Mobile phones have evolved from bulky handsets to slim feature phones to ever-popular smartphones. The advent of smartphones has provided the foundation for the rapid adoption of casual gaming on mobile phones. Gaming developers are seizing the opportunity to monetize this new media, but struggle to drive more users to download their game. To combat this problem, user acquisition strategies were born, and none quite as successful as the incentivized install, which relied on the demand for one game’s virtual currency to promote the discovery and install of another.
Businesses and platforms grew overnight to address these needs and developers responded. A vast majority of gaming publishers experienced great success and growth using the incentivized install model until Apple’s recent decision to ban such offers from the App Store. Below, I’ll address the current state of affairs, and also challenge developers to innovate and evolve their monetization strategy. Nothing lasts forever and successful developers must adapt in order to survive.
In April, reports swirled around Apple tweaking the App Store rankings with a new algorithm. The visibility that comes with having an app at the top of the rankings leads to organic downloads and is one of the most powerful and obvious ways to drive more users to a game. But how does an app get to the top? Although the “secret sauce” is still unknown, what we do know is that some combination of user engagement, positive reviews and installs, all in a short period of time, seems to be a contributing factor. What else helps? The incentivized install.
Results vary based on the app, but some apps could drive well over 100,000 – 300,000 installs over a two to four day period to propel their rankings in the store and further drive organic installs, all with the visibility they bought at an average of $0.50 per user. While this proved to be a lucrative way for developers to generate revenue and get to the top – it did not necessarily create a mode for acquiring users that would truly add lifetime value to the promoted game/brand. Apple’s subsequent ban of incentivized installs echoes this sentiment, but it does not explicitly elaborate on the improvements to its algorithm. There have been dramatic changes in rankings over the past few months, but nothing seems to be concrete, and the black box created by Apple has produced a speed bump for some developers.
Effects on Game Developers
Apple’s ban has obviously had consequences for developers. On one hand, a tactic that is used to acquire users has effectively been removed from an app’s promotion strategy. On the other hand, for an app that has acted as a “publisher” and utilized virtual currency to promote other app titles, it has lost a portion of its revenue stream. This is a pivotal turning point for many. Inevitably, only those with true quality and stickiness will be able to survive this seeming storm and remain contenders in the mobile gaming space. That being said, clear alternatives to a monetization strategy must be adopted and improved to continue delivering the best experiences for the user.
Game developers are now faced with a new challenge – making money through other means. Those who can adapt the fastest will face the greatest success. There are a variety of ways that can be explored and improved upon to continue to generate revenue for apps and help promote them at the same time:
– In-app purchases: This is the most conventional method of monetization. While it may not garner the same level of revenue, many apps have generated a healthy portion of their capital through this tried and tested offering.
– Non-incentivized display media: With the advances in targeting and tracking in mobile media, developers will not only have to consider this alternative to promote their games, but also innovate to provide an efficient method of driving revenue through this. Developers should strive to have a firm grasp of their audience in terms of demographics, interests and engagement. Being able to segment and sell to audiences efficiently will drive a higher quality user acquisition for a stickier user, and higher lifetime value than a user who does not engage in the new title. Effectively, this will drive prices up for inventory that converts.
– Developing CPI for Android or cross-platform strategy: An obvious effect of Apple’s announcement has been the increased facilitation to develop titles on the Android platform. Many developers that had put Android on the backburner have now re-prioritized to weeks instead of months.
– Sponsorships: These high-impact quality advertisements revolve around direct integration into gameplay. Adding a custom component exposes brands to players in a seamless manner that does not interrupt the user experience. Brands and agencies provide higher budgets for these executions due to the exclusivity and engagement that it drives. Being creative and figuring out the appropriate sponsorship strategy for your app will make you stand out amongst the rest and garner greater opportunities for increased monetization
– Full-screen/rich-media enabled units: Similar to sponsorships, rich media ad units drive higher engagement and command higher rates. Ensuring that your game is developed to support and serve ads that can run rich media from expandables to video and beyond are highly attractive to brands and agencies. This is a step above the standard display ad and will provide an enhanced user experience with engaging components and recognizable brands.
App discovery is an underlying cause to the chain reaction of events that Apple’s announcement has ignited. Those titles that have taken advantage of incentivized installs already have a leg up on current and any new developers who enter the marketplace. They can leverage their current reach to cross promote their upcoming titles to drive growth. While mobile is still in its infancy and has yet to be perfected, the most tried and true way to drive users to an application is through word of mouth.
Apple’s decision, albeit not favorable, has sparked a path to innovation. Developers are further committed to providing users with the best gaming experiences possible while challenging businesses to ensure that their efforts are appropriately rewarded with “word of mouth.” Additionally, it has challenged the marketplace to evolve and figure out the best ways to monetize these opportunities. Mobile devices are very personal – the most effective advertising will have foundations in user engagement to the point that ads might actually be welcomed. Once again, quality of the creative and how it is delivered to the user is the driving force behind increased revenue.
Tan Tmangraksat is director of strategic development at mobile ad exchange Mobclix, a Velti company. He oversees strategic partner and platform development for the Mobclix exchange. Tan joined Mobclix from Yahoo! where he was responsible for pricing and yield optimization for the entire western sales region. He joined Yahoo! as part of the BlueLithium acquisition where he contributed strategic leadership and direction and was instrumental in their integration with the Right Media Exchange. At BlueLithium, Tan managed their key partnerships as well as media optimization strategy to help grow the network’s reach significantly. Tan’s expertise in managing strategic relationships, monetization, media planning and executing new revenue generating opportunities successfully brings brands to premium publishers while building stellar products and teams from the ground up. Tan holds a degree in Political Economy from the University of California.