Mobile Gaming Ads Are Effed Up

Kind: captions Language: en You probably think mobile gaming ads are fake because devs are just bad at making them. That's not it. The game doesn't exist. You are just the guinea pig in a multi-billion dollar psychological experiment. It's all designed to see exactly how much your brain will tolerate a lie before it breaks. And it works because the algorithm running it just proved that lying to you is the most profitable thing a company can do. That was always the point. Chapter 1, the 81 billion dollar hallucination. By the end of 2025, the mobile gaming industry felt unstoppable. It topped 81.8 billion dollars that year, matching the 85.6 billion made by all other apps combined. These games aren't meant to be like traditional console titles. They're designed in bite-size loops made for distracted moments like on the bus, in line, in between everything else. And once you're in, it doesn't stay one game for long because the secret weapon of mobile gaming isn't gameplay, it's advertising. These games are all linked to the internet. That allows for multi- player and scoring competitions, but it also allows the game and their advertisers to contact players based on their actions. The algorithm knows what kind of games you like, and it'll recommend your next addiction to you. The games have been particularly well-known for their evocative animated ads. There is just one problem. The games don't exist. Most of these games are very similar to each other built around simple endless puzzle loops, usually variations of the match-three format popularized by Candy Crush. This is usually combined with some sort of competitive element with a larger player community or a world building element. But what is usually missing is the fast-paced action-based gaming that was advertised. So, why are mobile games so bad at marketing their own games? Well, they're not. They're doing exactly what they want to do. These deceptive ads aren't designed by men in suits pitching the next great advertising campaign. They're designed by high-frequency algorithms with one job, to get click-throughs and do it by any means necessary. If the deceptive ads perform slightly better than the honest ones, the entire advertising budget goes to that model, and the honest ad gets buried. The lies don't just become prevalent, they are automated, and no number of complaints can change this as long as the click-through rate is slightly higher. The machine understands our instincts just a little too well. But, how did we get to this point? Chapter two, the 99-cent graveyard. Mobile gaming began taking off in the late 2000s and early 2010s as smartphones became widespread. Before that, mobile gaming was mostly limited to simple built-in titles like Snake. But, once app stores arrived, that changed everything. People could download full games directly to their phones, often with hundreds of levels ready to go. Compared to the world of consoles, those games were shockingly affordable. Many launched for as little as 99 cents, making them instantly accessible to millions, and that all adds up. The new era of gaming was a massive hit, and a few properties stood out from the crowd. Cut the Rope kicked off an era of physics-based puzzle games, but that was nothing compared to the launcher game Angry Birds though, which became a sensation, eventually spawning a series of movies in addition to multiple spin-offs. But, that wasn't the only way the games were piling up the cash. Games like Capcom's Smurf Village and Pocket Gems Tap Pet Hotel pioneered the microtransaction model. Users could pay a few dollars at a time for special perks like consumable power-ups or ways to bypass levels. Soon, these addictive games were getting in-app purchases that dwarfed the money they were getting from the initial game purchase. The addictive nature of the game made it easy to just spend a few more dollars and think about it tomorrow. So, they decided to cut out the middleman. Angry Birds 2 and Cut the Rope 2 surprised everyone by announcing that the game itself would be free to play. But, if something is free, it usually means you are the product. The most valuable commodity for a game is getting you into the game and tempting you to spend money. The focus shifted away from good game design and more toward keeping people in the game as a constant income stream. All it took was one click. The most valuable metric for video games now is cost per install or CPI. This is the fixed amount an advertiser pays the publisher every time a user installs a game from an ad. Unlike cost per action CPA, where the payment depends on deeper actions like purchases or sign-ups, CPI pays out as soon as the install happens. That means one click can be enough for the publisher to get paid. This model favors ad campaigns where the user is visually enticed to take action quickly and it does not matter how long they stick around. The focus pivoted from selling the game to selling the idea of the game. And the ensuing ad campaigns didn't just clickbait people, they hacked the human brain. Chapter 3, the Zeigarnik trap. The current mobile gaming clickbait hellscape might trace part of its design logic back to Gestalt psychology. It all started when Soviet psychologist Bluma Zeigarnik observed a psychological phenomenon while in a restaurant. Her waiter seemed to have issues remembering details of orders that had already been completed, but he had no issue with remembering them during busy dining hours. This led to her creating a series of experiments that came up with one conclusion, incomplete tasks stick in people's minds more than completed ones. This research has even been used to support recess in schools, suggesting that short breaks during intense lessons don't reduce learning momentum and may even improve memory retention. It also shows up in software design. Onboarding flows often include progress prompts that remind users how closely they are to finishing each step. This adds a gamification element as users chase that 100% and they're more likely to stay engaged until completion. But like most things, it can be used for good and for evil. Did you ever notice that most of the mobile ads you encounter feature the character failing miserably? The hapless homeowner is pulling pins to release the gold in his attic, but he accidentally releases the boiling lava instead. Questionable home design aside, this is in direct contrast to the way board games used to be advertised, usually ending with one kid winning and celebrating. These ads often end on a negative note because they want you to solve the problem. This style of ad triggers a few unique psychological effects in the viewer, making it more likely that they'll click the ad to start playing. First, the Zeigarnik effect kicks in, and it makes the game more memorable because the task wasn't successfully completed. Second, it makes the viewer think, "I could do that." Then, they think of themselves as more competent than the player that made that initial mistake, which is usually fairly obvious. This creates a cognitive itch that makes the viewer want to step in and fix the mistake. And then, they're in. That's all it takes. By 2020, the market had completely shifted. The majority of game apps were free to play, and almost all contained microtransactions. The combination of the algorithm tracking user activity and the use of these deceptive marketing tactics had led to social media being overrun by these games, almost all with similar tactics. If you went to the comments of any one of those posts, you would see plenty of people complaining that the game didn't even contain any of these puzzles and calling them scams. It's such a blatant game of manipulation that it feels like it should be illegal. And for a while, it almost was. Chapter 4, the 2020 loophole. In the United States, advertising laws are relatively loose compared to much of the rest of the world, and proving fraud in court can be difficult. But, mobile games operate in a global market, and a major ruling overseas can still force companies to change course. The UK's advertising standards authority, or ASA, is responsible for overseeing ads in one of the world's largest markets. The agency is especially strict when it comes to deceptive advertising aimed at children. And in 2020, they brought down the hammer. The focus was on one of the world's largest mobile game designers, the Irish-based Playrix. [music] Those games, Homescapes and Gardenscapes, featured elaborate ads that showed the protagonists battling death traps and playing out elaborate story segments. But in reality, the games were both your standard match-three games that allowed contestants to collect points that would upgrade their home or garden. Both games were open-ended, allowing endless play and microtransactions, but there was absolutely none of the elaborate gameplay hyped up in the ads. According to the ASA, that broke the law. The 2020 ruling targeted two ads specifically that were deemed deceptive, and the company was ordered to stop running them. But this was more of a shot across the bow against the entire industry. The mobile game market had become increasingly reliant on clickbait ads that didn't even resemble the games they were selling. If that tool was cut off, the designers would have to either develop a whole new marketing model, revamp their games, or have their high-paid lawyers find a loophole. They picked option three, and were incredibly successful. The 2020 ASA ruling might have sounded like a death blow to the current model of game marketing, but it actually provided a road map for deception. The ASA ruling specifically said that if the gameplay in the ad didn't resemble the one in the actual game, it couldn't be used. But crucially, it didn't say how much of the game had to contain that gameplay. So, many games did the bare minimum to become legally compliant with the ASA. These flashy games from the ads would become short mini-games that you got to play every 50 levels. In some cases, it was just another thing users were grinding toward with every match-three level and microtransaction. The deception game marched on, and that opened the floodgates to financial success. Chapter five, the arbitrage machine. A ruling against the company's business model is usually a devastating blow, but it didn't seem to affect Playrix. The company had yearly revenue of over $400 million by 2016, not long after Homescapes and Gardenscapes debuted on the scene. But by 2023, that had jumped to over 2.8 billion. The company was the king of the premium sector on mobile games, and it owed it almost entirely to its deceptive gameplay ads. Once it figured out how to skirt the ASA ruling, it was onward and upward, and it soon spawned one copycat after another. Another gaming company, Magic Tavern, soon had similar hits. The games often teased players with images of pitiful women in needs of makeovers or a place to stay, urging users to help them. This was another tactic used by these games, tugging on the heartstrings with a non-existent person suffering. Despite the anger of users who felt they're being played, the model worked. It all came down to one number. Welcome to the hard math of user acquisition arbitrage. This is where cost per install comes into play. The goal is to get more revenue from a customer than it costs to acquire them. As the revenue you get from an individual client is highly unpredictable, especially on a free-to-play game, companies need to create a quick and cheaper recruitment process. This has created a race to the bottom for clickbait ads that create a sense of urgency among viewers. And it worked. The current model of mobile game ads has been called deceptive, even outright fraudulent, but it can't be called unsuccessful. The gulf between the current wave of free-to-play games using clickbait ads and the established RPG and puzzle games that honestly show their gameplay has only grown. The latter has a rough CPI of between five and $10 a user, with the hopes of keeping them around long-term for continued investment. But match three games like Homescapes have a much higher CPI, typically costing between two and five dollars per customer. This is just getting them in the door. These games battle a brutal player retention rate, but that might not even matter. The dirty little secret of the mobile game industry is that they're not quite trying to sell the game to you. They're selling you to their advertisers. Most people connect to those games through a shared network of some kind, most commonly their Google or Facebook accounts. That means that once you sign on to your first game, the company has your data. And they and their advertising partners will make sure you get plenty more ads just like it, trying to use the same tricks to tempt you into yet another spiral. But, it doesn't usually work. The vast majority of people who download one of those games leaves quickly after they realize it doesn't live up to the hype. People realize it's a lie, but the math keeps working. How? Chapter 6, the whale hunt. If you look at most statistics about these types of deceptive ads, you'll conclude that they actually work terribly. The retention rate for mobile games is rock bottom, with up to 75% of new players deleting the app within 24 hours. This is what's known as churn, the in and out process where people try out a new game and they quickly dismiss it. But, the rates here are far worse than they are with pay-to-play games or games with accurate gameplay advertised. If any other ad campaign had a 75% failure rate, it would be thrown out the window. Except, it's not a failure rate at all. In 2020, a post on Tumblr went viral when [music] a bank employee described how her team got an angry call from a customer. His card had been disabled for suspected fraud and he wanted an explanation. They explained that someone had spent almost $5,000 on the popular video game Genshin Impact and his bank account was almost drained. Except that this wasn't a scammer, it was the customer. The second they unblocked his card, he [music] proceeded to spend another 200 bucks on the game. An addictive personality and a game designer's dream. The whales make up less than 1% of a game's user base, but can often make up a majority of their profits. [music] These players usually have a lot of disposable income and addictive personality and a tendency to get overly enmeshed in games. [music] Once they get addicted to a mobile game, they can easily drop hundreds of dollars a week buying microtransactions. As they're often only a dollar to five dollars a go, it's easy to ignore the overall impact. Keeping these players with clickbait promises, limited time deals, and flashy new features that amount to a new coat of paint on the same game is the priority for the game. But, there is one demographic that is the most at risk. One of the biggest complaints about mobile gaming in recent years has been the appeal of the genre to children. They're often pulled in by the flashy designs, and they don't know how to self-regulate in the same way. And with many of these in-app purchases being one-click equipped, a child with their parents' phone can easily rack up hundreds of dollars in charges. Getting those charges refunded is often difficult. [music] Big Tech usually argues that parents are responsible for monitoring their children's online activity. But, when the backlash gets bad enough, public pressure can sometimes force them to reconsider. So, the games are okay with losing you as long as they don't lose their whales. Whales are a common feature of casinos where they'll roll out the red carpet for those players, making sure they stay happy. But, mobile games don't have to work that hard. The algorithm will do it for them. Some games, when they detect a top player stepped away from the game, will send a series of reminders as ads [music] in the feeds. It can take the form of a player character in peril or crying in order to increase the emotional stakes for the whale's return. And the trap has been set, >> [music] >> and thanks to new technology, it's about to become inescapable. Chapter 7, the AI Liar. Right now, most of these games put relatively little effort into the actual gameplay. They'll regularly roll out new levels, but most are a rehash of old levels, slightly [music] tweaked. New features when rolled out are usually the gamification of existing mechanics designed to encourage people to spend more time on the site. But what they do spend a lot of time on is developing the elaborate fail scenarios that people see on the timeline, and they have designers to make them look as exciting and dramatic as possible. Or at least they did. AI video generators like Runway and Google Flow are quickly becoming capable of generating short clips in only a minute. However, these clips are far from perfect and are often riddled with animation errors. That makes them generally unsuitable for commercial use, but it makes them perfect for clickbait driven mobile game ads. The game can replace its human designers, generate ads in half the time, and create an endless flow of instantly deployed ads designed to lure people into the game, and they're taking the last remnants of human design with them. This will take the cost per acquisition down to near nothing. The team only requires one employee on marketing to supervise the ads and come up with the prompts for the AI generator. The profit margin will go even higher for those clickbait driven games, making it even harder for the games trying for genuine marketing to compete. And as the meta game shifts even further toward these deceptive mobile ads, there will be less incentive for studios to try to do anything but just reskin their match three engines. And it may have a permanent impact. Chapter eight, the cost of the click. The reckoning isn't new. The mobile game era has lasted more than 15 years. For most of that time, the industry has increasingly shifted toward ads that flat-out lie to their audience. The poor comments on the ads didn't make an impact, and the legal case against them turned out to be a minor slap on the wrist. Meanwhile, the audience has been slowly trained to just assume every ad marketing a mobile game to them is lying. Trust is broken, and for many people it's not coming back. But that's fine, as the whales are still there, right? When the games rely on the whales, they're taking a big risk. One whale being cut off by his parents, losing his job, or simply getting frustrated with a glitch and rage quitting has a big impact on the game's bottom line. Additionally, the whales are getting older. Some will get married and have kids and will simply outgrow the game. That means they have to find new players somewhere else, and they might find out that they're hoisted on their own petard. There have been many reports that Gen Z and Gen Alpha are actively hostile to AI and tend to refer to anything deceptive as AI with contempt. That means these marketing strategies might actively turn them off, but the damage might already have been done. These free-to-play clickbait-driven games are all over the App Store. It's hard to tell the few good games from the bad ones, which means it might be time to start looking for the diamonds hidden underneath the slop. The App Store still has its place as an easy, cheap spot for independent game designers to launch their efforts. These games are usually premium pay-once games with unique gameplay, and they can still be found there. You just have to sift through a whole lot of clickbait first. Mobile games might be on the verge of a reckoning, but they're not the only one starting to feel the backlash for shady practices. Check out Ticketmaster's finally getting what it deserves, or watch this.