ROI seems to be the holy grail for mobile games’ developers, when talking about user acquisition. Don’t get me wrong, acquiring huge volumes of new users is still the ultimate goal, as long as such users generate revenue and bring value to the business. Therefore, it’s become essential to monitor new mobile games KPI in order to optimize your mobile user acquisition strategy.
For example, here at Mapendo we’ve been working with some well-known game developers for months, accessing their internal BI in order to better understand how to increase their user acquisition ROI. Based on our experience with mobile games, we’ve focused our attention on 3 key metrics:
- Retention Rate;
- In-app purchases (IAPs)
By looking closely at these 3 metrics, we’re able to update our user acquisition strategy in order to increase the overall ROI.
Life-time value (LTV)
In the user acquisition ecosystem, and especially for mobile games, life-time value refers to the value, measured in revenue, a new user will bring to an app, during their entire lifecycle as a user. Often abbreviated as LTV, it predicts how much revenue a user can generate based on their post-install behavior: how often they open the app, how many levels they complete, how much they spend in-app and so on.
LTV is often confused with ARPU, which stands for Average Revenue Per User. While LTV predicts the value generated by users during their whole lifetime using the app, ARPU reflects current data. Indeed, it means the revenue generated by each user in a well-defined time period, and it is computed as follows: Total revenue generated by new users / number of new users.
Real time data about LTV allow DSPs like Mapendo to quickly evaluate the users they’re bringing in and to make proper adjustments when needed. By looking at LTV, we are able to measure the performance of app publishers, where we buy ad placements; but we can also decide to adjust our CPI in order to balance the LTV and achieve the target ROI.
The second metric in our list is the retention rate, which measures user engagement by telling how many users keep using the app several days after the install, out of all the users acquired through a specific source. The formula is the following:
Retention Rate = ( number of users who keep opening the app during the selected time period / number of users acquired during the selected time period) * 100
Retention rate can be measured over different time periods, choosing how many days after the install to include in the calculation. For instance, many mobile games’ developers look at retention rate on Day 1, Day 7 and Day 30, when evaluating their user acquisition sources.
Also, retention rate is a good indicator of users’ quality, often included in game developers’ predictive model to compute ROI.
When launching a new user acquisition campaign for mobile games, we always look at retention rate in the learning phase. While initially buying ad placements from thousands of apps across many app categories, we start looking at the ones with high retention rate. This allows us to narrow down a shorter selection of apps where to buy traffic and focus our optimization efforts.
For example, we saw that users coming from other mobile games have a number of app opens more than 3 times higher than users coming from any other app category. Then, even amongst game categories there are slight differences, but they also depend on the game promoted. For a simulation game we were promoting, role-playing proved to be the best category in terms of retention rate and ROI.
Together with retention rate, we monitor several other metrics, which include in-app purchases (IAPs), that bring us to the next section.
In-app purchases (IAPs)
The real game changer for increasing ROI are in-app purchases, which are at the core of any monetization strategy for most mobile games. That’s why high-quality users are defined by the frequency and the number of in-app purchases they make.
When optimizing user acquisition towards in-app purchases, it’s crucial to understand the user funnel, when users are allowed to start making IAPs, the different types of IAPs and which ones are more valuable for app developers.
Indeed, some games have a long monetization process, expecting IAPs to come in after several days after the install has happened. Instead, other mobile games monetize early on right after the install, and they tend to greatly value users who generate in-app purchases within the first days after they’ve downloaded the app. It’s necessary to understand the right timing of in-app purchases in order to better evaluate all the app publishers, with the proper time.
By monitoring the time difference between installs and in-app purchases, we are able to identify those monetization patterns and further optimize the sources where we are buying ad placements from.
Last but not least…
Even though volumes are still the most vital source for mobile apps and mobile games especially, profitability and ROI have taken over. Changes on the optimization process are necessary, pivoting the strategy from scaling volumes no matter what, to increase ROI by acquiring high-quality users.
In order to do so, LTV, retention rate and in-app purchases represent three useful metrics to optimize user acquisition and boost ROI for mobile games.
- LTV: it predicts how much revenue a user can generate based on their post-install behavior;
- Retention Rate: it measures user engagement by telling how many users keep using the app several days after the install, out of all the users acquired through a specific source;
- In-app purchases (IAPs): purchases made by users in-app, which are the main monetization channel and the biggest driver of user acquisition ROI.