China, Japan, Korea: How Asian Markets Do In-Game Ads

Asia Mobile Market

The Asia-Pacific region is a hotbed of mobile advertising, set to outgrow the Americas and EMEA within a few years. And unlike the West, where apps grew up alongside mobile web, almost all ads are displayed in apps — more than 75%, according to ad data company Vpon.

In East Asia, the fight is instead between mobile ads and in-app purchases. While the West has always had a balance of IAP and ad-driven business models, countries like China and Japan were more dominated by pay-to-win games that rarely leaned on ads.

That’s changing today, as ads formats like rewarded and playable grow up, and players sample a wider variety of apps. Here’s a look at the ad market in three big Asian countries: Japan, Korea and China.

Japan: Rewarded is a familiar concept

Rewarded ads have been around for a long time in Japan. Back in 2007, vending machines would dispense a free drink in exchange for ad views. A few years later, Square Enix was offering free console games on the PC for ten minutes of gameplay per ad.

Last year, LINE, the most popular chat app in the country, partnered with ad tech company Fyber to let users earn coins by watching videos. “Rewarded video ads are steadily becoming a staple secondary revenue stream for mobile gaming devs who have traditionally focused on just IAP,” shared Jim Schinella in an interview with Pocket Gamer.

However, the most successful Japanese mobile games aren’t known for their ads. A possible indicator of the future is MagicAnt’s Fill One-Line Puzzle Game. Most of the game relies on in-app purchases. Yet it also has a rewarded ad option and a non-intrusive banner ad that stays at the bottom of the screen away from the action. The game is currently in the top 10 of Japan’s App Store, and in the top 100 in the US.

Heavy ad implementations can work, too. Human Tower, a Japanese indie hit, offers rewarded ads after each run, as well as pop-up ads after every couple of rounds.

South Korea: Ads for loot

In South Korea, a large chunk of in-app ad spend in the country still goes to traditional display ads — although the banners also notoriously claim a lot of accidental clicks.

Rewarded ads look like they’re on a trend to displace display, though. Animal Hot Springs, a quirky collection game where you play a cat running a spa, is entirely based on rewarded ads, which unlock animals and in-game items. There are no banner or pop-up ads.

Interestingly, the game also shows evidence of South Korea’s rich heritage of loot crates: prizes given for watching ads are randomized, and there’s no cap or cool down time. Users can keep watching until they get lucky and receive the item they want.

China: Short and not always so sweet

In China, pay-to-win is the law of the land. Purely ad-supported games are rare, hampered by poor mobile internet speeds. Heavy-handed regulation on advertising also plays a role, with a variety of rules prohibiting advertising in online games or shifting users out of an app because of an ad click. Many prohibitions come not from the law, but from the 400 competing Android app stores, which are keen to avoid losing customers to each other.

But China is a land of rapid change. Today, internet connectivity is better. Rules for ads are less restrictive. And all the advertising money is flowing to in-app ads: only 2% mobile ad spend goes to mobile web ads. Brands are racing to advertise in apps: Nike and McDonalds reportedly paid more than half a million each to have their ads appear on WeChat, after Tencent introduced rewarded ads into the messaging platform’s games.

To suss out what works for mobile ads, developers should watch social media sites and messaging platforms. For instance, Sina Weibo users prefer short video ads — not image ads — and mostly click on ads featuring celebrities or references a Chinese region or city.

Gamers may be tolerant of fairly aggressive tactics. In Bombarika, a Cheetah Mobile game, ads are used to “punish” failure. Players are notified that an ad is coming after they fail a certain number of times — a tactic that we would definitely not recommend for Western users, but that seems to work fine in China.

Asia is part of a world trend: highly successful casual games that rely on ads for monetization. At the same time, East Asian players have different expectations: in some cases, players familiar with advertising from years past may be accepting of pop-ups, or already familiar with rewarded ads. China and Japan in particular are markets to watch: the former with evolving regulations, and the latter with a rich history of creative advertising.