The holiday season is a busy time, and mobile gamers can get overwhelmed by sales and deals. However, Q4 is not the end of the year for mobile marketers – an often-overlooked opportunity lies between the day after Christmas and throughout January, known to some as Q5.

During this post-holiday lull, many games tend to decrease UA spending after heavy investments in the run-up to Christmas. But for the ones who continue to invest beyond that, the period can be highly lucrative in terms of increasing revenue and attracting new users. As Noam Zada, Head of Global Mobile Game Marketing at TikTok, says:

“As the year moves forward, Q5 becomes a pivotal moment for marketers. Blending creative experimentation with data-driven strategies during this period can unlock powerful user acquisition and growth.”

Three Reasons Why Q5 is Big Business

#1 – Peak Device Activations = Game Discovery Potential: December leads globally in new device activations, peaking on Christmas Day. This surge can be seen in the graph below, where Q4 of every year since 2019 has always had the highest number of smartphone shipments. For mobile marketers, this means more opportunity than ever for new players to discover and install new games.

#2 – More Screen Time = Higher Revenue Potential: During the holiday period, gamers typically enjoy more downtime. That often means spending more time on their mobile devices playing (or discovering) games. More time in-game correlates with an increased chance of monetization.

The impact of both points can be seen in the downloads and IAP revenue graphs below, where December and January tend to be some of the highest downloads and revenue months in the year. For mobile marketers, this translates into a potentially high ROAS audience that’s ripe for acquisition.

#3 – Lower Costs = Higher ROI: Many ad networks reduce rates during Q5 as advertisers deplete their budgets during Cyber Week and year-end campaigns. Further, media prices during this period tend to offer better ROI compared to the pre-holiday season, when CPMs and CPIs hit their peak.

For example, CPMs on Facebook, Instagram, and TikTok drop anywhere between ~10-40% during Q5 compared to late November, as seen in the data below. In other words, cost efficient UA opportunities are automatically created during Q5 across a variety of advertising platforms.

Further, this growth opportunity impacts various mobile genres slightly differently, as showcased by TikTok’s Q5 vs Q4 2023 data, which shows:

• CPI drops for specific genres: Racing (-58.77%), Match (-32.96%)
• CPA drops for specific genres: Hypercasual (-88%), Simulation (-73%), Puzzle (-65%)

Finally, various countries are also impacted differently, as showcased by TikTok’s Q5 vs Q4 2023 data below.

The above essentially results in lower than usual advertiser competition, more opportunity for visibility, and access to a potentially higher ROI audience.

That said, two challenges exist:

• Users are fatigued by holiday/Q4 ads and are therefore harder to reach.
• Everyone jumping on the Q5 opportunity creates higher ad marketplace competition across long-tail mobile developers and publishers. 

Sustaining growth momentum during this quarter requires creativity and data-driven tactics. Let’s jump into how it’s done today.

Navigating Q5 Across UA Channels

Facebook and AdMob focus on retargeting and seasonally relevant creatives to obtain users during Q5. Their platforms encourage advertisers to use dynamic, visually engaging ad formats for acquiring new users at lower costs.

These platforms also suggest re-engagement campaigns to keep users acquired during high-traffic periods focused on incentivizing further app engagement for better long-term performance. However, the problem with retargeting campaigns is that the CPI can be significantly higher than acquiring new users, potentially impacting ROAS if not carefully managed.

Unity and ironSource (now merged as one company) both offer similar Q5 tactics, using their expertise in immersive ad formats — playable and rewarded video ads — to drive Q5 engagement. Unity Ads regularly touts its mediation services where advertisers can dynamically adjust spend across networks in pursuit of the Q5 audience in the most cost-efficient manner.

Complementing this, ironSource focuses on LTV with AI-driven optimization and predictive analytics to help advertisers more efficiently retain new users. That said, reliance on AI-driven optimizations can pose risks, as performance may suffer without adequate human oversight or input during rapidly changing market conditions.

AppLovin stands out as a high-impact creative company, specializing in formats like playables to maximize Q5 engagement. By pushing the needle on advertiser innovation around creative formats and re-engagement at scale through high-retention ad experiences, AppLovin positions itself as a high value network for acquiring and retaining users during Q5 (case studies here and here).

However, the risk lies in the volatility of this network in terms of quality and volume. There will be periods of excellent ROAS and incredible volume, but quality can drop in a matter of days. As a result, mobile marketers need to carefully manage budgets to avoid overspending on low-performance users.

TikTok frames Q5 as a season of “Discovery, Engagement, and Value”, where winning requires a focus on both performance-driven strategies and creative approaches. According to TikTok’s research, 75% of TikTok users consider the platform a key touchpoint in their decision to buy or download a mobile game. Users also reportedly take 2x more actions on average compared to mobile gamers on other platforms, and they spend 1.6x more on IAPs under similar conditions.

TikTok offers a variety of AI-driven tools to make the most of Q5, such as Smart+ (~25-30% ROAS increases) that maximizes returns by automating campaign management across targeting, bidding, and creative (case study with Extra Dimension Games here). Additional offerings include Value-based Optimization (~35-40% ROAS increases), and its creative suite effectively helps advertisers address creative fatigue while rapidly iterating on creative concepts to keep up with TikTok’s fast-moving, trend-heavy environment (case study with Bytro Labs here). But challenges exist here too, similar to those of the previously mentioned AI-driven tools.

Two major takeaways emerge from all the above. First, Q5 is a great time for mobile advertisers to run multi-channel campaigns and optimize channel-specific approaches, without breaking the bank.

For example, Kooapps, widely recognized for their game Snake.io, wanted to further optimize their TikTok ad spend. So they ran parallel Android campaigns — one with TikTok’s Smart+ alongside a control campaign without Smart+, maintaining identical ad group settings and creatives across both campaigns for a fair comparison. The former proved to be the winner here with a -56% CPI reduction and a 2x ROAS increase (full case study here). Another example is Whatwapp, the Milan-based gaming studio behind Scopa (~$16M in IAP revenue, ~10M downloads to date according to Sensor Tower), who saw similar results using TikTok’s solutions.

Second, due to the period’s lower costs, Q5 has also proven to be a great time to test UA creative tactics. For example, Homa closely monitored the performance of its creatives to maximize launch impact of its new hybridcasual game, Clean It!, inspired by TikTok’s carpet-cleaning trend. Homa continually updated the creative brief based on which tactics proved most effective.

One such example was running seasonal themes, while aligning their creative concepts with current trends on TikTok and successful styles from competitors’ TikTok videos. This approach reduced CPI by -55% and resulted in +10% longer average play time. Read the full case study here.

The Q5 Opportunity

Heading towards Q5, the UA landscape presents a mix of challenges and opportunities. With peaking device activations, more screen time, and lower CPMs across ad networks, it is a prime period for mobile marketers to drive cost-effective growth, audience re-engagement, and potentially higher profitability.

However, since Q5 immediately follows the Q4 frenzy, mobile marketers need to strike a balance between creative innovation and data-driven precision in their targeting of potentially fatigued audiences. It is a pivotal season wherein mobile marketers can take advantage of a slightly less competitive ads marketplace, diversify their channel mix, more cheaply test new creative strategies, make more meaningful relationships with their target audience, and offer an on-ramp to success in the coming year.

Q5 is more than a hidden quarter; it’s a relatively untapped opportunity waiting to be seized by those who recognize its potential. There’s around a month left to prepare, and we hope you make the most of it!

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In Other News

💸 Funding & Acquisitions:

• Play Ventures raises $140M in third gaming fund
• Merak Capital launches $80M fund to support MENA games start-ups
• SayGames to invest $30M in hybrid casual studios over next three years
• Clash of Clans creator’s Bit Odd takes eccentric approach to mobile game design, raises $18.2M
• SuperScale raises $1.2M in funding round

📊 Business & Products:

• How Highrise is cultivating a UGC platform driving $250M in marketplace sales
• Solo Leveling: Arise hits 50M players and $139M revenue in first six months
• Pokémon TCG Pocket has reportedly generated $120M since launch
• Warcraft Rumble is making the move to PC with monthly mobile earnings down 92% in first year
• Xsolla and Com2uS forge strategic partnership to offer payment and backend services to developers

👾 Miscellaneous:

• Watch: How to unlock your game’s next level with TikTok
• The Indie Game Awards make debut on December, 19th
• Supersonic launches hybridcasual competition for mobile game developers
• Final Fantasy VII Rebirth and Astro Bot lead The Game Awards 2024 nominees
• Genies launches Parties for brands and creators to launch their own “AI Roblox”

Our Gamification Consulting Services

Today, we’re highlighting our gamification consulting services. Applying game mechanics to all sorts of applications has proven to boost retention, engagement, and revenue — but doing it right can be harder than it seems.

Naavik offers gamification deconstructions, workshops, and ongoing flexible support. Here is what one of our clients had to say.

If you’d like to learn more, reach out here! Also check out our expanded consulting service portfolio here.