About three years ago, in an era before the Apple Music streaming service, Wally Nguyen was browsing through the Apple Music Store to purchase songs when he had a realization. You could listen to 30 to 60-second samples of songs to decide whether you liked them, but you couldn’t do the same with apps. The only way to try a game was to download it in its entirety, which was a considerable waste of time given how it only takes a few moments to realize whether you like a game or not.
Coincidentally, Nguyen’s longtime friend, Artem Grigoryan (mNectar CTO), had reached a similar conclusion while working with interactive showcase technology—users could rotate a virtual watch from within an ad—and thought that it could be applied to games. The two partnered with Daniel Cheng (mNectar CRO), who reached out to developers such as Kabam (Marvel: Contest of Champions) to find out that there was strong interest in removing the mobile game download barrier.
That’s when they formed mNectar—an ad platform that streams 30-second demos called Playable Ads straight to a user’s mobile device. Users can play a game straight away and then decide whether or not they want to download a game after experiencing the demo. According to mNectar, the conversion rate is seven times greater than with video ads, while user retention does twice as well. Considering how the cost-per-install advertising rates are rising ever higher, with developers and publishers spending between $3 to $10 per person, connecting gamers with the games that they’ll stay with is critical. It is no wonder why both Google and Apple are implementing similar technologies in their respective app stores.
Wally Nguyen, CEO of mNectar, talks to [a]listdaily about the how mNectar’s Playable technology will shape how users discover mobile games in the future as the era of downloads dies out.
Note: This interview has been edited for readability.
How are mNectar’s Playable Ads better than traditional downloads?
When you think about it, downloads are dead. You’re streaming movies on Netflix and streaming music on Spotify. I haven’t used a Microsoft document in about five years; I just use Google Docs. So, for all intents and purposes, the download was dead. But on our mobile devices, downloads are everywhere.
We have these devices that are supposed to be the future, but we’re stuck in the 1990s in terms of downloading everything. Downloads are also just a barrier. If you want to try anything on mobile, you have to download it. Three-quarters of apps that are downloaded get deleted within a day, according to TechCrunch. So, 75 percent of the time, people end up downloading something and then they delete it. That’s a massive time-suck to the user, but that’s also a waste of money for developers.
We know that the app install market is worth between $5 to $7 billion right now. That’s how much game developers are spending to market and acquire new users, what they’re really paying for is that barrier. About 75 percent of that $7 billion is wasted because we know [most] users delete whatever they just downloaded.
With Playable Ads, we stream the real experience to you. There’s no lying or misleading that you might get with a video or any other type of ad. You get the game, you play a level, and if you like it, you’ll probably download it. If you don’t, you probably won’t. It’s simple product marketing, but really hard to build from a technology standpoint. But now that we’ve been at it for three years, I’m proud to say that we haven’t lost a single customer, and they come back to tell us that we’ve saved them a ton of money. We’re only acquiring that 25 percent of customers who want to play our games.
Playable Ads are about 30 seconds long. Is that enough time for users to engage with games?
It depends on the genre. If you’re talking about a casual match-3 game, 30 seconds is about right. If you’re talking about something longer, like Marvel Contest of Champions, we’ll probably go up to a minute or a minute-and-a-half. With something deep, like Game of War, we’ll go a little bit longer.
The thing about Playable is that we can track real engagement. The most prevalent ad form for apps today is video. They generally auto-roll, which interrupts the experience, and you’re stuck watching it. Most people treat them like TV commercials by putting down the phone, walking away, and doing something else. With Playable, we know that users are actually playing, and we can track every touch event. We know—when we stream millions of Playables every day—the appropriate amount of time for a user to get hooked, and that’s data we give back to our clients.
Google has streaming demos in the Google Play search. How do Playable Ads compare?
The only two players in the world that do this [app streaming] right now is us and Google. Google announced its playable products back in November, so I’m proud to say that we’re about two years ahead. We can both stream to WiFi very easily, but mobile users could be in a cab or otherwise moving. mNectar is the only one that can stream down to cellular coverage, including Edge, LTE and 4G. We can stream to any device, to any mobile user, as long as it’s at least iOS 7 or Android 4.4.
What do you see as the future of Playable Ads?
We believe that downloads will go away. In the very near future, we won’t be downloading anything on our devices; we’ll just be streaming content. In between here and there, we believe we train users to get into app streaming through advertising.
When you say the end of downloads, you mean you’re working towards streaming full games?
Exactly—that is how mNectar is poised. We have a trained market. Advertising is the start of the path for us. When users sample games for 30 seconds to a minute, the natural question is, “why can’t I keep playing?” We’ll be able to turn our infrastructure to allow for full play. That is the vision for the company. The infrastructure we built today for advertising is the same infrastructure we’ll use for full streaming of all content on mobile.
Playables are said to have seven times the conversion and twice the retention rate of video. What do you think accounts for that?
We ran video ads to see how they worked and also got first party data back from our customers. We saw a 7x conversion rate compared to video. People are downloading apps after Playables because they trust the experience. They know what they’re going to get when they hit download, and there are no surprises. It’s all about setting the proper level of expectation. Video is a massive over-promise and under-deliver. With Playable app streaming, what you see is what you get, and the retention rates are high for that reason.
What do you think about hits such as Clash of Clans and Game of War, with their popular commercials?
I think those examples are great ones, but they’re different. There’s no argument that Supercell and Machine Zone are two of the most successful game studios to date, but they didn’t start with TV commercials. TV was the island of last resort, in that they had been spending for years and maxed out all mobile avenues of getting people to see their games. The reason I say island of last resort is because there is no data in TV commercials. There’s no link between running a $5 million Super Bowl ad and the number of views you’ll get. It’s really hard to connect that data.
I would argue that we don’t compete with TV commercials because we’re not the island of last resort. We’re the first call for advertising games. Machine Zone is running Playable advertising like crazy. They got a taste of it and saw the better conversion and retention rates, and now it’s one of their more popular ways of advertising. I also want to state that product marketing shouldn’t be only for the rich developers. Only the top one percent of developers can buy TV commercials. We have a really big problem right now in that the top 100 stays the top 100 unless a cultural event like Pokémon GO comes around.
Apple just announced paid app search. That’s not going to change anything. We’re working with a lot of indie developers that have an average CPI (Cost Per Install) of $5 to $8. That’s not scalable. You spend $8 to acquire a user and maybe make a dollar off of them? Only developers that are already wildly successful, or funded with a lot of money, can afford to buy users at a loss. We’re helping all app developers get the right type of audience, and help the audience find the right type of game.
With so many mobile games available, how will mNectar keep from overwhelming users with content?
There’s a very strong, rational argument that we’re at “peak app.” The market is too saturated, and I think that’s why there’s a lot of enthusiasm around VR and AR. It’s like a new gold rush. I don’t think a lot of the fundamentals are there, but I think a lot of developers are just praying that VR becomes the next app platform because it’s really hard to make money on mobile now.
In that future, I think games must earn the user’s attention. Another stat is that most users only use about nine apps in total. I think that’s where mNectar will thrive. When you have to earn your right to be in that top nine and not be deleted at the end of the day, it’s all about setting up the proper expectations the first time. Video ads have encouraged 93 percent of users to download ad-blocking software. Users are sick of being fooled by video and all other types of ads. The advertising industry is cannibalizing itself because it refuses to evolve and put the user first.
That world is great for mNectar. Apple and Google love us because we don’t lie to users. In that peak app future, where advertising gets fewer and fewer eyeballs because of ad-blocking, I believe product marketing will go much farther.