Spending your way to the top of the free charts is so 2011!
You want more users. You need more users. But how do you get the users you want?
15 Minutes of Fame
Game developers are under ever increasing pressure to find sources of consistently strong users at good prices. As the mobile space is maturing game developers are getting more sophisticated with their user acquisition strategy. Between Apple banning incentivization, updating the ranking algorithm (still not as good as Google’s of course) and cracking down on the bot farms, developers have refocused on quality rather than quantity. This focus has shifted spend from burst campaigns to steady and targeted campaigns.
Flight to Quality
For now, the easy and cheap(ish) six figure install days are behind us. You can still buy a place on the top charts, but how effective is the strategy?
The goal is no longer reaching the top free rankings but the top grossing. As a direct result, UA strategies have changed and so have ad spend patterns. Developers are analyzing their acquired users’ gameplay and spending according to the device and geographies where they succeed. Whether you define quality as a user that gets past level eight or monetizes before level three; acquiring these users is achievable with the right formula.
Let’s take an example:
For their first campaign a game developer spends $2 per install on worldwide traffic across all devices.
After two weeks and 100k installs they are thrilled as they shoot up the charts and get the desired exposure. However, this campaign yields only 30% of “sticky” users and the remaining 70% churn with little-to-no-value. This campaign results in spend of $200k for 30k above average users for an eCPI of $6.67.
For their second campaign the advertiser spends $2 on US & iPad traffic and reaches only 25k installs. Because the campaign is targeted to higher value users 50% generate above average LTV. This campaign results in spend of $50k for 12.5k above average users for an eCPI of $4.
There are two major points to consider:
First, consider the user overlap of the two campaigns. The untargeted campaign will capture those same 12.5k high value US/iPad users. It will also capture 17.5k additional high value users. So for an additional $150k the untargeted campaign yields 17.5k marginal quality users at an eCPI of $8.57. In fact, those 17.5k “above average” users will likely result in a negative ROI because of this second consideration….
Because the LTV for US/IPad users is 3.5x higher than US/iPhone users, the developer can bid up to 3.5x higher on a targeted campaign and generate an even higher amount of quality installs over a shorter timeframe. Yet the untargeted campaign will pay the same price for iPhone as they did for iPad; significantly lowering the ROI.
When evaluating user acquisition strategies remember that your game performs differently across various regions and devices. Targeted campaigns yield stickier users that monetize with high engagement and retention rates. Untargeted campaigns acquire a bulk of traffic, the majority of which churn at a much higher rate and drive up your effective cost.
So what’s the lowdown?
iPad and Western users typically yield higher returns and are in higher demand. Hence, they’re pricier! We’re looking at three main elements: high-quality traffic, available high-ROI users and resulting advertiser competition. Developers need to make sure they’re acquiring “la creme de la creme” of users to sustain their grossing rankings.
The early stage breakdown is very simple and looks like this:
- - iPad (higher LTV) vs. iPhone (average LTV)
- - Western users (high LTV/high price) vs. Chinese users (Low LTV/low price)
This breakdown, while still in its infancy, is powerful. The reality is that current tools for measuring mobile ad campaign results still lack the sophistication that developers expect. Soon users will not just be grouped based on traditional categories (device, country, demographic), but targeting will be taken one step further and there will be a shift towards other factors like spending behavior.
As the mobile space matures we’ll see a progressive optimization of user acquisition that will drive higher and higher ROI justifying higher and higher bids. By how much will this continue going up? Let us know the direction you’re heading. We’ll continue sharing trends we’re seeing, answer any questions you might have and suggest new best practices as the mobile gaming space evolves.