We have been receiving many inquiries on why ads monetization may be a better solution than in-app purchases for the Chinese market. This article argues that this is due to a cultural factor that favors free ads over paid perks, along with stricter regulatory standards and resulting upfront costs that are required for IAPs.
The hyper-casual games market provides a strong case for ads monetization. This article explains that a high dependence on ads monetization is one rule that a successful hyper-casual game follows. Publishers are more concerned about optimizing ads monetization than gameplay. The player’s inevitable (and expected) loss and resultant incentive to renew gameplay is capitalized upon—unintrusive ads every time the player loses—which ironically translates to huge ads revenue gains for developers. According to Game Analytics, the average eCPMs of hyper-casual games are USD 4 in the US and USD 3.9 in China.
These figures show that the ads monetization model is just as profitable on the other side of the world.
Writing from personal experience, the Chinese culture is all about sniffing out the best freebies and deals. Call it greed but we are just trying to be rational consumers even if it turns out that the time spent price-checking or waiting is in conflict with the saying that ‘time is money’. The notions of calculations, cost, money and figures are so ingrained into our lives that every move or decision probably has an underlying monetary reason. Of course there may be the hardcore gamers that will pay for ad-free gameplay but for the majority of users, this cultural factor may be the reason why they would never pay for the game or service that runs fine when afforded a little patience. And frankly, there are plenty of options for the casual (and rational) user to switch to if a certain game or service is no longer freely accessible or where ads and pop-ups for paid perks appear too often. It may even be that the ads are so smartly integrated and timed that they offer the user a chance to take a breath and recollect themselves before they continue onto the next level. Better still, playable ads may not feel like nuisances at all! For developers, it is therefore the timing, frequency and type—video, banner or interstitial—of ads that are the real factors to decide on.
The other reason why China is a less IAP friendly market is, unsurprisingly, a monetary one as well. IAP games in China are required to have both an IP Certificate and an ISBN Publishing License. Whilst we offer both of these services at APPTUTTi along with priority technical support under our RSPP Max package, these come with considerable upfront costs.
Conversely, the ads monetization model is the ONLY free way to publish your apps and games in China. Our RSPP Basic package has you covered with free access to 3 major app stores in China. This free path should be used as a stepping stone to cement yourself and your brand in the Chinese market. Analytics on our performance statistics and monetization pages will also help you tweak and improve your apps and games to better fit local expectations. In the long run, this should help you establish brand recognition and better the prospects of successful IP and ISBN applications. And before you know it, your ads revenue will probably have those IAP upfront costs covered!
One last note I have is that even if you are still adamant about publishing IAP versions, there is no harm in simultaneously publishing ads monetization versions for free to pass the time it takes for the various IAP-specific applications.