A few months ago, at a mobile gaming conference, I had a conversation with a PM from a major mobile gaming company that primarily develops casual games. I asked him about their interstitial ad strategy, and he responded, “Since interstitial ads don’t contribute significantly to our revenue, we don’t prioritize them.” At that moment, I thought to myself, “That makes sense.”
Did you think the same way?
Over the past six months, we, Airbridge Data Science team, have had the opportunity to conduct numerous experiments and in-depth data analyses on interstitial ads. Through testing various strategies, we gradually gained a deeper understanding of how interstitial ads impact multiple aspects of a game. And now, looking back, I realize that my initial “That makes sense” response was a mistake.
Let me share a few real-world experimental results that we observed. In each experiment, all in-game variables were kept constant, and only the frequency and timing of interstitial ads were adjusted to ensure a fair observation and analysis. Additionally, when I say something “increased” or “decreased” below, I mean that the change was statistically significant.
Case Studies
Game A: Increasing interstitial ad frequency led to a rise in total revenue (revenue from interstitial ads + rewarded ads + in-app purchases). Interstitial ad revenue increased significantly, in-app purchase revenue remained the same, and rewarded ad revenue slightly declined.
Game B: Decreasing interstitial ad frequency also led to a rise in total revenue. This time, interstitial ad revenue slightly dropped, rewarded ad revenue remained unchanged, and in-app purchase revenue significantly increased.
Game C: Increasing interstitial ad frequency led to a drop in total revenue. While interstitial ad revenue rose slightly and rewarded ad revenue remained unchanged, in-app purchase revenue dropped significantly.
Each scenario can be interpreted differently:
In Game A, increasing ad frequency allowed non-paying users who would have churned quickly to watch more ads, ultimately boosting revenue.
In Game B, reducing ad frequency kept whale users engaged longer, leading to a significant increase in in-app purchases.
In Game C, increasing ad frequency secured revenue from light users early on (similar to Game A), but it also drove away high-value whale users, causing a major drop in in-app purchases.
But are they the only possible cases? Absolutely not. In fact, these are just three examples among many real cases we have experienced.
When adjusting interstitial ad frequency, even with a simple calculation, there are eight possible ways the revenue from interstitial ads, rewarded ads, and in-app purchases can shift (2×2×2=8). When considering the magnitude of these changes and their interactions, the number of possible revenue outcomes becomes even greater.
And we haven’t even talked about timing yet. Through our research, we’ve discovered meaningful correlations and causal relationships between when a user first encounters an interstitial ad and their engagement and retention levels. These factors further add complexity (I’ll cover this in a future post).
A Key Question for You
Let me ask you this:
Is there any other single variable in a casual game that, when adjusted, can cause such dramatic changes in revenue? Probably not.
The reason interstitial ads have such a powerful and varied impact on revenue is that they directly influence user engagement and retention. If we visualize this in a causal graph, interstitial ads don’t directly impact revenue; they impact engagement and retention first, which in turn affect revenue.
And why do interstitial ads have such a profound effect on engagement and retention? Because players dislike them.
Think about it—when a player downloads a game, they are immediately forced to interact with something they don’t enjoy. Rewarded ads at least provide a benefit for waiting 60 seconds, but interstitial ads? They force players to sit through something unpleasant with no reward.
Revisiting the Conversation with the PM
If I could go back to that conversation with the PM, here’s what I would say:
1. As long as interstitial ads exist in your game, they cannot be ignored just because their revenue share is low. Whether they are whale users or those who churn quickly, all players are experiencing them and getting frustrated, and interstitial ads are impacting engagement, retention, and total revenue.
2. In Games A, B, and C, adjusting interstitial ad policies changed the revenue ratio between interstitial ads, rewarded ads, and in-app purchases. In other words, the revenue composition you see today is largely shaped by your current interstitial ad strategy.
3. There are very few other in-game elements that can drastically impact revenue when optimized correctly. Is it really the best strategy to ignore interstitial ads while tweaking other smaller in-game variables? Are we unconsciously allowing our games to deteriorate and missing out on significant revenue potential simply because we stopped asking the right questions?
