Should you still run Ads once the user has bought an IAP?

My latest game(WIP) features IAP and ads. I have provided an option to remove Ads as an IAP, alongside the other IAPs.

It got me wondering, should the removal of ads come as standard with any IAP? Or would that just be a good extra incentive for the user to spend on IAPs?

If you’ve paid for something in the game, do you feel that you have proved your worth as a user and so should not be subjected to ads?

Pros:
Users may be more enticed to spend on IAPs if it means the ads are gone too.
Users may be give better reviews as you are giving them value.
Users may be more inclined to play the game more so than they would have if ads had remained.

Cons:
You may be losing out on significant revenue as users who buy IAP are going to be using the exposed to more ads than average due to their investment (likely to return).
You may be losing out on significant revenue from users who would buy the “remove ads” IAP anyway.

What are your thoughts?

@A1ka1inE, I always prefer factual data than thoughts for this kind of stuff.
As a single IAP for removing ads in one of my app, what people do is try game the service. They purchase “remove ads” and then immediately cancel to check if the app/game will store the purchase info inside the preferences and not validate it with google.

Also many users are fine with having my app with ads than to spend solely on removing ads. I do still have continuous fifteen 5 star reviews with ads (of course I am not a fan boy of PPD like you)

@javaexp

Yeah I have ad-free version of my best apps, but not as IAPs. Likewise I see people trying to purchase and then cancel, but then they realise I’m using LVL etc.

Most users will be content with ads since this is Android, but the question is whether it’s worth it to remove ads for them once they spend on IAP.

since yours is a game. People will keep it for limited time only. Don’t you think that people won’t be inclined to spend money for removing ads.

Again going by facts, I haven’t come across any game with option to remove ads and those top developers won’t be fools to avoid an opportunity to earn from IAP when they are earning from coins etc.

Also more forum members can share their factual data as this is quite confusing method for developers.

I’ve thought about similar issues (since I cannot sell Google Payment related stuff from my location - I am talking about my thoughts about which features to offer for IAP via GetJar/Tapjoy).

My general impression is that users don’t care as much about ad removal as developers would like to think (or I thought).

Banner ads are least bothersome for users - though interstitial ads if presented in sufficient nuisance frequency would be major issue for users (but then they would have downrated your app from that already).

The reality is that you would optimally be showing interstitials at almost the border of being a pain (which would risk bad ratings) and being not bothering (which would risk ad removal being not high priority for users). Removal of such a presentation of ads therefore falls very close to being not something high on users’ agenda.

My feeling is that (and above sentence is one logical reasoning for why this maybe true) is that ad removal is not terribly high on user’s agenda (for a “nice” app which is already presenting ads not very often).

This leaves most OTHER features as being the main thing to be removed. So for IAP to work, those features should be additional (so users don’t badmouth your default app) - so additional bonus type stuff which users feel are great.

AND for “completeness” you could tack on the “removal of ads” to that also.

Now this naturally raises the question of “why must I lose ad revenue if users are not bothered by it ANYWAY” (by above reasoning). And the way I reasoned through this is that - the NUMBERS for IAP are SO LOW generally that they will be a FRACTION of your total users.

So you may see (say) IAP giving 20% of total revenue you earn - maybe higher for others.

However, the NUMBER of users actually responsible for that purchase (and this is similar to number of users who actually clicked through your ads etc.) - is MINISCULE compared to your total DAU (Daily Active Users).

So if you make $10 daily off an app from IAP - while your revenue from ads is $40 - then that IAP users are just 10 or so probably for that day ! And your DAU maybe 5000 users !

So VERY CLEARLY you lose ALMOST NOTHING by giving “remove ads as a bonus” with any IAP purchase to the user ! I think this logic should be quite compelling. Basically the number of IAP users are actually SO SMALL compared to your DAU that you LOSE NOTHING by giving “remove ads” to those IAP buyers. So this means you can “sweeten the deal” by tacking on “remove ads” to your other purchases. Or in other words ONE USER is SO USELESS for ad revenue that you can easily exempt a single user without worrying too much about revenue loss.

Now an aside on the IRONY of ad revenue sources !!

It is an irony of modern app development (or android app/user behavior/preferences) that the MAJORITY of revenue you are making (esp. from offerwalls and “do you want another app”) are essentially NON-LOYAL users of your app ! I have not done a study on whether the clicking users are actually returning users or new users (actually I DID do something close to that - with tiered Leadbolt HTML AppWall URLs - where I happened to pick DIFFERENT URLs to fetch depending on “how many days since app first installed” - and the first days was clearly the highest revenue - while later days DID on some occasion wind up being disproportionately higher in terms of revenue/numbers i.e. eCPM etc. - the second, third day returning user numbers fall off so rapidly in absolute terms that you COULD say that majority of revenue you are making IS from basically first day users).

And since from first day users you maybe losing out on 80% of users (who uninstall immediately or soon after) - maybe less for a great app - but this is the irony of it - that for most apps (and esp. so-so apps) you are making money on “not interested in your app” users !!

And this is PRECISELY WHY a lot of bad apps, spam apps etc. ARE able to make money from that. Because if the user doesn’t like the app, they are JUST AS LIKELY to click on “want to see another app” (or maybe more !) than a user who actually LIKES your app !

This therefore establishes an UPPER BOUND on how valuable an interested user actually maybe for your app (in terms of ad revenue). If the users who are NOT interested in your app are MORE valuable - then clearly the users interested in your app (and those who have gotten to the stage of IAP purchase etc.) are NOT any more valuable than the average DAU user of your app (and as stated above perhapd maybe even LESS valuable in that they maybe less bothered about clicking on ads if they actually like your app ?).

Here I am assuming an interested user is only using your app once - and this is a first approximation - because typically over a period of a week they may still only use it once. But over a lifetime, such users WOULD be spending more time in your app and thus it COULD be argued that interested users are more valuable (per user) than a non-interested user because interested user has 10x the exposure to your app (they may use your app 10 times over a lifetime).

However, it remains to be seen - i.e. explicit empirical data - HOW much valuable a non-interested user (using your app just once) is vs a typical interested user who uses your app 10 times - is that interested users likely to be 10x as valuable or is he not as valuable as one might naively think (i.e. 10x) because an interested user maybe tuning out ads and may not be that type of user (i.e. maybe a “one-app person” i.e. monogamous etc. !). It would be interesting to see that.

The question to ask is that if you have 5000 DAU (Daily Active Users) - and your IAP purchasers usually number in 5-10 users - then are those 5-10 users responsible for a significant chunk of your ad revenue ? Or is it all those other users who just use your app once.

My own feeling is that these 5-10 users could SAFELY be offered “remove ads also” without perhaps any real affect on your ad revenue. But as stated above … this is a handwaving argument and maybe true only to first approximation. There maybe some very odd statistical skew (like “hey it turns out ALL the revenue you earn is actually from all the allegiance-to-your-app users so by making ads free you are losing out on long term revenue”) - but it is probably a second degree effect which would need empirical data to be shockingly convincing.

@adforandroidapps, good inputs.
if you start writing for Smashing network, you will earn a lot man. All these IAP and ads earnings will fall short of it :smiley:

Another (more succinct) way of saying it is:

We have established here the types of earnings per DAU (ARPDAU) they are getting:

  • some get $0.005 per ARPDAU
  • others who do really well get $0.02 per ARPDAU
  • some big name games get like $0.50 etc. (some of this probably from “whales” and cash IAP and not GetJar/Tapjoy type of “have to do work to earn coins” type of thing)

So if your ARPDAU is about $0.0001 to $0.02 - you see that each DAU is worth that much in terms of revenue.

So you can see that for any half-decent IAP of say $0.20 worth even - it becomes reasonable to exempt that buyer from further ads.

The question then remains whether the type of user who is bothering to do IAP - if he is “no ordinary user” and is worth more thatn $0.001-$0.02 ARPDAU:

  • either because they revisit your app so many times they wind up ALMOST certainly clicking on an appwall ad eventually (which will get you $1.00 perhaps !)
  • or because as interested user they belong to a demographic of users who are “just very interested in apps” and are likely to click on your ads/appwalls more often than the typical DAU user

The second one could go either way - as it could be that a user interested in your app maybe less likely to click on an appwall ad - but this is something that will require empirical confirmation from real-world testing to confirm/deny such a postulation.

I’ve read somewhere that IAP for ad removals work for 1 in 1000 users where as free / paid model works for like 1 in 100, thats 10% increase , plus you can have a big IAP with all the features included, multiple IAP’s are a sure fire way of bad ratings

That probably varies by app … and depends on whether a feature is “essential” as seen by users. In that case IAP could make good revenue I am guessing.

However just talking about GetJar/Tapjoy mode of IAP vs. AppWall ads (for instance) - is that AppWall can pay $1.00 or so in some cases ! Meanwhile a single app download via Tapjoy/GetJar will not earn you more than $0.05-$0.10 - so that right there is a 10x decrease.

Oddly it is worth MORE if the user by themselves were to click on an ad - vs. doing so for GetJar/Tapjoy offerwall - and that is the discrepancy between non-incentivized downloads and incentivized downloads respectively.

So the challenge with IAP is that the the conversion rate has to be 10x higher than for AppWalls (!) in order to get similar revenue as you are getting from ads (non-incentivized AppWalls).

amazing info there, which app wall gave you $1? Im using leadbolt since today …so I’ve no idea which one to choose

I meant in terms of a user “commitment” to something - when a user clicks on AppWall and actually goes through with downloading of app, these type of actions can give you revenue up to $1.00 sometimes. This is the standard “cost per install” that advertisers of apps pay to get their apps installed. This is less for AppBrain - can be $0.18-$0.20 per install.

But I have seen clicks which have generated $1.00 on occasion.

This is not the same as CPC (cost per click) - since there maybe many more clicks and only 1/10 of those lead to actual installs of the app being advertised.

And is not the same as eCPM (earning per 1000 impressions of the appwall etc.) - which is an even grosser estimate of your earning power - basically you take 1000 impressions - then see how many lead to “clicks” - then how many lead to actual installs - and the revenue earned from those installs you divide by 1000 impressions. This is typically how it would work for app advertisers who would be payig per download.

So what I am saying is that while AppBrain may pay $0.20 per app install, there can be occasions where you can get up to $1.00 per app install - for non-incentivized app downloads.

However, for incentivized app downloads (where the user is presumably only downloading the app “to get the money”) - as with GetJar/Tapjoy. The app/game then rewards user for doing so by giving them some benefit within the game (virtual currency/coins or unlocking of some feature like remove ads etc.).

BTW, Leadbolt CPC (cost per click) is typically $0.03 (on normal days - not the slump days). I have seen it go as high as $0.06 CPC on some days only though.

So right there you are earning nearly as much just from the click (i.e. a view of the Google Play page for that advertised app) as you may earn for a “Download and run an app” for GetJar/Tapjoy.

But I suppose if you have a “killer feature” that you are giving users options to unlock with GetJar/Tapjoy (or Google Payments) - then that could earn something.

And here you can see the discrepancy - with IAP the conversion will depend on HOW GOOD YOUR FEATURE IS.

With ad revenue - it doesn’t matter how good your app is !!! (except in the indirect way that if it is good the users may stick around longer - and thus see more ads).

0.06??? that means when 1000 people click my wall , i get a 0.06? that doesnt sound so exciting

A CPC of $0.06 means you earn $0.06 every time a user clicks. 1000 clicks would equal $60.

Interesting discussion here. I may consider pushing “remove ads” into all the IAPs instead then. Thank you @javaexp and @adforandroidapps

Even though I was aware of this discussion - a rehash of it has made me feel I should do something similar myself i.e. reduce “remove ad” as a premium (since no one really wants it - I had earlier incorporated this discussion stuff by reducing the cost of removing ads from my developer-perception-of-value-of-ads). After this rehashing above, I was considering offering removal of ads even more freely.

I recently also saw an app which had GetJar/Google Payment and which was removing ads for ANY of the IAP purchases.

However, a caveat to consider is that if removal of ads is not that valuable to user, then offering it with EVERYTHING may not do much either.

A variation maybe to use the “removal of ads” as an added carrot - to direct user to choose one of the IAP offerings (that you would like the user to do). For example it could be a “Combo” or a special package which includes all the IAP features. And so is seen as a “deal”. The removal of ads could still be placed in the IAP list on it’s own - if nothing else to suggest to user the “actual price” of the removal of ads - even though you may NEVER expect users to actually go for that.

So that establishes the price - then the Combo gives a sense to user that “hey, why don’t I just get that - which has removal of ads also for just 10% more”. So you would price the Combo at considerable discount (essentially counting removal of ads as a fraction of it’s “real price”).

Here you are using the “removal of ads” not because user really wants it - but as an added extra to “sweeten the deal” - this way user feels like they got great deal - and you also benefit from user going to a higher priced IAP package.

At least that’s how it looks like in a thought experiment.

I like the combo idea. Although in my game people seem to buy more higher prices items than the combo itself. Maybe because I put the combo too low on the price ladder (as first option to be honest, a mistake I need to fix later). I’ve also made the combo thing non-consumable - so if user ever gets back to the app he won’t have ads and will get some consumable things too as a bonus.

So this is with Google Payments - the users want to buy the highest price items (thinking they are the best deal or to reduce transactions just do it in one go type of thing ?).

What would you say the IAP are as percentage of ad revenue - beginning to rival it (if it is a game) ?

one more advantage of having “remove ads” thing is improved ratings. Why?
Because users who complain about too many ads, know that the developer is going to ask to do an IAP for $0.99 so either they don’t rate or give stars as deserved by the app/game.

My current main game has only a single IAP, which is Remove Ads. I dont make any relevant money from it, it’s there mostly to avoid people complaining about ads and giving low ratings.

On average 8% of my daily income is from IAP (remove ads) and 92% from ads. I dont think Remove Ads IAP is a profitable model.

Btw, I didnt try to make a paid “full” (ad-free) version, might be worth it.