenges of bidding against the traditional practices of mediation and waterfall setups. Our goal is to unravel which is more effective in 2024: optimizing mediation setups or fully embracing bidding.
Despite the buzz around bidding, statistics reveal a telling story: non-bidding networks account for a substantial share of revenue in the mobile ad space. Specifically, among our clients, these networks represented 54% of revenue on iOS and an even higher 59% on Android before Google’s full transition to bidding. This data underscores the critical role that non-bidding networks continue to play in the overall ad revenue landscape.
The impact of Google's move towards a bidding-only model, slated to be fully realized in 2024, adds another layer to this narrative. This transition is expected to reshape revenue distribution significantly, yet it's crucial to recognize that non-bidding networks will still account for a sizable portion of the revenue pie.
For instance, even post-Google’s shift, we see that non-bidding networks are still generating 42% of iOS revenue and 34% of Android revenue. The implication is clear: overlooking or under-optimizing these networks could lead to a substantial loss in potential revenue.
Understanding the importance of non-bidding networks in revenue generation, therefore, becomes pivotal. It's not just about acknowledging their existence but actively engaging in optimizing their performance. This means fine-tuning the placements, floor prices, and frequency of ads from these networks in the waterfall setup to ensure maximum eCPM. Neglecting this aspect of ad mediation, in the wake of the industry's tilt towards bidding models, could be a missed opportunity.
A prevalent myth in the industry during most of 2023 was the assumed superiority of bidding over traditional waterfall models. Bidding is often perceived as a more modern, efficient approach, offering a hands-off experience for ad monetization managers. However, this view overlooks the nuanced reality.
Our tests and experiences have shown that bidding doesn't always guarantee better performance. In fact, in some cases, switching to a bidding model led to a decrease in eCPMs, as the absence of set floor prices can sometimes lower the overall revenue potential.
The effectiveness of these models can be best understood through real-world case studies. For instance, in tests where we attempted to transition from DT Exchange instances to bidding, we observed no significant improvement. More strikingly, when switching from UnityAds instances to bidding, there was a decrease in ad ARPDAU by 2.5%, 3%, and 3.5%.
Similarly, a shift from AdMob instances to a hybrid setup (combining AdMob instances with Google bidding) resulted in a 7.3% decrease in ad ARPDAU. These examples highlight that while bidding offers certain advantages, it doesn't always outperform the waterfall model, especially in terms of revenue optimization.
Several factors influence the performance of bidding and waterfall models, making it essential to understand the context of each setup. These factors include:
Therefore, while bidding offers a more streamlined, hands-off approach, it is not a one-size-fits-all solution. The traditional waterfall model, with its detailed control over ad placements and pricing, still holds considerable value, especially in terms of revenue optimization.
Through strategic adjustments and enhancements, ad monetization managers can significantly improve their revenue streams. Below are actionable tactics and strategies designed to refine and optimize these setups effectively.
One of the first steps in maximizing revenue from non-bidding networks is to optimize price points. This involves setting high floor prices where feasible, based on historical performance data and market benchmarks. For instance, setting aggressive floor prices at $200, $300, or even up to $900 for premium ad slots can drive substantial revenue uplifts. This strategy requires continuous monitoring and adjustment to balance between high fill rates and maximizing eCPM values.
Diversifying into non-tier1 markets offers a fertile ground for revenue growth. By expanding focus beyond the most competitive markets, you tap into untapped or underutilized potential. This includes tailoring ad strategies to fit the unique characteristics of tier 2 and tier 3 countries.
For hybrid models incorporating both bidding and waterfall strategies, implementing bid floor optimization is crucial. This involves setting minimum prices that bidders must meet to win the ad space, thus ensuring that revenue does not dip below a certain threshold. Optimizing bid floors can lead to an uplift in ad ARPDAU (Average Revenue Per Daily Active User), sometimes by significant margins. This strategy requires a delicate balance to avoid overly restricting competition and reducing fill rates.
Latency in ad delivery can detrimentally impact user experience and, by extension, revenue. High-latency ad instances not only degrade the user experience but can also lead to lower engagement rates and reduced fill rates. By analyzing and optimizing waterfall-level and instance-level latency, and removing or adjusting high-latency, low-revenue generating instances, ad monetization managers can achieve a smoother user experience. This often results in a noticeable increase in ad ARPDAU by improving both user engagement and impression rates.
Exploring new ad providers through AB testing is a strategic method to enhance ad performance. This involves running controlled experiments to compare the performance of current ad providers against potential new entrants. By methodically testing and analyzing results, ad monetization managers can identify providers that offer better eCPM, fill rates, or user engagement. This approach allows for data-driven decisions in selecting ad networks that contribute positively to the overall ad revenue.
Continuing our deep dive into the strategies of mobile ad monetization, it becomes apparent that neither bidding nor traditional waterfall setups alone offer a silver bullet. As a result of the nuances of each model and the dynamic nature of the mobile advertising landscape, a hybrid approach emerges as the most compelling option. This method leverages the strengths of both bidding and waterfall models, aiming for an optimal balance between automation and manual control.
The hybrid model stands out for its versatility and efficiency. It allows ad monetization managers to harness the automated efficiency of real-time bidding while retaining the strategic control offered by waterfall setups. This blend ensures that high-value ad inventory is maximized through bidding, while also allowing for targeted, strategic placements via waterfall setups for specific segments of inventory or ad networks not yet on bidding. This dual approach can lead to an increase in overall ad revenue, as it combines the best of both worlds: the high fill rates and competitive eCPM of bidding with the granular control and optimization possibilities of waterfalls.
Effectively combining these methods requires a nuanced understanding of your ad inventory and the performance metrics of your ad networks. Start by segmenting your inventory based on performance. Use bidding for segments where it consistently outperforms or matches the waterfall setup in terms of revenue and user experience. For parts of your inventory where data shows traditional setups yield better results, or for ad networks that excel in a waterfall context, maintain or enhance those setups.
Regularly review performance data to adjust your approach, experimenting with the placement of networks between bidding and waterfall layers to optimize revenue and fill rates. Additionally, leverage technology and tools that allow for dynamic switching between models based on real-time performance analytics, ensuring that your ad monetization strategy remains flexible and responsive to market changes.
The evolution of ad mediation is poised to offer even more sophisticated control mechanisms, enabling a more seamless and effective integration of bidding and waterfall models. Future developments are expected to provide deeper insights into performance analytics, automate the optimization process, and offer more granular controls over ad placements. This progress will likely further empower ad monetization managers to fine-tune their strategies, ensuring they can achieve the optimal blend of automated efficiency and strategic control.
In addition to better navigating the complexities of today's mobile ad landscape, a hybrid approach can also help managers position themselves to take advantage of future advances in ad mediation. This strategy acknowledges the unique benefits and limitations of both bidding and waterfall models, seeking to maximize revenue while ensuring a positive user experience.
A key takeaway from our discussion is that a balanced, hybrid approach to ad mediation has undeniable value. With its intelligent combination of automation and waterfall setups, this strategy emerges as a robust solution to mobile advertising's complexity. Ad monetization managers can optimize ad inventory, maximize revenue, and maintain a seamless user experience by combining the strengths of both models.
As we look towards 2024, with its expected shifts and challenges in ad monetization, it becomes even more imperative to be strategic, agile, and make informed decisions. GameBiz Consulting can help you through these complexities. We are an ideal partner for navigating these changes thanks to our expertise in balancing mediation with bidding. By working together, we can craft an ad monetization strategy that is not only resilient to market changes but also adaptive to future ones.
Let GameBiz Consulting help you unlock the full potential of your ad revenue strategies. Contact us today to learn how we can support your journey toward a more balanced, effective, and profitable ad mediation setup.
