User acquisition is the process of bringing new users into an app through a mix of marketing tactics. In gaming, that mix typically includes paid campaigns, social media marketing, email marketing, influencer marketing, and app store optimization.
Generally, mobile game businesses are cash flow heavy businesses that run on tight margins - so while a lot of revenue is coming in, most of that revenue is immediately being spent on acquiring new users and feeding the growth cycle and scale up.
Let’s take a look at what the mobile user acquisition flow looks like. Here, Game A is the publisher and Game B is the advertiser.
- User plays Game A
- Game A displays an ad for Game B to the user
- User clicks on Game B’s ad
- User arrives at the app store page for Game B
- User installs and launches Game B
- User makes an in-app purchase in Game B
What is the user acquisition cost?
The core metric in measuring mobile user acquisition campaigns in ROAS, or return on ad spend. This metric tells you whether or not your campaign - and by extension your game business - is profitable. To be ROAS positive, your user acquisition cost (usually measured by CPI, or cost per install) needs to be lower than the lifetime value.
This equation is the crux of every user acquisition campaign - meaning it doesn’t matter how low or high your CPI is, as long as the average revenue per user you’re generating is higher.
CPI < LTV
The key metrics to track user acquisition cost and make sure your user acquisition campaigns are running smoothly are:
- Lifetime value
- Average revenue per user
- Cost per install
- Return on ad spend
What is the user acquisition landscape today?
Before diving into best practices for improving mobile user acquisition strategy, let’s set the scene and review market context.
In 2021, mobile gaming started shrinking for the first time ever - following about 15 years of solid double digit growth. Many attribute the -7% crash to both COVID and macroeconomics - but the truth is, Apple’s decision to deprecate its IDFA tracker is the biggest culprit.
- Post-COVID return to normalcy: It’s true that COVID artificially boosted the amount of games people were playing (because they had nothing else to do) - so a dip makes sense as people started returning to the office in 2021. However, it’s more likely that a post-COVID return to the office would have affected PC gaming more than mobile gaming - since most people game at home on PCs. But while PC gaming suffered, mobile gaming suffered significantly more (-2% compared to -7% respectively). So in fact, COVID doesn’t quite explain why mobile gaming crashed so hard in 2021.
- Macroeconomics: The recession and mobile gaming crackdowns in China are another possible explanation. In 2021, China implemented a series of tough regulations on gaming in an effort to prevent gaming addiction in young people. However, digging deeper, this doesn’t explain why mobile gaming in US revenue was hit so hard.
- IDFA deprecation: In 2021, Apple introduced AppTrackingTransparency and effectively deprecated the IDFA tracker. Suddenly, game developers had no way to measure the performance of their user acquisition campaigns - because they no longer had an ID to track an ad to an install to a conversion. So, for example, an advertiser could see that users from Facebook campaigns go on to generate more revenue than users from Google campaigns. In that case, they’d know to increase budgets and focus more attention on Facebook. Unable to do that, user acquisition became less effective - and without quality players coming into the game and spending money, mobile revenue ultimately fell.
How to improve your user acquisition strategy today
Today, it’s harder than ever to scale games and the cost per user acquisition is more expensive than ever. But the IDFA isn’t coming back anytime soon - so game developers need to adjust their user acquisition strategy to the new normal. Here are a few user acquisition strategies we see getting more and more popular:
Acquire a broad variety of users
Instead of running highly targeted ad campaigns to a group of niche players, many studios are broadening their user acquisition strategy to acquire a larger top-of-funnel (i.e. all types of users), and then treating them differently inside the game. For example, they’re building a broad in-game monetization strategy that serves both ads and in-app purchases, so users have the option to monetize either way - and essentially “self-segment”. They’re also adding mini games like hidden objects or puzzles, which appeal to a wider audience of players beyond those who are there for the core game loop.
Dice Dreams, a social casino game by Superplay, is a great example of this strategy in practice. Their ads showcase different themes that appeal to different types of players - not just social casino players (which is quite a niche audience).
For example, this ad appeals to players who like puzzle games:
This Dice Dreams ad surfaces one of the mini-game inside the game rather than the core casino mechanic. By broadening their ad creatives, they’re able to acquire a wide variety of players. Then inside the game, those players engage with the mini-games they saw in the ad as they’re learning the core social casino mechanic.
Leverage media mix modeling
We’re seeing game developers get more and more innovative with their marketing strategies. Until now, performance marketing campaigns on ad networks like Applovin and Unity and social media networks like TikTok and Facebook were the norm. Now, many developers are expanding their user acquisition strategy to include brand marketing tactics like TV ads or ads with celebrities. Through media mix modeling, a technical formula for combining performance and brand marketing, they’re able to understand which of those campaigns performs best.
For example, Playtika used Drew Barrymore in this Bingo Blitz ad to tap into Drew’s broad following.
Meanwhile, Supercell put together a star-studded ad to promote Squad Busters:
Open direct-to-consumer channels
Like we’ve discussed, the fact that game developers no longer have the IDFA is a major obstacle for running positive ROAS campaigns. But there is a user acquisition strategy to gather user identification data which you can use to run targeted campaigns again - and that’s building a direct-to-consumer channel which collects email addresses. For mobile gaming, that usually comes down to a webshop - which is a website, outside of the app environment, that sells products and engages players directly and without Apple and Google in the middle. Here are a few benefits:
- Collect user identity data like emails and phones: To complete a purchase on the webshop and get a receipt, players must enter their email addresses - which is a piece of identity data you own and Apple and Google can’t take away from you.
- Create retargeting campaigns: Use email addresses to retarget players across mobile user acquisition campaigns
- Create lookalike audiences: Use email addresses to build lookalike audiences on Facebook and target similar players
- Bid higher and boost ROAS: Because you’re not selling items through Google and Apple and paying them 30% of your IAP revenue, you keep more revenue in your pocket. You can use that extra revenue to increase budgets on mobile user acquisition and win more impressions.
- Save spend with web, a cheaper UA channel: The user acquisition cost is cheaper on the web than it is on in-app ad networks. You’ll get more bang for your buck if you use some user acquisition budget to try and get valuable players to spend on the webshop instead of in-game.
- Add a free UA channel to your mix - email marketing: By collecting email addresses, you can build out a completely new user acquisition and remarketing channel - email. Then you can send newsletters and personalized emails to players as you wish, for free without worrying about the cost per user acquisition.
Start improving your UA strategy
Get in touch with us at Stash to learn how a direct-to-consumer web shop can significantly impact your overall user acquisition strategy and performance.