What Are the Key Trends in Mobile Gaming Ads in Southeast Asia?

Jun 18, 2020

Southeast Asia is a land of opportunity for mobile game developers, publishers, and advertisers

Source: e27.co, June 17, 2020

As a region, APAC has witnessed exponential growth in both mobile gaming and advertising revenue. APAC is home to over 1.23 billion gamers, more than every other region in the world put together.

While the high-value APAC markets such as China, Japan, and South Korea, tend to capture the most mind-share, Southeast Asia offers mobile gaming advertisers immense potential: a large, hardcore userbase with a relatively high ARPU for the region translates into exceptional opportunities.

In this piece, we’ll be looking at some of the key trends in mobile game advertising across the Southeast Asian region, identifying where the market is and what it responds best to.

What types of games are most popular in Southeast Asia?

The Southeast Asian region is unusual in that it has a relatively large user base that plays hardcore games. Titles such as Garena Free Fire, Lords Mobile, Ragnarok M, and PUBG take pole position in the region, both in terms of revenue and overall user numbers. According to a Niko Partners report, 90 per cent of Southeast Asian mobile gamers play e-sports titles.

At the same time, evergreen casual titles continue to enjoy immense popularity in the region. Candy Crush, Clash of Clans, Subway Surfers and Pokemon Go have each accumulated user base in the tens of millions.

There is an interesting mix of hardcore and casual gamers in this region. While core gamers are usually a small set, they contribute significantly to the gaming economy because of their high spending power. On the other hand, with increased smartphone penetration, it is the casual gamer base that has been rising exponentially.

Though they do not spend a lot of money, the time spent and stickiness quotient is very high. This is what makes them extremely attractive to advertisers. This mix of evergreen titles and a hardcore user base is advantageous to advertisers. Hardcore gamers tend to spend substantially more than mid-core and casual gamers.

While regional ARPU numbers remain relatively low, strong year-on-year mobile ad spends growth means that this hardcore user base with increased spending power will drive growth in the years to come. At the same time, the strong, user base for casual titles offers potential in terms of stable ad revenue streams.

Southeast Asian mobile ad market growth

While ARPU varies from US$8 in Indonesia to nearly US$80 in Singapore, breakneck year-on-year ad spending growth means the region has tremendous potential. Between 2016 and 2017, for instance, the region witnessed a 250 per cent increase in mobile ad spend. Mobile ad consumption is growing at an even faster pace than ad spends: The Philippines registered a nearly 430 per cent year-on-year increase in mobile ad consumption.

Both advertisers and publishers benefit here. Drastically increased ad consumption means greater revenue for game publishers. It also increases the TAM for advertisements, meaning ads reach more people, yielding higher product sales.

Mobile ad formats for Southeast Asian audiences

Hardcore and e-sports titles often monetise through in-game items that offer a competitive advantage. Southeast Asian gamers appear to be particularly receptive to monetisation approaches like in-game video. The Philippines, Indonesia, and Vietnam are among the world’s top ten countries in terms of mobile video ad consumption growth.
Because of the region’s relatively low ARPU and large gaming user base, alternative monetisation methods like opt-in video ads work to great effect. An effective strategy to monetise the user base would be offering premium currency and rewards to users in exchange for opt-in interstitials and videos.

It’s also important here to assess the kind of advertisements that work best in the region: Surprisingly, technology and social media-related ads account for less than 12 per cent of total ad views in the region. Retail, food and beverage, and health ads collectively account for over 50 per cent of all views. Advertisers from these sectors will see the best outcomes in terms of CTR.

With a population of nearly 700 million and a US$3.3 trillion economy, Southeast Asia offers immense opportunities to businesses in all sectors.

With smartphone penetration increasing, a hardcore e-sports oriented userbase, high opt-in rates for rewarded ads, and rapidly expanding mobile ad spend, the region offers developers, publishers and advertisers alike the chance to tap into a major new revenue stream as East Asian markets in Japan, Korea, and China mature.

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