💸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).