Designing Effective Online Ads

Designing Effective Online Ads

Any online game developer who doesn’t design with advertising in mind is giving up at least 50% of their game’s potential moneymaking value in the US.

The rule of thumb for advertising is that for every user who will pay you a dollar for your game, there is another dollar from advertisers available to sponsor all of the people who want to play your game without making a commercial purchase. (Roughly 97-99% in the US on average…)

To take advantage of this opportunity, online games should be designed to be monetized in “small” units of value, which is not surprisingly one of the huge advantages to games built around virtual goods economies. The correct way to “price” virtual goods would be to take into account the relationship between the virtual good’s retail price and market price for standard video advertisements.

A simple approach to pricing the advertising (or free) value of a virtual good is to multiply its retail price by 10 to get its estimated CPM (cost per thousand impressions) advertising value. For example: A $1 virtual broadsword could be made FREE at a $10 advertising CPM, which corresponds to the typical market price for a standard video ad unit.

Thus, asking for a buck for the virtual broad sword and getting it from 1% of your players or offering to let all players have it for FREE by watching a video ad will tend to produce about the same revenue! Really clever game developers will discover that they can get the commerce buck and the advertising buck and make twice as much money…

About Alex St. John
Alex is president and CTO of hi5, one of the world’s largest social entertainment websites, where he leads all product strategy, design, development and operations. Previously, he was CEO and co-founder of WildTangent Inc., the world’s largest online game network.

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