Google says game developers can rely on ads for income

As mobile app developers figure out the best ways to make money, Google wants to convince them that mobile ads can be a lucrative option — especially on its AdMob mobile ad network. As one piece of evidence, Google sent me a case study that outlines the success of a company called Best, Cool & Fun Games.

The startup was founded by former investment banker Guilherme Schvartsman, who says Best, Cool & Fun Games is “the #1 mobile gaming company in Latin America, by sales, product breadth, world reach and user satisfaction.” It has released 30 games that have been played by 10 million people. Even though the company based in Brazil, its biggest audience is in the United States, Schvartsman said.

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Schvartsman has been developing iPhone games since 2009, and he said one of his key decisions was embracing the “freemium” business model last summer. Until that point, he said, Best, Cool & Fun Games had had some success with games that cost 99 cents. Then it released a free version of its game Ant Smasher, which took advantage of Google’s AdMob ad network in two ways — it ran AdMob ads, but also promoted itself on other apps in the AdMob network. Google encourages this strategy by offering developers a discount if they spend their AdMob ad revenue on AdMob ads.

That turned Ant Smasher into the company’s most popular game by far. It has been in the top 100 games on the iPhone for the past four months and in the top 100 games on Android for the past two months. And it made much more money than Schvartsman expected. The app is now on-track to bring in $2 million in annual revenue, he said, with 80 percent of that coming from ads.

Now Best, Cool & Fun Games has followed the example of Ant Smasher’s success, releasing its other games in free, ad-supported versions. It cross-promotes its games with house ads. One out of three users who saw the Ant Smasher ad downloaded the free version of the game, Schvartsman said.

Moving forward, Best, Cool & Fun Games plans to start offering virtual goods in its games (good thing the Android Market finally supports in-app purchases) and launch tools that make it easier for developers to create games of their own. The company is in the process of raising venture funding, he said.

As for AdMob, Google’s acquisition of the mobile ad company has hit some bumps recently, including the departure of CEO Omar Hamoui and engineering manager Kevin Scott. But Google says the network is still performing well, with more than 2 billion ad requests per day (up four times from a year ago) and more than 50,000 publishers.