You don’t have to be good at math to know that if you only get $3 back on a $4 investment, then there’s something painfully wrong with whatever you’re doing.
No one’s more aware of that than game app developers, some of whom spend thousands of dollars on user acquisition daily — though the truly big players shell out way more than that. Take Supercell, creator of “Clash of Clans,” which sinks about $1 million a day on app marketing.
Of course, Supercell can afford it because the math works. Midia Research found that the game company makes $5 million in revenue every day. The more you test, the better your chances are of snagging the right users, and the more you make, the more you can test.
But smaller or mid-size app developers attempting to navigate the murky waters of the app-install economy are often met by a landscape populated by middlemen, unqualified audiences, and bot-infested ad networks.
It’s something Think Gaming co-founder Tim Ogilvie has thought a lot about and it’s the motivation behind the gaming company’s new mobile advertising data co-op, which he says will help game developers pool their experience and share intelligence in the ongoing quest to find the most valuable users.
“The big issue is that the more options you have, the most it costs to test relative to ongoing spend,” Ogilvie said. “Testing is almost like drilling for oil. You might spend $10,000 to drill with certain networks, and either they’ll turn into gushers that keep gushing on an ongoing basis — or you’ll go bust.”
There are hundreds of app networks and publishers out there. If an app developer is spending, say, $10,000 on testing each and every one of them, the price tag’s going to be pretty hefty.
Developers also have to contend with the ‘what have you done for me lately’ attitude of many gamers. Every time a developer has a new app, which is relatively often compared to brands or other advertisers, the testing process has to start again.
“Games turn over all the time. A game that was popular two years ago is probably either less popular today or not popular at all anymore,” Ogilvie said. “Basically, I can guarantee that 12 months from now, the top 10 games will be different from what they are today. Gamers are always looking for the next thing to play, and games are always looking for new app installs.”
ADEXCHANGER: Why is app marketing kind of like the Wild West for game developers?
TIM OGILVIE: The key question for these guys is: ‘If I’ve got players that are worth a certain amount of money to me, how can I find places to acquire people through advertising that will cost me less than that amount?’ Spotify might go out and spend millions to learn everything it can to get the most profitable users, so spending millions might not be that crazy if they get it back in user value. Theoretically, for a Spotify, those kind of learnings last forever.
But when we look at it from a gaming perspective, a new game comes up and six or nine months when people aren’t playing anymore developers have to go out there and re-figure out the landscape. It becomes incredibly expensive and ultimately unworkable because they only have a short time to reap the benefits. When people move on from your app after six months, all that knowledge goes to waste.
And that’s where the co-op comes in.
Yes. The co-op is about people contributing data to a centralized pool so we can all learn faster about this marketplace. If you boil it down, there are two main things developers need to look for: What does it cost to acquire and what is the user actually worth? So, rather than spending money to learn about a new placement, we would give you the information in exchange for your information about other placements.
What’s more important to app developers: downloads or engagement?
If you talk to anyone with an app, irrespective of whether it’s in the game category or not, they want more installs. The thing that games tend to be on the forefront on is having monetization that allows them to go out there and acquire those users.
Is the game app install gambit sustainable considering player turnover?
At this point, many app developers are just resigned to the fact that they can only keep people for so long. Most game developers would love to keep people forever once they’ve found them, but it’s a small universe of people who are loyal players. Most users churn off. Developers have become very smart about what that behavior looks like over time, which allows them to hone the way they go about acquiring users.
Are gamers loyal?
Loyalty to apps is a big issue everybody faces. I saw a stat recently that said the average person has something like more than 60 apps on their phone, but that the average user only uses 10 of them. Is it possible to get people to use more than 10 apps regularly? That’s a bigger, broader philosophical question and I’m not sure we have the answer to it. A lot of developers are struggling with that today. Unfortunately, that’s the reality and it can be frustrating.
How effective is something like cross-promotion between apps?
Some apps will play the leapfrog game all day long and send users to the next game when players reach the end of the natural lifecycle of the game they’re on. But I’d say Facebook and ads outside of app drive the most installs over one game driving another. The problem is that that’s just one of a zillion ways to acquire users.
What other strategies do developers use to encourage downloads?
Everyone’s seen Facebook app install ads on their mobile phones or ads that natively say, ‘Hey, there’s also an app for this game;’ and if you hit install, the app automatically downloads. There are a wide variety of native and non-native ad placements: banner ads that run on the mobile web, interstitials, ads in games, video ads. Some ads are incentivized. There’s a whole universe of companies that will pay you in some form of virtual currency for downloading another app or watching video ads.
But how you get a user to download has an impact on that user’s worth. If users install a game because they’re getting 50 points in another game to do so, then that person is worth less than someone who actually wants to play the game.
What can developers do to increase user value?
Testing. They have to test everything and spend money in all channels to see what to double down on and what to cull from the mix. They have to do this again and again. That’s the day-to-day life of the user acquisition folks.
Are there any best or best-ish practices for user acquisition in the game app world?
As it stands, the best-ish practice, and I think ‘best-ish’ is as good as it’s going to get today, is to broadly go out and spend money on tests to figure out what users cost, what they’re worth pre-install and what their lifetime value spend is. You spend some money, you set the cost and you repeat the cycle again and again and again.
