Constantly monitoring KPIs is crucial within the development of mobile games. Staying ahead of the competition requires a deep understanding of Key Performance Indicators (KPIs).
By monitoring these metrics, it is possible to measure the performance and success of your mobile games advertising and identify what can be improved. KPIs enable mobile games developers to understand users’ experience and behaviour and how to improve their mobile game advertising.
In this article, we’ll present five crucial KPIs that can make or break the success of your mobile game advertising.
1. Retention Rate (RR)
The first KPI presented here is Retention Rate (RR). It indicates the percentage of players who continue engaging with the game over time. It goes beyond acquiring new users and focuses on keeping them actively involved. A high Retention Rate indicates that your mobile game is keeping them interested, which is crucial to monetization.
Also, it is a useful metric to measure the quality of new users: the higher the number of users engaging with your mobile game, the higher the probability for them to perform in-app events and generate in-app revenues.
Retention Rate (RR) is calculated as follows:
RR = [(Number of users at end of period X – Number of users acquired in period X) / Number of users at start of period X] * 100.
Regularly monitoring and optimising retention rates can help enhance the overall player experience and identify any potential weaknesses of your mobile game advertising.
2. Life-Time Value (LTV)
Life-Time Value, or LTV, is another KPI that can be measured. It estimates the revenue a single user generates throughout their playing with the mobile game, and offers information about the quality of the users that the game is acquiring through user acquisition.
Combined with Average Revenue Per User, LTV is an excellent metric for determining the potential monetary value of your users: a high LTV suggests your mobile game advertising strategy is effective in targeting high-quality users. On the other hand, a low LTV may indicate the need for improvements in monetization strategies or content offerings.
Indeed, if you acquire only users with low LTV, your ROI/ROAS will be negative and in this case you will need to optimise your user acquisition strategy and/or change your channel or partner.
3. Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is a fundamental KPI that represents the total revenue, on average, brought by a user in a given period. It is a valuable metric for assessing the financial performance of the mobile game. It is calculated as:
ARPU = Total revenue / Total number of users in cohort.
ARPU includes all revenue-generating events in the mobile game, such as purchases, ads, subscriptions, etc. A rising ARPU is generally indicative of successful monetization efforts and a strong player base willing to spend within the game.
4. Return On Investment (ROI)
The most important KPI is represented by Return On Investment (ROI) which indicates the profitability of your mobile game advertising by comparing the gains from the game against the costs associated with its development and marketing.
Indeed, it is used by mobile games developers to evaluate user acquisition activities, especially when testing new partners. In the case of mobile games, its formula is the following:
ROI = [net revenue from new users / total ad spend] * 100
Monitoring ROI helps developers assess the efficiency of their investments and maintain a sustainable and profitable mobile game advertising.
5. Return On Ad Spend (ROAS)
The last critical KPI that we present here is Return On Ad Spend (ROAS) which measures the revenue generated from mobile games advertising, thus evaluating the effectiveness of an ad campaign. It is calculated as follows:
ROAS = (Revenue gained from advertising / Cost of advertising) * 100.
The higher the ratio, the better the campaign performed. ROAS allows you to know if and how profitable your campaigns are.
Conclusions
In the mobile games advertising world, success depends on the ability to adapt and make informed decisions. In order to boost player engagement, optimise retention, improve monetization, and ensure a satisfying user experience, mobile games developers must constantly monitor KPIs.
In this article we have presented 5 main KPIs:
- Retention Rate (RR) - the percentage of users that keeps using the mobile game over a period of time.
- Live-Time Value (LTV) - an important metric used to determine the revenue generated by a user during the time they’re using the mobile game.
- Average Revenue Per User (ARPU) - the average amount of revenue generated by a user in a given period.
- Return On Investment (ROI) - the most important KPI indicating the profitability of mobile game advertising.
- Return On Ad Spend (ROAS) - the measurement of the revenue generated from mobile games advertising,
Mobile games advertising’s continued success relies on constant KPI monitoring and effective implementation of improvement strategies.
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