Few things evolve as fast or as chaotically as mobile ad monetization. This often overlooked, but critical, layer of the mobile ecosystem now underpins roughly $20bn per year in publisher payouts and close to $65bn per year in mobile user acquisition spend. Over the past decade, a handful of grand industry themes have shaped how this money moves: the rise of real-time bidding, the concentration of demand into a small number of platforms, and the steady shift of power from publishers to auctions, algorithms, and intermediaries.

About 60-70% of all mobile video impressions are served on MAX, and almost 100% of those impressions are driven by header bidding. This has, in large part,  shifted the price-setting power away from publishers to the demand side, and as a result, publishers have seen eCPMs drop. This prompted savvy publishers to begin complex ad unit setups, in which they call multiple ad units for each ad opportunity with different bid floors.  

In some cases, the aggressive use of bid floors boosted ad revenue by 15-30%, making it one of the most effective ad monetization hacks of 2025. That hack, however, is now on borrowed time. From a mediation perspective, allowing publishers to trigger 5 to 30 different ad units per ad opportunity creates a material increase in server load and infrastructure costs, which mediation platforms are increasingly unwilling to absorb. I fully expect mediation platforms to regulate how often publishers can call multiple ad units in the future. This will significantly reduce the uplifts that publishers can generate with bid floors. 

On the ad unit side, one trend stands out above the rest: banners are on a death march into oblivion as a monetization source in mobile. Banners’ overall contribution margin in the ad monetization pie is decreasing and is on the verge of becoming worthless in modern ad stacks. Looking at the former hypercasual titan Voodoo, once known for its heavy banner monetization, it’s clear the format is starting to fall behind. Their latest surprise hypercasual hit, Epic Plane Evolution, completely ditches the format in favour of IAPs, Interstitials, and Rewarded Videos. 

Ad networks have aggressively doubled down on full-screen video formats since 2020. Rewarded videos and interstitials are becoming increasingly long and harder to skip; rewarded ads now often run past 60 seconds and include end cards that require 10 seconds and 4 clicks to exit. That friction drives higher conversion rates, which fuels advertiser demand, which in turn lifts eCPMs, making the formats more attractive to publishers. Banners have no such flywheel. The format looks almost the same as when it launched on mobile, and the market is treating it accordingly. Today, Interstitial ads account for about 50% of overall revenue, with Rewarded ads accounting for 35% while banners account for only about 15% of overall ad revenue. Banner revenue is only set to decline further with the rollout of header bidding. 

What is quietly emerging from this shift is something more fundamental: ads themselves are falling out of favor as a primary monetization strategy. Habby’s latest release, Wittle Defender, now generates less than 12 % of its revenue from ads. Rollic’s recent puzzle hits, Knit Out and Hole People, come from a studio once almost entirely dependent on ad revenue, yet now sit below 20 % IAA contribution. Even Vietnamese studios, historically among the most ad-reliant developers in the industry, are moving aggressively toward IAP-first models. The pattern is hard to ignore.

Header bidding is a major contributor to this shift. While bidding brought transparency and operational simplicity, it also eliminated many of the inefficiencies that once propped up ad margins. Fixed price deals, preferential waterfalls, and inflated CPMs are largely gone. Today, nearly everyone competes in the same real-time auction, and the result has been margin compression across the board. For studios that previously relied on negotiated network relationships to boost ad revenue, ad ARPDAUs have plateaued or declined outright. Faced with this reality, many teams have turned to IAP not because it is easier, but because ads no longer scale the way they once did.

There is a persistent narrative that studios are simply moving from ads to IAP. In practice, very few succeed in pulling this off. This is not a switch you flip. It requires rethinking game design, user segmentation, live operations, and internal incentives. The studios winning today are not abandoning ads entirely. They are treating ads as a secondary, highly segmented revenue stream while building IAP systems that carry the business. That blueprint is slower, more complex, and far more challenging to replicate, but it reflects the new reality of a bidding-driven ecosystem where ads are no longer the growth engine they once were.

That said, eCPMs may be entering a quieter renaissance. As platforms like AppLovin lean more heavily into e-commerce demand, from Temu and Shein to Amazon-backed campaigns, ad rates are already rising in select segments of the US market. This will not come for free. Higher advertiser competition will inevitably push up user acquisition costs for game studios, reshuffling economics on both sides of the marketplace. With AppLovin expected to roll out its e-commerce offering globally before year's end, ads may once again become a more meaningful revenue stream, not merely a fallback. Whether that shift restores pricing power or simply raises the cost of growth remains an open question.

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