Why Are ROAS Campaigns Important for Player Acquisition in Ad Based Games?

Ad monetization has become a key revenue-generating pillar for most games. By strategically displaying ads within the game, developers earn money through ad impressions and clicks. But ROAS campaigns for apps are difficult to run because you have to balance revenue and as spend. You need to make sure the revenue generated from the ads exceeds the cost of running the campaign. Otherwise, you will be paying more to acquire users, which isn’t sustainable in the long run. 

Since ROAS campaigns are important for user acquisition campaigns, this article will guide you on how to run ads for ad based games to improve monetization and help you reach your revenue goals. 

Let’s get started!

What are ROAS campaigns?

Return on ad spend (ROAS) determines how much revenue has been generated from an ad campaign. ROAS is usually expressed as a percentage and represents the amount earned from every dollar used in advertising. Game marketers use ROAS to access their user acquisition efforts at intervals of 3, 7, and 30 days. The 3-day ROAS, 7-day ROAS, and 30-day ROAS help marketers understand how much users spend 3, 7, and 30 days after installing the app. Insights from the metrics are useful in highlighting which channels or campaigns delivered the top-quality users. 

While there are other metrics that help marketers understand and optimize their campaigns, ROAS stands tall as the all-important metric you need to measure to determine campaign success. This is because, even if a campaign delivers high-quality users who generate significant revenue for the app, the campaign will be considered a failure if you paid more than you gained from those users. ROAS will let you know how much revenue you are generating from every dollar invested in your ad campaigns. Every marketer wants their ROAS to be very high, but even a partial ROAS is valuable as it shows you are not overpaying to acquire users. 

Calculating ROAS is very easy. Simply divide the total revenue from your ad campaign by the cost of the campaign: 

ROAS = Revenue from ad campaign/cost of ad campaign

For example, if you spent $1000 on a campaign and earned $1500 in profit, your ROAS is 150% (100% is the break-even point). 

ROAS = $1500/$1000 * 100

ROAS = 150%

There are of course cases where the ROAS is negative. For example, if you spent $1000 on a campaign and only generated $500, your ROAS would be -50%. When you notice your ROAS is negative, take time to access your marketing channels and creatives to know where the problem is and optimize accordingly. 

Challenges while running ROAS campaigns for ad-based games

Lately, we have witnessed the rise of games that generate most of their revenue by serving ads. This includes casual and hyper-casual games that aim to attract as many users as possible and monetize the audience by serving ads. While ads are an effective game monetization strategy, marketers experience certain challenges when running ROAS campaigns for apps. They include:

Can't calculate ARPU

Ad-based developers struggle to access user-level data, making it difficult for them to identify who their high-quality users are. Without this information, they cannot tell which campaign, marketing channel, or creative is responsible for bringing in high-quality users. 

It also becomes difficult to calculate the ARPU without the user-level data. To deal with the situation and measure the average revenue per user, some developers average their ARPDAU (average revenue per daily active user) and retention rates. The problem with this formula is that users are different and have varying viewing habits. 

Ad revenue gets mismatched

Most games aren't entirely ad-based. Developers tend to mix ads with in-app purchases to boost their mobile game marketing monetization efforts. While there’s nothing wrong with this, it often creates issues with campaign measurement and analysis. Revenue from these two sources often gets mismatched, with developers sometimes finding themselves calculating their ROAS with IAP revenue. 

In such cases, the ROAS figure they get is inaccurate, making it difficult to understand the impact of their ad investment and how to optimize it accordingly. This often leads marketers to unknowingly underbidding on high-impact sources in their UA campaigns and miss out on substantial revenue and scale. 

Cannot measure if your cost per install is justified or not

Without user-level data, user acquisition teams can only run campaigns with one CPI for all their sources. This makes it difficult to tell if the CPI from an ad campaign is justified or not. Sometimes the CPI may be lower than the LTV, but as we all know, all sources are different, and generalizing everything can lead to mistakes such as underbidding on high-performing sources and overbidding on low-performing ones. 

Target ROAS bidding on Google

Google Ads Smart Bidding feature analyzes search patterns and behavior to intelligently predict if a user is likely to convert when they search for the product or services you are advertising. It then lets you adjust your bid for the search to help you maximize the returns of your Google ROAS campaigns. For example, if the strategy determines that a user is likely to generate a high-value conversion for a particular search, Target ROAS will make a high bid on that search. But if the strategy predicts that a search isn’t likely to generate high-value conversions, it lows your bids for that search. By optimizing your bids at auction time, Google Target ROAS allows you to make the right bids to maximize your ad spend. 

Google Target ROAS can be a standard strategy for a single campaign or deployed as a portfolio strategy for multiple campaigns. Talk to a game marketing agency to determine the right portfolio strategy for your campaigns and to understand how automated bidding works. 

Before applying your target ROAS bid strategy, you need to set values for the conversions you are after. You should also set conversion value rules to better express the conversions as they relate to your business. Google demands that campaigns should have at least 15 conversions in the last 30 days to use target ROAS. Display campaigns need at least 15 conversions in 30 days across all campaigns. App campaigns need at least 30 conversions in a day (300 conversions in 30 days), while discovery campaigns need at least 75 conversions in 30 days, with 10 of those conversions happening in the last 7 days. Pay attention to these rules before creating your bid strategy to ensure your Google approves your application. 

With Google's approval, log into your ad account and create a bid strategy for your ad campaign. You can choose a bid strategy for a single campaign or a portfolio bid strategy for multiple campaigns. Enter the settings for your new strategy, give it a name, and save. 

Facebook Instant Games ROAS campaigns

The ROAS measurement tool in your Game’s App dashboard summarizes the ROAS for your UA campaigns. The tool captures both IAP and ad data and is available to all developers of Facebook Instant Games. 

To access the ROAS measurement tool:

• Open your Developer Dashboard and select the app for your game 
• Navigate to Instant Games from the dashboard and select ROAS Management (Beta). 

The ROAS tool displays a table that gives a summary of the ROAS data for all your active Facebook ROAS campaigns. Active campaigns are described as those that have been updated in the last 30 days and haven't been archived or deleted. The summary table contains the following data that will help you understand your campaign performance;

• Direct installs – the number of users acquired through ads. 

• Social installs – the number of times an invite was sent by a person who installed the game after clicking an ad. 

• Total ad spend – the amount spent on advertising on a particular date. 

• CPI – the game’s average cost per install. CPI is calculated by dividing the total ad spend by the total number of direct and social installs. 

• Total revenue – the amount generated from in-app purchases and ads directly attributed to social and direct installs. 

• Social LTV – the total revenue generated from in-app purchases and ads directed attributed to social and direct installs. Calculated by dividing the amount of money attributed to social and direct installs by the number of direct installs. 

• Social ROAS – the return on ad spend from direct and social installs. Calculated by dividing total revenue from direct and social installs by ad spend on social installs. 

• Social ROAS Dx – the social ROAS multiplied by the days since the last user cohort was acquired. 

Start tracking like a pro

If game marketing wasn’t hard enough, add analytics into the fray! This is a crucial part of your campaign, and something you’ll need to master if you want to get results. But it’s dangerous to go alone! Take this: The Game Dev's Complete Guide to Game Marketing Analytics.

Any game developer looking to generate more revenue from their creation can consider publishing ads at strategic locations within the game. Ad monetization allows you to monetize all your users and not just a portion who pay, as is the case with other methods like subscriptions and in-app purchases. 

However, ROAS campaigns for apps come with several challenges you need to navigate to become successful. Working with a game marketing agency is your best bet at dealing with all the issues that may arise. Game Marketing Genie is here to help develop the best game marketing strategy for your ROAS campaigns to ensure effective monetization. We will help you test your creatives and marketing channels to ensure they deliver high-value users to your game. 

Get in touch to talk to one of our marketing experts today!