💸Revenue #1 Ad Revenue Sharing
Advertising Fees
The average advertising fees in mobile apps can vary widely based on the industry, the type of ads (e.g., banner, interstitial, video), and the geographical location of the users. Cost Per Mille (CPM), Cost Per Click (CPC), and Cost Per Action (CPA) are common models.
CPM (Cost Per Mille): The advertiser pays per 1000 ad impressions.
CPC (Cost Per Click): The advertiser pays each time a user clicks on the ad.
CPA (Cost Per Action): The advertiser pays for a specific action, such as a purchase or a sign-up.
TG Games will commonly use a CPM model, which is common for in-game advertising. The average CPM can range from $1 to $10, with an average of $5 for our calculation.
Revenue Source | Details | Calculation | Outcome |
Ad Revenue Sharing | |||
Advertising Fees | Average Gaming App CPM range: $10 - $20 | Revised CPM for calculation: $15 |
$7.5 per 1000 impressions |
CPM Model | TG Games uses a CPM model | Advertiser pays per 1000 ad impressions | |
App's Share | TG Games retains 50% of ad revenue | 50% of $15 CPM | |
Points System | |||
Points Earned per Interaction | Users earn points for ad interactions | 10 points per meaningful interaction |
100 interactions per 1000 impressions |
Meaningful Interaction | Defined as every 10 impressions | 1000 impressions / 10 | |
Conversion Rate | |||
Points to Dollar Conversion | Users can redeem points for cash | 100 points = $1 |
|
Calculations for Ad Interactions | |||
Impressions to Interactions | Every 10 impressions result in 1 interaction | 1000 impressions / 10 | 100 interactions |
Points Earned by Users | For every interaction | 1 interaction = 10 points | 1000 points for 100 interactions |
TG Games’ Revenue | From 1000 impressions |
| $7.5
|
Points Equivalent to App's Revenue | If 1000 points = $10 | App earns $7.5, which is 75% of $10 |
|
Time Period | DAU | Daily Impressions | Daily Ad Revenue | Monthly Ad Revenue |
2024 Q2 | 10,000 | 100,000 | $750 | $22,500 |
2024 Q3 & Q4 | 20,000 | 200,000 | $1,500 | $45,000 |
2025 Q1 | 40,000 | 400,000 | $3,000 | $90,000 |
2025 Q4 | 100,000 | 1,000,000 | $7,500 | $225,000 |
CPM (Cost Per Mille): $15
App's Share of Ad Revenue: 50%
Daily Impressions: Calculated as DAU × 10 (average impressions per user per day).
Daily Revenue: Calculated as (Daily Impressions / 1,000) × $7.5 (TG Games' revenue per 1000 impressions).
Monthly Revenue: Calculated as Daily Revenue × 30 (average number of days in a month).
Revenue Sharing
TG Games retains 50% of the ad revenue. For every $5 CPM, TG Games earns $2.5.
Points System
The points system needs to be balanced so that it's attractive for users to interact with ads but also sustainable for TG Games' economy. A user earns an average of 10 points for each ad interaction.
User Interaction with Ads
For each interaction with an ad, the user gains points. TG Games earns $2.5 per 1000 impressions, and a user earns 10 points per interaction, we need to define how many impressions equal an interaction. Let's say it takes 10 impressions for a meaningful interaction (which is high for user engagement). This means for every 1000 impressions, there are 100 interactions, and TG Games earns $2.5.
Points Model:
Ad Revenue per 1000 Impressions (CPM): $5
App's Share: 50% = $2.5
Points per Interaction: 10 points
Conversion Rate: 100 points = $1
Calculations:
For Ad Interactions:
Every 10 impressions = 1 interaction = 10 points.
Every 1000 impressions = 100 interactions = 1000 points.
App's revenue for 1000 impressions = $2.5.
Points equivalent to app's revenue = 1000 points = $10 (since TG Games retains 50% of the ad revenue).
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