W3i’s Erik Lundberg on Android games monetization, tablet dominance, closing the gap with iOS

Monetization and insights provider W3i is stepping up its game with Pocket Gems and other mobile game developers on Android going into 2013. This could be the year that Google’s platform finally catches up in revenues to Apple’s iOS.

Through its expanded partnership with Pocket Games, W3i now provides monetization solutions to Tap Paradise Cove and Campus Life. Far from being mere banner ads, the monetization service focuses instead on providing a native experience in these Android apps — tailoring ads, offers and video campaigns to the user experience.

Erik Lundberg, General Manager at W3i’s San Francisco office (pictured), explains that the shift toward native experiences comes from mobile advertising finally moving away from online advertising models. With 15 years in online ads before joining W3i just eight months ago, he’s had time to study the changing trends.

“In the early days of ads and mobile apps, people took online models and slapped them on a smartphone like small banner ads that are only 100 pixels wide,” says Lundberg. “Users have tuned those out. More native ads like a full screen interstitial or offer-based ads, we see a much higher CPM, like 10 times higher. We think that trend will continue toward native ads that are a part of the application instead of just throwing up a banner.”

Inside Social Games: How has monetization on mobile evolved in the last 18 months?

Erik Lundberg, General Manager, W3i San Francisco: In the early days of the app economy, people were focused on in-app purchases as a revenue stream. The issues with that is a good conversion rate is 3 percent — so 97 percent of your audience isn’t monetizing, which doesn’t seem like the best strategy. More and more developers are branching out from in-app purchases and looking at offers and advertising, video — what you might call non-traditional revenue streams. A lot of them have seen significant increases from that. We work with developers that see anywhere from 20 to 50 percent [revenue increases] from incorporating video solutions.

ISG: We’ve heard developers say that this is the year Android revenues will finally catch up to iOS. What’s your take on the disparity?

Lundberg: Google Play is taking time to catch up [to Apple’s credit card number collection] and they still don’t have the penetration rate that Apple has, but they’ve been doing great work and improving the purchase process and capturing credit cards. We see that because purchase rates have increased. We also see advertising and offers being very important on Android, up to 50 percent — equal to in-app purchases on Android. We have been seeing overall monetization and average revenue per daily active user going up for Android. There’s a good chance that this is going to be the year they close the gap. Another indicator comes from what rates advertisers are willing to pay to acquire users. People come to us to buy app installs on a CPI basis and we’ve been seeing the rates on Android going up — getting closer and closer to what they pay on iOS. The better a platform monetizes, the more people are willing to pay to monetize on that platform.

ISG: Some developers see tablet as the next frontier of games. Do you believe monetization on tablet will prove to be different than monetization on mobile in the long term or is this just something we’re seeing in the short term because fewer people have tablets?

Lundberg: We believe it’s going to be a long term trend for a couple of reasons. One, it’s an upscale device. If you get an Android free or for a couple hundred dollars for a two-year contract… I just went out and paid over $800 for the new iPad with WiFi. It’s a very upscale device and for people who have the income to purchase either Android or iOS tablets, it’s a consumer that will monetize better.