Inside the game: Exploring waterfall ad monetization with top mobile gaming engineers

In this blog post, three of our experienced mobile gaming engineers discuss their knowledge of the waterfall method, creating a great waterfall strategy, and combining the power of waterfall and RTB methods.

The world of ad monetization in the mobile gaming industry is high stakes. Often, the fate of your game’s success hinges on your ability to understand mobile ads, handle ad networks, and navigate ad placements.

To help, we asked our team of in-house experts to pass along the knowledge they accrued during their time optimizing ads for a top mobile gaming studio in Brazil. In particular, this blog will focus on understanding the waterfall method, designing an effective waterfall strategy tailored to your mobile gaming company, and the advantages of combining real-time bidding (RTB) and waterfalls on the backend for better ad monetization.

Understanding the waterfall method of ad monetization

The ads industry offers numerous network SDKs for displaying ads, such as AdMob, Facebook Ads, AppLovin, Vungle, and AdColony. Managing these networks effectively is crucial for maximizing revenue potential while maintaining performance. In this process, one of the primary ways for determining which ad to display to your user is through the waterfall method.

In the waterfall method, your ad requests are passed sequentially from one ad network to the next in a predetermined order. Each ad request has a set price that each network will have to meet in order to place their ad. The ad request is then presented to each network in the order they were prioritized by the game developer. If the ad request is filled by the first network in line, aka the top-priority network, then the waterfall ends and the process is complete. However, if the No. 1 network in line cannot fill the ad, the request is then presented to the next network in line. This process continues until an ad is successfully chosen or until all the networks in the waterfall have been exhausted.

The waterfall approach is advantageous because it’s easy to implement and it aims to maximize revenue by prioritizing ad networks based on their historical performance.

Other important factors to consider when prioritizing the order of your waterfall include the health and stability of your app. Health and stability can be measured through fill rate, ANRs (Application Not Responding), and crashes. The fill rate represents the percentage of times a placement successfully displays an ad when requested. Low fill rates indicate inefficiency and may require adjusting the placement’s price or removing it from the waterfall.

Managing ANRs and crashes is essential because rendering and caching ads consumes significant resources. Balancing revenue and app health and stability becomes a tradeoff when a placement generates a high eCPM (effective cost per mille, or per 1,000 views) but also causes frequent ANRs or crashes. Striking the right balance between revenue and user experience is crucial. Data-driven toolsets like Embrace can help in adapting strategies such as avoiding certain ads or creating different waterfalls for specific devices to optimize performance.

How to design an effective waterfall strategy for your mobile gaming company

Designing an effective waterfall strategy for your mobile gaming company is crucial for maximizing revenue. While using an ad mediation SDK can simplify the process, manually designing your waterfall strategy offers you greater flexibility, control, and the ability to tailor the strategy to your specific needs in real-time. Consider the following factors to optimize your strategy:

  1. Region: Different countries or regions may have varying market dynamics and price ranges for ads. Creating separate waterfalls tailored to specific regions allows for better optimization and revenue generation.
  2. Length: The length of the waterfall refers to the number of ad networks or demand sources in the sequence. If the waterfall is too long, it may result in timeouts and lower fill rates as users may not see the ads in time. Conversely, if the waterfall is too short, there may be missed revenue opportunities. Experiment and fine-tune the waterfall length based on data insights.
  3. Price distribution: Ad networks differ in the amounts they are willing to pay for ads, and their price ranges may vary. It’s important to understand these variations and distribute the demand sources in the waterfall accordingly. Placing higher-paying networks higher in the waterfall can increase the chances of securing higher revenue-generating ads.
  4. A/B testing: Perform A/B tests by creating different variations of your waterfall design and comparing their performance. Test different ad network combinations or modify the order of networks. Analyze the results to identify the most effective waterfall configuration that maximizes revenue.

The benefit of combining RTB and waterfalls on the backend

While the waterfall method is advantageous because of its simplicity and efficacy, a method known as real-time bidding (RTB) can also be helpful when combined with the waterfall method on the backend. We’ll discuss RTB further in another post, but for now, you should know that RTB involves simultaneous auctions where multiple ad networks bid on ad inventory at the same time.

In this method, when an ad request is made in the game, information about the available ad inventory including the user demographics and device data are sent to multiple ad networks. The final price is determined by the network with the highest bid.

This method allows for dynamic competition, increased revenue potential, and higher eCPMs. eCPMs are a metric used in mobile advertising to measure the revenue generated for every thousand ad impressions served. Using this metric helps both ad networks and advertisers evaluate the monetization potential of their ad campaigns and inventory.

Combining RTB and the waterfall process on the backend can create a powerful hybrid approach that maximizes ad revenue for games. This combination leverages the benefits of both methods while mitigating their individual limitations.

It allows publishers to take advantage of the RTB environment, which offers increased competition (additional demand partners) and higher revenue potential (increasing the chances of securing higher prices). However, the fallback to the waterfall process ensures that if RTB doesn’t generate higher prices, the game can still monetize its inventory effectively.

Here’s how it actually works in the backend:

We ran the RTB process (auction) and identified the highest bidder. Rather than serving their ad right away, we integrated and merged this winning bid into the waterfall.

RTB has gained popularity in the ad tech industry due to increased revenue potential, control over inventory, and transparency. However, merging processes is necessary as not all ad networks are integrated with RTB yet.

Wrapping up

Achieving optimal ad monetization is a large undertaking. It involves the proper balance of thoroughly understanding the waterfall method, designing an effective waterfall, and knowing the benefit of combining the waterfall and RTB methods. Leveraging the insights shared in this blog will help you create better strategies and unlock new levels of success.

And when you’re really ready to take things to the next level, Embrace can help you take your mobile game optimization a step further. Our toolset gives you a comprehensive view of the factors affecting your end users’ mobile experience, like the details of your ANRs, crash rates, and the specifics of each user experience. With this level of detail, you gain the insight necessary to create exceptional user experiences, fostering a loyal user base that never wants to put your game down.

Explore Embrace today.

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