How Lessons Learned in Social Will Give You a Head Start in Mobile

This is a guest post by Josh Williams, President and CSO of Kontagent

Whether in the early stages of developing a mobile application, or already launched with a substantial user base, mobile app developers and marketers can gain a huge advantage and greater chance at success by looking at the way social app developers scientifically optimize their Customer LTV and ROI.

Over recent years, game developers and marketers on Facebook (as well as on other social platforms around the globe) have mastered the science of building and optimizing their games around customer data. They use that data to learn about what is and isn’t working in their applications.  From Acquisition to Retention to Monetization (the three stages in the ARM Funnel), the successful developers have created entire organizations around data-driven design at each level, and across all facets of their businesses.

All successful studios publishing games on Facebook today, live and die by the ARM funnel. Insights garnered throughout the ARM funnel show where to focus resources and marketing investment.  At its most basic level:

 

Acquisition: Figure out what audience performs best in your game and how to acquire members of that audience in the most effective, lowest-cost manner possible; from ads, to cross-promotions with other games, to install exchange networks, to viral channels. KPI’s = Cohort Customer Acquisition Cost (Cohort CAC); Cohort ARPU and Retention by Channel; Cohort ARPU and Retention by Campaign; Acquisition Conversion Funnel

Retention: Keep that audience engaged for as long as possible. Find fall-off points where users leave.  Learn how to encourage sharing with friends. KPI’s = Avg. Session Length; Day 1 Retention, Day 7 Retention, Day 30 Retention; Custom Event Funnels; User Lifetime Event Distribution; K-Factor (virality)

Monetization: Get these users to pay and to keep paying over time, optimizing their lifetime values (LTV) to the greatest degree possible. KPI’s = % Paying Users; Avg. Revenue per User (ARPU); Avg. Revenue per Paying User (ARPPU); Purchase Conversion Event Funnel

 

Game studios like Zynga, Popcap, Crowdstar and Gaia have been able to acquire users more profitably when armed with a perpetual flow of data, and a supporting data science infrastructure with the expertise to act on this data and optimize their ARM funnel. Their teams of data scientists and developers measured, iterated, tested and optimized relentlessly to acquire even more users at better customer acquisition cost and with higher yield ratios than most.

As the free to play model grows and dominates in mobile, it is no surprise that the ARM funnel is the right framework for measuring Customer Economics and per-user profitability in mobile as well.  Just like social app developers, mobile app developers need to understand and optimize acquisition, retention and monetization if they are going to succeed.

That said, mobile developers have a long way to go. And, as more social companies (including Zynga!) move aggressively to mobile, getting smart about data is increasingly important. At Kontagent, we believe those mobile developers who recognize the importance of data-driven app development throughout the ARM funnel will be well-positioned to lead the space.

Accordingly, here are the biggest challenges and opportunities facing mobile game developers, relative to measuring and optimizing around the tried-and-true ARM funnel.

 

Discovery & Acquisition

Biggest Challenges

  • The biggest hurdle is getting discovered and competing against companies with deep pockets who can muscle their way up the app store rankings.
  • Mobile ad networks are massively fragmented and difficult to target high-yielding cohorts of users (either through behavioral or demographic segmentation)
  • Understanding ROI (on iOS in particular, tracking from ad/source to install to monetization used to be impossible)

Biggest Opportunities

  • Reach large audiences at a relatively inexpensive cost basis by advertising on cross-promotional networks and partnering with other developers with high DAU counts
  • Segment users by acquisition channel, and optimize around those producing the highest per user ROI. Analytics make it possible to see differences between each source: Organic, Viral, Cross-Promotion & Advertising.
  • Build a great, highly engaging game! The better the experience, the more players will tell their friends. Word-of-mouth is a huge organic driver of installs for mobile devs right now, so focus on gameplay, and reap the benefits.  Use analytics to tell you where users are losing interest in your app.